The Warning Signs

Quantitative Easing Worked For The Weimar Republic For A Little While Too

noreply@blogger.com (The Warning Signs) — Fri, 27 Sep 2013 01:33:00 +0000

By Michael Snyder

There is a reason why every fiat currency in the history of the world has eventually failed. At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money. Sometimes, the motivation for doing this is good. When an economy is really struggling, those that have been entrusted with the management of that economy can easily fall for the lie that things would be better if people just had "more money". Today, the Federal Reserve finds itself faced with a scenario that is very similar to what the Weimar Republic was facing nearly 100 years ago. Like the Weimar Republic, the U.S. economy is also struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt. Unfortunately, the Federal Reserve has decided to adopt the same solution that the Weimar Republic chose. The Federal Reserve is recklessly printing money out of thin air, and in the short-term some positive things have come out of it. But quantitative easing worked for the Weimar Republic for a little while too. At first, more money caused economic activity to increase and unemployment was low. But all of that money printing destroyed faith in German currency and in the German financial system and ultimately Germany experienced an economic meltdown that the world is still talking about today. This is the path that the Federal Reserve is taking America down, but most Americans have absolutely no idea what is happening.

It is really easy to start printing money, but it is incredibly hard to stop. Like any addict, the Fed is promising that they can quit at any time, but this month they refused to even start tapering their money printing a little bit. The behavior of the Fed is so shameful that even CNBC is comparing it to a drug addict at this point...

The danger with addictions is they tend to become increasingly compulsive. That might be one moral of this week's events.
A few days ago, expectations were sky-high that the Federal Reserve was about to reduce its current $85 billion monthly bond purchases. But then the Fed blinked, partly because it is worried that markets have already over-reacted to the mere thought of a policy shift.
Faced with a choice of curbing the addiction or providing more hits of the QE drug, in other words, it chose the latter.

So why won't the Fed cut back on the reckless money printing?
Well, as Peter Schiff recently noted, Fed officials seem to be convinced that any "tapering" could result in the bursting of the massive financial bubbles that they have created...

The Fed understands, as the market seems not to, that the current "recovery" could not survive without continuation of massive monetary stimulus. Mainstream economists have mistaken the symptoms of the Fed's monetary expansion, most notably rising stock and real estate prices, as signs of real and sustainable growth. But the current asset price bubbles have nothing to do with the real economy. To the contrary, they are setting up for a painful correction that will likely be worse than the one we experienced five years ago.

As I have written about previously, the Federal Reserve is usually very careful not to do anything which will hurt the short-term interests of the financial markets and the big banks.

But at this point the Fed is caught in a trap. If it continues to pump, the financial bubbles that it has created will get even worse. If it stops, those bubbles will burst. But as Doug Kass noted recently, it is inevitable that these financial bubbles will burst at some point one way or another...

"Getting in was easy. Getting out—not so much. The Fed is trapped and can't end tapering or else the bond and stock markets will blow up. The longer this continues the bigger the inevitable burst."

In essence, we can have disaster now or disaster later.

But most Americans don't care much about what is happening on Wall Street. They just want economic conditions to get better for them and for those around them. And to this day, the mainstream media continues to sell quantitative easing to the American people as an "economic stimulus" program by the Federal Reserve.
So has quantitative easing actually been good for the U.S. economy?

Not really.

For example, while the Fed has been recklessly printing money out of thin air, household incomes have actually been going down for five years in a row...

What about employment?

Don't more Americans have jobs now?

Actually, that is not the case at all. Posted below is a chart that shows how the percentage of working age Americans with a job has changed since the year 2000. As you can see, the employment to population ratio fell from about 63 percent before the last recession down to underneath 59 percent at the end of 2009 and it has stayed there ever since...

So where is the "employment recovery"?

Can you point it out to me? Because I have been staring at this chart for a long time and I still can't find it.

So if quantitative easing has not been good for average Americans, who has it been good for?

The wealthy, of course.

Just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing the other day...

"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."
"Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday."
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed's policy is that the rich will spend their wealth and create jobs—essentially betting on "trickle-down economics."
"I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work," he said. "But it hasn't worked for five years."

Sadly, Druckenmiller is exactly correct.

Since the end of the last recession, the Dow has been on an unprecedented tear...

Of course these stock prices have nothing to do with economic reality at this point, but for the moment those that are making giant piles of cash on Wall Street don't really care.

Sadly, what very few people seem to understand is that what the Fed is doing is going to absolutely destroy confidence in our currency and in our financial system in the long-term. Yeah, many investors have been raking in huge gobs of cash right now, but in the long run this is going to be bad for everybody.

We have now entered a money printing spiral from which there is no easy exit. According to Graham Summers, the Fed has "crossed the Rubicon" and we are now "in the End Game"...

If tapering even $10-15 billion per month from $85 billion month QE programs would damage the economy, then we’re all up you know what creek without a paddle.
Put it this way… here we are, five years after 2008, and the Fed is stating point blank that the economy would absolutely collapse if it spent any less than $85 billion per month. This admission has proven just how long ago we crossed the Rubicon. We’re already in the End Game. Period.

Most Americans don't really understand what quantitative easing is, and most don't really try to understand it because "quantitative easing" sounds very complicated.
But it really isn't that complicated.

The Federal Reserve is creating gigantic mountains of money out of thin air every month, and the Fed is using all of that newly created money to buy government debt and mortgage-backed securities. Over the past several years, the value of the financial securities that the Fed has accumulated is greater than the total amount of publicly held debt that the U.S. government accumulated from the presidency of George Washington though the end of the presidency of Bill Clinton...

The same day that the Federal Reserve's Federal Open Market Committee announced last week that the Fed would continue to buy $40 billion in mortgage-backed securities (MBS) and $45 billion in U.S. Treasury securities per month, the Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBS than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton.

To say that this is a desperate move by the Fed would be a massive understatement. We have never seen anything like this before in U.S. history.
And look at what all of this wild money printing has done to our money supply...

In many ways, the chart above is reminiscent of what the Weimar Republic did during the early years of their hyperinflationary spiral...

Just like the Weimar Republic, our money supply is beginning to grow at an exponential pace.

So far, complete and total disaster has not struck, so most people think that everything must be okay.

But it is not.

In a previous article, I included an outstanding illustration from Simon Black that I think would be extremely helpful here as well…

Let’s say you’re at a party in a small apartment that’s about 500 square feet in size. Then suddenly, at 11pm, a pipe bursts, starting a trickle into the living room.
Aside from the petty annoyance, would you feel like you were in danger? Probably not. This is a linear problem– the rate at which the water is leaking is more or less constant, so the guests can keep partying through the night without worry.
But let’s assume that it’s an exponential leak.
At first, there’s just one drop of water. But each minute, the rate doubles. So by 11:01pm, there’s 2 drops. By 11:02, 4 drops. And so forth.
By 11:27pm, there’s only six inches of standing water. Yet by 11:31pm, just four minutes later, the entire room is under nearly 8 feet of water. And the party’s over.
For nearly half an hour, it all seemed safe and manageable. People had all the time in the world to leave, right up until the bitter end. 11:27, 11:28, 11:29. Then it all went from benign to deadly in a matter of minutes.

Are you starting to get the picture?

What the Federal Reserve is doing is systematically destroying the U.S. dollar, and the rest of the world is starting to take notice.

Why should they continue to lend us trillions of dollars at super low interest rates when we are exploding the size of our money supply?

It is simply not rational for other nations to continue to lend us money at less than 3 percent a year when the real rate of inflation is somewhere around 8 to 10 percent and reckless money printing by the Fed threatens to greatly accelerate the devaluation of our currency.

When QE first started, the added demand for U.S. government debt by the Federal Reserve helped drive long-term interest rates down to record low levels.

But in the long-term, the only rational response by all other buyers of U.S. government debt will be to demand a much higher rate of return because of the rapid devaluation of U.S. currency.

So QE drives down long-term interest rates in the short-term, but in the long-term the only rational direction for long-term interest rates to go is much, much higher and in recent months we have already started to see this.

The only way that the Fed can stop this is by increasing the amount of quantitative easing.

Right now, the Fed is buying roughly half a trillion dollars worth of U.S. Treasuries a year, but the U.S. government issues close to a trillion dollars of new debt and must roll over about 3 trillion dollars of existing debt each year.

If the Federal Reserve eventually decides to buy all of the debt, then interest rates won't be a major problem. But if the Fed goes that far our financial system would be regarded as a total joke by the remainder of the globe and we would reach hyperinflation much more rapidly.

If the Federal Reserve stops buying debt completely, the financial bubbles that they have created will burst and we will rapidly be facing a financial crisis even worse than what we experienced back in 2008.

But almost whatever the Fed does at this point, the rest of the world will probably continue to start to move away from the U.S. dollar as the de facto reserve currency of the planet. This move is just beginning, but it is going to have major implications for us in the years ahead. This is a topic that I will be addressing extensively in future articles.

Most of the debate about quantitative easing has focused on the impact that it will have on the U.S. economy in the short-term.

That is a huge mistake.

Of much greatest importance is what quantitative easing means for the long-term.
The rest of the world is losing confidence in the U.S. dollar and in U.S. debt because of the reckless money printing that the Fed has been doing.

But we desperately need the rest of the world to use "the petrodollar" and to lend us the money that we need to pay our bills.

As the rest of the planet starts to reject the U.S. dollar and starts to demand a much higher rate of return to lend us money, the U.S. economy is going to experience a tremendous amount of pain.

It is hard to put into words how foolish the Federal Reserve has been. The Fed is systematically destroying what was once the strongest financial system in the world, and in the end we are all going to pay the price.

http://theeconomiccollapseblog.com

NYC Residents Resorting to Eating Food from Dumpsters post Sandy

noreply@blogger.com (The Warning Signs) — Thu, 01 Nov 2012 23:01:00 +0000

ATTENTION---- The Red Cross has determined that these people do not need donations of food items, only cash. Mr. Romney, once again - they only need your cash, how dare you organize a food drive! But then again perhaps this is a FEMA food distribution container.......

View more videos at: http://nbcnewyork.com.

Photo of the Day

noreply@blogger.com (The Warning Signs) — Sat, 22 Sep 2012 05:22:00 +0000

Obama interviews his replacement for Biden

100 Days Until Taxmageddon

noreply@blogger.com (The Warning Signs) — Sat, 22 Sep 2012 04:35:00 +0000

Sunday will mark the start of the 100-day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2013:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors (later re-upped by President Obama and Democrat Congress in 2010). The following tax hikes will occur on January 1, 2013:

Personal income tax rates will rise on January 1, 2013. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

-The 10% bracket rises to a new and expanded 15%
-The 25% bracket rises to 28%
-The 28% bracket rises to 31%
-The 33% bracket rises to 36%
-The 35% bracket rises to 39.6%

Higher taxes on marriage and family coming on January 1, 2013. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level.

Middle Class Death Tax returns on January 1, 2013. The death tax is currently 35% with an exemption of $5 million ($10 million for married couples). For those dying on or after January 1 2013, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors on January 1, 2013. The capital gains tax will rise from 15 percent this year to 23.8 percent in 2013. The top dividends tax will rise from 15 percent this year to 43.4 percent in 2013. This is because of scheduled rate hikes plus Obamacare’s investment surtax.

Second Wave: Obamacare Tax Hikes

There are twenty new or higher taxes in Obamacare. Some have already gone into effect (the tanning tax, the medicine cabinet tax, the HSA withdrawal tax, W-2 health insurance reporting, and the “economic substance doctrine”). Several more will go into effect on January 1, 2013. They include:

The Obamacare Medical Device Tax begins to be assessed on January 1, 2013. Medical device manufacturers employ 409,000 people in 12,000 plants across the country. This law imposes a new 2.3% excise tax on gross sales – even if the company does not earn a profit in a given year. Exempts items retailing for <$100.

The Obamacare Medicare Payroll Tax Hike takes effect on January 1, 2013. The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Starting in 2013, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate.

The Obamacare “Special Needs Kids Tax” comes online on January 1, 2013. Imposes a cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare cap harms these families.

The Obamacare “Haircut” for Medical Itemized Deductions goes into force on January 1, 2013. Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2013, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These tax increases will be in force for BOTH 2012 and 2013. The major items include:

The AMT will ensnare over 31 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 31 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Full business expensing will disappear. In 2011, businesses can expense half of their purchases of equipment. Starting on 2013 tax returns, all of it will have to be “depreciated” (slowly deducted over many years).

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

Posted by Ryan Ellis on Friday, September 21, 2012 10:19 AM EDT
http://www.atr.org/days-taxmageddon-a7203

What is a Republic? A Democracy? Understanding the American Form of Government

noreply@blogger.com (The Warning Signs) — Sat, 22 Sep 2012 04:13:00 +0000

A really great video explaining the differences between a Democracy and a Republic. Very informative and easy to understand. This is a short video (10:35) but delivers a great lesson that every American needs to understand.

"2016 Obama's America" - Movie Preview

noreply@blogger.com (The Warning Signs) — Mon, 04 Jun 2012 19:33:00 +0000

2016 Obama's America takes audiences on a gripping visual journey into the heart of the world’s most powerful office to reveal the struggle of whether one man's past will redefine America over the next four years. The film examines the question, "If Obama wins a second term, where will we be in 2016?"

Across the globe and in America, people in 2008 hungered for a leader who would unite and lift us from economic turmoil and war. True to America’s ideals, they invested their hope in a new kind of president, Barack Obama. What they didn't know is that Obama is a man with a past, and in powerful ways that past defines him--who he is, how he thinks, and where he intends to take America and the world.

Immersed in exotic locales across four continents, best selling author Dinesh D’Souza races against time to find answers to Obama’s past and reveal where America will be in 2016. During this journey he discovers how Hope and Change became radically misunderstood, and identifies new flashpoints for hot wars in mankind’s greatest struggle. The journey moves quickly over the arc of the old colonial empires, into America’s empire of liberty, and we see the unfolding realignment of nations and the shape of the global future.

Emotionally engaging, 2016 Obama’s America will make you confounded and cheer as you discover the mysteries and answers to your greatest aspirations and worst fears.

Love him or hate him, you don’t know him.

Chairman Obama's 2-million person Truth Team

noreply@blogger.com (The Warning Signs) — Mon, 13 Feb 2012 20:52:00 +0000

article from: RT.com

Desperate to win re-election, President Obama is taking inspiration from a tactic used by China’s Chairman Mao during so-called "Cultural Revolution."

In order to spread his ideology, he creates his own army of brainwashed propagandists who are supposed to popularize talking points sent to them directly from the White House.

Modern days hongweibings (Chinese for red guards) are called the Truth Team, and if everything goes as planned, the president will have an army of over two million Americans on his side.

The Obama administration unveiled on Monday a campaign created to crush the GOP competition come November, a mission that they hope to make possible with an army of propaganda- pumped plebeians that will take talking points handed down all the way from the White House. The aim is to influence friends and family with rhetoric being reared as honest-to-goodness truth, and the Obama campaign is calling for Americans to enlist in its coast-to-coast grassroots communications unit that they are calling the Truth Team. They’re an intelligence army being equipped with information right from the White House, and some administration officials are already saying that their troops will be engaged to take on Mitt Romney and whatever other Republicans stand in the president’s way.

"If the other guys are going to run a campaign based on misrepresenting the president's record – and their own — we have two options: sit back and let these lies go unchallenged, or fight back with the truth," deputy Obama campaign manager Stephanie Cutter tells ABC News. "We're fighting back."

With the help of a trio of websites launched to inform and advise the Truth Team intelligence soldiers, the White House wants to enlist millions of young minds that will take cues from Pennsylvania Avenue and attempt to influence cohorts who might not yet be sold on President Obama. The administration is currently trying to corral a youth crew of Obama-backers in the 13 swing states and will them increase their operation elsewhere. By equipping the members with communiqué and creating a hub of intelligence on the World Wide Web, they hope that an army of millions can man a massive social media campaign that will litter every Twitter and Facebook feed in America with facts about the president, as well as truths to counter Republican Party lies created to crush Obama’s run for re-election.

Three years into his term and wielding a wheelbarrow full of unfulfilled promises, that might just not be enough.

On the Truth Team-created website KeepingHisWord.com, the campaign recalls issues that the president has stood by throughout his term so far. They applaud the administration for bailing out the automobile industry, cutting taxes for small businesses and putting Americans back to work. But while the site suggests that Obama was able to boost employment numbers up after nearly three years of catastrophic conditions, it does not acknowledge that this president oversaw one of the longest trends of unemployment in ages. The website reads, “The economy has been growing in the last 23 months under President Obama’s leadership,” yet during a Monday morning address from Annandale, Virginia, the president also described America as only now emerging from the “worst economic crisis in three generations.”

“I wake up every single morning thinking about how can I make sure that anybody who wants a job is able to get a job,” Obama is quoted on the site in a blurb that tries to defend his supposed record of employment creation. On Monday, however, he also said that it’s “a long way to go” before Americans looking for jobs will find them.

Elsewhere, the Truth Team tries to dismantle the plans of the president’s competition."The goal is to ensure that when Republicans attack President Obama's record, grassroots supporters can take ownership of the campaign and share the facts with the undecided voters in their lives," reads an official explanation from the president’s campaign. On one of the Truth Team-sanctioned websites, KeepingGOPHonest.com, the administration attempts to discredit Romney’s campaign by blogging about the Republican frontrunner’s record and how his campaign promises allegedly don’t align with what he tells America. “Romney’s tax plan helps millionaires and hurts the middle class” reads the latest post; “Romney thinks he can fix housing by doing nothing” says another.

Not brought up, of course, are the president’s own lies and broken promises.

There are the promises of comprehensive immigration reform which are three years behind schedule. There are the ongoing operations at the Guantanamo Bay military prison that the president vowed to shut down. And then there’s even the National Defense Authorization Act, which Obama signed two months ago making it possible for Americans to be indefinitely detained and tortured without ever being brought to trial.

But the Truth Team, sadly, most likely won’t be informed of those.

"People don't just want to hear from campaign statements or ads – they want to hear from the family and friends they trust," writes Stephanie Cutter, Obama's deputy campaign manager. And so with the creation of the Truth Team, Obama-friendly facts will be fed to enlistees with the hope that they will go out and spread the message of the president and put Obama in the White House for another four years.

“The president needs folks on board to roll up their sleeves, stand with him and get the truth out all over the country,” Cutter adds in her email. “The next time you hear Mitt Romney accusing the president of ‘crony capitalism’ or someone asking, ‘What has President Obama really accomplished?’ you'll know what to do.”

Cutter suggests that the appropriate response is to direct them to the Truth Team and hope for adding one more recruit to the roster. Just like the hope that the president offered during his last campaign, you might not want to take it for granted.

What If The Government Takes Over Wikipedia?

noreply@blogger.com (The Warning Signs) — Wed, 18 Jan 2012 20:51:00 +0000

article by: Gongalo Lira

As most people know, Wikipedia will go offline on Wednesday—in protest over the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA). The Financial Times has a brief but fairly comprehensive overview of what’s going on here.

A lot of people online—myself included—are against both SOPA and PIPA. And for one, I fully support what Wikipedia is trying to do: Shut itself down—the sixth most visited website on the planet—and thereby get those 234 million daily users to read its statement opposing SOPA and PIPA.

Knowing the editorial judiciousness of Jimmy Wales and the Wikipedia team, I have no doubt that, one, their opposition has been carefully thought through; and two, this unprecedented step of shutting down the site is extraordinarily serious—and thus emphasizes how seriously Wales and his team take the measures in SOPA and PIPA.

In other words, Wales and his team aren’t fucking around—this is a big deal.

But I couldn’t help wondering: The U.S. government must also recognize that this isn’t a temperamental teenager throwing hissy-fit—Wikipedia is seriously respected in the online community. Wikipedia’s shut-down is a big black eye to SOPA and PIPA—and to the people who are pushing it, especially Barack Obama’s White House.

So what if the U.S. government were to decide to take over Wikipedia? Prevent it from going offline? With the excuse that they’re taking it over and keeping it online “for the good of the American people”?

Let’s face it, Wikipedia is incredibly important to the Internet. Most of us go to Wikipedia first, if a quick Google search doesn’t get us the info that we need. And whenever we want to get the skinny on something complicated, Wikipedia is often the only place we go to.

Thus we are all particularly dependent on Wikipedia: It shapes our knowledge base much more profoundly than we either realize, or would probably like to admit. The fact that it doesn’t advertise, and depends instead on donations alone, gives it even more credibility, and to our eyes makes it that much more trustworthy.

But Wikipedia is an incredibly small, incredibly fragile operation. It’s yearly budget is less than $20 million per year—nothing, when compared to, say, the bailout of Citi.

Just as it declared Citi, BofA, Goldman and JPMorgan “Systemically Important Financial Institutions”, what’s to stop the U.S. government from declaring Wikipedia a “Systemically Important Website”?

And rather than throwing money at them, what’s to stop the government from revoking Wikipedia’s non-profit status? Declaring it a for-profit—and then using the IRS, say, to take it over? Or better yet, prevent it from shutting down by delaring it “Educationally Essential Website”—and putting it under the aegis of the Education Department? Take it over “for the good of the country”? And then maybe start shading and editing the various Wikipedia entries in order to give a “more balanced version of events”?

“Paranoid”, you say? Well, it’s not paranoia if they’re really coming after you.

Famously, Senator Joe Lieberman brought out security, terrorism, and all the other bugaboos when he argued for the U.S. government to have the ability to shut down the Internet—infamously concluding with the line that, “China, the government, can disconnect its Internet—we need to have that here too.”

State control of the Internet: That’s what Sen. Lieberman meant when he said, We need to have that here too. There’s really no other way to interpret what he said.

What if Lieberman or someone of his delicate sensibilities were to say something like, “Wikipedia is a Systemically Important Website. So we need to be able to take it over—for the protection of the American people and to stop them from being ‘misinformed’.”

Don’t think it can happen? Paranoid, am I?

Then why are Jimmy Wales and his team at Wikipedia shutting themselves down for a day? For kicks?

Or because they think that this is real?

Will Hunting Got It, Why Don't Most Americans

noreply@blogger.com (The Warning Signs) — Fri, 13 Jan 2012 03:32:00 +0000

I was watching the movie Good Will Hunting this evening and having not seen the movie since it was released I had forgotten about the following scene of the movie. Looking back I am amazed that this scene actually made it into the movie. The two minutes of dialog in this scene speak volumes about US foreign policies.

Are We Seeing The Build Up To World War III?

noreply@blogger.com (The Warning Signs) — Thu, 12 Jan 2012 18:32:00 +0000

article by Craig Hasten

I hope the American people are paying close attention to the what is going on around the globe recently. After 21 years of war in the Middle East it looks like The United States is setting the stage for the next conflict. It was announced yesterday that the CVN 70 Carl Vinson battle group entered the Arabian Sea off the Straits of Hormuz joining the CVN 74 John Stennis battle group which has been in the area for the past two months.

Now riddle me this!

With Obama calling an end to the Iraq, war paired with his recent announcement of defense budget cuts, why such a build up of firepower off the coast of Iran? The answer lies in the fact that Washington knows that Iran has no intention of halting its nuclear program which will give Obama the green light to force an oil embargo on Iran. Iran has already stated many times that if an oil embargo is placed against their country then they will close the Strait of Hormuz. I have no doubt that they will try to close the Strait but with their limited naval capabilities even they know that any such attempt would be futile. The US has made it public that they will not stand for the vital shipping lane to be closed by Iran and would use force to re-open it.

Now here is my question.

Would it really take the firepower of two US carrier battle groups to defeat the Iranian navy and re-open the Strait of Hormuz? One would hardly think so given the size and capabilities of the Iranian navy.

I would like to point out one interesting observation. In August of 1990 the US sent two aircraft carrier battle groups to the Persian Gulf when Iraq invaded Kuwait and their oilfields. The US knew it would be going to war with Iraq and felt like two aircraft carrier battle groups would be the required amount of force (along with the build up of ground troops) that would be needed to complete the job.

Does it appear that history is about to repeat itself?

I don't feel that what is going on with Iran has anything at all to do with their nuclear program, but as always, it's about the control of oil.

This time around I feel that it isn't just going to be the US and a few other tiny allies against a sovereign middle eastern country. This time around it is looking like all the major world players will be showing up for this one. This is starting to have the markings of a good old fashioned World War.

The Romney Con

noreply@blogger.com (The Warning Signs) — Wed, 11 Jan 2012 16:04:00 +0000

As we start to see the race for the White House heat up I find myself wondering what happened to the desire that everyone felt for "Change" three years ago. It quickly became obvious to those that voted for him that Obama had no intentions to delivering his promise of "Hope and Change" that got him elected in 2008. Never before had we seen such support for a candidate that simply promised two things, "Hope and Change".

Sadly, it looks like the American people who cried out for a change from the business as usual politics are being led down the same path again.

Mitt Romney who has broke out in the polls lately is no different than Obama except that he has chosen to hitch his wagon to the Republican party. Romney is nothing more than a wolf in sheep's clothing. The American people need to wake up and see Romney for who he really is, just another politician who is filling his war chest with Wall Street money.

If America is looking for a president who will turn this country around and get us back onto the path of prosperity this is not the man to do the job. All one needs to do is look into his past and see how he destroyed every American company that he took over during his time at Bain Capital. I promise you that Mitt Romney will treat this country no different than he did every company that he took over during his time with Bain. For Romney it is all about the money, greed and power.

Please take a minute to watch this short video to see who the real Mitt Romney is.

Penn State; My Final Loss Of Faith

noreply@blogger.com (The Warning Signs) — Tue, 22 Nov 2011 21:15:00 +0000

By Thomas L. Day

I’m 31, an Iraq war veteran, a Penn State graduate, a Catholic, a native of State College, acquaintance of Jerry Sandusky’s, and a product of his Second Mile foundation.

And I have fully lost faith in the leadership of my parents’ generation.

Penn State football coach Joe Paterno arrives home Wednesday, Nov. 9, 2011, in State College, Pa. (Matt Rourke - AP)
(Read Day’s follow up to this post in his chat Monday with readers here. )

I was never harmed by Sandusky, but I could have been. When I was 15, my mother, then looking for a little direction for her teenage son, introduced me to the Second Mile’s Friend Fitness program. It was a program resembling Big Brother, Big Sister with a weekly exercise regimen.

Instead of Sandusky’s care, I was sent to a group of adults, many of whom were in their 20s. They took me from a C-student to the University of Chicago, where I’m a master’s student now. They took the football team’s waterboy and made a 101st Airborne Division soldier.

I was one of the lucky ones. My experience with Second Mile was a good one. I should feel fortunate, blessed even, that I was never harmed. Yet instead this week has left me deeply shaken, wondering what will come of the foundation, the university, and the community that made me into a man.

One thing I know for certain: A leader must emerge from Happy Valley to tie our community together again, and it won’t come from our parents’ generation.

They have failed us, over and over and over again.

I speak not specifically of our parents -- I have two loving ones -- but of the public leaders our parents’ generation has produced. With the demise of my own community’s two most revered leaders, Sandusky and Joe Paterno, I have decided to continue to respect my elders, but to politely tell them, “Out of my way.”

They have had their time to lead. Time’s up. I’m tired of waiting for them to live up to obligations.

Think of the world our parents’ generation inherited. They inherited a country of boundless economic prosperity and the highest admiration overseas, produced by the hands of their mothers and fathers. They were safe. For most, they were endowed opportunities to succeed, to prosper, and build on their parents’ work.

For those of us in our 20s and early 30s, this is not the world we are inheriting.

We looked to Washington to lead us after September 11th. I remember telling my college roommates, in a spate of emotion, that I was thinking of enlisting in the military in the days after the attacks. I expected legions of us -- at the orders of our leader -- to do the same. But nobody asked us. Instead we were told to go shopping.

The times following September 11th called for leadership, not reckless, gluttonous tax cuts. But our leaders then, as now, seemed more concerned with flattery. Then -House Majority Leader and now-convicted felon Tom Delay told us, “nothing is more important in the face of a war than cutting taxes.” Not exactly Churchillian stuff.

Those of us who did enlist were ordered into Iraq on the promise of being “greeted as liberators,” in the words of our then-vice president. Several thousand of us are dead from that false promise.

We looked for leadership from our churches, and were told to fight not poverty or injustice, but gay marriage. In the Catholic Church, we were told to blame the media, not the abusive priests, not the bishops, not the Vatican, for making us feel that our church has failed us in its sex abuse scandal and cover-up.

Our parents’ generation has balked at the tough decisions required to preserve our country’s sacred entitlements, leaving us to clean up the mess. They let the infrastructure built with their fathers’ hands crumble like a stale cookie. They downgraded our nation’s credit rating. They seem content to hand us a debt exceeding the size of our entire economy, rather than brave a fight against the fortunate and entrenched interests on K Street and Wall Street.

Now we are asking for jobs and are being told we aren’t good enough, to the tune of 3.3 million unemployed workers between the ages of 25 and 34.

This failure of a generation is as true in the halls of Congress as it is at Penn State.
Perhaps the most vivid illustration this week of our leaderless culture came with the riots in State College that followed Paterno’s dismissal. The display resembled Lord of the Flies. Without revered figures from the older generation to lead them, thousands of students at one of the country’s best state universities acted like children home alone.

This week the world found the very worst of human nature in my idyllic Central Pennsylvania home. I found that a man my community had anointed a teacher and nurturer of children, instead reportedly had them hiding in his basement. The anger and humiliation were more than I could bear. I can’t wait for my parents’ generation’s Joshua any longer. They’ve lost my faith.

Thomas Day is a graduate student at the Harris School of Public Policy at the University of Chicago.

Epic Failure: The Supercommittee Was A Super Joke

noreply@blogger.com (The Warning Signs) — Tue, 22 Nov 2011 17:30:00 +0000

article from: The Economic Collapse

Does anyone need any additional evidence that our political system is completely broken? The bipartisan congressional supercommittee that was given two months to come up with at least $1.2 trillion in deficit cuts over the next decade has failed to reach an agreement. It is an epic failure and a national embarrassment. The truth is that they never even came close to an agreement. In fact, as you will read below, the two sides on the panel have been barely even talking to each other. In the end, the supercommittee was a super joke. Meanwhile, the U.S. national debt has passed the 15 trillion dollar mark and we are facing trillion dollar deficits as far as the eye can see. We are heading directly for a national financial disaster, and our "leaders" seem powerless to do anything about it.

According to the supercommittee's rules, any plan would have had to have been submitted to the Congressional Budget Office by Monday in order to give the CBO 48 hours to analyze how much the plan would reduce budget deficits over the coming decade.

When the supercommittee was announced, it made headlines all over the world, but now it is ending with a whimper.

The supercommittee was never a good idea in the first place, but you would have thought that they could have come up with something over the course of two months.
But instead all they are giving us are a whole bunch of excuses and a whole lot of hot air.

What a joke.

Is it really that difficult to come up with $1.2 trillion in cuts over a decade?

It isn't as if they would even be cutting very deeply. $1.2 trillion in cuts would not even cut the budget by $150 billion a year. We would still be talking about trillion dollar deficits way into the future.

But instead of agreeing to some token cuts, they have chosen to do nothing and to blame each other.

So now $1.2 trillion in "automatic budget cuts" will go into effect starting in 2013. But even that $1.2 trillion figure contains a lot of "fuzzy math". For example, it includes $169 billion in "projected savings" from "reduced interest costs" on the national debt.

I would love to see how they came up with that figure.

In any event, the truth is that none of these numbers really matter at all.

Why?

None of the budget cuts go into effect until after the 2012 election. That means that this Congress can vote to repeal the automatic cuts well before then.

Some in Congress are already pushing for this. For example, U.S. Senator John McCain said the following recently....

"It's something we passed. We can reverse it."

Or, even more likely, once the new president and the new Congress are elected in 2012 they will almost certainly choose to abandon this agreement.

When it comes to politics, the only thing that matters is what happens before the next election.

All of this talk of future cuts is just an illusion. When the next president and the next Congress come to power, they will want to do their own thing.

So after all of the huffing and puffing over the last couple of years, what has actually been accomplished as far as reducing our horrific budget deficits?

Not much at all.

We racked up a $1.3 trillion budget deficit during the fiscal year that just ended, and this fiscal year we will be somewhere in the same neighborhood.

We have been living in the greatest debt bubble in the history of the world, and at some point all of this is going to end very, very badly.

The total amount of debt in this country (government, business and consumer) has been rising much, much faster than our national income has. If you don't believe this, just check out this chart.

In particular, government debt is totally out of control. When Barack Obama first took office, the national debt was 10.6 trillion dollars.

It is now over 15 trillion dollars.

We are in debt up to our eyeballs and we desperately need our leaders to do something about it.

But according to a recent Politico article, the members of the supercommittee haven't even been talking to each other....

The supercommittee last met Nov. 1 – three weeks ago! It was a public hearing featuring a history lesson, “Overview of Previous Debt Proposals,” with Alan Simpson, Erskine Bowles, Pete Domenici and Alice Rivlin. The last PRIVATE meeting was Oct. 26. You might as well stop reading right there: The 12 members (6 House, 6 Senate; 6 R, 6 D) were never going to strike a bargain, grand or otherwise, if they weren’t talking to each other. Yes, we get that real deal-making occurs in small groups. But there never WAS a functioning supercommittee: There was Republican posturing and Democratic posturing, with some side conversations across the aisle.

Can you believe that?

Could it really be true that they have not met since November 1st?

Is Congress really that much of a joke?

According to Real Clear Politics, the approval rating for Congress is sitting at about 12 percent right now.

After this, it may get even lower.

Instead of working on a solution to our problems, the members of the supercommittee have been busy going on television and telling us who to blame.

The following is a short exceprt from a recent article in the Washington Post....

Republicans on the supercommittee held a conference call Saturday morning, and aides said members from both parties continued to talk by phone. But neither side was predicting a last-minute breakthrough. Instead, seven panel members booked appearances on the Sunday talk shows, as both sides readied their best arguments for why the other is at fault.

Our politicians are obsessed with finding someone else to blame and with getting ready for the next election.

Meanwhile, the ship is going down and people are starting to panic.

And this is not going to look good to the rest of the world at all. There is a very real risk that one of the other major credit rating agencies will decide to downgrade U.S. debt.

The second downgrade of debt is often more important than the first. When the first downgrade happened, U.S. debt still had a AAA rating from the other two major credit rating agencies.

But after another downgrade, the average credit rating of U.S. debt will be less than AAA. That will mean that U.S. debt will no longer be a cash proxy. A lot of transactions that take place right now in the financial world would not be able to happen if that takes place.

So what do our leaders need to do?

Well, the truth is that we should recognize that they are in a really, really tough position. Decades of nightmarish decisions have left us out of good options under our current financial system.

The reality is that members of Congress are damned if they do and they are damned if they don't.

This is what I mean - if we don't deal with our national debt now, everyone agrees that a massive day of reckoning is coming down the road. Greece is an example of what happens when debt catches up with a nation.

However, if we did cut the federal budget very deeply right now, it would almost certainly bring on a huge economic contraction.

Right now, insane federal spending is one of the only things keeping this economy afloat. If you were to suddenly pull half a trillion dollars (or more) of federal spending out of the economy, it would have a devastating impact.

A lot of people out there correctly argue for a huge reduction in federal spending, but they greatly underestimate the amount of pain that it would cause.

Let there be no doubt, all of this federal debt has enabled us to enjoy a "false prosperity" for several decades, and when we dramatically cut back on spending a lot of that "false prosperity" is going to disappear.

Our "real economy" is rapidly being gutted and America is becoming poorer as a nation every single day. One way that we have been making up the difference is by going into almost unbelievable amounts of government debt. When the government debt bubble pops, the pain is going to be enormous.

If you do not believe this right now, you will believe it soon enough.

Not that we should keep going into huge amounts of debt.

Every dollar that we "borrow" is actually being stolen from our children and our grandchildren.

In fact, that is what Thomas Jefferson believed. According to Jefferson, when the federal government borrows money in one generation which must be paid back by future generations it is equivalent to stealing....

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

We have got to stop stealing from future generations. If they get the chance, they will curse us for what we have done to them.

Anyone out there that supports our current system of running endless budget deficits is supporting a horrific crime against our children and our grandchildren.

But once again, we all need to clearly understand that when the borrowed money stops flowing out of Washington D.C., our economy is going to get much worse.

Are you prepared for the unemployment rate to double?

Are you prepared for foreclosures to soar to unprecedented heights?

Are you prepared for economic pain unlike anything you have ever seen before?

According to the New York Times, there are 100 million Americans that are either living in poverty or that are considered to be among the "near poor" right now.

So how bad will things get if we plunge into a depression?

Anyone that believes that we can drastically cut the federal budget and improve the economy at the same time under our current system is not being rational.

Just look at what is happening to Greece. They implemented substantial budget cuts (although not nearly big enough to bring them to a balanced budget) and they have plunged into a nightmarish economic depression.

Right now, we are in a position where we are going to experience a horrific amount of pain whatever we do. If we keep piling up debt at this rate we will experience a nightmare, but if we pop the debt bubble and try to live within our means we will also experience a nightmare.

There is a way out of this, but our politicians are not talking about it. As I have written about previously, if the federal government abolishes the Federal Reserve and starts issuing debt-free money, we could eliminate our federal budget deficits, cut taxes and improve the economy all at the same time.

But nobody is even talking about debt-free money.

Instead, all of our politicians are talking about "fixing" the current system.

Well, let me tell you, it is impossible to solve our problems under the current system. If we insist on maintaining our current debt-based financial system, it will only end in a massive amount of pain.

The American people need to get educated about our financial system. They need to learn that the Federal Reserve and the debt-based currency that they issue are at the very heart of our economic problems.

Back in 1913, prior to the passage of the Federal Reserve Act, the national debt was only about $2.9 billion.

Today, our national debt is over 5000 times larger.

Debt-based central banking is a perpetual debt machine. It is at the heart of our financial problems and it is also at the heart of the financial problems that Europe is experiencing.

Unfortunately, the American people don't understand this, and there are virtually no politicians out there that are even talking about this.

Very dark days are ahead for America.

You had better get prepared.

Horrible Bosses, Pitchforks & Torches

noreply@blogger.com (The Warning Signs) — Tue, 22 Nov 2011 15:44:00 +0000

D. Sherman Okst
Zero Hedge
November 22, 2011

If you haven’t seen the movie “Horrible Bosses” I’d recommend that you do. Please see it. Go enjoy yourself. As bad as things are getting it is incredible to realize that we can still laugh.

And trust me, you’ll laugh hard at this movie.

When I left the theater with my wife, I realized why it was that movie theaters did well in the last Great Depression. For an hour and forty minutes we escaped all the negativity that has crept into this world. It had a long lasting effect. For at least a week I was in a good mood.

The movie “Horrible Bosses” is comprised of a few character types: The ‘Psycho’, the ‘Maneater’ and the ‘Tool.’ Three friends come to the realization that their lives are miserable because of them. They like their jobs, they hate their bosses.

One friend, Dale used a playground, near the bar he frequented, as a late night urinal. He was arrested for indecent exposure. This got him the tile of “registered sex offender”—for what he claims was entrapment, (putting a playground adjacent to a bar). The irony is that his boss, Dr. Julia is a ‘manteater,’ the one the cops should have arrested. Bottom line—he’s not marketable.

Then we have Dave who works for a financial psycho who threatens to expose him to future employers for having a drinking problem—a problem that he really doesn’t have. Another non-marketable, stuck in his job for life worker.

Friend number three is Kurt. The owner of Kurt’s place of employment dies suddenly. This leaves the owners kid, ‘Bobby-the-Tool-Coke-Head’ as Kurt’s new boss. With the economy being what it isn’t, Kurt is also stuck at his job.

So the three come to the realization that their lives can only get better if they each kill their friend’s boss. They hire MF Jones as their murder consultant . He got the name MF because when he was a kid he stole from his mother’s purse and it really “set her back.”

The Psychopaths Have Crossed the Line

As I knock out my book “Where Psychopaths & Economics Meet,” I’ve resolved myself to not write “too many” articles. But, Gerald Celente is one of us. He’s one of the economic bloggers. One of the good guys. The ones out there reading good and spreading good in a world ruled by evil.

Our world has been taken over by three bad bosses: Political Capture, Economic Capture and Mainstream Media Capture. A sequel to “Horrible Bosses” is about to be written. Sadly I don’t think it’ll be a comedy.

A depression created by psychopaths.

I was just a college drop-in. My wife just got her degree. Twelve years of slogging through classes. I read most of her books along the way. When I wasn’t tutoring her in computer programming she was teaching me. I don’t recall the philosopher, but one said something to the effect: “Names aren’t coincidental.” When the Madoff scandal broke we laughed about his name, “made-off,” as in I made-off with your money. As my favorite author, the late Kurt Vonnegut would say, “someone should look into this.”

Celente got taken by MF Global. When I told my wife the story over coffee this morning she laughingly said, “MF as in Mother-F(again, I’ll let you fill in the blanks here)r Global. Hey, just like the movie “Horrible Bosses” and MotherF(ehem)r Jones.” Even the name Jon is a tipoff. I don’t trust people who spell their names like they are better than the rest of us, and Corzine I first misread as Conman somehow.

Can you spot the two criminals in this lineup?

So here we have 7,000 clients who got MF’d out of some $800,000,000 and Jon is walking around a free man. Let’s not mince words here, Jon is Obama’s top Wall Street Fundraiser.

Pitchforks and Torches

In 2004 we downsized. By 2007 our new house was complete. We literally built it ourselves. I didn’t use the cheapest materials. The house is very sound, 2 x 6 walls, heavier sheathing on the roof, the silent floor system, low-e windows, stone and HardiPlank all on top of a poured concrete foundation.

The circa mid-2000 appliances we got are made like junk—and we didn’t buy the cheapest ones. I’ve decided not to let this “slip.” My Jihad these days has been accountability.

The well guy put a computer in that sounds like one of the turbine engines on the planes I used to fly. He claims he did this to save me $300 dollars in electrical wire. I’m still trying to get his Bernanke math. I paid $2,000 bucks for this computer to save $300 bucks in wire. I must be a moron because losing $1,700 dollars doesn’t sound like a savings to me? Of course this computer turns the 3.5 horsepower, electric power guzzling, well pump on every time we so much as flush a toilet, and pushing age 50 we seem to do that a lot more often. As a result our downsizing to a smaller home hasn’t downsized our electric bill. But I “saved” 300 bucks in wire. I’ve got that going for me.
The stove has a broken knob. Turning on various burners is like playing musical knobs. Puts my wife in a great mood.

The oven door has to be screwed back together, it only separates when the oven is hot. Using a screwdriver with oven mitts on drives me bat(ehm) crazy.

The dishwasher racks had their track “stoppers” fall out, so now the racks fall out the tracks and we get to pick up glass.

The ice-maker in the fridge has to be manually turned on and off or ice goes all over the packed freezer. When we use the door dispenser we get more ice on the floor than in our glasses.

The gate opener outside has been replaced 12 times, and is ready again for a new computer board. The intercom by the gate stopped working — I’m not replacing it, I’m not social. It’s one reason I have an 8,400 volt electric fence, the other is I like keeping my garbage outside and I don’t like bears messing with it or eating it. Some poor son of a gun out west shot a bear because he was worried about his kids outside and the police charged him.

More governmental insanity that we pay for.

There is something in Celente’s voice. I’m not the only one who hears it. It reminds me of flying in weather, the times we got so close while deviating between cells that I could hear the thunder over the planes engines. Kunstler hears it too. Jim—another good guy—wrote today about Celente’s getting taken by MF Global, “I heard him [Gerald] fulminating over it on a podcast and he is not somebody I’d want to be on the bad side of.” Last week the wood stove manufacturer’s CEO and president heard my thunder. This week they buy their stove back and we put a more expensive one in.

I’m done dealing with morons and through with being robbed blind.

It’s bad enough inflation rips us off, but to be forced into buying lifetime warrenties which cost as much as the product that you’re buying, or having to replace what you just bought a year ago is criminal.

Things should not come down to pitchforks and torches—but they are quickly coming to that. It isn’t a pleasant fix but when the authorities think that it is permissible for someone to steal $800 million from 7,000 customers and nothing is immediatly done about it then it is proof that they have—once again—failed us. If you can backstop Wall Street you better backstop those ripped off by them—and this time, go liquidate their assets to pay it back. K-Street of course won’t tolerate that, and that’s who really pays our horrible bosses we call politicians. (Ron Paul and a few other good eggs excluded).

What happened to Celente and 7,000 other Celentes is no different from the cops who beat the ex-war vet protester until his spleen ruptured; or pepper sprayed those two little girls; or shot a kid in the head with teargas canisters and then, while lying helplessly on the ground in a puddle of his own blood, proceed to lob a flash grenade at him and those helping him. Sick!

Like I told the stove compnay—Nice job champs!

Americans have been very tolerant. We’ve handed money over for Wall Street bonuses rewarding the psychopaths who blew up our economy and created 23.9% unemployment (the real undistorted employment rate). We’ve watched silently as Bernanke lied to us about the banks being fixed—as if we’re too stupid to know that FASB is now just legalized Enron accounting. We’ve rolled our eyes and bitten our tongues when some of the psychopaths later professed to be, “Doing God’s work.” We’ve watched our kids get molested by perverts hired off adds on pizza boxes, had our wives breasts exposed during these idiotic searches and ourselves been exposed to radiation while in naked body scanners that could be used in the oncology departments of hospitals.

I seriously suspect that people have had enough and that it won’t be long before they break out the pitchforks and torches. Throughout history we’ve read about times when citizens were forced to resort to violence in order to restore law and order.

Ironic—if you really think about it.

I seriously suspect we are about to witness this first hand—pitchforks and torches.
Right now I’m just entirely ecstatic that my name isn’t Jon Corzine. Like Kuntsler says, ‘Celente isn’t someone that I’d want to be on the bad side of. If tomorrow I open up my RSS reader and see one of those 7,000 screwed by Mother F#r Global holding a pitchfork with Corzine’s head on it I won’t be surprised.’

I AM NOT MOVING - Short Film - Occupy Wall Street

noreply@blogger.com (The Warning Signs) — Tue, 18 Oct 2011 21:53:00 +0000

Incredible Speech By Wall Street Protester "End The Fed" 2011

noreply@blogger.com (The Warning Signs) — Sun, 09 Oct 2011 03:06:00 +0000

In all the media coverage I have viewed over the course of the past few weeks I failed to hear anyone who put forth a compelling argument as to what they were protesting against. Then I saw this young man and I was truly blown away. Here is a young man who truly understands what is going on in this country and gives one of the best speeches I have heard in a long time.

Obama Goes All Out For Dirty Banker Deal

noreply@blogger.com (The Warning Signs) — Fri, 26 Aug 2011 02:12:00 +0000

by Matt Taibbi / Rolling Stone

A power play is underway in the foreclosure arena, according to the New York Times.

On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

On the other side is the Obama administration, the banks, and all the other state attorneys general.

This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

But Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off. To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.

In addition to the global settlement, Schneiderman is also blocking an individual $8.5 billion settlement for Countrywide investors. He has sued to stop that deal, claiming it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses.”

If Schneiderman thinks $8.5 billion is an insufficient, fractional payoff just for defrauded Countrywide investors, then you can imagine how bad a $20 billion settlement for the entire industry would be for the victims.

In that particular Countrywide settlement deal, it looks like Bank of New York Mellon, the New York Fed, Pimco and other players negotiated on behalf of defrauded investors. They told the Times they were happy with the deal, but investors outside the talks told Gretchen they weren’t happy with the settlement.

Schneiderman apparently listened to those voices instead of the Mellon-Fed-BofA crowd, which infuriated the insiders who struck the actual deal. In a remarkable quote given to the Times, Kathryn Wylde, the Fed board member who ostensibly represents the public, said the following about Schneiderman:

It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.

This, again, is coming not from a Bank of America attorney, but from the person on the Fed board who is supposedly representing the public!

This quote leads one to wonder just what Wylde would consider “indefensible,” given that stealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money. Is Wylde waiting for Goldman and Citi to blow up a skyscraper? Dump dioxin into an orphanage? It’s really an incredible quote.

The banks are going to claim that all they’re guilty of is bad paperwork. But while the banks are indeed being investigated for "paperwork" offenses like mass tax evasion (by failing to pay fees associated with mortgage registrations and deed transfers) and mass perjury (a la the “robo-signing” practices), their real crime, the one Schneiderman is interested in, is even more serious.

The issue goes beyond fraudulent paperwork to an intentional, far-reaching theft scheme designed to take junk subprime loans and disguise them as AAA-rated investments. The banks lent money to corrupt companies like Countrywide, who made masses of bad loans and immediately sold them back to the banks.

The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process – this is almost certainly where Scheniderman’s investigators are doing their digging – before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.

They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.

In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That's because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market.

In other words: if Bank of America hadn’t found a way to sell worthless subprime loans as AAA paper to the Chinese and the Scandavians in May, you can be sure that it wouldn’t be going back to Countrywide in June to lend out more money for more subprime loans.

And Countrywide, in turn, wouldn’t then have been sending masses of reps out into the ghettoes to offer juicy home loans to undocumented immigrants and refis to confused old ladies on social security.

This is as bad as white-collar crime gets. But to Wylde, it doesn’t rise to the level of being “indefensible.” Until they do something worse than this, we apparently should support the banks, and make sure they don’t have to pay more than a fraction of what they made off of this kind of crime.

What is most amazing about Wylde’s quote is the clear implication that even a law enforcement official like Schneiderman should view it as his job to “do everything we can to support” Wall Street. That would be astonishing interpretation of what a prosecutor's duties are, were it not for the fact that 49 other Attorneys General apparently agree with her.

In Schneiderman we have at least one honest investigator who doesn’t agree, which is to his great credit. But everyone else is on Wylde’s side now. The Times story claims that HUD Secretary Shaun Donovan and various Justice Department officials have been leaning on the New York AG to cave, which tells you that reining in this last rogue cop is now an urgent priority for Barack Obama.

Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.

Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.

‘Before NATO intrusion, Libya was African Switzerland’

noreply@blogger.com (The Warning Signs) — Thu, 25 Aug 2011 16:37:00 +0000

Jon Stewart Wants To Know: Why Is The Media Ignoring Ron Paul?

noreply@blogger.com (The Warning Signs) — Tue, 16 Aug 2011 14:31:00 +0000

Over the weekend Dr. Ron Paul placed second in the Iowa Ames Straw Poll by a narrow margin of 200 votes behind Michelle Bachmann. One would have thought that the canidate who came in second in the Straw Poll would have received some serious media attention right?

Wrong!

As Jon Stewart points out in this clip from his show "The Daily Show", there seems to be a complete media blackout on Dr. Ron Paul. Furthermore I find it troublesome how the clip shows how every news outlet is on board with blackballing Dr. Ron Paul.

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Bank of America's Back-Door TARP!

noreply@blogger.com (The Warning Signs) — Wed, 10 Aug 2011 19:01:00 +0000

Taxpayer-owned Fannie Mae just bought the servicing rights to a bunch of bad loans from the struggling Bank of America. Where does it end?

By Abigail Field

FORTUNE -- Taxpayers may not realize it, but they just bailed out Bank of America again, this time to the tune of more than a half billion dollars.

The Charlotte, NC-based bank was one of the biggest recipients of bailout funds during the financial crisis. But Bank of America (BAC) continues to face deep problems related to its troubled mortgage portfolio and investors have battered the stock, which has plunged over 40% so far this year. That's escalated concerns that the bank may need to raise more capital. Yves Smith at Naked Capitalism has even started a BofA death watch.

But apparently the federal government is determined to resurrect BofA: the Wall Street Journal reports the feds have just used Fannie Mae, which is controlled by the U.S. government, to infuse BofA with $500 million and ease one of the bank's biggest headaches.

Yesterday afternoon on CNBC, Bank of America CEO Brian Moynihan mentioned that five of BofA's six businesses were making money. The one black spot was its massive portfolio of problematic mortgages and the liabilities flowing from it. Moynihan also mentioned that BofA had just sold some "mortgage servicing rights" as part of its balance sheet strengthening efforts, but he didn't elaborate.

According to the WSJ, Fannie Mae spent $500 million to buy the servicing rights to a big chunk of the "seven million loans still causing the most problems." Although the $500 million is a paper loss to BofA, in that the rights were "originally worth more," it looks like BofA is still getting a good deal because the portfolio's "value is expected to deteriorate further."

In fact, the deal is worth much more than $500 million to BofA, because getting rid of those servicing rights lifts a huge cost burden off BofA's shoulders. And if securitized loans are involved, which they most likely are, the sale also limits the BofA's potential liability to investors for its current servicing violations. Finally, the $500 million is surely more than the servicing rights are worth in an arms-length transaction. How do we know? Beyond the comment that the loans are expected to "deteriorate further," the goal of the intervention can only be to fix Bank of America's capital structure, which is easier for the government to do if it overpays for the rights.

In short, purchasing these servicing rights was another Troubled Asset Relief Program.

Servicing defaulted loans can be good business if cheaply produced foreclosure paperwork isn't questioned, and if the foreclosures have equity and can be resold easily with lots of junk fees. But the mortgage servicing rights Fannie Mae bought are stinkers: they have a 13% delinquency rate, which means lots of foreclosures and loan modifications.

Both foreclosures and mods have been big headaches for BofA, which faces potential liability for document fraud in its foreclosures on multiple fronts. Beyond that, foreclosures are simply expensive to do well. BofA was recently punished by Treasury for failing to do modifications well, and it's also been sued for how it does them.

But the loans Fannie Mae bought are even worse than 13% delinquency rate suggests. According to the WSJ, "more than half of the loans are in troubled U.S. real-estate markets." This likely means markets where a high percentage of the houses are underwater and there's a huge oversupply, driving prices down further and making defaults more likely.

Fannie Mae is purchasing "the servicing rights in order to transfer the day-to-day management of those loans to a different company." That's another huge sign that Fannie Mae is overpaying. If the rights were really worth $500 million, wouldn't a private company pay that for them? Instead, it sounds like Fannie Mae is doing a bailout two-step, one to BofA and one to whomever takes these rights off Fannie Mae's hands.
Another thing needs to become clear: where did Fannie Mae get the money to do BofA the favor of buying these rights? Fannie Mae just asked for another bailout of its own, seeking a new $5.1 billion infusion last week.

Think about how good this deal is for BofA: it gets to stop the bleeding, or at least cauterize much of the wound in its balance sheet that lousy mortgage servicing rights and mortgage securities liabilities are creating. And it gets half a billion dollars to boot.

And taxpayers? Well, we get to own yet another good chunk of BofA's mess.

Video: MSNBC’s Dylan Ratigan has a meltdown over the meltdown

noreply@blogger.com (The Warning Signs) — Wed, 10 Aug 2011 15:38:00 +0000

Finally, someone at MSNBC has the balls to say on air what the root of the problems is in this country. Money and politics!

MSNBC's Dylan Ratigan is mad as hell about the U.S. financial crisis--and he's not gonna take it anymore!
While convening a roundtable discussion on the market meltdown on his eponymous MSNBC show on Tuesday, Ratigan exploded.

"We've got a real problem!" an exasperated Ratigan shouted. "This is a mathematical fact! Tens of trillions of dollars are being extracted from the United States of America. Democrats aren't doing it, Republicans aren't doing it. An entire integrated system, financial system, trading system, taxing system, that was created by both parties over a period of two decades is at work on our entire country right now. And we're sitting here arguing about whether we should do the $4 trillion plan that kicks the can down the road for the president for 2017, or burn the place to the ground, both of which are reckless, irresponsible, and stupid."

"I'm sorry to lose my temper," he continued. "But, I tell you what, I've been coming on TV for three years doing this, and the fact of the matter is that there's a refusal on both the Democratic and the Republican side of the aisle to acknowledge the mathematical problem, which is that the United States of America is being extracted."

Later, on the show's website, Ratigan called it his "epic 'Network' moment."

Visit msnbc.com for breaking news, world news, and news about the economy

Lets Take A Moment To Dissect Bernake's Latest Zero Interest Rate Policy

noreply@blogger.com (The Warning Signs) — Wed, 10 Aug 2011 05:35:00 +0000

by: Bruce Krasting / ZeroHedge.com

I had this to say last week:

The Fed could easily attempt to buy some market peace by issuing a statement that the policy of zero interest rates would be extended for a minimum period of one year. I consider this to be a “high probability" to happen in the next 30 days.

I got it right, but I got it completely wrong. I feared that the Fed could extend the ZIRP language for as long as a year. Not in my wildest dream did I think they could take the extremely risky move of guaranteeing that interest rates will remain at zero for another 24 months.

Having been shocked, my thoughts.

*This action is indefensible on economic merits. This move is not motivated by sound monetary policy. It’s motivated by politics. This is a payback to Obama. Shame on the Fed for mixing politics with money.

*We will not go two years with this monetary policy without inflation (measured by core) exceeding the previously stated commitment by Bernanke that policy would not be allowed to rise above 2%. Bernanke and the dove members that signed onto this policy have lied to the American people. Bernanke has done it on 60 Minutes. He has done it to Congress. Shame on all of them.

*The Fed has taken away its ability to react to a situation that would require them to tighten. We are now on a one-way street. There is no way to turn around anymore. I believe the Fed has abdicated its responsibilities under the dual mandate. The have no ability to react if inflation should pop up in a year from now. Even worse, they have no policy options should there be a run on the dollar. The possibility of a run on the buck has gone up exponentially as a result. Should that happen, the Fed will have left us economically defenseless. Shame on the Fed for making us more vulnerable to a speculative attack.

*The stock market run up this afternoon is the Bernanke Put at work. Lets be clear on the consequences of Perpetual ZIRP. From this day onward every buy and hold investor who acquires Treasury debt with maturities of less than five-years is GUARANTEED TO LOSE MONEY. So if you accept that, then stocks have to look better. Shame on the Fed for debasing money and punishing savers.
*We have only one monetary policy. Juice stock multiples. This is the farthest thing from “Progressive” economics as you can get. We have a policy in place that is designed to make wealthy people wealthier. At some point there will be a social cost to this. The fires and riots in London were triggered by a shooting. Underneath is a rage between haves and have nots. Shame on the Fed for rigging the outcome for fat cats. Double shame on them for when our streets are filled with rage.

*Zero interest rates also means Zero risk. I think the change in Fed language will exacerbate recent short-term funding liquidity. I think we will see this appear (again) sooner versus later. I think Zero interest rates discourages leveraged investing. This policy will dry up liquidity in the asset backed market (Shadow banking system). I'm looking for evidence of this in the Euro Dollar funding markets. I am also looking for it to occur in the Term Commercial Paper market. Shame on the Fed for setting us up for this systemic risk.

*Brazil, Argentina, Korea, Indonesia are going to scream bloody murder over perpetual ZIRP. Russia is likely to get downright ugly with their rhetoric. I wouldn’t be surprised if they took this opportunity to vote with their feet and just abandon the dollar as a reserve holding. China will also make noise. They will make more calls for a new international currency to replace the dollar. The Central bankers in Japan and Switzerland are puking in the trashcan over this. Bernanke is exporting US deflation to them. Shame on the Fed for pursuing Beggar my neighbor policies. They deserve all the global criticism they are about to get.

*Bernanke bills himself as a student of the Depression. He has said over and over that he would not make the mistakes that the Fed made in 1937 when a tightening of monetary policy triggered another wave of deflation. I think the history books will look at the Fed and August of 2011 and draw a similar conclusion. At a critical time in history the Fed has taken action. The mistake of 72 years ago DID cause a recession that lasted a few years. The mistakes of 2011 will mark a point in history where America turned a corner downward. One that will take a few decades to recover from. The history books will shame Ben.

I'm 63 and I'm Tired

noreply@blogger.com (The Warning Signs) — Wed, 10 Aug 2011 01:03:00 +0000

By Robert A. Hall

I'm 63. Except for one semester in college when jobs were scarce and a six-month period when I was between jobs, but job-hunting every day, I've worked, hard, since I was 18. Despite some health challenges, I still put in 50-hour weeks, and haven't called in sick in seven or eight years. I make a good salary, but I didn't inherit my job or my income, and I worked to get where I am. Given the economy, there's no retirement in sight, and I'm tired.

Very tired.

I'm tired of being told that I have to "spread the wealth" to people who don't have my work ethic. I'm tired of being told the government will take the money I earned, by force if necessary, and give it to people too lazy to earn it.

I'm tired of being told that Islam is a "Religion of Peace," when every day I can read dozens of stories of Muslim men killing their sisters, wives and daughters for their family "honor"; of Muslims rioting over some slight offense; of Muslims murdering Christian and Jews because they aren't "believers"; of Muslims burning schools for girls; of Muslims stoning teenage rape victims to death for "adultery"; of Muslims mutilating the genitals of little girls; all in the name of Allah, because the Qur'an and Sharia law tells them to.

I'm tired of being told that out of "tolerance for other cultures" we must let Saudi Arabia use our oil money to fund mosques and mandrassa Islamic schools to preach hate in America and Canada , while no American nor Canadian group is allowed to fund a church, synagogue or religious school in Saudi Arabia to teach love and tolerance.

I'm tired of being told I must lower my living standard to fight global warming, which no one is allowed to debate.

I'm tired of being told that drug addicts have a disease, and I must help support and treat them, and pay for the damage they do. Did a giant germ rush out of a dark alley, grab them, and stuff white powder up their noses while they tried to fight it off?

I'm tired of hearing wealthy athletes, entertainers and politicians of both parties talking about innocent mistakes, stupid mistakes or youthful mistakes, when we all know they think their only mistake was getting caught. I'm tired of people with a sense of entitlement, rich or poor.

I'm real tired of people who don't take responsibility for their lives and actions. I'm tired of hearing them blame the government, or discrimination or big-whatever for their problems.

Yes, I'm damn tired.

But I'm also glad to be 63.

Because, mostly, I'm not going to have to see the world these people are making.

I'm just sorry for my granddaughter!

Robert A. Hall is a Marine Vietnam veteran who served five terms in the Massachusetts State Senate.

A 634 Point Stock Market Crash And 8 More Reasons Why You Should Be Deeply Concerned That The U.S. Government Has Lost Its AAA Credit Rating

noreply@blogger.com (The Warning Signs) — Tue, 09 Aug 2011 04:05:00 +0000

article from: theeconomiccollapseblog.com

Are you ready for part two of the global financial collapse? Many now fear that we may be on the verge of a repeat of 2008 after the events of the last several days. On Friday, Standard & Poor's stripped the U.S. government of its AAA credit rating for the first time in history. World financial markets had been anticipating a potential downgrade, but that still didn't stop panic from ensuing as this week began. On Monday, the Dow Jones Industrial Average dropped 634.76 points, which represented a 5.5 percent plunge. It was the largest one day point decline and the largest one day percentage decline since December 1, 2008. Overall, stocks have fallen by about 15 percent over the past two weeks. When Standard & Poor's downgraded long-term U.S. government debt from AAA to AA+, it was just one more indication that faith in the U.S. financial system is faltering. Previously, U.S. government debt had a AAA rating from S&P continuously since 1941, but now that streak is over. Nobody is quite sure what comes next. We truly are in unprecedented territory. But one thing is for sure - there is a lot of fear in the air right now.

So exactly what caused S&P to downgrade U.S. government debt?

Well, it was the debt ceiling deal that broke the camel's back.

According to S&P, the debt ceiling deal "falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."

As I have written about previously, the debt ceiling deal was a complete and total joke, and S&P realized this.

Forget all of the huge figures that the mainstream media has been throwing at you concerning this debt ceiling deal. The only numbers that matter are for what happens before the next election.

The only way that the current debt ceiling deal will last beyond the 2012 election is if Obama is still president, the Democrats still control the Senate and the Republicans still control the House. If any of those things change, this deal ceiling deal is dead as soon as the election is over.

Even if all of those things remain the same, there is still a very good chance that we would see dramatic changes to the deal after the next election.

So in evaluating this "deal", the important thing is to look at what is going to happen prior to the 2012 election.

When we examine this "deal" that way, what does it look like?

Well, Barack Obama and the Democrats get the debt ceiling raised by over 2 trillion dollars and will not have to worry about it again until after the 2012 election.

The Republicans get 25 billion dollars in "savings" from spending increases that will be cancelled.

The "Super Congress" that is supposed to be coming up with the second phase of the plan may propose some additional "spending cuts" that would go into effect before the 2012 election, but that seems unlikely.

So in the final analysis, the Democrats won the debt ceiling battle by a landslide.

25 billion dollars is not even 1 percent of the federal budget. The U.S. national debt continues to spiral wildly out of control, and our politicians could not even cut the budget by one percent.

Somehow our politicians believed that the rest of the world would be convinced that they were serious about cutting the budget, but it turns out that global financial markets are tired of getting fooled.

It has gotten to the point where now even the big credit rating agencies are being forced to do something.

Not that they really have much credibility left. Everyone still remembers all of those AAA-rated mortgage-backed securities that imploded during the last financial crisis. The reality is that the big credit rating agencies are a bad joke at this point.

Several smaller credit rating agencies have already significantly slashed the credit rating of the U.S. government. But a lot of pressure had been put on the "big three" to keep them in line.

But now things have gotten so ridiculous that S&P felt forced to make a move.

Sadly, our politicians are still trying to maintain the charade that everything is okay. Barack Obama says that financial markets "still believe our credit is AAA and the world's investors agree".

Once again, Barack Obama is dead wrong.

The truth is that the credit rating for the U.S. government should have been slashed significantly a long time ago. This move by S&P was way, way overdue.

Moody's might be the next one to issue a downgrade. At the moment, Moody's says that it will not be downgrading U.S. debt for now, but Moody's also says that it has serious doubts about the enforceability of the "budget cuts" in the debt ceiling deal.

This crisis is just beginning. It is going to play out over time, and it is going to be very messy.

The following are 8 more reasons why you should be deeply concerned that the U.S. government has lost its AAA credit rating....

#1 The U.S. dollar and U.S. government debt are at the very heart of the global financial system. This credit rating downgrade just doesn't affect the United States - it literally shakes the financial foundations of the entire world.

#2 As the stock market crashes, investors are flocking to U.S. Treasuries right now. However, once the current panic is over the U.S. could be faced with increased borrowing costs. The credit rating downgrade is a signal to investors that they should be receiving a higher rate of return for investing in U.S. government debt. If interest rates on U.S. government debt do end up going up, that is going to make it more expensive for the U.S. government to borrow money. The higher interest on the national debt goes, the more difficult it is going to become to balance the budget.

#3 We could literally see hundreds of other credit rating downgrades now that long-term U.S. government debt has been downgraded. For example, S&P has already slashed the credit ratings of Fannie Mae and Freddie Mac from AAA to AA+. S&P has also already begun to downgrade the credit ratings of states and municipalities. Nobody is quite sure when we are going to see the dominoes stop falling, and this is not going to be a good thing for the U.S. economy.

#4 10-year U.S. Treasuries are the basis for a whole lot of other interest rates throughout our economy. If we see the rate for 10-year U.S. Treasuries go up significantly, it will suddenly become a lot more expensive to get a car loan or a home loan.

#5 The current financial panic caused by this downgrade is hitting financial stocks really hard. The big banks led the decline back in 2008, and it looks like it might be happening again. Just check out what CNN says happened to financial stocks on Monday....

Financial stocks were among the hardest hit, with Bank of America (BAC, Fortune 500) plunging 20%, and Citigroup (C, Fortune 500) and Morgan Stanley (MS, Fortune 500) dropped roughly 15%.

#6 China is freaking out. China's official news agency says that China "has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets". If China starts dumping U.S. government debt that would make things a lot worse.

#7 There are already calls for the Federal Reserve to step in and do something. If the U.S. economy drops into another recession, will we see more quantitative easing? It seems like we have reached a point where the Fed is constantly in "emergency mode".

#8 The U.S. national debt continues to get worse by the day. Just check out what economics professor Laurence J. Kotlikoff recently told NPR....

"If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap"

Dick Cheney once said that "deficits don't matter", but the truth is that all of the debt we have been piling up for decades is now catching up with us.

The United States is in such a huge amount of financial trouble that it is hard to put into words. The days of easy borrowing for the U.S government are starting to come to an end. We have been living in the greatest debt bubble in the history of the world, and it has fueled a tremendous amount of "prosperity", but now the party is ending.

A whole lot of financial pain is on the horizon.

Please prepare for the hard times that are coming.

The Silver Bears Are Back For Part 7

noreply@blogger.com (The Warning Signs) — Tue, 09 Aug 2011 03:24:00 +0000

Everyone's favorite cartoon is back after the silver bears make yet another return appearance, this time number 7, in which more than anything,zt is made clear that the name of Blythe Masters will live in infamy long after she no longer has anything to do with the price of silver, and, allegedly, its ongoing suppression.

For those that have not seen parts 1-6 of the silver bears series which lays out how JP Morgand and company are manipulating the silver market you can view those episodes in our "Silver" section.