Financial Sex Aid: Florida Co-Eds Seek “Sugar Daddy” for College Degree
– People who are looking for the perfect match, both men and women, go online seeking a certain kind of arrangement.
A “sugar baby” is typically younger and eager for adventure. A “sugar daddy” is usually an older, financially established provider. A website called www.seekingarrangement.com helps the two meet.
CBS4?s Jorge Estevez found a 22-year old who is looking for her first sugar daddy. She is a Miami student looking for someone to help her pay for her higher education and all the related expenses.
A self-proclaimed, cute blonde who is looking for fun in Fort Lauderdale admits to being a college student looking for some help.
And another pretty, young Miami college girl, who does not want to be identified, is more direct, asking specifically for 10 to 20-thousand dollars monthly. The 22-year old claims to be looking for someone who will never say ”NO” to her needs.
“The lesson here… ask and you shall receive,” she told Estevez.
“What have they given you?” asked Estevez.
“They have given me cars, trips, jewelry. These guys will take you out and they will court you,” she responded.
Jorge asked “What do these guys do for you?”
“They support you financially… financially,” she replied.
Support is proving to be crucial for a 20-year old sugar baby, who is in college at Florida International University.
“Have they paid your tuition?” asked Estevez.
“Books?” he asked.
“Books. Everything,” she responded. “When I say everything… I mean everything.”
In fact, her profile asks for someone to “help a young’in out”. And she is not alone. Numbers compiled by the “seeking arrangement” website showed that in the past six months, FIU ranked 20th in a list of the top universities with “sugar baby” sign ups.
Florida ranked third in the U.S. behind New York and California with 67,815 total users, of all ages. There are just over 1,000,000 and growing .
Our FIU student argued that it’s a way to survive the times.
“I don’t get support from my parents. As soon as I turned 18, they told me I am on my own. I have to figure everything out on my own Jorge.”
“And you discovered this? And you thought…?” asked Estevez.
“My dreams came true Jorge.”
“Your dreams came true,” he repeated.
Then his interview added, “But with every give… there is a take.”
“They give you trips. They pay for school. They give you presents. What do you give them?” asked Estevez.
“Sex,” said the FIU “sugar baby.”
“Just like that,” asked Jorge.
“Just like that,” she said.
“And you are OK with that?” Jorge probed.
“I am OK with that,” she replied.
But seeking arrangement, which began in 2006, insists they are not an escort service and specifies the terms of the relationship are left up to the two consenting users. Estevez spoke with the website’s founder, Brandon Lee.
“Why is this not like prostitution, since you mentioned it?” asked Estevez.
“We do not allow escorts or prostitutes to use the website. That is what I call a one or two-hour arrangement. It is not what this is about,” Lee said.
In fact, the website monitors profiles. They claim they shut down as many as 20-a day for alluding to inappropriate behavior.
“To make sure that terms such as hourly rate, in call, out call and terms like that aren’t used, we highlight them and catch them.
We put that question on the table for our “sugar baby.”
“What do you say to people who say this is a form of prostitution?” asked Estevez of our FIU student.
“That is not true,” she explained. “Prostitution is when you get paid for sex and that is just it. Sex. For this, you build a relationship with someone.”
It’s a relationship that begins online, a common practice nowadays, where one person logs on hoping to find another who is also in search of that perfect match.
“Years from now you are successful. What do you say to you about doing this?” Jorge inquired.
“They have money they want to help you. They see you struggling, They want to help you. Whether or not it is an arrangement… it is still a relationship,” the woman explained.
A match, found online, between two consenting adults looking for their own special arrangement.
So what is the ratio for these consenting adults? Well, most dating websites have more men than women. But at seekingarrangement.com, it’s the opposite. The ratio is 20 sugar babies to every one sugar daddy.
Seeking Arrangement is developing a mobile app for your smart phone and the website is going global with a Spanish language version and other languages.
Obama Has Now Increased Debt More than All Presidents from George Washington Through George H.W. Bush Combined
By Terence P. Jeffrey
(CNSNews.com) – The Obama administration passed another fiscal milestone this week, according to new data released by the Treasury Department. As of the close of business on Oct. 3, the total national debt was $14,837,099,271,196.71—up about $44.8 billion from Sept. 30.
That means that in the less-than-three-years Obama has been in office, the federal debt has increased by $4.212 trillion–more than the total national debt of about $4.1672 trillion accumulated by all 41 U.S. presidents from George Washington through George H.W. Bush combined.
This $4.212-trillion increase in the national debt means that during Obama’s term the federal government has already borrowed about an additional $35,835 for every American household–or $44,980 for every full-time private-sector worker. (According to the Census Bureau there were about 117,538,000 households in the country in 2010, and, according to the Bureau of Labor Statistics, there were about 93,641,000 full-time private-sector workers.)
When Obama was inaugurated on Jan. 20, 2009, according to the Treasury Department, the total national debt stood at $10,626,877,048,913.08.
At the end of January 1993, the month that President George H. W. Bush left office, the total national debt was $4.1672 trillion, according to the Treasury. Thus, the total national debt accumulated by the first 41 presidents combined was about $44.8 billion less than the approximately $4.212 trillion in new debt added during Obama’s term.
As of Monday, Obama had been in office 986 days—or about 32 and a half months. During that time, the debt increased at an average pace of $4.27 billion per day. Were that rate to continue until Obama’s term ends on Jan. 20, 2013, the debt would then stand at about $16.86534 trillion—an increase of more than $6.2 trillion for Obama’s four years.
That would equal nearly $53,000 for each American household or more than $66,00 for each full-time private-sector worker.
That total national debt did not exceed $6.2 trillion until 2002, when George W. Bush was president.
Million Dead, $1.8 Trillion Spent On Decade-Long U.S. “War On Terror”
by Tom Clonan
US pays price in blood and treasure for war on terror
By Tom Clonan
-In January 2002, the US began the lesser publicised Operation Enduring Freedom – Philippines…In October 2002, the US military started African military operations from Djibouti, establishing Operation Enduring Freedom – Horn of Africa…within Ethiopia, Somalia, Chad and Niger….This operation was subsequently broadened to include Operation Enduring Freedom – Trans Sahara, widening the scope of its operations to Central Africa and sub-Saharan Africa. This little-known war on terror in Africa has been fought in the main by thousands of US special forces and has been overshadowed by US military operations in Afghanistan, Iraq and Pakistan…[T]he US continues to wage its war on terror on several continents – from the Horn of Africa and Yemen to Iraq, Afghanistan and Pakistan.
In the decade since 9/11 about a million people worldwide have lost their lives in what is now known as the global war on terror.
The term “War on Terror”, was first used by President George Bush on September 16th, 2001, at Camp David as the US began to configure its military response to Osama bin Laden’s attacks on New York and the Pentagon.
In the weeks and months following 9/11, the Bush administration launched a series of robust military and intelligence interventions worldwide. The first phase started with the invasion of Afghanistan, or Operation Enduring Freedom, which began in October 2001.
The war aims were simple – to remove the Taliban leadership in Kabul and deny al-Qaeda physical sanctuary within the country. The US aimed to destroy al-Qaeda and disrupt its capacity to mount international operations from Afghan soil. It also sought to capture or kill bin Laden.
In January 2002, the US began the lesser publicised Operation Enduring Freedom – Philippines, to destroy the Islamist terror groups Jemaah Islamiyah and the Abu Sayaf group who had been co-ordinating terrorist operations throughout the Philippines and Indonesia from the island of Besilan…
In October 2002, the US military started African military operations from Djibouti, establishing Operation Enduring Freedom – Horn of Africa, designed to identify and destroy al-Qaeda affiliated Islamist terror cells within Ethiopia, Somalia, Chad and Niger.
This operation was subsequently broadened to include Operation Enduring Freedom – Trans Sahara, widening the scope of its operations to Central Africa and sub-Saharan Africa. This little-known war on terror in Africa has been fought in the main by thousands of US special forces and has been overshadowed by US military operations in Afghanistan, Iraq and Pakistan.
In March 2003, the US invaded Iraq in Operation Iraqi Freedom. The war aims of the US in Iraq were less clear than in its other interventions. Faulty and false intelligence reports on so-called weapons of mass destruction were mobilised as a motivation to attack Iraq.
The initial invasion phase, involving approximately 200,000 coalition troops, managed to topple Saddam Hussein’s regime. Saddam was subsequently captured, tried and hanged in Iraq. But no weapons of mass destruction were discovered and the invasion had the unintended consequence of strengthening Iran’s influence in the region.
A decade after the Twin Towers attacks, the US continues to wage its war on terror on several continents – from the Horn of Africa and Yemen to Iraq, Afghanistan and Pakistan. The term “war on terror” has entered the language as a catch-all phrase for everything from the inconvenience of security checks at airports to drone attacks in Pakistan. Officially, however, the global war on terror is now over. The Obama administration has rebranded and renamed the Global War on Terror, the Overseas Contingency Operation.
Since March 2009, the Pentagon and US Department of Defense have been requested to refrain from using the term, Global War on Terror.
In terms of blood and treasure, the wars have been costly for the US and Nato. In Iraq, the US and its allies lost almost 5,000 troops. More than 32,000 were wounded. In Afghanistan, where casualty rates have increased five-fold in five years, the US and its allies have lost almost 3,000 killed in action with a further 13,000 wounded.
More than 10,000 US and foreign mercenaries – euphemistically termed security contractors – have also been killed and injured in Iraq and Afghanistan.
The strain of a decade of war on America’s volunteer army has been heavy. According to the US Army Surgeon General 66,935 US troops suffer from acute combat stress reaction. In addition, the US Congressional Research Service has reported that a staggering 178,876 US veterans have suffered traumatic brain injuries. Almost 2,000 of these veterans are amputees and hundreds have also died of self-inflicted wounds or suicide while on active service in Iraq and Afghanistan.
The rate of suicide among US troops has more than doubled since 9/11. For civilians, the cost of war has been especially high. While estimates vary, British medical journal The Lancet suggests that a minimum of 655,000 Iraqi civilians were killed during Operation Iraqi Freedom.
Similar studies suggest that approximately 4,000 Afghan civilians have died during Operation Enduring Freedom. These figures represent those killed by both coalition troops and belligerent forces within Iraq and Afghanistan. The majority of civilian casualties, in both countries, were inflicted by insurgents.
The US Congressional Research Service, in its March 2011 report, states that the Overseas Contingency Operation has cost the US taxpayer $1.3 trillion – $130 billion per annum since 9/11. At present, US military operations worldwide cost $386 million per day, or $4,000 dollars per second. According to US Congressional estimates, the final bill will total $1.8 trillion.
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China To US: Any Attack on Pakistan Would be Construed as an Attack on China
Posted on Pakalert
China has officially put the United States on notice that Washington’s planned attack on Pakistan will be interpreted as an act of aggression against Beijing. This blunt warning represents the first known strategic ultimatum received by the United States in half a century, going back to Soviet warnings during the Berlin crisis of 1958-1961, and indicates the grave danger of general war growing out of the US-Pakistan confrontation.
“Any Attack on Pakistan Would be Construed as an Attack on China”
Responding to reports that China has asked the US to respect Pakistan’s sovereignty in the aftermath of the Bin Laden operation, Chinese Foreign Ministry spokesperson Jiang Yu used a May 19 press briefing to state Beijing’s categorical demand that the “sovereignty and territorial integrity of Pakistan must be respected.” According to Pakistani diplomatic sources cited by the Times of India, China has “warned in unequivocal terms that any attack on Pakistan would be construed as an attack on China.” This ultimatum was reportedly delivered at the May 9 China-US strategic dialogue and economic talks in Washington, where the Chinese delegation was led by Vice Prime Minister Wang Qishan and State Councilor Dai Bingguo.1 Chinese warnings are implicitly backed up by that nation’s nuclear missiles, including an estimated 66 ICBMs, some capable of striking the United States, plus 118 intermediate-range missiles, 36 submarine-launched missiles, and numerous shorter-range systems.
Support from China is seen by regional observers as critically important for Pakistan, which is otherwise caught in a pincers between the US and India: “If US and Indian pressure continues, Pakistan can say ‘China is behind us. Don’t think we are isolated, we have a potential superpower with us,’” Talat Masood, a political analyst and retired Pakistani general, told AFP.2
The Chinese ultimatum came during the visit of Pakistani Prime Minister Gilani in Beijing, during which the host government announced the transfer of 50 state-of-the-art JF-17 fighter jets to Pakistan, immediately and without cost.3 Before his departure, Gilani had stressed the importance of the Pakistan-China alliance, proclaiming: “We are proud to have China as our best and most trusted friend. And China will always find Pakistan standing beside it at all times….When we speak of this friendship as being taller than the Himalayas and deeper than the oceans it truly captures the essence of our relationship.”4 These remarks were greeted by whining from US spokesmen, including Idaho Republican Senator Risch.
The simmering strategic crisis between the United States and Pakistan exploded with full force on May 1, with the unilateral and unauthorized US commando raid alleged to have killed the phantomatic Osama bin Laden in a compound at Abottabad, a flagrant violation of Pakistan’s national sovereignty. The timing of this military stunt designed to inflame tensions between the two countries had nothing to do with any alleged Global War on Terror, and everything to do with the late March visit to Pakistan of Prince Bandar, the Saudi Arabian National Security Council chief. This visit had resulted in a de factoalliance between Islamabad and Riyadh, with Pakistan promising troops to put down any US-backed color revolution in the kingdom, while extending nuclear protection to the Saudis, thus making them less vulnerable to US extortion threats to abandon the oil-rich monarchy to the tender mercies of Tehran. A joint move by Pakistan and Saudi Arabia to break out of the US empire, whatever one may think of these regimes, would represent a fatal blow for the fading US empire in South Asia.
As for the US claims concerning the supposed Bin Laden raid of May 1, they are a mass of hopeless contradictions which changes from day to day. An analysis of this story is best left to literary critics and writers of theatrical reviews. The only solid and uncontestable fact which emerges is that Pakistan is the leading US target — thus intensifying the anti-Pakistan US policy which has been in place since Obama’s infamous December 2009 West Point speech.
Gilani: Full Force Retaliation to Defend Pakistan’s Strategic Assets
The Chinese warning to Washington came on the heels of Gilani’s statement to the Pakistan Parliament declaring: “Let no one draw any wrong conclusions. Any attack against Pakistan’s strategic assets, whether overt or covert, will find a matching response…. Pakistan reserves the right to retaliate with full force. No one should underestimate the resolve and capability of our nation and armed forces to defend our sacred homeland.”5 A warning of full force retaliation from a nuclear power such as Pakistan needs to be taken seriously, even by the hardened aggressors of the Obama regime.
The strategic assets Gilani is talking about are the Pakistani nuclear forces, the key to the country’s deterrent strategy against possible aggression by India, egged on by Washington in the framework of the US-India nuclear cooperation accord. The US forces in Afghanistan have not been able to conceal their extensive planning for attempts to seize or destroy Pakistan’s nuclear bombs and warheads. According to a 2009 Fox News report, “The United States has a detailed plan for infiltrating Pakistan and securing its mobile arsenal of nuclear warheads if it appears the country is about to fall under the control of the Taliban, Al Qaeda or other Islamic extremists.” This plan was developed by General Stanley McChrystal when he headed the US Joint Special Operations Command at Fort Bragg, North Carolina. JSOC, the force reportedly involved in the Bin Laden operation. is composed of Army Delta Force, Navy SEALs and “a high-tech special intelligence unit known as Task Force Orange.” “Small units could seize [Pakistan’s nukes], disable them, and then centralize them in a secure location,” claimed a source quoted by Fox.
Obama Has Already Approved Sneak Attack on Pakistan’s Nukes
According to the London Sunday Express, Obama has already approved an aggressive move along these lines: “US troops will be deployed in Pakistan if the nation’s nuclear installations come under threat from terrorists out to avenge the killing of Osama Bin Laden… The plan, which would be activated without President Zardari’s consent, provoked an angry reaction from Pakistan officials… Barack Obama would order troops to parachute in to protect key nuclear missile sites. These include the air force’s central Sargodha HQ, home base for nuclear-capable F-16 combat aircraft and at least 80 ballistic missiles.” According to a US official, “The plan is green lit and the President has already shown he is willing to deploy troops in Pakistan if he feels it is important for national security.”7
Extreme tension over this issue highlights the brinksmanship and incalculable folly of Obama’s May 1 unilateral raid, which might easily have been interpreted by the Pakistanis as the long-awaited attack on their nuclear forces. According to the New York Times, Obama knew very well he was courting immediate shooting war with Pakistan, and “insisted that the assault force hunting down Osama bin Laden last week be large enough to fight its way out of Pakistan if confronted by hostile local police officers and troops.”
The Shooting Has Already Started
The shooting between US and Pakistani forces escalated on Tuesday May 17, when a US NATO helicopter violated Pakistani airspace in Waziristan. Pakistani forces showed heightened alert status, and opened fire immediately, with the US helicopter shooting back. Two soldiers at a Pakistani check post on the border in the Datta Khel area were wounded.8
Possible Pakistani retaliation for this border incursion came in Peshawar on Friday, May 20, when a car bomb apparently targeted a 2-car US consulate convoy, but caused no American deaths or injuries. One Pakistani bystander was killed, and several wounded. In other intelligence warfare, Ary One television reported the name of the CIA station chief in Islamabad, the second top US resident spook there to have his cover blown in six months.
US Envoy Grossman Rejects Pakistani Calls To Stop Border Violations
US Special Representative to Afghanistan and Pakistan Marc Grossman, the replacement for the late Richard Holbrooke, on May 19 arrogantly rejected Pakistani calls for guarantees that no more Abottabad-style unilateral operations would be mounted in Pakistan.9 In refusing to offer such assurances, Grossman claimed that Pakistani officials had never demanded respect for their border in recent years.
In the midst of this strategic crisis, India has gone ahead with inherently provocative scheduled military maneuvers targeting Pakistan. This is the “Vijayee Bhava” (Be Victorious) drill, held in the Thar desert of north Rajastan,. This atomic-biological-chemical Blitzkrieg drill involves the Second Armored Corps, “considered to be the most crucial of the Indian Army’s three principal strike formations tasked with virtually cutting Pakistan in two during a full-fledged war.”
The Nation: A CIA-RAW-Mossad Pseudo-Taliban Countergang
One way to provide the provocation needed to justify a US-Indian attack on Pakistan would be through an increase in terrorist actions attributable to the so-called Taliban. According to the mainstream Pakistani media, the CIA, the Israeli Mossad, and the Indian RAW (Research and Analysis Wing) have created their own version of the Taliban in the form of a terrorist countergang which they control and direct. According to one account, “Central Intelligence Agency (CIA) operatives have infiltrated the Taliban and Al-Qaeda networks, and have created their own Tehrik-e-Taliban Pakistan (TTP) force in order to destabilize Pakistan.” The former Punjab Regional Commander of the Pakistani Inter-Service Intelligence (ISI), retired Brigadier General Aslam Ghuman, commented: “During my visit to the US, I learned that the Israeli spy agency Mossad, in connivance with Indian agency RAW, under the direct supervision of CIA, planned to destabilize Pakistan at any cost.”12 Was this countergang responsible for last week’s double bombing in Waziristan, which killed 80 paramilitary police?
According to the same account, Russian intelligence “disclosed that CIA contractor Raymond Davis and his network had provided Al-Qaeda operatives with chemical, nuclear and biological weapons, so that US installations may be targeted and Pakistan be blamed….” Davis, a JSOC veteran himself, was arrested for the murder of two ISI agents, but then released by the Pakistani government after a suspicious hue and cry by the State Department.
CIA Claims The New Al Qaeda Boss Lives in Waziristan
If the US needs a further pretext for additional raids, it will also be easy to cite the alleged presence in Waziristan of Saif al-Adel, now touted by the CIA as bin Laden’s likely successor as boss of al Qaeda.13It is doubtless convenient for Obama’s aggressive intentions that Saif al-Adel can be claimed to reside so close to what is now the hottest border in the world, and not in Finsbury or Flatbush.
In the wake of the unauthorized May 1 US raid, the Pakistani military chief General Kayani had issued his own warning that similar “misadventures” could not be repeated, while announcing that US personnel inside Pakistan would be sharply reduced. In the estimate of one ISI source, there are currently about 7,000 CIA operatives in country, many of them unknown to the Pakistani government. US-Pakistan intelligence sharing has reportedly been downgraded. In response to Kayani’s moves, the CIA limited hangout operation known as Wikileaks once again showed its real nature by attempting to discredit the Pakistan commander with dubious US cable reports that he had demanded more Predator drone attacks, not fewer, in recent years.
Especially since Obama’s West Point speech, the CIA has used Predator drone attacks to slaughter civilians with the goal of fomenting civil war inside Pakistan, leading to a breakup of the country along the ethnic lines of Punjab, Sind, Baluchistan, and Pushtunistan. The geopolitical goal is to destroy Pakistan’s potential to be the energy corridor between Iran and China. Selig Harrison has emerged as a top US advocate for Baluchistan succession.
Since May 1, six reported US Predator drones attacks have slain some 42 Pakistani civilians, goading public opinion into a frenzy of anti-US hatred. In response, a joint session of the Pakistani parliament voted unanimously on May 14 to demand an end to American missile strikes, calling on the government to cut NATO’s supply line to Afghanistan if the attacks should continue.14 Since the Karachi to Khyber Pass supply line carries as much as two thirds of the supplies needed by the Afghanistan invaders, such a cutoff would cause chaos among the NATO forces. All of this points to the inherent insanity of provoking war with the country your supply line runs through.
US Wants to Use Taliban Boss Mullah Omar Against Pakistan
The State Department dropped all preconditions for negotiating with the Taliban back in February, and the US is now reported by the Washington Post to be talking with envoys of Mullah Omar, the legendary one-eyed leader of the Quetta Shura or Taliban ruling council. It is apparent that the US is offering the Taliban an alliance against Pakistan. US regional envoy Grossman is hostile to the Pakistanis, but when it comes to the Taliban he has been nicknamed “Mr. Reconciliation.”15 By contrast, the US is said to be determined to assassinate the head of the Haqqani network using a Bin Laden-type raid. The Pakistanis are equally determined to keep the Haqqani as an ally.
If China stands behind Pakistan, then Russia might be said to stand behind China. Looking forward to the upcoming June 15 meeting of the Shanghai Cooperation Organization, Chinese President Hu praised Sino-Russian relations as being “at an unprecedented high point,” with an “obvious strategic ingredient.” In a press conference this week, Russian President Medvedev was obliged indirectly to acknowledge that the much-hyped Obama “reset” with Russia had amounted to very little, since the US ABM missile program in Romania and the rest of eastern Europe, so obviously directed against Russia, means that the START treaty is of dubious value, thus raising the specter of a “new Cold War.” Given the NATO assault on Libya, there would be no UN resolution against Syria, said Medvedev. Putin has been right all along, and Medvedev is trying to imitate Putin to salvage some chance of remaining in power.
Are We in July 1914?
The crisis leading to World War I began with the Sarajevo assassinations of June 28, 1914, but the first major declaration of war did not occur until August 1. In the interim month of July 1914, large parts of European public opinion retreated into a dreamlike trance, an idyllic la-la land of elegiac illusion, even as the deadly crisis gathered momentum. Something similar can be seen today. Many Americans fondly imagine that the alleged death of Bin Laden marks the end of the war on terror and the Afghan War. Instead, the Bin Laden operation has clearly ushered in a new strategic emergency. Forces which had opposed the Iraq war, from MSNBC to many left liberals of the peace movement, are variously supporting Obama’s bloody aggression in Libya, or even celebrating him as a more effective warmonger than Bush-Cheney because of his supposed success at the expense of Bin Laden. In reality, if there were ever a time to mobilize to stop a new and wider war, this is it.
This post first appeared on Webster Tarpley’s website.
9 “US refuses to assure it will not act unilaterally,” thenews.jang.com.pk/NewsDetail.aspx?ID=15758
10 “No US assurance on unilateral ops,” nation.com.pk/pakistan-news-newspaper-daily-english-online/Politics/20-May-2011/No-US-assurance-on-unilateral-ops
11 “Getting leaner and meaner? Army practices blitzkrieg to strike hard at enemy,” Times of India, May 10, 2011, articles.timesofindia.indiatimes.com/2011-05-10/india/29527731_1_three-strike-corps-army-and-iaf-transformational
12 “CIA has created own Taliban to wreak terror havoc on Pakistan, claims Pak paper,” ANI, May 12,my.news.yahoo.com/cia-created-own-taliban-wreak-terror-havoc-pakistan-091621821.html
13 “New al-Qaeda chief in North Waziristan,” May 19, 2011
China Calls For International Oversight Of The US Dollar, Suggests Single Global Currency Replace It
China is demanding “international supervision over the U.S. dollar” and says they are looking at the option of creating a new single global currency to replace the dollar altogether.
China has published an article in its stated owned Xinhua news agency that rails against the United States for losing its AAA credit rating and has issued a series of demands to U.S. policy makers and the international community.
China begins by railing against the “arrogance and cynicism from some Western commentators” in regard to the credit rating downgrade of U.S. debt that was issued by China’s Dagong Global credit rating agency last year and goes on to state that they have the right to demand the U.S. address its debt problem to protect the Chinese dollar.
In concluding the article China is calling upon the international community to intervene with a program of “international supervision over the U.S dollar” while indicating they are looking at the option of creating a global currency to replace the dollar altogether.
China has released a scathing op-ed in Xinhua, the official Chinese news agency, in which the authors waste no time to humiliate a “debt-ridden Uncle Sam” following the S&P downgrade, in the most violent surge in the recent war of words between the ascendent and descendent superpowers. Some choice selections: “Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth”, “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets.” It doesnt stop there, “[the US] should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits.” China takes the opportunity to give the US a little lecture on a broken way of life: “All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss.” And lastly, China once again gets back to its pissing contest about whose reserve currency is bigger: “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.” Just wild fun.
There is alleged evidence the United States has no Gold left at Fort Knox. Rumors that the government is providing American land as collateral to China. It is true China has alreadydivested 97% of their US bond holdings. The US government is preparing for the inevitable and even the USDA is on record as predicting food riots in the US later this year. If the US does default. What would stop China, Russia or other debt holders from simply attacking. The answer is very little. The fact is, the collapse of the World’s lone superpower is contrived. It has been planned perfectly and executed flawlessly. Today, the World is on the road to unification. Tony Blair is spearheading the effort to create a One World Church. It is coming folks. The END truly is near. Very soon we will see One number to rule all of us. What will YOU do? – PECAN
After historic downgrade, U.S. must address its chronic debt problems
The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered as its triple A-credit rating was slashed by Standard & Poor’s (S&P) for the first time on Friday.
Though the U.S. Treasury promptly challenged the unprecedented downgrade, many outside the United States believe the credit rating cut is an overdue bill that America has to pay for its own debt addition and the short-sighted political wrangling in Washington.
Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth.
China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets.
To cure its addiction to debts, the United States has to reestablish the common sense principle that one should live within its means.
S&P has already indicated that more credit downgrades may still follow. Thus, if no substantial cuts were made to the U.S. gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way.
Moreover, the spluttering world economic recovery would be very likely to be undermined and fresh rounds of financial turmoil could come back to haunt us all.
The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.
It should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits.
A little self-discipline would not be too uncomfortable for the United States, the world’s largest economy and issuer of international reserve currency, to bear.
Though chances for a full-blown U.S. default are still slim now, the S&P downgrade serves as another warning shot about the long-term sustainability of the U.S. government finances.
International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.
For centuries, it was the exuberant energy and innovation that has sustained America’s role in the world and maintained investors’ confidence in dollar assets. But now, mounting debts and ridiculous political wrestling in Washington have damaged America’s image abroad.
All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss.
The events in this video look more and more likely every day.
Reuters also reported on the Xinhua article and added that China will now be forced to dump the U.S. dollar.
The downgrade of U.S. credit rating is expect to take a major toll on China’s over $2 trillion in investments in the U.S. dollar.
With no where else to put all of that money China will be forced to invest it into a one world currency.
China blasts U.S. over debt problems, calls for dollar oversight
SHANGHAI | Sat Aug 6, 2011 2:35am EDT
(Reuters) – China roundly condemned the United States for its “debt addiction” and “short sighted” political wrangling and said the world needed a new stable global reserve currency.
In a harshly-worded commentary by the official Xinhua news agency on Saturday, China gave its first official comments on the United States losing its gilded AAA long-term credit rating from Standard & Poor’s.
Chinese economists said the U.S. credit rating downgrade posed a great risk to financial markets and they expected it to prompt China, the world’s biggest holder of U.S. Treasuries, to accelerate the diversification of its holdings.
“China will be forced to consider other investments for its reserves. U.S. Treasuries aren’t as safe anymore. There is a class of assets out there that are more risky than AAA, but less risky than AA+. China didn’t consider these investments before, but now it would be forced to do so,” Li said.
Evidence being presented for an upcoming trial in Chicago is raising more questions about the extent the U.S. Justice Department might have contributed to violence in Mexico’s war with drug cartels.
Documents filed on behalf of accused drug lord Jesus Vicente Zambada Niebla say the Justice Department agreed to protect him from prosecution in exchange for information about other drug cartels.
Zambada, 36, is the son of an alleged leader of the Sinaloa drug cartel that operates in Mexico’s western states. The cartel is accused of murders, gunrunning, drug smuggling, bribery of public officials and attacks on police.
The Justice Department gave the Sinaloa cartel’s leaders “carte blanche to continue to smuggle tons of illicit drugs into Chicago and the rest of the United States,” according to pre-trial documents filed by Zambada’s attorneys.
If true, the allegations could revive political outrage against U.S. law enforcement agencies for their tactics against the Mexican drug cartels.
They already suffered criticism from Congress for a program to track gun smugglers called Operation Fast and Furious. The operation allowed thousands of guns to be smuggled into Mexico so the Bureau of Alcohol, Tobacco, Firearms and Explosives could trace them to the cartels that were using them for murder and other acts of violence.
However, some of the guns never were recovered. Others were recovered only after they had been used to commit murder.
The Mexican government responded by accusing U.S. law enforcement agencies of irresponsibly promoting violence across the border. The U.S. Congress investigated.
In the case against Zambada, he claims he cannot be prosecuted under the drug charges against him because of an immunity agreement with the Drug Enforcement Administration. He said he was “betrayed” by U.S. authorities.
He also says the DEA gave the same immunity to Joaquin Guzman Loera, nicknamed El Chapo, or “Shorty.”
Guzman is at the top of the FBI’s “Most Wanted” list and listed in 2010 by Forbes Magazine as one of “The World’s Most Powerful People” for his role as the Sinaloa cartel’s leader.
Guzman still is operating in Mexico after escaping from a maximum security prison in 2001 only days before he was scheduled to be extradited to the United States.
Zambada’s court filings said the DEA agreed to avoid giving information to the Mexican government that could lead to the arrest of the Sinaloa cartel leaders.
Prosecutors are demanding concrete information of the immunity agreement. So far, Zambada’s statements are the only evidence of the collaboration with the DEA.
He was arrested at a Mexico City hotel on March 17, 2009 and later extradited to the United States. His trial is scheduled to begin Feb. 13, 2012.
Zambada is charged with conspiracy to possess and distribute cocaine and heroin. He faces possible life imprisonment. He has pleaded not guilty to the charges.
An indictment accuses Zambada of using “every conceivable means of transport” drugs into the Chicago area, where it was distributed throughout the United States. The indictment says Zambada sent huge amounts of money back to Mexico.
His means of transporting drugs allegedly included a Boeing 747 airplane, cargo ships, submarines, rail cars, trucks, speedboats and fishing boats.
Zambada’s lawyers say all of the alleged crimes occurred between Jan. 1, 2004 and March 19, 2009, which was a period covered by the immunity agreement with the DEA.
Under the immunity agreement, Sinaloa cartel leaders were “informed by agents of the DEA through [their attorney] that United States government agents and/or Mexican authorities were conducting investigations near the home territories of cartel leaders so that the cartel leaders could take appropriate actions to evade investigators,” a July 29 court filing by Zambada’s attorneys says.
It also says that “Mr. Zambada Niebla believed that under the prior agreement, any activities of the Sinaloa cartel, including the kind described in the indictment, were covered by the agreement, and that he was immune from arrest or prosecution.”
On May 29, Mexican federal police in four helicopters attacked a drug cartel in a mountain redoubt. They were rebuffed by heavy fire, including from a massive .50 caliber rifle.
A bullet hole left in one helicopter’s plate glass window is one exhibit in an exhaustive House Committee on Oversight and Government Reform report released Tuesday showing the breadth of a high-stakes, unprecedented, and, ultimately, ill-advised US scheme called “Operation Fast and Furious.”
The .50 caliber bullet hole, the report says, likely came from a gun trafficked via Fast and Furious, an operation to allow nearly 2,000 arms to leave US gunshops via certain traffickers who the US government had identified and thought it could track. The idea was to trace these “straw buyers” to key cartel figures in an attempt to score major gun busts to prove the US was serious about stopping arms trafficking across the border.
Instead, the report alleges that the operation – which one US official has called “a perfect storm of idiocy” – likely allowed hundreds of powerful guns to cross into Mexico, possibly changing the outcome of cartel battles with Mexican police, leading to the deaths of many Mexicans and one federal agent, Border Patrol Agent Brian Terry, and damaging diplomatic relations between the US and Mexico.
The Fast and Furious scandal is still playing out, with hearings in the House Oversight Committee Tuesday. Chairman Rep. Darrell Issa (R) of California says he is intent on finding out how high in the Obama administration knowledge of the operation went.
The report, “Fueling Cartel Violence,” backs reports that leaders in the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) were aware of the operation. But it also names several key Department of Justice officials, such as Assistant Attorney General Lanny Breuer, as “clearly” being aware of the operation – a charge that the Obama administration denies.
According to whistleblowers and key witnesses, however, the real lesson behind Fast and Furious, a two-year operation that ended in January 2011, is how “groupthink” clouded decision-making at the highest levels of government, causing an agency to go against its basic instincts – which is to not allow arms to be trafficked illegally – and consequently contribute, not detract, from border violence.
“These guns weren’t going for a positive cause, they were going for a negative cause,” ATF attaché Carlos Canino told the congressional oversight committee. “The ATF armed the [Sinaloa] cartel. It’s disgusting.”
Despite repeated pushback from some agents and the attaché office in Mexico City, ATF Acting Director Kenneth Melson assessed it as “a good operation,” the report says. According to witnesses, Assistant Attorney General Breuer appeared to cite Fast and Furious in meetings with Mexican officials, saying the US had a major gun-interdiction effort underway out of Phoenix, the report adds.
Where the guns went
The plan was to trace the guns through straw buyers to major cartels, to then build cases and make arrests. But early on, it became evident that tracking the guns had become a problem and that hundreds had made their way across the border and disappeared into cartel gun caches. According to the report, Fast and Furious guns made their way to three prominent Mexican cartels: Sinaloa, El Teo and La Familia.
Those within ATF who raised concerns about the fundamental flaw in the strategy were rebuffed or simply kept in the dark, Daniel Kumor, the ATF’s international affairs chief, told congressional investigators.
At least one witness cited in the report contended knowledge of the tactics in Fast and Furious was widespread in ATF and Justice: “It was common knowledge that they were going down there to be crime guns.”
The report names main Justice Department trial attorney Joe Cooley as saying the movement of vast numbers of guns to Mexico was “an acceptable practice.” Mr. Cooley was Breuer’s main contact with Fast and Furious, according to the report.
The Justice Department has maintained that it never knowingly allowed guns to “walk” to Mexico.
In the report, at least one higher-up fought back against accusations that field officers and ATF attachés in Mexico were raising concerns about the program. Asked if his reports raised concerns about the operation, Bill McMahon, deputy field operations director for ATF, told Congress: “Not that I can remember.”
So far, nobody at the Justice Department has publicly acknowledged a role in the case, and President Obama has said neither he nor Attorney General Eric Holder knew anything about it until the story broke after the murder of Brian Terry in a Sonora, Ariz., gun battle in December 2010. President Obama has ordered the Justice Department inspector general to investigate.
On Tuesday, the Justice Department fought back against the report’s characterizations of Breuer’s involvement.
“The Committee’s report promotes unsubstantiated theories by selectively releasing excerpts of transcripts while ignoring testimony and other information,” writes spokeswoman Tracy Schmaler in an e-mail. “For whatever reason, the leadership of the Committee chose not to release witness testimony that makes clear that operational details relating to this investigation were unknown to senior Department of Justice officials.”
In previous testimony, Acting Director Melson, said the strategy was not “intended to allow the guns to go to suspected straw purchasers without any good faith belief that you could recover those weapons.”
But he also suggested that the field agents had wide latitude. The agents, not the supervisors, “do the tactical stuff,” Melson said. ATF Acting Deputy Director William Hoover added in his testimony that there was no reason for Justice officials to be aware of the tactics, “because I certainly didn’t brief them on the techniques being employed in Fast and Furious.”
The fallout from the operation has taken its toll on lives and diplomatic relations, say congressional investigators.
In October, 2010, cartel members kidnapped Mario Gonzalez Rodriguez, the brother of Chihuahua Attorney General Patricia Gonzalez Rodriguez. A few days later, police found Mr. Rodriguez’s body in a shallow grave. Shortly thereafter, police engaged cartel members in a gun fight, from which several guns were recovered. Two were traced to Operation Fast and Furious.
When Mr. Canino confronted other ATF officials about the need to inform the Mexican government about the link, he says he got “zero instructions,” and that “every time I mentioned it, guys started looking at their cellphones, silence in the room.”
Eight months after the murder, Canino finally told Mexican Attorney General Maricela Morales about the link. “Hijole” (oh my), she said.
There is wild disagreement about what is causing it, but what most people can agree on is that there is something fundamentally wrong with America. The fabric of American society just does not seem to be as strong as it used to. In fact, many would argue that society is coming apart at the seams. Corruption and decay seem to be everywhere. I spend a lot of time in my other articles blaming a lot of this corruption and decay on politicians, bureaucrats and business leaders, but the reality is that they are only part of the story. The truth is that those who are leading us are a reflection of what we have become as a nation. If you got rid of all of our corrupt leaders that would not suddenly “fix” this country. Millions of ordinary Americans have become deeply corrupt as well. The kinds of things that you are about to read about below were very rare in past generations. Society is falling apart all around us and we haven’t even seen the complete collapse of the U.S. economy yet.
A lot of people like to blame the increasingly bizarre behavior of the American people on the economy, but the reality is that things are not nearly as bad as they are eventually going to be. Yes, the U.S. “Misery Index” recently hit a 28 year high. Tens of millions of American families are deeply suffering. Unemployment is rampant and unprecedented numbers of Americans have been getting kicked out of their homes.
But that is nothing compared to what is coming.
So what is America going to look like when true economic suffering comes along?
That is something to think about.
A lot of the items in the list below may seem easy to dismiss as “isolated incidents”. But when you start examining patterns of behavior over an extended period of time, certain trends begin to emerge. America is become a very cruel place. The love of most people seems to be growing cold. What some people are willing to do for a little bit of money or just because someone has “pissed them off” is absolutely stunning. The America of today is fundamentally different from the America of past generations.
We have changed, and not for the better.
The following are 20 signs that the fabric of American society is coming apart at the seams…..
#1 A 17-year-old Florida teen is being accused of killing his parents with a hammer, hiding their bodies in the master bedroom, and then inviting dozens of people over for a massive house party.
#2 What is it with 17-year-olds? Another 17-year-old has been charged with putting a plastic bag over the head of his mother and choking her to death with a belt. His two brothers just stood by and watched while this happened. Apparently the 17-year-old was infuriated because his mother wanted them to play a game of Yahtzee with her.
#3 The largest school cheating scandal in the history of the United States was recently uncovered in the Atlanta area. Dozens of teachers and principles were involved according to a recently released 413 page report….
More than three quarters of the 56 schools investigated cheated on a 2009 standardized state test, with 178 educators implicated, including 38 principals. Eighty-two teachers confessed to erasing students’ answers and correcting tests. The report says widespread cheating has occurred since at least 2001 and that orders to cheat came from the top.
#4 A Vancouver, Washington woman has been charged with trying to sell her newborn baby in front of a Taco Bell. Apparently she was hoping to get somewhere between $500 and $5000 for the baby.
#5 In the United States today, if you don’t show cops “proper respect” there is a good chance that you are going to get tazed. Just check out this disturbing video of an incident that recently happened in Alabama.
#6 A 48-year-old woman in California was recently arrested after she drugged her husband, chopped off his manhood and threw it into the garbage disposal.
#7 In the Dallas area, five people (including a pregnant woman) were trampled while lying on the ground as thousands of desperate people madly dashed to get into line to get on a waiting list for rental assistance vouchers.
#8 A 35-year-old New York man that has been charged with “kidnapping, killing and dismembering an 8-year-old boy” says that he “hears voices” and he has been ordered to undergo a psychological evaluation.
#9 There has been a rash of car robberies in the Atlanta area recently. Just a couple of nights ago, more than 30 cars were broken into in a single night in south Buckhead.
#10 All over the United States this summer, thieves are stealing just about anything they can get their hands on. People are stealing air conditioners, copper wiring, restaurant furniture, metal drain covers and even hair extensions.
#11 In Woodstock, Georgia a 61-year-old man reportedly promised to give a 17-year-old boy money if he would do certain “things” for the man. Well, it turns out that the 61-year-old man ended up setting the teen on fire….
A 61-year-old man has been arrested on charges of aggravated battery, cruelty to children, false imprisonment, and solicitation of sodomy after he set a 17-year-old boy on fire in Woodstock.
#12 In Washington state, a 23-year-old woman is accused of dumping her newborn baby into a trashcan at the hospital. When a nurse finally found the plastic bag with the baby boy inside of it, the child was blue in the face from a lack of oxygen. Fortunately, the baby survived the ordeal.
#13 In another story from Washington state, a man that is being charged with producing child porn is being allowed to watch that porn all he wants while he is in prison because he is acting as his own lawyer and needs to have “access to the evidence“….
So because he’s acting as his own lawyer, he gets full access to the evidence against him. Which means that as he prepares for trial, a private room has been set up in the jail where Gilbert can watch the full 30-hour archives of his own child porn collection.
#14 The National Retail Federation says that “inventory loss” for retail stores was up 11% last year. Most of the “inventory loss” is attributed to such things as shoplifting and employee theft.
#15 In Minnesota recently, a mob of teen girls brutally pummeled a mother and her two daughters until they were black and blue. Apparently the mob of teen girls was enraged over a pair of missing sunglasses.
#16 One of the hot new trends for young males is to play the “knockout game“. In this “game”, a group of young men picks out an innocent bystander and the first one to knock that person out is the “winner”.
#17 Prior to 2011, most Americans had never even heard of “mob robberies“. Today, they have made headline news all over the nation.
#18 In the San Francisco area recently, fire crews and police just stood on the shore and watched as a suicidal 50-year-old man slowly drowned to death in the San Francisco Bay.
#19 Meanwhile, the federal government continues to waste money on some of the most bizarre things imaginable. For example, the federal government actually gave money to the National Institutes of Health to study the effect that the size of “a certain part of the body” has on the sex lives of gay men. Can anyone think of a reason why the federal government would want to throw money away on such frivolous studies when millions of Americans can’t even find jobs right now?
#20 Many believe that a big reason for all of this chaos in America today is the decline of the American family. In 1960, married couples accounted for 75 percent of all households in America. Today, they account for just 48 percent of all households.
Whatever your political or religious philosophy is, hopefully you can agree that America is in trouble. Every single day, there are more shocking revelations about the corruption and the decay that are spreading throughout this nation.
Sadly, instead of coming together to work on some solutions to our growing problems, Americans are becoming more divided than ever.
The mainstream media teaches us that our “opponents” are those that belong to political, social or religious groups that are different from our own. They love to divide us and play us off against each other. Everywhere you look in America, hate is growing.
But hatred is never the answer. Yes, we should always stand up for what we believe is right, but we can do that and still love one another at the same time.
Unfortunately, as America continues to come apart at the seams we are probably going to see this country become even more divided.
United we stand, divided we fall – you make the call America.
Back during the financial crisis of 2008, the American people were told that the largest banks in the United States were “too big to fail” and that was why it was necessary for the federal government to step in and bail them out. The idea was that if several of our biggest banks collapsed at the same time the financial system would not be strong enough to keep things going and economic activity all across America would simply come to a standstill. Congress was told that if the “too big to fail” banks did not receive bailouts that there would be chaos in the streets and this country would plunge into another Great Depression. Since that time, however, essentially no efforts have been made to decentralize the U.S. banking system. Instead, the “too big to fail” banks just keep getting larger and larger and larger. Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets. Today, the top 10 banks control 77 percent of all U.S. banking assets. Unfortunately, these giant banks are also colossal mountains of risk, debt and leverage. They are incredibly unstable and they could start coming apart again at any time. None of the major problems that caused the crash of 2008 have been fixed. In fact, the U.S. banking system is more centralized and more vulnerable today than it ever has been before.
These huge banks are giant financial vacuum cleaners. Over the past couple of decades we have witnessed a financial consolidation in this country that is absolutely unprecedented.
This trend accelerated during the recent financial crisis. While the big boys were receiving massive bailouts, the hundreds of small banks that were failing were either allowed to collapse or they were told that they should find a big bank that was willing to buy them.
As a group, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo held approximately 22 percent of all banking deposits in FDIC-insured institutions back in 2000.
By the middle of 2009 that figure was up to 39 percent.
That is not just a trend – that is a landslide.
Sadly, smaller banks continue to fail in large numbers and the big banks just keep growing and getting more power.
Today, there are more than 1,000 U.S. banks that are on the “unofficial list” of problem banking institutions.
In the absence of fundamental changes, the consolidation of the banking industry is going to continue.
Meanwhile, the “too big to fail” banks are flush with cash and they are getting serious about expanding. The Federal Reserve has been extremely good to the big boys and they are eager to grow.
For example, Citigroup is becoming extremely aggressive about expanding….
Citigroup has been hiring dozens of investment bankers, dialing up advertising and drawing up plans to add several hundred branches worldwide, including more than 200 in major cities across the United States.
Hopefully the big banks will start lending again. The whole idea behind the bailouts and all of the “quantitative easing” that the Federal Reserve did was to get money into the hands of the big banks so that they would lend it out to ordinary Americans and get the economy rolling again.
Well, a funny thing happened. The big banks just sat on a lot of that money.
In particular, what they did was they deposited much of it at the Fed and drew interest on it.
Since 2008, excess reserves parked at the Fed have grown by nearly 1.7 trillion dollars. Just check out the chart posted below….
The American people were promised that TARP and all of the other bailouts would enable the big banks to lend out lots of money which would help get the economy going for ordinary Americans again.
Well, it turns out that in 2009 (the first full year after Congress passed the bailout legislation) U.S. banks posted their sharpest decline in lending since 1942.
Lending has never fully recovered since the crash of 2008. The big financial institutions like Goldman Sachs, Morgan Stanley and JPMorgan Chase have been able to get all the cash that they need, but they have not passed that generosity along to ordinary Americans.
In fact, the biggest U.S. banks have actually reduced small business lending by about 50 percent since the crash of 2008.
That doesn’t sound like what we were promised.
These “too big to fail” banks have been able to borrow gigantic amounts of money from the Fed for next to nothing and yet they still refuse to let credit flow to local communities. Instead, the big banks have found other purposes for all of the super cheap money that they have been getting from the Fed as Ellen Brown recently explained….
It can be very profitable indeed for the big Wall Street banks, but the purpose of the near-zero interest rates was supposed to be to get banks to lend again. Instead, they are, indeed, paying “outrageous bonuses to their top executives;” using the money to engage in the same sort of unregulated speculation that nearly brought down the economy in 2008; buying up smaller banks; or investing this virtually interest-free money in risk-free government bonds, on which taxpayers are paying 2.5 percent interest (more for longer-term securities).
What makes things even worse is that these big banks often pay next to nothing in taxes.
For example, between 2008 and 2010, Wells Fargo made a total profit of 49.37 billion dollars.
Over that same time period, their tax bill was negative 681 million dollars.
Do you understand what that means? Over that 3 year time period, Wells Fargo actually got 681 million dollars back from the U.S. government.
Isn’t that just peachy?
Meanwhile, the big financial giants have not learned their lessons and they continue to do business pretty much as they did it prior to 2008.
The big banks continue to roll up massive amounts of risk, debt and leverage.
Today, Wall Street has become one giant financial casino. More money is made on Wall Street by making side bets (commonly referred to as “derivatives”) than on the investments themselves.
If the bets pay off for the big financial institutions, mind blowing profits can be made. But if the bets go against the big financial institutions (as we saw in 2008), firms can collapse almost overnight.
In fact, it was derivatives that almost brought down AIG. The biggest insurance company in the world almost folded in 2008 because of a whole bunch of really bad bets.
The danger from derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”. It has been estimated that the notional value of the worldwide derivatives market is somewhere in the neighborhood of a quadrillion dollars.
The largest banks have tens of trillions of dollars of exposure to derivatives. When the next great financial collapse happens, derivatives will almost certainly be at the center of it once again. These side bets do not create anything real for the economy – they just make and lose huge amounts of money. We never know when the next great derivatives crisis will strike. Derivatives are essentially like a “sword of Damocles” that perpetually hangs over the U.S. financial system.
When I start talking about derivatives I get a lot of people in the financial community mad at me. On Wall Street today you can bet on just about anything you can imagine. Almost everyone in the financial world has gotten so used to making wild bets that they couldn’t even imagine a world without them. If anyone even tried to put significant limits on futures, options and swaps it would cause Wall Street to throw a hissy fit.
But someday the dominoes are going to start to fall and the house of cards is going to come crashing down. It is an open secret that our financial system is fundamentally unsound. Even a lot of people working on Wall Street will admit that. It is just that people are so busy making such big piles of money that nobody wants the party to stop.
It is only a matter of time until some of these big banks get into a huge amount of trouble again. When that happens, we might really find out whether they are “too big to fail” or whether we could get along just fine without them.
If The U.S. Government Loses Its AAA Rating It Could Potentially Unleash Financial Hell Across The United States
Courtesy of The Economic Collapse Blog
For decades, the U.S. government has had a AAA rating. On the scales used by the big three credit rating agencies, that is the highest credit rating that a government can get. Moody’s scale actually uses lettering that is a little different from the other two big agencies (“Aaa” instead of “AAA”), but you get the point. Right now, the U.S. government is closer than ever to losing its AAA rating. The threat of a rating downgrade is going to continue to grow regardless of how the political theater that we are watching unfold in Washington D.C. plays out. The truth is that the federal government has accumulated a debt that is so vast that it will never be paid back. In fact, we are rapidly approaching the point when this debt will no longer be serviceable. If the credit rating of the U.S. government is not slashed right now, it will be soon enough. In fact, the truth is that the U.S. government is such a financial mess that it should have been done long ago. But whenever the United States does lose its AAA rating, we could potentially see financial hell unleashed because it will also mean that there will almost certainly be a wave of credit rating downgrades from coast to coast, according to https://thesoutherninstitute.com.
As I have written about previously, government debt becomes more painful the higher that interest rates go. When the big credit agencies downgrade the credit rating of a government, that is a signal to investors that they should ask for higher interest rates on debt issued by that government.
This does not always play out in practice (just look at Japan), but nations such as Greece, Portugal and Ireland sure are going through financial hell right now as they deal with reduced credit ratings and soaring interest rates.
Right now, the U.S. government is able to borrow gigantic quantities of money at ridiculously low interest rates. This is the primary reason why the debt disaster predicted by so many in the past has not arrived yet.
If the credit rating of the U.S. government is downgraded, it could finally get investors all over the world to realize that the game is over and that they should be demanding much higher returns on debt issued by the U.S. government. The truth, as U.S. Representative Ron Paul put it recently, is that the U.S. government is already “insolvent” and at some point we are all going to have to face reality….
“Ultimately, the fundamentals show this country is bankrupt.”
So whether or not it happens right now, the truth is that at some point the credit rating of the U.S. government is going to go down and interest rates are going to go up.
Unfortunately, it appears that this might happen sooner rather than later.
Earlier this week, Moody’s Investors Service publicly announced that it would be reviewing our Aaa bond rating for a possible downgrade.
On Thursday, S&P actually went so far as to announce that there is a “50 percent chance” that it will downgrade the credit rating of the U.S. government within the next three months.
S&P has been warning of trouble for some time now. Back on April 18th, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned that a downgrade was likely at some point soon if nothing changed.
If the credit rating of the U.S. government gets slashed and if that results in higher interest costs on the national debt, that is going to make it much harder to balance the budget.
The U.S. government will take in somewhere around 2.2 or 2.3 trillion dollars this year. It will spend somewhere in the neighborhood of 3.5 or 3.6 trillion dollars this year.
Included in that spending is about 400 billion dollars that goes for interest on the national debt.
As I explained in a previous article, if our interest costs double or triple it is going to make it basically impossible to balance the budget under our current system.
If interest rates on U.S. government debt were to rise to moderate levels, we could soon be easily paying a trillion dollars a year just in interest on the national debt.
If interest rates on U.S. government debt were to rise to the levels that Greece, Portugal and Ireland are now facing, it would be beyond catastrophic.
But a reduced credit rating and higher interest rates would not just hurt the finances of the U.S. government.
Any financial institution that is linked to the U.S. government in any way would also probably be downgraded.
This fact was noted in the announcement put out by Moody’s this week….
In conjunction with this action, Moody’s has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks.
We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the government or the affected financial institutions.
Just think of the financial carnage that would cause.
Also, check out what one Bloomberg article had to say about the potential cascading effects of a credit rating downgrade for the U.S. government….
At least 7,000 top-rated municipal credits would have their ratings cut if the U.S. government loses its Aaa grade, Moody’s Investors Service said.
An “automatic” downgrade affecting $130 billion in municipal debt directly linked to the U.S. would occur if the federal level is reduced, Moody’s said yesterday in a report. Additionally, top-rated securities with no direct links to the national government will be reviewed for similar action.
But the nightmare would not end there. The truth is that the credit ratings of large numbers of state and local governments from coast to coast would likely be reviewed and downgraded as well. Right now, many state and local governments are scratching and clawing in a desperate attempt to survive financially, and a significant rise in interest costs would be enough to wipe many of them out.
The ripple effects of a U.S. government credit downgrade would be endless.
A lot of people argue that if the federal government ran a balanced budget from now on none of this would matter.
Unfortunately, that is not true.
At this point, a very high percentage of U.S. government debt is short-term debt. That means that gigantic amounts of debt must be “rolled over” each year in addition to any new debt that we take on. So even if interest rates rise significantly on just the existing debt that we have it is going to be a total nightmare.
And make no mistake, whether it happens now or later a collapse of U.S. government finances is coming.
David Murrin, the chief investment officer at Emergent Asset Management, recently told CNBC the following….
“It’s inevitable that the U.S. will default—it’s essentially an empire which is overextended and in decline—and that its financial system will go with it”
Right now it is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course. We are on a runaway train that is heading straight for a brick wall.
Europe is also a complete financial wreck. The sovereign debt crisis over in the EU continues to grow worse by the day and there is no end in sight.
If the U.S. collapses, Europe is not strong enough to save it. If Europe collapses, the U.S. is not strong enough to save it.
We really are entering an unprecedented time in world history. We are on the verge of the first truly global financial disaster.
It is going to be interesting to see which major currency crashes and burns first. Some think that it will be the euro. Others think that it will be the dollar.
In any event, the reality is that the current global financial system is not sustainable. The folks that are in charge can try to keep things together for as long as possible, but at some point the dominoes are going to start to fall and the house of cards is going to crash.
We have entered a time when there is going to be financial crisis after financial crisis. Even if the EU and the U.S. government can somehow fix things for the moment, more problems are going to be just around the corner.
All over America, restlessness and frustration are growing. It has now been almost three years since the great financial crash of 2008, and yet the U.S. economy is still a complete and total mess. In fact, there are all sorts of signs that things are about to get even worse, and the American people are just about fed up. Virtually every major poll, survey and measure of consumer confidence shows that the American people are becoming more pessimistic about the economy. Millions of hard working Americans that worked their fingers to the bone for their employers and that did everything “right” are sitting at home on their couches tonight staring blankly at the television. Many of them still have a hard time believing that they were laid off and that there is nobody out there that wants to give them a good job. There are millions of other Americans that won’t get much sleep tonight because they will spend much of the night rolling around in bed wondering how they are possibly going to be able to pay the mortgage. We have never faced such an extended economic downturn in modern U.S. history, and a lot of people are starting to freak out about the condition of the economy. As Gerald Celente likes to say: “When people lose everything and have nothing left to lose – they lose it.”
Every single month, the number of good jobs continues to go down. Wall Street actually rewards companies that have a good “outsourcing strategy“. As I have written about previously, a growing percentage of the jobs that are being “created” these days are very low paying jobs. But you can’t support a family, pay a mortgage or even afford decent health insurance on what you would make stocking shelves at Target or passing out buckets of chicken for KFC.
The American people keep waiting for “hope” and “change” to show up, but all they get instead are more helpings of “despair” and “frustration“.
Sadly, most Americans still cling to the hope that if the “next election” will just turn out the right way that things will be okay. But the truth is that things seem to stay on pretty much the same course no matter who we put into office.
For many years the status quo seemed to be okay for most people, but now we are starting to reap the results of the economic seeds that we have sown.
Now our economic decline is starting to accelerate and people are starting to panic. Most Americans may not know why all of this is happening, but what many of them do know is that something in their gut is telling them that things have gone terribly, terribly wrong somehow.
The following are 10 signs that the American people are starting to freak out about the condition of the economy….
#1 Things have already gotten so bad that Americans will literally trample one another just to get on a waiting list for rental assistance vouchers. Just check out the following excerpt from a local news report about a recent incident in Texas….
At least eight people were hurt Thursday morning while scrambling to line up for a limited number of Dallas County rental vouchers — after waiting for hours in their cars.
People lined up Thursday morning to apply for Dallas County Section 8 housing vouchers. Dallas County sheriff’s spokesman Kim Leach estimated the crowd at about 5,000.
Video of this incident is posted below. One of the people that was trampled was a pregnant woman….
#2 Almost every measurement of consumer confidence is going down. For example, the Conference Board’s consumer confidence index fell from 61.7 in May to 58.5 in June.
#3 The Reuters/University of Michigan consumer sentiment index has fallen to 63.8 after being at 71.5 in June. It is now the lowest that it has been since the last recession “ended”.
#4 The Rasmussen Consumer Index is down 9 points from a month ago.
#5 A recent poll taken by Rasmussen found that 68 percent of Americans believe that we are actually in a recession right now.
#6 According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%.
#7 In many areas of the United States this summer, just about anything that is not bolted down is being stolen by people that are desperate for money.
#8 According to one recent poll, 39 percent of Americans believe that the U.S. economy has now entered a “permanent decline”.
#9 Another recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.
#10 According to a brand new Reuters/Ipsos poll, 63 percent of Americans believe that the nation is on the wrong track. That figure is three percent higher than it was last month.
One of the only things preventing chaos from breaking out in the streets of our cities from coast to coast is government handouts.
Today, almost 20 percent of all personal income in the United States comes from benefits provided by the federal government.
You don’t believe this? Just check out what the New York Times recently had to say….
Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics.
There are tens of millions of Americans that are living “on the edge”, but at least the massive government handout programs are enabling most of them to survive.
So what happens when the checks from the government stop coming?
Look, I am not advocating that the “welfare society” that we have become is a good thing. Today, Americans receive more in direct government benefits than they pay in taxes. That is not even close to sustainable.
What I am pointing out is that tens of millions of Americans that are deeply suffering are currently being pacified by these government handouts. Once the handouts are cut significantly or taken away completely it is going to unleash a lot of anger and frustration.
Of course what the American people really need are good jobs that will give them dignity and allow them to provide for their families, but millions of those keep getting shipped out of the country.
So the only thing that millions of Americans still have to hang on to are their government benefits. Once that changes a whole lot of people are going to throw a fit.
In fact, we are already seeing some really bizarre behavior across the United States. In many areas of the country we are literally watching society crumble right in front of our very eyes.
But not all Americans will resort to lawless behavior. In fact, there are a lot of really good, hard working people out there that this economy has left behind.
There are some people that have put in decades of hard work only to see their dreams shrivel up over the past few years.
Some of the stories people send me are absolutely heartbreaking. I have looked at each and every comment that has been left on The Economic Collapse over the past couple of years. Needless to say, it has taken a huge investment of my time to go through more than 20,000 comments. But in the process I have gotten a very good idea of what people are going through across the nation.
So how badly are people hurting? Well, a reader identified as “Anna44” recently shared with us what some of her family members have been going through in this economy….
My B-I-L was a dealership owner/manager who worked long hours over 38 years and had to close his doors when Saturn was dissolved. When his dealership went under, 72 others lost their job. That’s 72 families who took a hit. He lost his home, everything. A few of his former employees lost their homes as well eventually. They were not lazy or WORTHLESS. It took him a year and a half to finally find something, but now he lives in a hotel unable to qualify for a house or apartment. This is an educated man who competed nationwide for top dog and got it more then once. His biggest fault? He’s almost 60, young enough to need the work, but too old to be hired.
As for my husband- 26 years AF officer, handling millions & billions on International & National levels has just entered his 7th month of unemployment. Two tours abroad- lazy he is NOT. He doesn’t qualify for unemployment, nor is he counted because he gets a retirement check. He wants and needs to work- yet there is little out there. If he doesn’t find something soon, we too will lose the home we sunk every cent into after 20 years of saving for it!
All across America tonight there are similar stories. People have done everything “right” all of their lives and they are frustrated that now they have been pushed to the edge of poverty by this economy.
Unfortunately, it looks like things may soon get even worse. Economist David Rosenberg recently told CNBC the following….
“We’re just one small shock away from the economy going back into recession.”
That is not what the American people want to hear.
What they want to hear is that things are about to get better.
What they want to hear is that things are going to get back to normal soon.
Sadly, that is just not going to be the case.
The economy is going to get worse and worse, and the frustration and the anger of the American people is just going to continue to grow.
America Is Rapidly Bleeding Wealth And Jobs: 28 Statistics About The Gutting Of The U.S. Economy That Will Blow Your Mind
Red alert! Over 40 billion dollars of America’s national wealth is being shipped out of the country every single month. Our economy is being gutted and we are bleeding wealth and we are bleeding jobs. This is a distress call. Is anyone listening? Thousands of our factories and millions of our jobs are being shipped overseas. Over the past decade over 6 trillion dollars have been transferred into the hands of foreigners. Our national government is so broke that they constantly have to go and beg those foreigners to lend us back some of that money in order to finance our exploding debt. The number of good jobs continues to decline and there are millions upon millions of my countrymen that are unemployed. Can anybody help us? Mayday! Mayday! Mayday!
Sadly, the vast majority of Americans really are dead asleep on this issue. They just continue to run out to the big retail stores and fill their carts with products made in China and yet they seem completely bewildered by the fact that the number of good jobs continues to decline.
Over the past decade, the number of middle class jobs has fallen by about ten percent. There is a reason for this. America is becoming poorer. The economic pie is shrinking. When we ship 40 to 50 billion dollars into the hands of foreigners every single month, that means that there is a lot less wealth for all of us to divide up.
Every single month, the U.S. ships in massive amounts of foreign oil and massive amounts of cheap plastic trinkets from places such as China which we greedily consume. In return, we send them a giant pile of money.
This happens month after month after month. You see, we always need more of their oil and more of their plastic trinkets. They are more than happy to keep getting richer and richer.
Meanwhile, thousands of our factories and millions of our jobs continue to be sent overseas where labor is far cheaper. Thanks to globalization, American workers much now directly compete for jobs with workers that are willing to work for less than a dollar an hour on the other side of the globe.
The dismantling of our economy is happening right in front of our eyes and most of our politicians are not doing a thing to stop it.
The following are 28 statistics about the gutting of the U.S. economy that will blow your mind….
#1 According to the U.S. Department of Commerce, the U.S. trade deficit for the month of March was $48.2 billion. That was up from $45.4 billion in February.
#2 The United States has had a negative trade balance every single year since 1976.
#3 Between December 2000 and December 2010, the U.S. ran a total trade deficit of 6.1 trillion dollars.
#4 The U.S. trade deficit with China in March was $18.1 billion. This is money that is not going to support U.S. businesses and U.S. workers. If that money was actually going to our businesses and to our workers it would increase tax revenues.
#5 Since China entered the WTO in 2001, the U.S. trade deficit with China has grown by an average of 18% per year.
#6 During 2010, we spent $365 billion on goods and services from China while they only spent $92 billion on goods and services from us.
#7 Since 2005, Americans have gobbled up Chinese products and services totaling $1.1 trillion, but the Chinese have only spent $272 billion on American goods and services.
#8 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.
#9 According to a recent report from the Economic Policy Institute, between 2001 and 2008 the United States lost 2.4 million jobs due to the growing trade deficit with China. Every single state in America experienced a net job loss due to our trade deficit with China during that time period.
#10 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.
#11 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.
#12 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.
#13 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.
#14 China produced 19.8 percent of all the goods consumed in the world last year. The United States only produced 19.4 percent.
#15 According to the IMF, China is going to have the largest economy in the world by 2016.
#16 Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.
#17 Back in 1998, the United States had 25 percent of the world’s high tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.
#18 Manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.
#19 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion.
#20 Last year, China produced 11 times as much steel as the United States did.
#21 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe? Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.
#22 In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.
#23 According to one recent study, China could become the global leader in patent filings by next year.
#24 China is now the number one supplier of components that are critical to the operation of U.S. defense systems.
#25 In 2010, the number one U.S. export to China was “scrap and trash”.
#26 Thanks to our exploding trade deficit with China, the Chinese have accumulated nearly 3 trillion dollars in foreign currency reserves. That is the largest stockpile of foreign currency reserves on the entire globe.
#27 The amount of the trade deficit that can be attributed to foreign oil is at the highest level that we have seen since 2008.
#28 It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States.
Our dependence on foreign oil is literally bleeding us dry. Once we have burned up all of that foreign oil in our cars we are left with nothing. But the people we bought all that oil from are still sitting on all that cash.
As we ship our wealth, our factories and our jobs out of the country, America is getting poorer.
That means that individual Americans are getting poorer.
According to one estimate, between 1999 and 2009 real median household income in the United States declined by 5.0%.
Today, over 44 million Americans are on food stamps and over 47 million Americans are living in poverty. This is not an accident and it didn’t happen overnight. Our economic policies are absolutely killing us.
This economic downturn has hit men particularly hard. As thousands of manufacturing facilities have shut down, millions of blue collar workers have been dumped out on the street. Most blue collar workers are men.
Since January 2008, male employment has declined by 4,932,000 jobs.
During 2010, only 66.8% of American men had jobs, which was a new all-time record low.
There are a lot of blue collar workers that are sitting at home on their couches today that are still trying to figure out what in the world happened to their good jobs.
There are now more than 6 million Americans that the government says have given up looking for work completely. Most of them are men.
Sadly, in our society today most of the people that pursue higher education are women. Today, 61% of all college degrees are earned by women.
Not that a college education is a ticket to success in today’s world. According to the Economic Policy Institute, the unemployment rate for college graduates younger than 25 years old was 9.3 percent in 2010.
In fact, the majority of all of our college graduates end up running home to Mom and Dad after they graduate.
According to a poll conducted by Twentysomething Inc., 85 percent of U.S. college graduates will move back home with their parents (at least initially) after graduation. That is up from 67 percent back in 2006.
The truth is that there are not nearly enough jobs for everyone and that is a huge problem.
We have become a nation that consumes far more wealth than it produces. That is a recipe for disaster any way that you cut it.
Until we have some fundamental changes to our trade policy, these long-term trends are just going to continue. We are going to continue to bleed wealth, bleed factories and bleed jobs.
Tax revenues go down when factories shut down and when American workers are sitting at home on their couches. This is a huge factor in why our federal, state and local governments are drowning in debt. We have got to have more wealth creation inside this country or else we are going to continue to see our government debt problems get even worse.
If you walk into just about any major retail store today, what do you find?
You find loads and loads of products that have been made somewhere else.
I hope that you are enjoying “the low, low prices” because they come at a very high cost.
We once had the greatest economic machine in the history of the world but now it is being gutted like a fish.
If we continue on the road that we are on, the entire country is eventually going to become just like Detroit.
Even Ben Stein Is Warning That An Economic Collapse Is Coming
He sure has come a long way since “Ferris Bueller’s Day Off”. During a recent television segment for CBS, Ben Stein declared that “the tea leaves are ominous” and he warned that an economic collapse may be coming. In particular, Ben Stein is deeply concerned about inflation. During his recent appearance on CBS, Stein proclaimed that the Federal Reserve is “just shoving money out the door as fast as it can” and that this could have horrific consequences for the U.S. financial system. Sadly, Ben Stein is exactly right on this point. The Federal Reserve has already injected enough money into the financial system to create an inflationary disaster. Fortunately most of this liquidity is still being held by the banks (this will be further explored below), but once all of that money starts getting released into the financial system it is going to unleash economic chaos.
In the video that you are about to watch, Ben Stein states that “when serious inflation hits, it hits everyone”.
And that is absolutely true. Inflation is a hidden tax on ever single dollar that each one of us holds. Nobody can cheat that hidden tax and nobody can escape from it.
You may have noticed that the price of gas is going up.
In fact, just the other day UPI reported that the price of gas at one station in the Washington D.C. area was up to 5 dollars a gallon.
Can it get much worse?
Well, actually yes it can.
Richard Hastings, a strategist at Global Hunter Securities, recently told CNBC that he believes that we could potentially see $6 gas at some point this summer.
Do you think that a lot of American families will rethink their summer vacations if that happens?
Perhaps Americans will just fly instead.
Well, that is rapidly becoming more expensive as well. Just check out what one recent CNN article had to say about rising airfares….
Late Tuesday, Southwest Airlines raised all of its round-trip fares by $10. Delta (DAL, Fortune 500) initiated this latest round of price increases on Monday, and as of midday Wednesday American Airlines (AMR, Fortune 500), JetBlue (JBLU) and United Airlines (UAL) had matched it.
As Ben Stein also notes in the video below, food prices are soaring as well. Rampant money printing by the Federal Reserve and serious crop problems all over the globe have created a “perfect storm” for agricultural commodities. In the video, Stein sounds downright apocalyptic as he describes crop failures around the world….
But now, we are getting serious crop shortfalls in China – an enormously important agricultural producer and consumer. U.S. crop forecasts are also disappointing. There are huge problems in Australia, South America, and Russia. Corn, wheat, rice and other foodstuff prices are just going wild.
And you know what?
Ben Stein is right.
In a recent article about the global food crisis, I detailed some of the agricultural commodity price increases that we have seen….
*According to the World Bank, the global price of food has risen 36% over the past 12 months.
*The commodity price of wheat has approximately doubled since last summer.
*The commodity price of corn has also about doubled since last summer.
*The commodity price of soybeans is up about 50% since last June.
*The commodity price of orange juice has doubled since 2009.
But it isn’t just food and gas that are going up. The value of virtually all “hard assets” is going up.
Investors are running to precious metals such as gold and silver in a desperate attempt to preserve their wealth. Gold and silver have been absolutely skyrocketing. The price of gold set another brand new all-time record high this week. The price of silver hit a 31-year high today.
So why is this happening?
One of the biggest reasons for all of this is that the Federal Reserve has been flooding the system with new money. In the video below, Ben Stein points to quantitative easing as the primary reason why we are seeing so much inflation….
But most important of all, the Fed is just shoving money out the door as fast as it can, creating piles of cash in banks.
The Federal Reserve had hoped that economic growth would be sparked by all of this new cash, but that is only happening to a minimal degree.
Instead, what Ben Stein believes all of this new money is going to bring about is a situation known as “stagflation”.
Do you remember the 1970s and the “misery index”?
Well, we seem to be headed for a repeat of those days.
In a previous article, I defined stagflation….
Stagflation exists when inflation and unemployment are both at high levels at the same time.
Up to this point, we have had high unemployment but relatively low levels of inflation.
But now we are going to get to enjoy high unemployment and high inflation at the same time.
Video of Ben Stein’s recent appearance on CBS is posted below. You can read a transcript of his remarks here. It is amazing that a mainstream news outlet would allow this much truth to get out….
Look, the reality is that you cannot pump this much money into the financial system without there eventually being very serious consequences.
For decades the Federal Reserve has been systematically debasing the U.S. dollar, but what the Fed has been doing to the money supply over the past couple of years is absolutely unprecedented. Just check out the chart below….
So why hasn’t all of this new cash caused chaos in the economy already?
Well, because most of it is still trapped in the financial system. Banks have been reluctant to loan it out. Instead, they seem content to keep most of it on reserve at the Fed.
But if all of this new money starts leaking out into the economy it is going to drive prices up. When you have lots more money chasing roughly the same number of goods and services it is inevitable that inflation will result.
Robert Wenzel of EconomicPolicyJournal.com believes that more quantitative easing is not even necessary to turn the U.S. economy into a hyperinflationary nightmare. In fact, Wenzel says that there are enough excess reserves at the Fed right now to turn us into another Zimbabwe….
With over $1.4 TRILLION in excess reserves, Bernanke never has to resort to QE style monetary operations ever again, to print money. If those excess reserves leak into the system, Bernanke has enough sitting there to make Zimbabwe look like a model of prudent money management. As per usual, Bernanke has most of the media and Fed watchers looking at the wrong card.
Forget about QE3, keep your eye on excess reserves. Excess reserves are funds that are not in the system bidding up prices, but when they enter the system by banks using them to make loans, have the potential to result in a multiple of their size, when they impact the money supply. Because of this potential for multiple size impact, excess reserve entering the economy are considered high-powered money.
We would have never even been in this position if we had never allowed the Federal Reserve to be created and had never gotten 14 trillion dollars in debt. But now America has a debt problem that can never be solved under the current system. We are locked into a debt spiral from which there is no escape.
Last year, the U.S. government spent more on interest on the national debt than on the following departments combined….
*The Department of Health and Human Services
*The Department of Energy
*The Department of Veterans Affairs
*The Department of Justice
*The Department of Homeland Security
*The Department of Agriculture
*The Treasury Department
*The Department of Labor
But right now the U.S. is still able to borrow tons of money at super low interest rates.
So what happens if interest rates go up?
It could potentially be catastrophic.
That is why the decision by S&P to downgrade its outlook on U.S. government debt was such a big thing the other day. The U.S. still has a “AAA” rating, but S&P is warning that the AAA rating is in danger.
So what would it mean if the U.S. lost the AAA rating that it currently holds?
The Washington Post recently described it this way….
A credit rating downgrade for the United States would spell even more financial trouble for the U.S. government, hampering its ability to borrow money as investors demand higher yields to make up for the increased risk. That would cause its national debt to balloon further and increase the need to hike taxes or make even more painful cuts in spending.
But the U.S. government continues to borrow money like there is no tomorrow and Ben Bernanke and his friends at the Fed continue to recklessly print money.
As bad as things may seem for many of you right now, the truth is that what we are experiencing at the moment is a “false bubble of prosperity”. Things are eventually going to get much, much worse.
Enjoy this time of economic peace and stability while you still can. Our leaders have absolutely destroyed our economic future and we are going to want to have some good memories to hold on to while we are living through economic hell in the years ahead.
The United States is in the middle of a devastating long-term economic decline and it is getting really hard to deny it. Over the past year I have included literally thousands of depressing statistics in my articles about the U.S. economy. I have done this in order to make an overwhelming case that the U.S. economy is in deep decline and is dying a little bit more every single day. Until we understand exactly how bad our problems are we will never be willing to accept the solutions. The truth is that our leaders have absolutely wrecked the greatest economic machine that the world has ever seen. Most Americans just assume that we will always experience overwhelming prosperity, but that is not anywhere close to the truth. We are not guaranteed anything. Our manufacturing base has been gutted, the number of jobs is declining, more Americans are dependent on government handouts than ever before, our dollar is dying and as a nation we are absolutely drowning in debt. The economists that are trumpeting an “economic recovery” and that are declaring that the U.S. economy will soon be “better than ever” are delusional. We really are steamrolling toward a complete and total economic collapse and our leaders are doing nothing to stop it.
The following are 24 more signs of economic decline in America. Hopefully you will not get too depressed as you read them….
#1 On Monday, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned the U.S. that it could soon lose its AAA rating. This is yet another sign that the rest of the world is losing faith in the U.S. dollar and in U.S. Treasuries.
#2 China has announced that they are going to be reducing their holdings of U.S. dollars. In fact, there are persistent rumors that this has already been happening.
#3 Hedge fund manager Dennis Gartman says that “panic dollar selling is setting in” and that the U.S. dollar could be in for a huge decline.
#4 The biggest bond fund in the world, PIMCO, is now shorting U.S. government bonds.
#5 This cruel economy is causing “ghost towns” to appear all across the United States. There are quite a few counties across the nation that now have home vacancy rates of over 50%.
#6 There are now about 7.25 million less jobs in America than when the recession began back in 2007.
#7 The average American family is having a really tough time right now. Only 45.4% of Americans had a job during 2010. The last time the employment level was that low was back in 1983.
#8 Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
#9 According to a new report from the AFL-CIO, the average CEO made 343 times more money than the average American did last year.
#10 Gas prices reached five dollars per gallon at a gas station in Washington, DC on April 19th, 2011. Could we see $6 gas soon?
#11 Over the past 12 months the average price of gasoline in the United States has gone up by about 30%.
#12 Due to rising fuel prices, American Airlines lost a staggering $436 million during the first quarter of 2011.
#13 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes.
#14 Approximately one out of every four dollars that the U.S. government borrows goes to pay the interest on the national debt.
#15 Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
#16 Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.
#17 Average household debt in the United States has now reached a level of 136% of average household income. In China, average household debt is only 17% of average household income.
#18 The average American now spends approximately 23 percent of his or her income on food and gas.
#19 In a recent survey conducted by Deloitte Consulting, 74 percent of Americans said that they planned to slow down their spending in coming months due to rising prices.
#20 59 percent of all Americans now receive money from the federal government in one form or another.
#21 According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.
#22 As the economy continues to collapse, frustration among young people will continue to grow and we will see more seemingly “random acts of violence”. One shocking example of this happened in the Atlanta area recently. The following is how a local Atlanta newspaper described the attack….
Roughly two dozen teens, chanting the name of a well-known Atlanta gang, brought mob rule to MARTA early Sunday morning, overwhelming nervous passengers and assaulting two Delta flight attendants.
#23 Some Americans have become so desperate for cash that they are literally popping the gold teeth right out of their mouths and selling them to pawn shops.
#24 As the economy has declined, the American people have been gobbling up larger and larger amounts of antidepressants and other prescription drugs. In fact, the American people spent 60 billion dollars more on prescription drugs in 2010 than they did in 2005.
Why Investors Are Buying Silver As If There Is No Tomorrow
The American Dream
April 23, 2011
The price of silver has been absolutely exploding lately. It has reached heights not seen since the Hunt Brothers attempted to corner the silver market over three decades ago. But this time there are no Hunt Brothers to blame for the stunning rise in the price of silver. So exactly why are investors buying silver as if there is no tomorrow right now? Well, the truth is that there are a lot of reasons. Investors have been flocking to precious metals such as gold and silver as the value of paper currencies has declined. The euro is incredibly weak right now and the U.S. dollar appears to be on the verge of a major collapse. In fact, the entire financial system is highly unstable right now. In such an environment, investors seek some place safe to park their money, and right now gold and silver are seen as safe harbors. But gold and silver have not been going up in price at the same pace. So why is silver outperforming gold so significantly?
The price of silver has increased by more than 150% over the past 12 months. But the price of gold has only gone up about 30%.
If you invested $100 in the S&P 500 ten years ago it would be worth about $107.48 today.
If you invested $100 in gold ten years ago it would be worth about $569 today.
If you invested $100 in silver ten years ago it would be worth about $1037 today.
Clearly something is going on with silver.
Many people are convinced that this is part of a correction that is long overdue. Geologists tell us that there is approximately 17.5 times as much silver in the crust of the earth as there is gold. But today the price of an ounce of gold is about 30 times higher than the price of an ounce of silver.
That would seem to indicate that the price of silver still has a lot of room to grow relative to the price of gold.
In addition, silver is a key industrial commodity and it is constantly being used up. Today, silver is used in a vast array of products and medicines. The following is an excerpt from an official U.S. government report that describes just some of the ways silver is used in society today….
Silver’s traditional use categories include coins and medals, industrial applications, jewelry and silverware, and photography. The physical properties of silver include ductility, electrical conductivity, malleability, and reflectivity. The demand for silver in industrial applications continues to increase and includes use of silver in bandages for wound care, batteries, brazing and soldering, in catalytic converters in automobiles, in cell phone covers to reduce the spread of bacteria, in clothing to minimize odor, electronics and circuit boards, electroplating, hardening bearings, inks, mirrors, solar cells, water purification, and wood treatment to resist mold. Silver was used for miniature antennas in Radio Frequency Identification Devices (RFIDs) that were used in casino chips, freeway toll transponders, gasoline speed purchase devices, passports, and on packages to keep track of inventory shipments. Mercury and silver, the main components of dental amalgam, are biocides and their use in amalgam inhibits recurrent decay.
Estimates vary, but many experts are now projecting that at current consumption rates we will run out of silver at some point during this century.
A d v e r t i s e m e n t
On the other hand, we are not facing a similar problem with gold. Gold, because it has traditionally been so expensive, is not used in many products at all. The total amount of gold on earth just continues to increase each year.
Silver is also considered to be a lot more accessible for smaller investors. Not many average Americans can afford to do much investing in gold because it is so expensive. But just about anyone can afford a few ounces of silver.
As investors around the globe have watched the Federal Reserve create endless amounts of money and as they have watched the U.S. government borrow endless amounts of money the hunger for precious metals has grown.
The following is what John Browne had to say about the current situation in a recent commentary….
Today, with the Federal Reserve treating the greenback as a never ending lottery ticket for deficit spending politicians, many investors feel the U.S. dollar is good for nothing. As a result there is an increasing international pressure to remove the U.S. dollar’s reserve status. Given that there is no widely accepted alternative to the dollar (the euro has many problems of its own), this is creating fears of an international currency crisis, which has fueled interest in precious metals.
As the U.S. dollar and other paper currencies continue to decline, the demand for precious metals such as gold and silver is only going to increase.
Most investors are not stupid. They know that the European debt crisis is approaching a meltdown. They know that U.S. government debt is not sustainable. They know that all of the paper currencies around the world that are backed by nothing will continue to decline in value just like they always have. All of the major central banks have been recklessly printing money. In such an environment it only makes sense to put your wealth into hard assets.
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But there is another layer to all of this. Many now view investing in precious metals as a way to rebel against the Federal Reserve and other central banks. All over the globe people are waking up to how unjust the banking system is. Since central banks such as the Federal Reserve are almost completely unaccountable politically, many individuals have sought other ways to protest the system. Getting out of “Federal Reserve Notes” and into precious metals is one small way to do that.
In any event, what is clear is that the price of silver is likely to continue to go up over the long-term. Silver is used in thousands of products and we are slowly running out of it. Meanwhile, the central banks of the world are absolutely flooding the globe with paper currency. What all of that adds up to is a much higher price for silver.