Jan. 28 (Bloomberg) — Investors will have a tougher time assessing Federal Reserve policy when officials today replace interest rates with emergency credit programs as their main tool for steering the economy.
Without rates as their main policy gauge, Chairman Ben S. Bernanke and the Federal Open Market Committee also will find it more difficult to anticipate the impact of their statements on financial markets during the worst credit crisis in seven decades.
“It’s not only harder for them to predict, but it’s harder for them to get traction” from the Fed’s $1 trillion effort to revive credit, said Keith Hembre, a former Fed researcher who is now chief economist at FAF Advisors Inc. in Minneapolis.
The new focus on changes in the size and composition of the central bank’s assets makes it harder for policy makers to revive confidence in bond and stock markets, Fed watchers said. Such confidence is needed after financial shares tumbled 29 percent and unemployment hit a 16-year high since the Fed cut the main rate to a record-low 0.25 percent or less on Dec. 16.
The central bank, while pursuing its policy of easing credit, probably won’t alter borrowing costs today and for the remainder of 2009, according to the median forecast of analysts surveyed by Bloomberg News.
That means analysts can’t base their predictions for Fed decisions on a simple interest rate benchmark for the first time since the FOMC began releasing policy statements in 1994.
“It’s not multiple-choice anymore,” said RBS Greenwich Capital chief economist Stephen Stanley, a former Richmond Fed researcher. “It’s essay questions.”
The FOMC will release a statement at about 2:15 p.m. in Washington at the conclusion of a two-day meeting.
Reliable Measure
Policy makers lost one reliable measure of market sentiment in September when futures ceased to be an indicator of investor expectations for interest rate decisions.
The Fed had failed to align its policy target rate with the rate banks charge each other for overnight loans. Traders had looked at the so-called federal funds rate when determining their bets on what the policy makers will do.
Central bankers have yet to dispel investor uncertainty by announcing targets for the size or composition of its balance sheet beyond current programs, such as plans to purchase mortgage bonds and housing-finance totaling $600 billion. Assets held by the Fed have more than doubled to $2.04 trillion over the past year.
In January 18, 2009, the Associated Press reported that in an interview aired on “Dateline NBC” the Chairman and CEO of Berkshire Hathaway Inc., Warren Buffett said that the “US is engaged in an economic Pearl Harbor.”
A shiver ran down my spine!
There was hardly any comment by any of our national dailies or the leading financial dailies.
Obviously, what Warren Buffett said is open to several interpretations. Whatever it may be, it cannot be good.
Why?
If the United States is engaged in an economic Pearl Harbor, it follows that there must be an enemy. Who is this enemy?
When the Japanese attacked Pearl Harbor, it gave President Roosevelt the pretext to enter World War II, at a time when the nation was against going to war. It was a day of infamy and American blood must be avenged. The rest, as they say is history – but a distorted one at that. It is now widely held that President Roosevelt had received advance warnings about the Japanese attack on December 7, 1941. But the intelligence never reached the US Fleet and the ensuing anger and outrage compelled what was once a reluctant public to join the British induced war against Germany.
But recently, this reference to Pearl Harbor by the neo-cons gave rise to the Global War of Terror in 2001 which postponed the day of financial reckoning by seven years, when President George Bush pumped over US$3 trillion into the war economy.
Recall what the neo-con think tank, Project for the New American Century foretold: “the process of transforming the US into tomorrow’s dominant force was likely to be a long one, in the absence of some catastrophic and catalyzing event like a new Pearl Harbor.”
September 11 was the catalyzing event, the New Pearl Harbor which enabled the neo-cons to put into action their plan for global domination. And like the events leading to the original Pearl Harbor, President Bush and his regime were warned by eleven countries and were supplied with specific intelligence in the months before 9/11 but no actions were taken.
It was another day of infamy and the United States was led once again by the nose to embark on a military misadventure in Afghanistan and Iraq. The Global War on Terror was unleashed!
This is the third time that a catastrophic event is invoked to justify a certain course of action.
Why?
That it is Warren Buffett who is making this reference is most telling, for he is the hidden economic and financial adviser to President Obama. Warren Buffett has in fact said that Obama is the best man for the job!
Warren Buffett is not the effable businessman that the mass media make him out to be. He is an insider in every sense of the word.
I have said repeatedly for over two years that there is an ongoing global currency warfare and what is at stake is the hegemony of the US dollar. Warren Buffet knows that if the dollar ends up officially as toilet paper, his fortune and that of his global partnership – the hidden manipulators would be finished.
This message that the US is in an economic Pearl Harbor is meant for the enemy, as yet to be disclosed to the American public. It is a warning no less.
President Obama has echoed the sentiments in the course of his inauguration speech.
Food for thought:
In both the previous Pearl Harbor events, there were advance warnings of the impending attacks on the United States, which were later used as a pretext for waging global wars – World War II and the Global War on Terror.
What is in store for the United States and the world in this, the third and final Pearl Harbor?
Since Warren Buffett has stated that the United States is already “engaged in an economic Pearl Harbor” I can only conclude that we are going to be in a real big mess very soon – to be precise, the end of the first quarter of 2009!
Matthias Chang is a frequent contributor to Global Research. Global Research Articles by Matthias Chang
Samuel T. Francis, 57, a columnist and former editorial writer for the Washington Times and an outspoken voice of American conservatism, died Feb. 15 at Prince George’s Hospital Center in Cheverly after unsuccessful surgery to repair an aneurysm in his aorta. An area resident for 28 years, he lived in Seabrook.
Mr. Francis began writing editorials for the Washington Times in 1986. He served as the paper’s deputy editorial page editor from 1987 to 1991 and acting editorial page editor from February to May 1991. He was a staff columnist from 1991 to 1995 and continued writing a nationally syndicated twice-weekly column until shortly before his death.
He wasn’t just conservative but proudly “paleoconservative” — certainly not neoconservative.
LECTURE: THE GLOBAL FINANCIAL CRISIS — The Great Depression of the 21st Century with Michel Chossudovsky (professor of economics at the University of Ottawa) Causes and consequences of the financial meltdown; The speculative onslaught; Financial fraud and the “bank bailouts”; Bankruptcy of the real economy; Impacts on employment, wages and social services; Towards a spiralling public debt; The economic crisis and its relationship to the Middle East war; The centralization of corporate power; The concentration of wealth; The globalization of poverty. What are the policy alternatives?
For a picture of the US real estate crisis, imagine New Orleans wrecked by Hurricane Katrina, and before the waters even begin to recede, a second Katrina hits.
The 1,120,000 lost US retail jobs in 2008 are a signal that the second stage of the real estate bust is about to hit the economy. This time it will be commercial real estate–shopping malls, strip malls, warehouses, and office buildings. As businesses close and rents decline, the ability to service the mortgages on the over-built commercial real estate disappears.
The over-building was helped along by the irresponsibly low interest rates, but the main impetus came from the slide of the US saving rate to zero and the rise in household indebtedness. The shrinkage of savings and the increase in debt raised consumer spending to 72% of GDP. The proliferation of malls and the warehouses that service them reflect the rise in consumer spending as a share of GDP.
Like the federal government, consumers spent more than they earned and borrowed to cover the difference. Obviously, this could not go on forever, and consumer debt has reached its limit.
Shopping malls are losing anchor stores, and large chains are closing stores and even going out of business altogether. Developers who borrowed to finance commercial ventures are in trouble as are the holders of the mortgages, derivatives and other financial junk associated with the loans.
The main source of the economic crisis is the infantile belief of US policymakers that an economy could be based on debt expansion. As offshoring moved jobs, incomes, and GDP out of the country, debt expanded to take the place of the missing income. When the offshored goods and services were brought back to be sold to Americans, the trade deficit rose, adding another level of financing for an economy that consumes more than it produces.
The growth of debt has outpaced the growth of real output. Yet, the solution offered by Obama’s economic team is to expand debt further. This is not surprising as Obama’s economic team consists of the very people who brought on the debt crisis. Now they are going to make it worse.
The unexamined question is: Who is going to finance the next wave of debt?
The US budget deficit for fiscal year 2009 already appears to be on a path to $2 trillion, and that is before Obama’s stimulus program. What we are looking at is a $3 trillion budget deficit if Obama’s program is enacted in time to impact the economy this year.
Foreign countries can finance a $500 billion US budget deficit out of their trade surpluses with the US. But foreigners do not have the funds to finance a US budget deficit in the trillions of dollars, and they would not finance such a deficit even if they had the funds. Foreigners are over-weighted in dollar holdings and prefer to lighten their holding than to add to them. America’s economic prospects are dim as are the dollar’s prospects as reserve currency. An annual budget deficit in the trillions of dollars makes the dollar’s prospects appear even dimmer.
Iain Martin says the Prime Minister hasn’t ’saved the world’ and now faces disgrace in the history books
By Iain Martin
Last Updated: 8:41AM GMT 21 Jan 2009
They don’t know what they’re doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious.
Yesterday marked a new low for all involved, even by the standards of this crisis. Britons woke to news of the enormity of the fresh horrors in store. Despite all the sophistry and outdated boom-era terminology from experts, I think a far greater number of people than is imagined grasp at root what is happening here.
The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic.
The political impact will be seismic; anger will rage. The haunted looks on the faces of those in supporting roles, such as the Chancellor, suggest they have worked out that a tragedy is unfolding here. Gordon Brown is engaged no longer in a standard battle for re-election; instead he is fighting to avoid going down in history disgraced completely.
The link above as well as what follows is from Google cache. Not sure how long that cache will stay but here is the article that someone, for some reason, wanted to suppress.
By Ben Russell and David Prosser
Saturday, 17 January 2009
Britains biggest banks are “technically insolvent”, Royal Bank of Scotland said yesterday, as the global banking industry was rocked by another day of turmoil, including the announcement of $23bn (£16bn) of new losses from Merrill Lynch and Citigroup, the giant US institutions.
Analysts working for RBS, one of several British banks to have received emergency funding from the UK Government last year, told the City that “the domestic UK banks are technically insolvent on a fully marked-to-market basis”.
The warning does not mean British banks are about to go bust, because the assessment is purely theoretical, and RBS said the position was “not unusual at this stage in the economic cycle”.
However, it will add to pressure on the Government to provide more support for the country’s banks. Treasury officials are now set to spend this weekend in talks about a fresh round of measures, which could be unveiled as early as next week, to free up lending to households and major corporations hit by the credit crunch.
The value of Barclays fell by a quarter in stock market trading yesterday, amid a series of wild rumours about its finances, although the bank said it saw no need to comment on the drop. Its board said in a statement last night that it knew “no justification for the fall”.
The statement said next month the bank expected to report that profits before tax for 2008 were “well ahead” of the £5.3 billion forecast by analysts.
City analysts said the bank had been targeted by traders after regulators lifted a ban yesterday on the short selling of financial stocks. Barclays’ share price, along with the value of other British banks, was also hit by dismal news from the international markets, including the announcement on Thursday night that the Irish government was nationalising Allied Irish Banks. In the US, Bank of America announced yesterday that it was taking a $20bn injection of emergency funding from the US government, subsequently revealing that Merrill Lynch, the investment bank it rescued last year, had lost more than £15bn in the final three months of last year.
Citigroup, once the world’s largest bank, announced more than $8bn of losses for the final quarter of last year, and revealed plans to split itself in two.
Treasury officials were still discussing plans to help British banks last night but the proposals are likely to include up to £100bn of new guarantees for the wholesale markets that underpin mortgage and other loans.
Other possible measures being considered include state support to help Britain’s largest companies raise their own funds. Another option is to launch a “bad bank” to remove tainted assets from the banks’ balance sheets, though while this policy is under consideration, it is thought to remain some way off.
Other proposals include ring-fencing the toxic assets within bank balance sheets. Lord Mandelson, the Business Secretary, has also talked of easing the terms of the Government’s £37bn bank bailout in order to kickstart lending. Downing Street made it clear yesterday that the Government remained committed to doing “whatever is necessary to help British businesses and families get through this global financial recession”.
Reform plan raises fears of Bank secrecy The urge to coverup what one ought not be doing is immense. That fact helps explain Plans To Allow Secret Printing By The BOE.
The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy.
The Government is set to throw out the 165-year old law that obliges the Bank to publish a weekly account of its balance sheet – a move that will allow it theoretically to embark covertly on so-called quantitative easing. The Banking Bill, which is currently passing through Parliament, abolishes a key section of the law laid down by Robert Peel’s Government in 1844 which originally granted the Bank the sole right to print UK money.
The ostensible reason for the reform, which means the Bank will not have to print details of its own accounts and the amount of notes and coins flowing through the UK economy, is to allow the Bank more power to overhaul troubled financial institutions in the future, under its Special Resolution Authority.
However, some have warned that it means: “there is nothing to stop an unreported and unmonitored flooding of the money market by the undisciplined use of the printing presses.”
It comes after the Bank’s Monetary Policy Committee cut interest rates by half a percentage point, leaving them at the lowest level since the bank’s foundation in 1694.
Debating the issue in the House of Lords recently, Lord James of Blackheath, a Conservative peer, said: “Remove [this] control and there is nothing to stop an unreported and unmonitored flooding of the money market by the undisciplined use of the printing presses.
“Quite why the Bank has to keep its operations so shrouded in secrecy is a mystery to me,” said Simon Ward, economist at New Star. “This [reform] will make it much more difficult to track what the Bank is doing.”
Where’s the mystery? Simon answers his own question.
South Korea, it is often said, is the most connected country in the world.
A new-model democracy where 90% of households are hooked up to a fast-flowing torrent of news, views, opinion and online debate. And with it, it is argued, has come a new breed of opinion former. To guide and sway public opinion, no longer is it necessary to be a fat cat media mogul.
A broadband connection is all you need.
Oracle
But as well as a computer keyboard, a voice loud enough, or interesting enough, to be heard above the electronic din is what really counts. Minerva was that kind of voice. Taking the Roman goddess of wisdom’s name as his nom-de-plume, Minerva became a one-man oracle for these troubled economic times.
Or bloggacle perhaps.
In hundreds of internet postings over the past year the blogger has spent his days pounding the keys, pouring forth his opinions on where he felt the South Korean economy was heading. “Downwards” and “fast” would probably be two of the best words to sum up his view.
But what appears to have really catapulted him to fame were a number of specific predictions.
A week before the collapse of the US investment bank Lehman Brothers, there was the uncanny prophet, predicting exactly that. And as the government fought to shore up the value of the Korean currency, there was Minerva accurately predicting its subsequent, dramatic slide.
The forecasters at Leap2020 (who have been right in many of their predictions, but wrong in large calls such as the timing of the collapse of the dollar) are predicting that 2009 will be an unfolding year of worldwide insolvency:
A new sequence of the fourth phase (so-called “decanting phase”) of the unfolding global systemic crisis has began: the sequence of global insolvency.***
Contrary to what political leaders and their central bankers seem to believe worldwide, the problem of liquidity that they are striving to solve by means of historic interest rate drops and unlimited money creation, is not a cause but a consequence of the current crisis. It is in fact a problem of solvency***
The situation prevailing today throughout the entire global financial system, a large part of the world economy and all the economic players (including States) who based their growth on debt in the past years. The crisis translates and magnifies a problem of global insolvency. The world is becoming aware of the fact that it is a lot poorer than it used to believe in the last decade. And 2009 is the year when all the economic players must try to assess their real level of solvency, knowing that many assets are still losing value. Moreover a growing number of investors no longer trust the traditional instruments and indicators of measurement. Quoting agencies have lost all credibility. The US Dollar is just a fiction of international monetary unit and many countries are striving to get away from it as quickly as possible. Thus, quite rightly, the entire financial sphere is suspected of being a giant black hole. Concerning companies, no one can tell if their order books are reliable because in every sector customers cancel their orders or just stop buying, even when prices are discounted, as indicated by dropping retail sales in the past few weeks. Concerning States (and municipalities), slumping fiscal revenues are likely to result in even higher deficits and then bankruptcies. As a matter of fact, Russian billionaires, Gulf oil-monarchies, Chinese commercial Eldorados, all the « golden-egg geese » of companies and financial institutions of the planet (namely European, Japanese and North-American ones) turn out to be insolvent or hardly solvent. The question of the solvency of the US federal State and federated states (as well as of Russia or the United-Kingdom) is beginning to be asked by some big international media; as well as the question of the solvency of large capital-based pension funds, major players in this past twenty years’ globalised economy.
According to LEAP/E2020, the trend is clear: the sequence that has begun this year is a sequence of global insolvency.
Is there anything to what they are saying?
Well, probably the leading expert on monetary policy – Milton Friedman’s co-author on the leading treatise on the Great Depression – agrees that the problem is not one of credit, but of solvency. She told the Wall Street Journal in October that insolvent American companies should be allowed to fail, so that the system can correct itself.
Paulson and Bernanke and Frank and the rest ignored her. Instead of letting poorly-run companies fail, and letting well-run companies pick up the pieces cheaply and then use them for valid business purposes, the fed enacted various schemes to try to stop or hide the failure of the weak and incompetent businesses.
The government has not only failed to stop “the contagion”, they have ensured that it infects larger and larger companies . . . and eventually the governments which try to “fix” their problems.
Due to this faulty approach to the economic crisis, the entire world now faces an insolvency crisis.
TROY, Mich. — The bad bets made by executives at Independent Bank of Michigan are on display in spots across the state: a defunct bowling alley, a new but never occupied shopping center and the luxurious Whispering Woods Estates, which offers prime lots for never-constructed dream homes.
Now it is the federal government making the big bet here.
The Treasury Department has invested $72 million out of the $700 billion in federal bailout funds to help prop up this community bank, which traces its roots back 144 years in Michigan. It is a small chunk of the giant rescue fund being wagered by Washington to encourage banks like Independent to resume lending and jump-start the frozen economy.
But Independent, hard put to find good borrowers in a suffering economy, and fearful of making the kind of mistakes that got it into trouble in the first place, is not doing much lending these days. So far it is using all of the government’s money to shore up its own weak finances by repaying short-term loans from the Federal Reserve. “It is like if you are in an airplane and the oxygen mask comes down,” said Stefanie Kimball, the bank’s chief lending officer. “First thing you do is put your own mask on, stabilize yourself.”
This is not what the Treasury Department had in mind when it started this program, saying it would give the nation’s “healthy banks” enough money to start lending again, so that people could buy homes and businesses could invest and create jobs, thereby invigorating a disintegrating economy.
A close look at Independent Bank’s handling of its government money demonstrates just how much harder this has turned out to be, and the conflicting challenges that banks across the United States are confronting in the new bailout era. Like hundreds of other banks, it is caught between the government’s push to increase lending and its own caution.
As of Tuesday, 257 financial institutions in 42 states had received $192 billion in capital injections from the Treasury’s Troubled Asset Relief Program, or TARP, out of $250 billion set aside for this purpose. Seven giant banks — like JPMorgan Chase and Citigroup — have received more than 62 percent of the total so far, and have gotten most of the attention.
But it is the smaller community banks like Independent that are seeing the largest number of investments, with 186 banks so far getting allocations of less than $100 million. With little public attention, this money in recent weeks has been streaming out to community banks across the nation, in dollops as small as $1 million — the amount set aside for Independent Bank of East Greenwich, R.I. Ultimately, more than 1,000 banks are expected to take part in the program.
While most of the banks that have received money appear to be relatively healthy, dozens of other banks that received federal funds are, like Independent Bank of Michigan, financially stressed by a high volume of delinquent loans.
Bailout Is Questioned
Economists say the decision by banks like Independent to use the federal money for purposes other than lending, while perhaps disappointing, is not surprising, given that the Treasury Department did not honor its plan to give the money only to healthy banks.
“It’s a matter of logic — when you are in a perilous position, like many of them are, you try to bolster your balance sheet,” said Alan S. Blinder, a monetary policy economics professor at Princeton. “But this is a real flaw in the program.”
Some banking experts are even questioning if the bailout may be doing more harm than good, in some cases, by giving banks like Independent a cushion as they struggle to fix their problems, rather than forcing them to sink or swim on their own. It could also delay mergers of weaker banks with healthier ones.
“You are keeping a lot of troubled institutions in kind of a status quo state,” said Eric D. Hovde, the chief executive of a Washington-based hedge fund that invests in the banking industry. “They can continue on their merry ways.” In Congress, anger over the management of the TARP program runs deep. Many lawmakers say that there is little oversight, and that they can see no evidence that the taxpayer money is making its way from the coffers of banks to businesses and consumers. The program is likely to be fundamentally changed under the administration of Barack Obama, who on Monday asked President Bush to request that Congress release the remaining $350 billion.
Some lawmakers have criticized the Treasury for allowing banks to use the government’s bailout money to acquire rival banks.
As additional evidence of the growing anxiety, bank regulators on Monday sent a notice to banks receiving federal money ordering them to disclose how they are using it. It also pushed them to emphasize new loans. “A lot of the money is already out there and the inspector general needs to get up to speed on how banks are using it,” said Senator Claire McCaskill, Democrat of Missouri. “We need to make sure we get this money back and the only way we can do that is with strong oversight on how this money is spent.”
EL PASO – Mexico is one of two countries that “bear consideration for a rapid and sudden collapse,” according to a report by the U.S. Joint Forces Command on worldwide security threats.
The command’s “Joint Operating Environment (JOE 2008)” report, which contains projections of global threats and potential next wars, puts Pakistan on the same level as Mexico. “In terms of worse-case scenarios for the Joint Force and indeed the world, two large and important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico.
“The Mexican possibility may seem less likely, but the government, its politicians, police and judicial infrastructure are all under sustained assault and pressure by criminal gangs and drug cartels. How that internal conflict turns out over the next several years will have a major impact on the stability of the Mexican state. Any descent by Mexico into chaos would demand an American response based on the serious implications for homeland security alone.”
The Joint Forces Command in Norfolk, Va., is a Defense Department combat command that includes different military service branches, active and reserves. One of its roles is to transform the military’s capabilities.
In the report’s foreword, Marine Gen. J.N. Mattis, the Joint Forces commander, said “Predictions about the future are always risky. … Regardless, if we do not Mexico’s President Felipe Calderon announces a new economic stimulus package in Mexico City, Wednesday, Jan. 7, 2009. In an attempt to head off layoffs at companies vulnerable to the economic crisis, Calderon announced the government will invest 2 billion pesos into the country’s troubled industries.
try to forecast the future, there is no doubt that we will be caught off guard as we strive to protect this experiment in democracy that we call America.”
The report offers “a Polaroid snapshot,” and conditions in Mexico and elsewhere are in a state of flux, said Brig. Gen. José Riojas, executive director of the National Center for Border Security and Immigration at the University of Texas at El Paso. “I’m not sure Mexico looks today like it did nine months ago,” Riojas said.
The report is the latest focusing on Mexico’s security problems, which stem mostly from drug violence and corruption. Recently, the Department of Homeland Security and former U.S. drug czar Barry McCaffrey issued similar assessments.
Despite such reports, El Pasoan Veronica Callaghan, a border business leader, said she keeps running into people who “are in denial about what is happening in Mexico.”
Last week, Mexican President Felipe Calder n Hinojosa instructed his embassy and consular officials to promote a positive image of Mexico. He’s also vowed to continue the crackdown on drug cartels.
Diana Washington Valdez reports for the El Paso Times, a member of the Texas-New Mexico Newspapers Partnership, and may be reached at dvaldez@elpasotimes.com; 546-6140.
A few weeks ago when the Fed announced a strategy designed to bring down long-term interest and home mortgage rates through unlimited Treasury bond purchases, government debt staged a spectacular rally. To the unschooled market observer, the spike may be difficult to understand. After all, why would the value of Treasury bonds rise while their underlying credit quality is deteriorating faster than Bernie Madoff’s social schedule? The move is actually a perfect illustration of the tried and true Wall Street strategy of “buy the rumor and sell the fact”.
If it is well known that the Fed will be a big purchaser of Treasuries, those buying now will be positioned to unload their holdings when the buying spree begins. If the Fed pays higher prices in the future, traders can earn riskless speculative profits. If the traders lever up their positions, as many are likely doing, even small profits can turn unto huge windfalls.
The downside of course, is that all of the demand for Treasuries is artificial. Treasuries are now in the hands of speculators looking to sell, not investors looking to hold. These players are analogous to the mid-decade condo-flippers who flocked to new developments for quick profits. They did not intend to occupy their properties, but rather flip them to future buyers. Once these properties came back on the market, condo prices collapsed, as developers were forced to compete for new sales with their former customers.
This is precisely what will happen with Treasuries. Just as the U.S. government issues mountains of new debt to finance the multi-trillion annual deficits planned by the Obama Administration, speculative holders of existing debt will be offering their bonds for sale as well. In order to prevent a complete collapse in the bond prices the Fed will be forced to significantly increase its buying.
However, since the only way the Fed can buy bonds is by printing money, the more bonds they buy the more inflation they will create. As inflation diminishes the investment value of low-yielding Treasuries, such a scenario will kick off a downward spiral. But the more active the Fed becomes in their quest to prop up bond prices, the bigger the incentive to hit the Fed’s bid. The result will be that all Treasuries sold will be purchased by the Fed. But with the resulting frenzy in the Treasury market, and with inflation kicking into high gear, we can expect that demand for other debt classes that the Fed is not backstopping, such as corporate, municipal and agency debt, to fall through the floor, pushing up interest rates across the board.
In order to “save” the economy from these high rates the Fed will then have to expand its purchases to include all forms of debt. If that happens, run-away inflation will quickly turn into hyper-inflation, and our currency will be worthless and our economy left in ruins.
To avoid this nightmare scenario, the Fed should pull out of the bond market before it’s too late and let prices fall to where real buyers, those willing to hold to maturity, re-enter the market. Given how high inflation will likely be by the time this happens, my guess is that long-term Treasury yields will have to rise well into the double digits to clear the market.
The grim reality of course is that when the real estate bubble burst the Government was able to “bail-out” private parties. However, when the bond market bubble bursts, it will be the U.S. Government itself that will be in need of the mother of all bailouts. If U.S. taxpayers or foreign creditors are unwilling or unable to pony up, and if the nightmare hyper-inflation scenario is to be avoided, default will be the only option. If misery really does love company, Bernie Madoff’s clients might finally find some comfort.
Since the enactment of the Agricultural Act of 1949, CCC’s major activity has been the administration and implementation of nonrecourse loans to producers of major agricultural commodities. Generally, Congress establishes loan rates for certain commodities on a per-unit basis. Under the program’s “nonrecourse” provisions, the producer may satisfy the loan obligation through forfeiture to CCC of the commodity pledged as collateral for the loan. As a result, CCC acquires commodities that are forfeited or delivered under these nonrecourse loans. The accumulation of stocks of these forfeited commodities requires CCC to maintain provisions for their eventual disposal. The acquisition, procurement, storage, distribution, and disposal of commodities are handled by the Farm Service Agency under the administration of the Deputy Administrator for Commodity Opeartions. The regulations at 7 CFR part 1402 contain CCC policy for certain commodities available for sale by CCC.
Here you will find current as well as historical commodity price reports, values, CCC inventories, food assistance reports, and more.
Compare Current Inventroy ( November 2008 ) to Inventory in May 2002
“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”
– Friederich August von Hayek, Nobel Prize Laureate, Economics, 1974
One of the most absurd arguments I’ve heard justifying the Fed’s current policy of printing record sums of money is that it won’t be printing nearly enough dollars to offset the massive losses created by the magnitude of asset sales around the globe — due to de-leveraging. More simply stated, the Fed is not printing enough money to match the losses incurred.
That notion is so preposterous it’s insulting.
Yes it’s true, the credit crisis has triggered massive de-leveraging. I’ve read and heard estimates ranging anywhere from $10 to $30 trillion in losses. But that isn’t a loss of currency! Asset prices are falling because debt and equity positions are being liquidated, but the supply of currency isn’t diminishing at all. In fact, the amount of currency being printed by just about every government on earth is staggering! Furthermore, the volume of assets in the world isn’t decreasing — only values are decreasing.
Printing currency doesn’t increase the true value of anything; printing currency is inflation, and the result of inflation will be rising prices, yields, and interest rates, across the board. It may feel like value is being created, but it’s not.
De-leveraging is a relatively short-term phenomenon; it’s going to end of its own accord — whether governments are printing currency and crushing yields or not. But the fact that governments are printing money, and that they are crushing yields only means one thing: when the de-leveraging stops, prices, interest rates, and yields are going higher. The purchasing power of the currency you’re using is going to diminish, and the only defense is to buy real assets that can withstand inflation — or even outpace it. What sort of safe-havens qualify? The usual suspects: commodities, durable goods, and precious metals — especially gold.
If printing vast sums of dollars isn’t enough, add to this already precarious situation the fact that the U.S. — already massively in debt — is planning to issue trillions of dollars in new debt this year, and trillions more in 2010. Now you begin to see how the potential conflagration only becomes more flammable, and you better believe the U.S. isn’t the only country printing currency and issuing debt. Japan, Germany, France, and England — to name but a few — are doing exactly the same thing.
And yet, as I’ve said so many times recently, governments like China and Japan, who have heretofore bought U.S. debt — thereby fueling the consumption-driven boom of the last two decades — are tapped out. They’re losing their appetite for U.S. and European debt. The cracks are starting to appear, and analysts all over the world are taking notice. Witness this passage from an article last week in the International Herald Tribune:
“…as fewer dollars flow into China, the government has fewer dollars to buy American bonds and help finance the U.S. trade and budget deficits.”
Everyone from Bloomberg, to Moneyweek, to Barrons is waving the red flag, and bond yields have begun to groan as the upward pressure increases.
I’m just shaking my head right now. I cringe at the thought of people draining the remains of their devastated stock portfolios, dumping the proceeds into Treasuries or cash. I know it’s trite, but this really is the perfect storm, and when the dollar and Treasuries fall apart, a lot of people are going to lose even more money — at a time when prices and interest rates are going to be skyrocketing in response to the reckless printing of an unprecedented amount of currency around the globe. I know I’m not the only person who sees what is about to happen; this is going to make the 1970s and 1980s look like a day at the fair.
I have always been an optimist, but I am, for the first time in my life, truly terrified of the future.
PhD economist Marc Faber said in a recent interview that the last bubble to crash will be in long-term U.S. treasury bonds. Indeed, Faber has suggested shorting long-term treasuries at just the right moment. (He also is confident that – sooner or later – the U.S will go bankrupt).
Reuters correspondent and former Sempra economist John Kemp points out some irony regarding the fed’s policy regarding long-term treasuries:
The Fed’s decision to cut interest rates to between zero and 0.25 percent, coupled with a promise to keep them there for an extended period, and the threat to conduct even more unconventional operations in the longer-dated Treasury market risks the biggest bubble of all, this time in the U.S. government debt.***
The Fed is misleading investors into the biggest bubble of all time. Bernanke is making what learned economists call a “time-inconsistent” promise to hold interest rates at ultra low levels for an extended period.
The problem is that if the unconventional monetary policy works, and the economy picks up, the Fed will come under pressure to “normalize” rates and reduce excess liquidity to prevent a rise in inflation. The resulting rate rises will inflict massive losses on anyone who bought bonds at today 2.25 percent rate.
Bizarrely, Bernanke and Co are in fact inviting investors to bet the policy will fail, the economy will remain mired in slump for a long period, deflation will occur and interest rates will remain on the floor, as Japan’s have done since the 1990s . . . . Bernanke and Co are gambling memories will prove short and investors will prove just as eager to pay top prices for long-term government and private debt even though the downside is large [as previous times when they've bought at the top of the market].
[The fed is really saying] Let us have one last bubble, and when it collapses, we promise not to do any more in future…honest.
The must-create-big-bubble-to-fight-the-big-bust-we-created-with-the-last-bubble shenanigans of the Fed are leading us into disaster.
One month ago, the Trinity campus was divided by Dr. Sara Roy’s remarks about troubling conditions in Israel as a result of the Israeli occupation of Palestinian lands. Trinity’s Friends of Israel asserted in the February 10 Tripod that Roy, a professor at Harvard University’s Middle East Study Center whose lecture was sponsored by the Trinity organization Friends of Palestine, among others, had “provided the audience with an insidious account of the root causes of the current conditions in the Palestinian territories.” The February 17 Tripod carried two more letters inspired by Roy’s remarks, furthering the debate over the Israeli-Palestinian conflict.
On February 20, Hillel, the Anti-Defamation League, and the Friends of Israel countered by sponsoring a talk by Ben Harris, speechwriter and assistant spokesman for the Israeli Mission of the U.N. about Israel’s treatment in the United Nations.
Harris’ talk discussed Israel’s treatment in the U.N. and what he considered the U.N.’s role to be in achieving peace between Israel and Palestine.
Harris began his remarks by saying that the U.N. was a government organization which, “like any government organization has flaws and needs to be scrutinized,” regretting that its operations are so complex they are often clear only to those directly involved or deeply concerned with them.
Presuming authority from his own direct involvement in working in the U.N., Harris then discussed what he considered was Israel’s relative importance within the U.N., noting that he and other supporters of Israel are “continually frustrated with the disproportionate amount of attention given to Israel in the U.N.”
The first example he cited to illustrate this disparity was the fact that Israel was not given a ‘regional group,’ within the U.N. Assigning regional groups is the U.N.’s method for fostering geographic diversity in all of its governing bodies, where members are nominated from within their regional groups.
Israel’s exception from a regional group prevents it from being a part of any of the specific bodies of the U.N., such as the Security Council or “any other typical U.N. action.”
Harris mentioned that although Palestine only has “observer status,” within the U.N., not full-fledged state power, it still manages to derive power through the Arab Conference, which often votes in favor of Palestine. “Israel,” he said, “is boxed in, while Palestine enjoys extra power.”
The U.N. Human Rights Commission provided another example that Harris highlighted to show the disparate amount of attention that Israel receives in the U.N.. This Commission is supposed to provide an outlet for “anyone who feels human rights are being violated,” but according to Harris, “one quarter to one third of the resolutions concern Israel” because Palestinian representatives “manipulate the platform to make things difficult for Israel.”
He mentioned a two-day conference on human rights where Israel was given its own agenda item, so that the human rights violations in the rest of the world were discussed the first day, and the second day was devoted entirely to human rights violations committed by Israel. Harris feels that this imbalanced attention on Israel diminishes the credibility of the Human Rights Commission, because, “other countries’ actual human rights violations are ignored.”
Harris then began to discuss whether the U.N. could act as an “honest, impartial broker for peace in the Middle East.” Harris did not seem to think that the U.N. is impartial, but he did appear to believe it can have some role in the peace process, albeit a limited one.
He mentioned that in some cases, the U.N. can act as a “go-between” or “back channel,” conveying messages and allowing open communication between countries that are too bitter to have such communication on their own. He does not, however, feel that Israel and Palestine need this type of help from the U.N. as they are geographically connected and already have communication through established commercial ties.
Another possible role for the U.N. that Harris sees is to make proposals if neither country knows where to begin in the peace process.
Again, Harris considers this unnecessary for Israel and Palestine because they, “know what peace looks like,” just have not been able to achieve it.
He expressed his feeling that the U.N. could be involved in the Israeli-Palestine peace process by lending some legitimacy to the negotiations. “If the U.N. endorses [a peace process],” Harris believes, “it has the appearance of international legitimacy.”
He feels the U.N. missed this opportunity during the negotiations at Oslo, where they could have lent legitimacy but instead, “undermined Israeli-Palestine trust by adopting resolutions that rendered judgment on the peace process itself.”
Harris emphasized that the U.N. cannot impose a solution to the process because it “lacks the credibility and power to enforce” such an imposition, also saying that peace “happens privately, between people.”
He does not think, therefore, that, “every country in the U.N. needs to weigh in on Israeli-Palestine peace.” In order for this peace to be achieved, in Harris’ view, Palestinians need to recognize that Israel has legitimate claims to the land.
According to Harris, the Palestinians see themselves as victims of historical injustices that need to be fixed, and the U.N. has, “indulged this delusion” while Israel sees the conflict as “both countries’ struggle for self-determination.” He reasons that both countries’ claims need to be considered legitimate so they can find a way to share one strip of land.
In the end, Harris is optimistic that peace will eventually come to the Middle East, and that the U.N. will “tag along.” He feels that it may take a new generation of Israelis and Palestinians who have grown up fostering peace individually in order for their people to make peace as a whole.
Throughout his comments, Harris emphasized the need for continual open dialogue between supporters of both sides to ease the peace process. Given the past month’s discussion about the conflict on campus, Trinity seems to be taking a step in that direction, though the opposing sides may be talking past each other instead of with each other.
Blog Author’s note: My personal belief is that the UN are so opposed to Israel, because it is the conflict that they cannot reolvs, as they haven’t created it, compared to all other conflicts in the wolrd initiated by the iluminatis/freemasons.
UN is basically trying to demonize Israel (and the US) in order to gain popularity among the arab nations, that way it will be easier to impose a One World Government/One World Order.
I.O.U.S.A. boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. As the Baby Boomer generation prepares to retire, will there even be any Social Security benefits left to collect? Burdened with an ever-expanding government and military, increased international competition, overextended entitlement programs, and debts to foreign countries that are becoming impossible to honor, America must mend its spendthrift ways or face an economic disaster of epic proportions. Throughout history, the American government has found it nearly impossible to spend only what has been raised through taxes. Wielding candid interviews with both average American taxpayers and government officials, Sundance veteran Patrick Creadon (Wordplay) helps demystify the nation’s financial practices and policies. The film follows U.S. Comptroller General David Walker as he crisscrosses the country explaining America’s unsustainable fiscal policies to its citizens. With surgical precision, Creadon interweaves archival footage and economic data to paint a vivid and alarming profile of America’s current economic situation. The ultimate power of I.O.U.S.A. is that the film moves beyond doomsday rhetoric to proffer potential financial scenarios and propose solutions about how we can recreate a fiscally sound nation for future generations
I stumbled across this pie chart yesterday – a real eye-opener
Though massive in size, the Bailout figures used in the chart above were severely understated – or were tallied w/older data.
Currently, based on data extracted from The Motley Fool: $3.9 Trillion Was a Drop in the Bucket we’re now looking at a bailout total of ~ $8.6T – with no end in sight.
Before you ask” “why should I give any credence to this article?” Please take a couple of minutes to read my 2008 assessment – written in Dec 07: Ushering a new Economic Era.
Though I hope that I’m wrong in my bleak 2009 outlook below, these are my expectations as I see things today. Ultimately, the data (12 months from now) should tell us whether or not I was close.
Economic Tsunami of 2009
The US is still in the early stages of a growing global economic crisis, combined with a tectonic monetary transformation, yet many Americans are merely in a daze and struck with surreal disbelief – like a group of tourists wandering the beach in Phuket, Thailand after the waters receded… This awe inspiring event has never been seen before and most are oblivious to the fact that this is just the breathtaking precursor to a disastrous outcome, so the ignorant masses stay put – trying to grasp the unreal – incognizant of the devastating consequences of their inaction…
The waters started receding in 2008 and as the year comes to a close, the tide is now fully pulled out to sea… 2009 however will likely cause mother nature to reverse these forces quickly, and the first wave of this massive economic tsunami, building on the horizon for over a year now, will finally come crashing ashore with quite destructive results.
My personal 2009 expectations:
- US Job Market to get much worse and will be the “hot topic” discussed in the mainstream media; The BLS officially published and severely understated U-3 unemployment rate will easily cross the 10% threshold in 2009. (link to the real US unemployment picture)
- Housing market will continue to crater while prices fall unabated – due to increasing unemployment, resetting ARMs, inability to refinance, and more people (who CAN afford their mortgage) merely “walking away” – out of disgust/exasperation that banks refuse to work with them (the responsible borrowers/homeowners) while they continue to reward the irresponsible. Home sales however, may likely start to pick up, as those who 1) have a job and 2) can qualify, take advantage of lower mortgage rates and homes become more affordable – but the number of new buyers will significantly lag behind the pervasive increase in foreclosure rates, so home inventories will continue to build while prices fall.
- Bailouts Galore; we’re already $8.6 Trillion into this bailout mess (link to 2008 bailout figure)), so what’s several more trillion in unpayable (aside from inflation erosion) taxayer dollars? I anticipate we will see bailouts for California, Michigan and others; more money for AIG, the Bond market, Infrastructure improvements, additional stimulus checks for the masses, etc. link to the money hole
- DOW to test the 6,000 range; though we will see a few nice bear-market rallies before and after, the 6,000 range will likely be tested – but don’t think this will be the “ultimate low”, as that should come later. link to DOW, where’s the floor?
- US Dollar to fall to lowest levels in history; with all the new bailouts and increasing debt levels of the US Gvt, the dollar will lose its prestige as a global monetary safe haven and will ultimately test the 65 level (and possibly lower) on the US Dollar Index – sparking a new round of consumer inflation for the masses. The US dollar won’t lose its reserve currency status in 2009, but it will in due time. link to Dollar: faltering foundation of US economic strength
- Treasury bubble pops – a flight to safety ensued in late 2008 and Treasuries were the vehicle used. High demand caused rates to fall while face values rose. When the Treasury bubble bursts in 2009, traders will be crushed as rates rise and face values fall. As this happens, the buying price of the bond drops and thus, traders will have to sell currently owned bonds for less than what was paid.
- Derivatives unwind; over a quadrillion (a thousand trillion) dollars in derivatives existed at the height of this economic bubble – part of the reason for our “slowed and controlled” economic implosion. Our monetary masters (AKA: The Plunge Protection Team – PPT) have thrown everything – including the kitchen sink, at our banks, markets and economy – to prevent a massive unwind of this monsterous derivatives complex. From what I understand, much of the froth in these notional derivatives have already expired/bled off, yet we are still stuck with about $700 Trillion outstanding. If the PPT can keep our house of cards afloat for another 18-24 months, these too will expire and the biggest threat to our global economy will have blown over, but I think we’re going to see some fireworks first. If AIG, Fannie/Freddie, GM, Citigroup or a big someone else implodes, they will likely set of a chain of cascading counterparty derivative dominoes – insurance bets that can’t be paid, but that which are needed to pay off other counterparties, who in-turn, can no longer pay off others, etc.
- Complete US Banking System Nationalization and/or Banking System “Holiday” (shutdown); hundreds of new bank failures will likely lead to public panic, banking runs and gvt imposed withdrawl limits; which will ultimately lead to nationalization and/or a banking system holiday. If a holiday IS imposed, ATM machines, banks and electronic commerce will be shut down across the nation (as the government tries to figure out what to do). People will grow anxious as their credit/debit cards don’t work and they’re unable to buy food, gas – anything. It may be wise to keep some cash under the matress (just in case). link to banking system shutdown?
- Gold crosses through $1,200 on it’s way to meet its 2010 or 2011, one-to-one ratio with the DOW.
- US Economic Depression is declared; it took a year of looking at backwards data for the “experts” to finally declare that we’ve been in a recession the whole time – a year now! If we experience just four more months of the same, it will be an economic downturn and predicament not seen since The Great Depression. Well folks, the ingredients are already baked into the cake…
Closing:
Ultimately, 2009 will be quite bad as that first tsunami wave crashes ashore, but it’s only the first of many and once the waves end, we’ve still got flooding, carnage, destruction and cleanup to deal with. Let’s just hope that these events don’t lead to a complete breakdown in society. link to Social Implications of a Significant Economic Downturn
U.S. Debt Expected To Soar This Year
$2 Trillion Increase May Test Federal Ability to Borrow
By Lori Montgomery
Washington Post Staff Writer
Saturday, January 3, 2009; Page A01
With President-elect Barack Obama and congressional Democrats considering a massive spending package aimed at pulling the nation out of recession, the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world’s appetite for financing U.S. government spending.
For now, investors are frantically stuffing money into the relative safety of the U.S. Treasury, which has come to serve as the world’s mattress in troubled times. Interest rates on Treasury bills have plummeted to historic lows, with some short-term investors literally giving the government money for free.
But about 40 percent of the debt held by private investors will mature in a year or less, according to Treasury officials. When those loans come due, the Treasury will have to borrow more money to repay them, even as it launches perhaps the most aggressive expansion of U.S. debt in modern history.
With the government planning to roll over its short-term loans into more stable, long-term securities, experts say investors are likely to demand a greater return on their money, saddling taxpayers with huge new interest payments for years to come. Some analysts also worry that foreign investors, the largest U.S. creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the United States as the bedrock of the global financial system.
While the current market for Treasurys is booming, it’s unclear whether demand for debt can be sustained, said Lou Crandall, chief economist at Wrightson ICAP, which analyzes Treasury financing trends.
“There’s a time bomb in there somewhere,” Crandall said, “but we don’t know exactly where on the calendar it’s planted.”
The government’s hunger for cash began growing exponentially as the nation slipped into recession in the wake of a housing foreclosure crisis a year ago. Washington has since approved $168 billion in spending to stimulate economic activity, $700 billion to prevent the collapse of the U.S. financial system, and multibillion-dollar bailouts for a variety of financial institutions, including insurance giant American International Group and mortgage financiers Fannie Mae and Freddie Mac.
Despite those actions, the economic outlook has continued to darken. Now, Obama and congressional Democrats are debating as much as $850 billion in new federal spending and tax cuts to create or preserve jobs and slow the grim, upward march of unemployment, which stood in November at 6.7 percent.
Congress is not planning to raise taxes or cut spending to cover the cost of those programs, because economists say doing so would further slow economic activity. That means the government has to borrow the money.
Some of the borrowing was done during the fiscal year that ended in September, when the Treasury added nearly $720 billion to the national debt. But the big borrowing binge will come during the current fiscal year, when the cost of the bailouts plus another stimulus package combined with slowing tax revenues will force the government to increase the debt by as much as $2 trillion to finance its obligations, according to a Treasury survey of bond dealers and other market analysts.
As of yesterday, the debt stood at nearly $10.7 trillion, of which about $4.3 trillion is owed to other government institutions, such as the Social Security trust fund. Debt held by private investors totals nearly $6.4 trillion, or a little over 40 percent of gross domestic product.
According to the most recent figures, foreign investors held about $3 trillion in U.S. debt at the end of October. China, which in October replaced Japan as the United States’ largest creditor, has increased its holdings by 42 percent over the past year; Britain and the Caribbean banking countries more than doubled their holdings.
Economists from across the political spectrum have endorsed the idea of going deeper into debt to combat what many call the most dangerous economic conditions since the Great Depression. The United States is in relatively good financial shape compared with other industrial nations, such as Japan, where the public debt equaled 182 percent of GDP in 2007, or Germany, where the debt was 65 percent of GDP, according to a forthcoming report by Scott Lilly, a senior fellow at the Center for American Progress.
Even a $2 trillion increase would push the U.S. debt to about 53 percent of the overall economy, “only a few percentage points above where it was in the early 1990s,” Lilly writes, noting that plummeting interest rates show that “much of the world seems not only willing but anxious to invest in U.S. Treasurys, which are seen as the safest security that an investor can own in a risky world economy.”
Still, some analysts are concerned that the deepening global recession will force some of the largest U.S. creditors to divert cash to domestic needs, such as investing in their own banks and economies. Even if demand for U.S. debt keeps pace with supply, investors are likely to demand higher interest rates, these analysts said, driving up debt-service payments, which last year stood at $250 billion.
“When you accumulate this amount of debt that we’re moving into, it’s not a given that our foreign friends are going to continue on the path they’ve been on,” said G. William Hoagland, a longtime Republican budget analyst who now serves as vice president for public policy at the health insurer Cigna. “There’s going to come a time when we can’t even pay the interest on the money we’ve borrowed. That’s default.”
Others say those fears are overblown. The market for U.S. Treasurys is by far the largest and most liquid bond market in the world, and big institutional investors have few other places to safely invest large sums of reserve cash.
Despite their growing domestic needs, “China and the oil countries are going to continue running large surpluses,” said C. Fred Bergsten, director of the Peterson Institute for International Economics. “They certainly will be using money elsewhere, but I don’t think that means they won’t give it to us.”
As for the specter of default, Steven Hess, lead U.S. analyst for Moody’s Investors Service, said even a $2 trillion increase in borrowing would not greatly diminish the U.S. financial condition. “It’s not alarmingly high by our AAA standards,” he said. “So we don’t think there’s pressure on the rating yet.”
But that could change, Hess said. Nearly a year ago, Moody’s raised an alarm about the skyrocketing costs of Social Security and Medicare as the baby-boom generation retires, saying the resulting budget deficits could endanger the U.S. bond rating. Even as the nation sinks deeper into debt to finance its own economic recovery, several analysts said it will be critical for Obama to begin to address the looming costs of the entitlement programs and signal that he has no intention of letting the debt spiral out of control.
Failure to do so, Bergsten said, would “create dangers . . . in market psychology and continued confidence in the dollar.”
ITEM: In his new book The August Coup, Mikhail Gorbachev states that socialism “…is an idea that draws strength from many achievements of Christianity …. “
Correction: Socialism and Christianity are irreconcilable. One is based on the atheistic philosophy found in the Communist Manifesto; the other is based on the deity of Jesus Christ.
Anyone who doubts that the Communist Manifesto is also a socialist manifesto need only read Frederick Engels’ preface to the 1888 edition, which declares that the Communist Manifesto “is undoubtedly the most widespread, the most international production of all Socialist literature, the common platform acknowledged by millions of working men from Siberia to California.”
But why wasn’t it called a “Socialist Manifesto” instead? According to Engels, “Socialism was, in 1847, a middle-class movement, Communism a working-class movement …. And as our notion, from the very beginning, was that ‘the emancipation of the working class must be the act of the working class itself,’ there could be no doubt as to which of the two names we must take.”
Socialism means economic control of the people by government. In a socialist country, the state is all-powerful. Such an all-powerful state views itself — and not God — as the ultimate authority. It is not surprising, therefore, that the Communist Manifesto calls for abolishing family, marriage, countries, and religion as well as private property. Under the socialist system the state determines what is right and wrong — without any competing loyalties to God, family, or country.
Karl Marx, the principal author of the Communist Manifesto, once called religion “the opium of the people.” Marx viewed man as mere matter that can be shaped, and perfected, by his external environment. How different this is from the Christian view that man has an eternal soul and is responsible for his own actions!
It is impossible for a true Christian to be a socialist or for a true socialist to be a Christian. Nevertheless, socialists have cleverly twisted the scriptures in order to make their materialistic philosophy appear Christian. As Marx explained in the Communist Manifesto: “Nothing is easier than to give Christian asceticism a Socialist tinge. Has not Christianity declaimed against private property, against marriage, against the State? Has it not preached, in the place of these, charity and poverty, celibacy and mortification of the flesh, monastic life and Mother Church.”
by John R. Lott Jr., Chicago: University of Chicago Press, 225 pages
About half the U.S. population lives in one of the 31 states with relatively permissive laws regulating who may carry a concealed firearm. These states range from northern New England (Maine, New Hampshire, Vermont) to the deep South (Mississippi, Alabama, Georgia, Florida), the Piedmont (Virginia, North Carolina) to the Southwest (Oklahoma, Texas), the upper Midwest (the Dakotas) to the Pacific Northwest (Washington). They include urban states (Pennsylvania), suburban states (Connecticut), rural states (West Virginia and Montana), and everything in between. The other half of America’s people live in jurisdictions like New York, where access to concealed-carry permits is limited to those who can demonstrate a specific need for potentially deadly self-protection, or Illinois, where no one other than peace officers may carry a gun.
A massive natural experiment is thus under way, one that will ultimately tell us whether liberal gun carrying laws are good or bad policy. The early results are striking. It can no longer be seriously argued that relaxing the rules against concealed carrying of handguns is an invitation to violence, to bloody shootouts over fender-benders or football games. That sort of thing, always rare, is essentially absent from crime statistics, no matter what a state’s rules concerning who may carry a gun in public. What’s more, it is beginning to look as though, when a state authorizes private persons to carry handguns, it takes an important step toward suppressing serious crime.
What is at issue in gun control debates is people’s (mostly untutored) intuitions about which of two conflicting theories of human behavior has the upper hand in the real world. The first of these theories, sometimes called the “instrumentality theory” of lethal outcomes, holds that when firearms are more readily available, offenses such as armed robbery and murder–and impulsive homicides especially should increase because guns make it easier to commit crimes.
The opposite theory is that of “general deterrence,” which can be summed up in one phrase: more guns, less crime. That, not coincidentally, is the title of an important new book by one of America’s most resourceful and fearless econometricians, John Lott, who for the last several years has been the John M. Olin Visiting Fellow in Law and Economics at the University of Chicago Law School.
Each of these theories captures a certain amount of reality. We know, for example, that x number of impulsive homicides would not occur in a gun-free world. On the other hand, we also know that the prospect of meeting armed resistance changes the calculations of human actors, whether they intend good or mischief. That is why we insist that Brinks guards, soldiers, and Secret Service agents carry guns. We recognize that if they did not, their ability to deter predators would shrink or, in some cases, altogether disappear. To know what firearms policy to pursue, one has to know which of these tendencies dominates the other. Like so many other questions with a seemingly ideological leading edge, this one, at bottom, turns out to be empirical.
The Baltic Dry Index is a daily average of prices to ship raw materials. It represents the cost paid by an end user to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts.
This BDI is one of the purest leading indicators of economic activity. It measures the demand to move raw materials and precursors to production. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. This could also be gleaned from looking at commodity prices, but there are substitution effects and futures contracts that make it difficult to interpret the impact of commodity price fluctuations.
Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it.
So what does all this mean for you and your family?
Raw materials are not being shipped. This means metal,lumber,grain etc….
Without the raw materials, factories will not be able to make finished goods.
This means no factory jobs and no goods for store shelves.
No goods mean nothing to transport.
Nothing to transport means no trucking/rail shipments
No shipments mean transport companies go bankrupt.
This means there may be no one to ship the vital supplies (food,medicine,gasoline)
Forget the stock market it’s like a body that doesn’t know its dead yet…..
Bottom Line:
Might be prudent to stock up that empty pantry – while you still can!
Zechariah 12 – 2 Behold, I will make Jerusalem a cup of trembling unto all the people round about, when they shall be in the siege both against Judah and against Jerusalem. 3 And in that day will I make Jerusalem a burdensome stone for all people: all that burden themselves with it shall be cut in pieces, though all the people of the earth be gathered together against it.
This was an amazing declaration by the prophet Zechariah in 520 BC. At the time it was delivered, Jerusalem was in complete ruins, yet Zechariah declared that Israel would someday be the center of world attention on day and that all of Israel’s neighbors would be gathered together against her. To the rest of the world Israel would be a big burden.
There has been no time since that prophecy that this prophecy could be true other than today. For more than fifty years Israel’s Arab neighbors have tried to attack them without success, even though they outnumber Israel 50 to 1. Every time they attack them Israel comes out the victor.
Zechariah 12 – 6 In that day will I make the governors of Judah like an hearth of fire among the wood, and like a torch of fire in a sheaf; and they shall devour all the people round about, on the right hand and on the left: and Jerusalem shall be inhabited again in her own place, even in Jerusalem.
For 18 centuries of exile from their land, Jews and Christian’s who read their bibles knew that the Jew would once again possess Jerusalem. This finally happened in 1948, but it wasn’t until 1967 that the Jews regained possession of the city Jerusalem just as it was predicted. Jeremiah 31 – 10 Hear the word of the LORD, O ye nations, and declare it in the isles afar off, and say, He that scattered Israel will gather him, and keep him, as a shepherd doth his flock. 11 For the LORD hath redeemed Jacob, and ransomed him from the hand of him that was stronger than he.
Even though Israel has less than 2 percent of the world’s population more than 30% of the discussions in the United Nations revolve around them. Everyone is seeking a lasting peace between Israel and her neighbors but her neighbors allow for peace only as a ploy to be able to attack them again in some other way. There is no real interest in Peace by her neighbors.
Zechariah 12 – 8 In that day shall the LORD defend the inhabitants of Jerusalem; and he that is feeble among them at that day shall be as David; and the house of David shall be as God, as the angel of the LORD before them. 9 And it shall come to pass in that day, that I will seek to destroy all the nations that come against Jerusalem.
The God of the Bible promises to protect Israel while the god of the Quran promises to destroy her. This is why no one should be deceived to think that these books contain information about the same God. Whichever of these books is true causes the other by necessity to be declared as untrue.
It is clear that eventually all nations of the world will be against Israel. When that happens God will gather all the nations into the valley of Jehoshaphat for one final battle.
Zechariah 14 – 2 For I will gather all nations against Jerusalem to battle; Joel 3 – 2 I will also gather all nations, and will bring them down into the valley of Jehoshaphat, and will plead with them there for my people and for my heritage Israel, whom they have scattered among the nations, and parted my land.
(See also Ezekiel 38:14-23)
Israel has been conquered as a whole in the past but only in recent years has the land been parted (divided). After the first world war in the 1917 “Balfour Declaration”, the 1919 “Paris Peace Conference” and in 1922 the “Declaration of Principles” of the League of Nations the ancient land of Israel which has been called Palestine was recognized as belonging to the Jews. Great Britain was given the mandate to see “Palestine” once again become the national homeland of the Jew but instead divided the land giving 70 percent of it to Emir Abduallah Hussein because of his oil. The gifted land is called Transjordan, now known as Jordan. The Muslims immediately destroyed every Jewish temple and expelled all Jews from the land. This action against Israel set the sun on the British Empire.
Genesis 12 – 3 And I will bless them that bless thee, and curse him that curseth thee:
Then on November 29, 1947 the United Nations further divided the land giving only 13 percent of what had been designated for the national homeland. The Arabs however want it all. Every so-called peace proposal ever since that time has involved the West asking Israel to give up more of her land. So it is with president Bush’s current “Road map to peace”.
There is one thing that unites all the enemy nations that surround Israel today, it is Islam. Yet the prophecies regarding Israel’s enemies was written one thousand years before Islam ever existed. The Sahih Al-Buhari hadith says, “The last day will not come until the Muslims confront the Jews and the Muslims destroy them. In that day Allah will give a voice to the rocks and the trees and they will cry out ‘O Muslim, O Abdullah, there is a Jew hiding behind me. Come and kill him!’”.
This is not an obscure teaching but part of the foundation of Islam, taught to Muslims through the centuries. It is taught in every Muslim school all over the world and in North America as well. The Jewish state must be crushed or Islam is proven to be a false religion! In a conference of the Islamic Committee for Palestine in Chicago, December 28-31, 1990, Sheikh Abdul Azis Oudeh, one of the leaders of the Islamic Jihad Movement, declared “Now Allah is bringing the Jews back to Palestine in large groups from all over the world to their big graveyard where the promise will be realized upon them, and what was destined will be carried out.”
The consequences of following the wrong God will be severe. If you defy the God of the Bible you will be punished. We cannot pick and choose to accept some parts of the bible and reject others. Until Islam’s real intentions are faced and somehow dealt with, any “peace” plans for the Middle East are a fool’s dream.[1]
With the massive monetary expansion experienced in recent months and the promise for unprecedented levels of money and credit supply increase in coming months, the United States Federal Reserve looks on paper to be sending America straight into hyperinflation. Germany’s post-World War I Weimar Republic, post-World War II Hungary, 2001 Argentina, and present day Zimbabwe are all analogous examples of massive debt monetization, which all led to hyperinflationary disaster. Never before has the entire world’s economy been linked to one nation’s, however, as is the case today with the United States.
In a case of economic mutually assured destruction, foreign creditor nations and their central banks can’t afford to spark a run on the US Dollar, because it would kill their own export-based economies, as well as devalue their debt repayments and foreign exchange reserves. But the United States has been financing consumption through debt for decades and has resorted to monetary expansion to finance its debt and deficit spending, which is only going to increase with Barack Obama’s infrastructure and social programs. The Troubled Assets Relief Program (TARP) itself amounts to $700B, all of which will essentially be “printed.” Foreign demand for US debt is all but gone, as creditor nations are now attempting to unwind their USD positions. Huge creditor nations like China and Iran were net sellers of US Treasuries in recent months, attesting to the weakening of the American debt bubble. So where’s all this excess liquidity go?
The answer is gold, and it is the only way to prevent the hyperinflationary scenarios referenced above from materializing in the United States.
The Fed has been on a money printing binge of unprecedented proportions, but has been able to thus far “trap” the excess liquidity from reaching the consumer level, which is what causes price inflation. It started a massive foreign currency sale this summer through the Exchange Stabilization Fund (ESF) that led to a supply increase of Euros and suppression of dollar usage. It has been liquifying troubled banks by issuing them T-bills financed through monetization in exchange for toxic assets by utilizing reverse repurchase agreements. And it has used the recent deleveraging and commodity collapse (partially caused by credit defaults in many of the overleveraged institutions that were supporting the commodity bull) to supply the temporary demand for US Dollars and feeding its own foreign exchange reserves.
But the excess liquidity thus far is trapped in time-sensitive and manipulated instruments now, and without a demand for American debt, it has to go somewhere. As T-bills expire and the stock market descends further, actual currency is going to be released out of sequestration into the economy. The Fed cannot allow the market to breach below its November lows, unless it wants widespread insolvency in insurers and banks, which are legally required to halt operations in the event of insolvency. I’ve heard estimates of 7500 and 8000 in the Dow as being minimum support levels that, if broken for an extended time, would lead to economic collapse in America as financials would all go under. To prevent this and to finance Obama’s deficit spending, actual dollars will have to be injected into the system and they will be.
Weakness in the dollar causes strength in gold, which is something the Fed (through America’s banks) has been suppressing for years. COMEX shorts dominate this suppression of gold prices, but this act will be discontinued to prevent economic collapse. Allowing gold’s price to rise to current fair levels (and then rise further to represent gold’s rising fundamentals) will soak up much of the excess liquidity, preventing hyperinflationary price increases in consumer goods. Gold reached backwardation this month, signifying the big gold market manipulators are abandoning their short positions.
Ben Bernanke is a proponent of dollar devaluation against gold and is a staunch advocate of Frank D. Roosevelt’s decision to do so in 1934 during the Great Depression. Dollar devaluation is one of the government’s most prized tools, as it allows debts to be paid back in devalued nominal terms, transferring risk and purchasing power destruction to American taxpayers, who have no clue what is going on. Inflation is a tax on the people and with a fiat currency, a power-limitless Fed can (and has) tax the hell out of the American people.
The dollar, and fiat currency as a whole, faces collapse now, however, as the artificial wealth created and used in the past few decades is now showing its nature as being just that– artificial. The global monetary system will have to return to some sort of precious metal backing, directly or indirectly, and surging gold prices is essential for this to occur.
Rising gold prices represents the excess liquidity being soaked up and also causes nominal equity values to rise without dramatic rises in consumer goods. Gold has little utility outside of store of value, which is why its price hasn’t collapsed at nearly the same rate other commodities, like oil and natural gas, have. As crude and steel suffered demand destruction from consumers losing wealth quickly, gold was barely touched at all and in fact probably would have shown even more strength hadn’t it been for the aforementioned manipulations of the Fed and the global deleveraging of financial institutions.
Creditor nations like China and Iran are buying as much gold as is possible without dramatically disturbing prices, and Iran has said it wants to convert the majority of its foreign exchange reserves into bullion. Gold-buying sentiment is getting stronger as the massive seigniorage of the Fed, and with gold shorts being abandoned by the Fed, the huge demand is finally going to surface into price expansion.
Technically, gold appears poised to break out of its countertrend down move in its primary bull, leading to much higher prices soon. It broke out of its 50DMA on strong volume recently and is approaching a 200DMA breakout. With backwardation occuring this month, all indicators point to gold surging in the coming months.
Gold and gold miner stocks are also looking quite bullish. I recommend Royal Gold (RGLD), which recently broke out of a great long-term base, as well as El Dorado Gold (EGO), Goldcorp (GG), Iamgold Corp (IAG), Barrick Gold (ABX), Randgold Resources (GOLD), Jaguar Mining (JAG), Anglogold Ashanti (AU), Agnico-Eagle Mines (AEM), and Newpont Mining (NEM) for the coming year. Also, look into buying the Ultrashort 30-year Treasury Bond ETF (TBT) as the US debt bubble collapses and debt monetization starts to show up in the Fed’s balance sheets. I do suggest buying lots of bullion, however, as stock market returns are in nominal dollar-denominated terms.
The American total credit market debt to GDP ratio is at unprecedented highs, well above 350%, and this with ridiculously manipulated inflation numbers artificially deflated through hedonics. The government deficit could top $2 trillion next year. And the Fed is going to print money to pay for it all. The only way to prevent hyperinflation is to return to some sold of hard asset-backed monetary system and to allow gold’s price to rise dramatically.
My prediction: gold breaks $2000/oz in 2009 and $10,000/oz by 2012.
Disclosure: Long gold bullion; no positions in stocks.
In 1871, Pike published the 861 page Masonic handbook known as the “Morals and Dogma of the Ancient and Accepted Scottish Rite of Freemasonry”.
After Mazzini’s death on March 11,1872, Pike appointed Adriano Lemmi (1822-1896, 33rd degree Mason), a banker from Florence, Italy, to run their subversive activities in Europe. Lemmi was a supporter of patriot and revolutionary Giuseppe Garibaldi, and may have been active in the Luciferian Sociaty founded by Pike. Lemmi in turn was succeeded by Lenin and Trotsky, then by Stalin. The revolutionary activities of all these men were financed by British, French, German, and American International bankers; all of them dominated by the House of Rothschild.
Between 1859 and 1871, Pike worked out a Military blueprint for three world wars and various revolutions throughout the world which he considered, would forward the conspiracy to its final stage in the 20th Century. In addition to the supreme council in Charleston, South Carolina, Pike established Supreme Councils in Rome, Italy (led by Mazzini); London, England (led by Palmerston); and Berlin Germany (led by Bismark). Directories in Washington, DC (North America), Montevideo (South America), Naples (Europe) Calcutta (Asia) and Mauritius (Africa) which were used to gather information. All of these branches have been the secret headquarters for the Illuminati’s activities ever since.
“Albert Pike and Three World Wars”
As do most occultist, Albert Pike had a “spirit guide”, who dispensed “Divine Wisdom” and enlightened him regarding how to achieve the New World Order. A spirit guide is a being who meets someone who has given themselves over to the practice of the occult; however, people who are practitioners of the New Age Religion do not view this as a bad thing. In fact, they would strongly argue that they are filled with happiness and joy by interacting with their spirit guides. One message that Albert Pike received from his spirit guide, and which in reality we know to be demonic vision, he described in a letter that he wrote to Mazzini, dated August 15, 1871. This letter graphically outlined plans for three world wars that were seen as nessasary to bring about the “One World Order”, and we can marvel at how accuratly it has predicted events that have already taken place. This is not because the devil has powers of prophecy, but because his agents have undertaken to manipulate political events to closely follow his designs.
It is commonly believed fallacy that for a short time, the letter to Mazzini was on display in thr British Museum Library in London, and it was copied by William Guy Carr, former Intelligence Officer in the Royal Canadian Navy. The British Library has confirmed that such a document has never been in their possession. Further research (with thanks to JG) indicates that Carr learned bout this letter from Cardinal Caro y Rodriguez of Santiago, Chile, who wrote “The Mystery of Freemasonry Unveiled. Following are extracts of the letter, showing how Three World Wars have been planned for many generations.
“The First World War” must be brought about in order to permit the Illuminati to overthrow the power of the Czars in Russia and of making that country a fortress of atheistic Communism. The divergences caused by the “agentur” (agents) of the Illuminati between the British and Germanic Empires will be used to format this war. At the end of the war, Communism will be built and used in order to destroy the other governments and in order to weaken the religions. Students of history will recognize that the political alliances of England on one side and Germany on the other. Forged between 1871 and 1898 by Otto von Bismarck, co- conspirator of Albert Pike, were instrumental in bringing about the first World War.
“The Second World War” must be fomented by taking Advantage of the differences between the Fascists and the political Zionists. This war must be brought about so that Nazism is destroyed and that the political Zionism be strong enough to institute a sovereign state of Israel in Palestine. During the Second World War, International Communism must become strong enough in order to balance Christendom, which would be then restrained and held in check until the time when we would need it for the Final Social cataclysm. After this Second World War, Communism was made strong enough to begin taking over weaker governments. In 1945, at the Potsdam Conference between Truman, Churchill, and Stalin, a large portion of Europe was simply handed over to Russia, and on the other side of the World, the Aftermath of the War with Japan helped to sweep the tide of Communism into China.
“The Third World War” must be fomented by taking advantage of the differences caused by the “ Agentur” of the “ Illuminati” between the political Zionists and the leaders of Islamic World. The war must be conducted in such a way that Islam ( the Moslem Arabic World) and political Zionists (The State Of Israel) mutually destroy each other. Meanwhile the other nations , once more divided on this issue will be constrained to fight to the point of complete Physical, Moral, Spiritual and Economical Exhaustion… We shall unleash the Nihilists and the atheist, and we shall provoke a formidable social cataclysm which in all its horror will show clearly to the Nations the affect of absolute atheism, origin of savagery and of the most bloody turmoil. Then everywhere, the citizens, obliged to defend themselves against the world minority of revolutionaries, will exterminate those destroyers of civilization, and the multitude , disillusioned with Christianity, whose deistic spirits will from that moment be without compass or direction, anxious for an ideal, but without knowing where to render its adoration, will receive the true light through the universal manifestation of the pure doctrine of Lucifer, brought finally out in the public view. This manifestation will result from the general reactionary movement which will follow the destruction of Christianity and Atheism, both conquered and exterminated at the same time.
Since the terrorist attacks of September 11, 2001, world events, and in particular the Middle East, show a growing unrest and instability between Jews and Arabs. This is completely in line with the call for a Third World War to be fought between the two, and their allies on both sides. This Third World War is still to come, and recent events show us that it is not far off.
Karl Marx, the principal author of the Communist Manifesto, once called religion “the opium of the people.” Marx viewed man as mere matter that can be shaped, and perfected, by his external environment. How different this is from the Christian view that man has an eternal soul and is responsible for his own actions!
As do most occultist, Albert Pike had a “spirit guide”, who dispensed “Divine Wisdom” and enlightened him regarding how to achieve the New World Order. A spirit guide is a being who meets someone who has given themselves over to the practice of the occult; however, people who are practitioners of the New Age Religion do not view this as a bad thing. In fact, they would strongly argue that they are filled with happiness and joy by interacting with their spirit guides. One message that Albert Pike received from his spirit guide, and which in reality we know to be demonic vision, he described in a letter that he wrote to Mazzini, dated August 15, 1871. This letter graphically outlined plans for three world wars that were seen as nessasary to bring about the “One World Order”, and we can marvel at how accuratly it has predicted events that have already taken place. This is not because the devil has powers of prophecy, but because his agents have undertaken to manipulate political events to closely follow his designs.
