PRESIDENT OBAMA’S ELECTION NIGHT VICTORY SPEECH – NOVEMBER 6, 2012 IN CHICAGO, ILLINOIS
November 11, 2012 5 Comments
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AMERICANS ELECT OBAMA TO A SECOND TERM AS PRESIDENT
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ELECTION 2012: IT DOESN’T MATTER WHO WINS
On October 19, 2011, Lionel said that regardless of what the mainstream media says, it really doesn’t matter who wins the 2012 Presidential election. The script was written long ago to make the United States part of a One World Government system.
NO MATTER WHO WINS THE U.S. PRESIDENCY, THE 2012 ELECTION WILL MARK THE BEGINNING OF THE END OF AMERICA AS THE WORLD’S LARGEST ECONOMY, AS AMERICA’S ECONOMY COLLAPSES, THE DOLLAR ENDS, AND CHINA’S ECONOMY SURPASSES THE UNITED STATES IN 2016.
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TEN DIRE CONSEQUENCES OF OBAMA’S RE-ELECTION VICTORY
NOVEMBER 11, 2012
by Mike Adams, the Health Ranger
(NaturalNews) What does an Obama re-election mean for the next four years in America? Now that he’s in his second and last term, of course, Obama no longer needs to restrain his actions according to popularity. He can simply unleash any desirable executive order and rule by decree, bypassing Congress as he has frequently promised to do.
This puts America in a very dangerous situation, given Obama’s well-demonstrated desire to destroy freedom and liberty in this nation. Remember: Obama is anti health freedom, anti food freedom, anti GMO labeling, anti medical freedom and anti farm freedom. He’s the one who issued an executive order claiming government ownership over all farms and farm equipment, in case you forgot that little fact.
He’s also the guy who just recently issued an executive order merging Homeland Security with local corporate entities to grant the executive branch of government a power monopoly over the nation, bypassing the courts and Congress. You probably haven’t even heard about that one, because he secretly signed it during Hurricane Sandy.
Given Obama’s atrocious track record on freedom during his first four years in the White House, here are my top 10 predictions for the next four (if America even lasts that long before ripping itself apart):
#1) Huge expansion of TSA and the surveillance state
Watch for TSA to expand its occupation of America by setting up checkpoints on roadways, sporting events, malls and “surprise” locations. Expect to see TSA agents become even more belligerent and lawless as they ramp up their sexual molestation of innocent victims.
#2) Expansion of secret arrests of American citizens
Obama secretly signed the NDAA, legalizing the secret arrests of U.S. citizens while denying them due process. Obama also authorized secret “kill lists” that claim to authorize the U.S. government to assassinate targeted individuals.
With his re-election in place, expect Obama to start issuing a mass of “kill orders” that will even start targeting political opponents.
#3) Acceleration of national debt blowout and endless fiat currency creation
Under Obama, the national debt experienced a massive blowout where Obama added trillions of dollars to the existing debt: http://www.USdebtclock.org
Right now, Obama is overseeing a trillion dollars a year in additional debt — an amount that simply cannot be sustained without running smack into a financial catastrophe. It now appears that financial collapse it going to occur under Obama, not Romney.
#4) Rapid expansion of GMOs and USDA collusion
Monsanto and the biotech corporations have thrived under the Obama administration thanks to USDA collusion and scientific fraud.
Over the next four years, expect GMOs to dominate the U.S. food supply while the Obama White House rejects any effort to try to label GMOs on a national basis.
#5) Increasingly dictatorial government health care
Obamacare will grow like a cancer, pushing Americans into mandatory vaccinations that inject children with mercury, formaldehyde, MSG and aluminum.
Look for the Obama administration to wage even more wars against raw milk freedom, farm freedom and food freedom, all while requiring yet more foods to be pasteurized or fumigated under the guise of “food safety.”
#6) Immediate surge in sales of guns and ammo
Obama has promised to try to destroy the Second Amendment and deny Americans the liberty to own firearms. With his re-election, expect to see a massive surge in gun sales as more people attempt to stock up in anticipation of gun bans (or government gun confiscation).
#7) Accelerated erosion of the Bill of Rights and civil liberties
Under Obama, civil rights, human rights and the Bill of Rights will be rapidly eroded. This goes hand in hand with the cancerous growth of government. As government expands its power and confiscates more economic resources, it simultaneously destroys individual liberties and due process.
This isn’t to say that Romney would have been any better, of course. Both candidates were philosophically invested in the rapid expansion of Big Government.
#8) Continued destruction and looting of the U.S. economy
Under Obama, the financial looting of the U.S. economy by the global bankster elite will continue. The same would have been true with Romney, by the way.
Under Obama, America’s unemployment rate will continue to head skyward, entitlements will be expanded, and the USA will be plunged into a tyrannical welfare state dominated by mindless zombies who have no cognitive grasp of reality.
#9) A “giant sucking sound” of employers leaving America
Ross Perot was right! That “giant sucking sound” is the sound of employers leaving America in droves, hiring offshore workers instead of creating jobs in the USA. And why? Because employers can’t afford to pay Obamacare mandates and still stay competitive in the global marketplace.
#10) Stepped-up attacks on veterans and preppers
Returning U.S. veterans will continue to be vilified by the Obama administration, to the point where even more veterans will be arrested as “terrorists” for engaging in fundamental preparedness strategies such as storing food, water, medicine and ammo.
Watch for the liberal media to join the White House in painting veterans as “dangerous” individuals needing psychiatric medications. Never mind the fact that the media owes preppers a huge apology in the aftermath of Hurricane Sandy.
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POST-ELECTION PREDICTIONS, NO MATTER WHO WINS
It’s true that Barack Obama and Mitt Romney have many political differences. But they also agree on many essential policies; enough to make the next four years easily predictable, no matter who wins. Here are three predictions based on the most important shared beliefs of the two candidates:
1) Wall Street will reign supreme. During the debates it was made clear that no further action against Wall Street was necessary. But the banks are bigger under Obama than they were under Bush, which means they are still “too big to fail,” ensuring future bailouts paid by taxpayers. Federal Reserve policy is not controversial for either Republicans or Democrats: historic low interest rates combined with printing massive amounts of additional money — called “quantitative easing” — have both served the profits of Wall Street banks quite well, while everyone else sees their wages and benefits cut. Loans to working people are no easier to come by, while the banks and corporations are literally sitting on trillions of dollars of reserves in cash.
2) Post election national austerity cuts. The national deficit is the result of bank bailouts, foreign wars, and decades of continually lowering taxes for the rich and corporations. Obama and Romney both ignore these facts, and favor “trigger cuts” — massive cuts in jobs and social programs that would go into effect if Republicans and Democrats can’t agree on how many trillions of dollars of cuts to make (Obama’s proposed deficit cutting plan would make 4 $trillion in cuts; Paul Ryan wants 6 $trillion.)
And while Obama has made quite a bit of noise about “taxing the rich” to help fill the deficit gap, the same promises were made last election and amounted to naught when he extended Bush’s tax cuts. Taxing the rich is the only alternative to making cuts, since working people have so little left to tax. Instead, Obama is using the deficit to justify massive cuts to Medicare, public education, unemployment insurance, and likely Social Security and other programs. The Obama/Romney “rift” over the deficit is, in reality, a polite discussion of how best to slash and burn social programs, while differences are exaggerated for the sake of their election campaigns.
3) Foreign wars will continue. Listening to Obama and Romney debate foreign war was very much a Pepsi/Coke style debate. Both candidates love Israel, hate Iran and Syria, lie about a “time table” for Afghanistan (no serious foreign policy pundit believes the U.S. is leaving Afghanistan in 2014). Both are for continued drone bombings of Pakistan, Yemen and Somalia which are obvious war crimes, while both candidates hypocritically accuse Syria of “human rights violations.” In short, both candidates argue over how best to push the Middle East and North Africa to the brink of regional war, without being blamed for it.
Ultimately, there do exist differences in social policy between President Obama and Mitt Romney. The above policies, however, will deeply affect all working people in the United States. The country is not in a typical recession. Most economists agree that, at best, the U.S. economy can expect a “lost decade” of economic stagnation — at worst, a double dip recession/depression.
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TIME MAGAZINE PERSON OF THE YEAR: PRESIDENT BARACK OBAMA: “ARCHITECT OF THE NEW AMERICA”
Mac Slavo
shtfplan.com
December 19th, 2012
Editor’s note: No more Mister Hope and Change. The 2013 Obama is enshrined in the darkness of authoritarianism.
One of the most prestigious awards (in addition to a Noble Prize) that can be bestowed upon a member of the elite is Time Magazine’s Person of the Year.
This year, the award goes to the “Architect of a New America”, none other than Barack Obama.
The President joins such notable figures and social architects as Adolf Hitler (1938), Joseph Stalin (1939, 1942), Nikita Khrushchev (1957), Richard Nixon (1971, 1972), Henry Kissinger (1972), The Endangered Earth (1988), Ted Turner (1991), Bill Clinton (1992, 1998), George Bush (2000, 2004), Vladimir Putin (2007), and Ben Bernanke (2009).
Via SGT Report:
Kill lists, illegal detention, illegal torture, illegal wiretapping of citizens, endless unconstitutional wars, drone attacks on men, women and children… you’ve got to do a LOT to get this honor. Congrats Obama!
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OBAMA “FUNDAMENTALLY TRANSFORMING THE UNITED STATES OF AMERICA”
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THE OBAMA DECEPTION
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FALL OF THE REPUBLIC
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CHINA’S ECONOMY WILL SURPASS THE U.S. IN 2016
For the first time, the International Monetary Fund has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China. And it’s a lot closer than you may think. According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
According to the IMF forecast, whoever is elected U.S. president in 2012, that person will be the last one to preside over the world’s largest economy. Most people aren’t prepared for this. They aren’t even aware it’s that close.
Sadly, most Americans still cling to the hope that if the “next election” will just turn out the right way that things will get better. But the truth is that things are going to stay on the same course no matter who the American people put into office. For many years the status quo seemed to be just fine for most people, but now we are starting to reap the results of the economic seeds that we have sown.
The United States 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 American Dream is dying. Every month more American families are slipping out of the middle class and into poverty. The sad part is, very few people see it coming.
In a recent interview with Dmitry Orlov about the coming U.S. economic collapse that was posted on shtfplan.com:
“First you have financial collapse, which is basically the volume of debt that has to be taken on in order for the economy to continue functioning, cannot continue. We’re seeing that right now in Greece, we’re probably going to see that in Japan, we’re definitely at a point now in the United States where even if you raised the income tax to 100 percent, there’s absolutely no way of covering the liabilities of the U.S. federal government. So, we’re at that point now but the workout of the financial collapse is not all quite there. We don’t quite have a worthless currency but that’s also in the works.
That, of course, is followed by commercial collapse especially in a country like the United States that imports two thirds of its oil. A lot of that is on credit and if a little bit of that oil goes missing then the economy starts to fall apart because nothing moves unless you burn oil in the United States and, of course, a lot of goods that are sold everywhere are imported again, on credit.
When the U.S. dollar dies and our financial system collapses we are not going to be able to get all of the things that we need from the rest of the world so cheaply any longer. That is going to cause fundamental changes inside the United States. The U.S. economic news is getting worse and worse, but this is just the beginning. What is eventually going to happen in this country is going to be so nightmarish that most Americans can not even imagine it right now.”
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PENTAGON KNOWS CHINA WILL BE U.S. ENEMY NO. 1 STARTING IN 2017
The World Bank has a sobering forecast for the future of China’s economy. It’s produced a report saying without reform, the globe’s second biggest economy will suffer a major slowdown over the next 20 years. With major consequences for the whole world. Let’s get more on this from author and international consultant Adrian Salbucci, who joins RT from Buenos Aires in Argentina.
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INTELLIGENCE COMMUNITY: U.S. OUT AS SOLE SUPERPOWER BY 2030
By BYRON TAU | Politico
A new report by the intelligence community projects that the United States will no longer be the world’s only superpower by 2030.
“In terms of the indices of overall power – GDP, population size, military spending and technological investment – Asia will surpass North America and Europe combined,” the report concludes.
“Global Trends 2030: Alternative Worlds” — prepared by the office of the National Intelligence Council of the Office of the Director of National Intelligence — projects that the “unipolar” world that emerged after the fall of the Soviet Union will not continue.
“With the rapid rise of other countries, the ‘unipolar moment’ is over and no country – whether the U.S., China, or any other country – will be a hegemonic power,” the report argues.
“The United States’ relative economic decline vis-a-vis the rising states is inevitable and already occurring,but its future role in the international system is much harder to assess,” it argues.
“Global Trends” projects that the United States will retain a unique role in the international system — in part because of its history and past leadership.
“The U.S. most likely will remain ‘first among equals’ among the other great powers, due to the legacy of its leadership role in the world and the dominant role it has played in international politics across the board in both hard and soft power,” it argues.
And the intelligence community does not believe the United States will be supplanted as the world’s only superpower by another country.
“The replacement of the United States by another global power and erection of a new international order seems the least likely outcome in this time period,” the report projects.
The report argues that rising powers like China, India and Brazil are not unified by any common ideology and are more focused on their regional role. And the report warns against the consequences of a U.S. withdrawal from the world’s stage.
“A collapse or sudden retreat of US power would most likely result in an extended period of global anarchy,” it argues.
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NATIONAL INTELLIGENCE COUNCIL REPORT: ONLY GLOBALIZATION WILL SAVE THE FUTURE
Susanne Posel
Occupy Corporatism
December 11, 2012
In a new report entitled “Global Trends 2030: Alternative Worlds”, the National Intelligence Council (NIC) says that due to global economic changes, shifting in investments and the sudden rise of other nations to buck the US as the world’s superpower, the balance of “megatrends” in sovereign countries is transforming the world. Intelligence agencies in the US consulted with private corporations, academia, think-tanks, those of political influence and leaders in 14 countries; as well as the European Union.
Global dominance is leaving American shores for other world leaders to come and claim their possible rise to power.
Christopher Kojm, chairman of the NIC states: “We are at a critical juncture in human history, which could lead to widely contrasting futures.”
As the global economy redefines power throughout the world, vulnerabilities have cropped up which have inflated the fears of individual economies and stunted growth. Kojm refers to this symptom as “malleable” and encourages “decision-makers, whether in government or outside, to think and plan for the long term so that negative futures do not occur and positive ones have a better chance of unfolding.”
Matthew Burrows, lead author of the study for the NIC explains that 7 main issues are driving change and accelerating the “tectonic shifts” that are happening across the globe:
• Growth of the middle class
• Access to new technology
• Shifting economic power
• Aging populations
• Urbanization
• Demand for basic resources – food and water
• Energy dependence
The reverberation of the implosion of the euro, potential pandemics, the Chinese economy failures, nuclear war and the ever-present cyber-attack loom in the not-so-distant future and increasingly influence the course of national history for all nations.
The biggest debate implied in the report that if this continued course “will result in a global economic breakdown or whether the development of multiple growth centers will lead to resiliency.”
Constrains of a bourgeoning population continuing to rise is predicted to cause more strain all-around by 2030. The middle class, being a consumer-machine is viewed as unsustainable and a threat to life as we know it. Urbanization is the most logical “quick-fix” to this immediate problem; however there is also the issue of man-made climate change as well as resource allocation which is expected to be in short supply due to the effects of one another.
Resource management is a new concept beyond conservation ideals of the past. It is the mindset being spurred into the social meme to decrease the psychological pressure of the reality we face as access to food, water and energy is incrementally being taken from the general population.
Burrows states: “You have a huge problem on the resource side. How do you manage all this prosperity that is putting a lot of strain on the resources? You have to have collaboration on the technology, you have to have a big energy or water project the world is really geared up for, because otherwise it turns into a bad scenario.”
Governments are expected to coerce the public and private sector corporations into submitting to new constraints on resources as power moves into the hands of global governors and global action is used to maintain order and balance. Predictive models as well as data profiling will assist governmental bodies in tipping the scales and gaining “control over society.”
By making the changes appear to be tipping the scales “more in favor of the individual than the state” the general public is ever-fooled into following their government without question – even as those promises of more freedom are dwindled away to nothing and an all-encompassing control grid is unveiled.
The governing role of the United Nations (UN) and the International Monetary Fund (IMF) are expected to quell any “ambivalent” or “resentful” feelings that may develop between China and the US as leadership shifts occur. The expectation of a “cyber arms race” is coming into focus as cyber and bio-terror weapons become readily accessible, and national digital infrastructure begins to define how a nation will and is able to defend itself in this new electronic warfare age.
In the report, the necessity of “fusion” wherein the US and China meld into a collaborative global unity is viewed as the solution to the coming problems. Without this scenario, it is envisioned that “interstate conflict[s] increase” and “the US draws inward” which will halt all growth toward globalization.
Failing to fuse together will also result in a world where “inequalities explode as some countries become big winners and others fail. … Without completely disengaging, the US is no longer the ‘global policeman.’”
Communication dominated by social media and electronic signals is a drastic move from the physical realm, yet is projected to take over the world, leaving the stronger nations to battle out who will define the path way into the next century.
Megacities are the next phase of societal living as 2/3rds of the world’s population move into urbanized centers, connected through technological advances and protected by digitally controlled healthcare. In this respect, the current “death” of the middle class is simply viewed as a transformation with the rise of the global middle class wherein the better educated, technologically savvy and physically healthy are coalesced into a one-for-all mindset and the individual is fallen to the wayside for the achievements of humanity as a whole.
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SPECIAL GUEST DR. MATHEW BURROWS ON GLOBAL TRENDS 2030 AND ICT IMPACT
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ROBERT D. KAPLAN: THE RISE OF ASIA
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HONG KONG NOW WORLD’S TOP RETAIL ADDRESS – OVERTAKES FIFTH AVENUE
NOVEMBER 18, 2012
World famous Fifth Avenue, in Manhatten is no longer the most prominent retail address in the world. Hong Kong’s Causway Bay address now crowned as the worlds most prestigious shopping location.
In a real estate report by real estate firm Cushman & Wakefield Inc the top commercial retail locations were analyzed.
The Top Five most expensive blocks are as follows:
- Hong Kong’s Causeway Bay, rent $2,630 a square foot per year
- Fifth Avenue, $2,500 a square foot per year
- Times Square, $2,100
- Hong Kong, Central $1,856
- Hong Kong, Tsim Sha Tsui, $1,547
For more information on the report, click here.
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CHINESE BUYERS LEAD FOREIGN INVESTMENT IN US HOUSING MARKET
By Laura Prabucki | FoxNews
As the U.S. housing market slowly starts to recover, foreign investment is helping it along.
According to the National Association of Realtors, non-American buyers accounted for $82 billion in home sales last year. More than $7 billion of that is by the Chinese, who are now the second largest foreign home purchasers after Canadians. They’re buying high-end, multimillion-dollar homes from California to New York and paying cash.
“They’re probably the top 1 percent of the Mandarin speakers that are coming from China,” said Brent Chang, a Coldwell Banker realtor in Southern California. “They’re really the people who have their own businesses or maybe were part of the government.”
Some of these homes are specifically catered to Chinese buyers. Fox News visited a home listed at $8 million in Pasadena, Calif., that had two kitchens, the smaller one had ventilation for the cooking for aromatic or “stinky” foods like fish. It also has a lower level in-law suite and even a koi pond.
“People from China do a lot more business in their homes so they want their homes to really scream that they’ve made it and they’re successful, ” said Chang.
The Chinese like the U.S. because their money goes further. In Shanghai, $2 million might only get you a two-bedroom condo.
“You get a huge bang for your buck, you get land, you get good schools, you get a safe environment, nice community life, ” said Linda Chang, a realtor who works with her son, Brent, in the San Marino and Pasadena areas of California.
Chang says while many other real estate markets have suffered, her area has flourished thanks to Chinese and other foreign buyers.
“It’s been fantastic for the U.S. housing market because we have not suffered as other communities have,” said the elder Chang. “In fact, our property values have increased.”
While some of the Chinese buyers live in the U.S. full or part-time, realtors estimate about 40 percent of the homes are for investments. They’re snapping up houses in states hit hard by foreclosures such as Nevada and Florida. Some are buying two or three homes at a time.
According to Shanghai magazine Hurun Report, mainland China has almost 1 million millionaires and nearly half of them say they want to invest in the United States.
“It’s a sign of their status,” said Betty Chan, who deals with Chinese buyers in Las Vegas. “You can show off to your friends and family that I can buy something overseas, not everybody can do it.”
Chan continued: “Most Chinese like to own a Mercedes … it doesn’t matter whether a Mercedes is a good car or not. It’s just showing their status in the community, so owning a foreign house is pretty much a prestigious status in China, so they’re proud to tell their friends: ‘Hey, I own a house overseas.’”
Buyers from China also invested almost $2 billion in commercial property in 2011, or quadruple what they spent several years ago.
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OBAMA HELPS CHINESE INVESTORS PURCHASE US REAL ESTATE TO COMPENSATE FOR 2008 CRASH
Susanne Posel
Occupy Corporatism
December 11, 2012
The National Association of Realtors (NAR) is reporting that thanks to foreign investors, the housing market is beginning to make a recovery. These non-American buyers have purchased $82 billion worth of US homes with $7 billion being Chinese and the second largest investors to the Canadians.
Chinese business owners and possibly government representatives are acquiring a large amount of American real estate with $2 billion in commercial properties in 2011.
The NAR also says that Japanese investors are “buying up America’s landmarks” which has been hailed as an “economic miracle”. The Japanese are interested in owning “high-priced hotels, golf courses, office buildings and condominiums.”
Since 1993, the Japanese have been able to assist the American investor in purchasing “distressed assets” (i.e. foreclosed real estate) by lowering the market values which created astronomically low purchase prices. Now the Chinese from Hong Kong are bringing their money to American shores, buying up properties at an alarming rate.
Canadian investment in US real estate has between 1994 to 1998 to 20.0% along with Germany and the Netherlands.
The NAR praises this boom in foreign investors are a conceptual move from traditional to non-traditional investing. New York is seeing an obvious increase in sales to foreign investors which as contributed to the increasing pace of real estate transactions; while not increasing the value of those properties.
CB Richard Ellis, global real estate advisory firm, asserts that foreign money flooding the US real estate markets means a 1.5% increase to Americans. As property in America is moved into the hands of Asian business-owners and government representatives large portions of New York City, Washington DC, Boston and San Francisco are disappearing from the control of Americans.
In the Miami and Fort Lauderdale areas of Florida 10% of client investors are foreign which accounts for 50% of their business transactions. This trend has been going strong since 2010.
This move is touted as an attempt to turn foreign currency from the implosion being committed in the Euro-Zone. And in protecting their ability to use their fiat currency, investing in hard assets (i.e. property, land) is ensuring the wealthy remain so regardless of whether or not fiat currencies are destroyed across the globe.
The Obama administration is pushing for auctions of foreclosed to foreign investors in bulk sales. The foreclosed properties held by Fannie Mae, Freddie Mac and the Federal Housing Agency (FHA) are of the utmost importance to unload onto foreign investors. By setting the stage for easy money from foreign investors, Obama ensures that those investments are given a major return as more properties are given up for rent rather than resold.
The largest banks in the US, controlled by the technocrats are staunchly opposed to this move by Obama. They include:
• Wells Fargo
• JPMorgan & Chase Co
• Bank of America
• Citigroup
Janet Seiberg of MF Global claims that these foreign investors are contributing billions of dollars to American housing markets and that this is “a great idea, and it’s one of the few things that we’ve heard in several years now that could really help housing in a meaningful way.”
Seiberg points out that Resolution Trust Corporation tried to liquidate real properties to stimulate the housing market – which was a scheme to put money into the pockets of their clients. Other distractions from the actual plot behind this move toward foreign money purchasing American property is purveyed by Morgan Stanley analysts who say that rental-trends have turned ownership of real property into “lower volatility and outsized returns vs. other major asset classes, even when accounting for the housing bubble and subsequent declines.”
Earlier this year, in cities like St. Paul Minnesota, Mayor John Zanmiller’s backed a law restricting the amount of rental space to no more than 10% in any given neighborhood. Zanmiller said in defense of this city action is his claim that, “ . . . Our concern is that Fannie and Freddie are going to start dumping bundles of properties. [Rental limits] ensure that there are not huge clusters of rentals popping up in one particular block or in one particular area of the city.”
The city officials justify this action as claiming the rental numbers bring the property values down. Opponents say there have not been any studies to prove this fact; that city officials are discriminating against the rental community. A 2003 study conducted by the Journal of Housing Research loosely alluded to a correlation between higher home ownership rates and higher home values, ye there was little to no mention of the causation being renters.
In 2008 our financial and monetary system completely collapsed. Since that time the technocrats have been “propping up the system” to make it appear as if everything was fine. In reality our stock market and monetary systems are fake; meaning that there is nothing holding them in place except the illusion that they have stabilized since the Stock Market Crash nearly 5 years ago.
Since this time, the Department of Homeland Security (DHS) in conjunction with FEMA and other federal agencies have been quickly working to set in place their directives of control under a silent martial law.
The cause for the bailout of the banks was a large sum of cash needed quickly to repay China who had purchased large quantities of mortgage-backed securities that went belly-up when the global scam was realized. When China realized that they had been duped into buying worthless securitized loans which would never be repaid, they demanded the actual property instead. The Chinese were prepared to send their “people” to American shores to seize property as allocated to them through the securitized loan contracts.
To stave this off, the American taxpayers were coerced by former President Bush and former US Treasury Secretary Hank Paulson. During that incident, the US Senate was told emphatically that they had to approve a $700 billion bailout or else martial law would be implemented immediately. That money was funneled through the Federal Reserve Bank and wired to China, as well as other countries that were demanding repayment for the fraudulent securitizations.
To further avert financial catastrophe, as well as more debt or property seizure threats by the Chinese, the Euro was imploded there by plunging most of the European countries into an insurmountable free-fall for which they were never intended to recover.
All the money that those banks claimed they needed to avert collapse was also sent to the Chinese to add to the trillions of dollars lost during the burst of the housing bubble on the global market.
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CHINESE BID WINS AUCTION FOR A123
By Anousha Sakoui | The Financial Times
A Chinese car parts maker has won the auction for bankrupt US battery maker A123 Systems, in a further success in international dealmaking for Chinese groups.
Wanxiang Group bid about $257m to win the auction for the battery maker, which supplies electric cars. The sale still requires the approval of the Delaware court where A123 filed for bankruptcy.
The US group will formally submit the bid to the court for approval on Tuesday. The sale will also require the approval of the US Committee on Foreign Investment.
In an effort to ease political approval, Wanxiang will not be taking over A123’s defence business, which will be sold to Illinois-based Navitas for $2.25m.
“We think we have structured this transaction to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August, as well as to address concerns raised by the Department of Energy,” said Dave Vieau, chief executive of A123.
Wanxiang beat a joint bid by Johnson Controls of Milwaukee and Japan’s NEC. Its victory comes after Cnooc, the Beijing backed oil group, on Friday secured Canadian approval for its $18bn bid for Nexen, the biggest Chinese M&A deal on record.
China M&A in the year to December 7 reached $145bn, a record for any year to this point, according to Thomson Reuters.
In October, A123 – which was awarded a $249m grant from the US government – became the latest stimulus-backed company to file for bankruptcy, prompting a fresh round of attacks on President Barack Obama’s support for emerging energy technologies.
The company said it was seeking Chapter 11 bankruptcy protection “to provide for an orderly sale” of its operations and “help maximise the value of its assets for its stakeholders”.
The company had attempted to secure a rescue deal with Wanxiang before it went into administration.
The company had been a flagship of Mr Obama’s attempt to stimulate new environmentally friendly industries but ran into difficulties as a result of slower than expected sales of electric cars.
Its bankruptcy follows that of other companies backed by US government grants or loan guarantees, including Solyndra, a manufacturer of solar modules, Abound Solar, another panel maker, and Ener1, which also makes batteries for electric cars.
A123 did not get a loan guarantee but was awarded the $249m grant as part of the Obama administration’s stimulus in 2009. By the end of June it had drawn down only about $130m of the money because demand for its products was not strong enough to justify additional investment in manufacturing capacity.
It also received grants and tax credits from the state of Michigan of up to $141m.
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CHINESE GROUP BUYS 80% OF AIG PLANE UNIT FOR $4.2 BILLION
By Zachary Tracer and Cathy Chan - Bloomberg
Dec 10, 2012
A Chinese group agreed to buy 80.1 percent of American International Group Inc. (AIG)’s plane-leasing unit for $4.23 billion in the nation’s largest acquisition of a U.S. company.
The International Lease Finance Corp. acquirers, led by New China Trust Co. Chairman Weng Xianding, have an option to buy another 9.9 percent, New York-based AIG said today in a statement. The transaction, which values ILFC at $5.3 billion, passes China Investment Corp.’s $3 billion purchase of a stake in Blackstone Group LP (BX) in 2007 as the biggest Chinese-U.S. deal.
The acquisition gives the group control of the world’s second-largest aircraft lessor as rising travel in China and Asia spurs demand for planes. AIG, which counts the U.S. government as its largest investor, is selling the Los Angeles- based unit as Chief Executive Officer Robert Benmosche focuses on insurance operations and works to reduce debt.
“This ILFC deal squarely places the leasing business where future growth will be,” said Will Horton, a Hong Kong-based analyst at CAPA Centre for Aviation. “There are large opportunities in China, but also in countries like Indonesia and Malaysia.”
AIG will record a $4.4 billion non-operating loss, which includes a $1.8 billion non-cash charge tied to tax assets, when the transaction meets criteria for “held for sale” accounting treatment, according to the statement. The deal is subject to approval by U.S. and Chinese regulators.
Share Decline
The insurer dropped 2.3 percent to $33.36 at 4:02 p.m. in New York. AIG said late Dec. 7 that superstorm Sandy will cost the company about $1.3 billion after taxes and reinsurance, the highest sum disclosed by a U.S. insurer. The company has gained 44 percent this year, compared with a 13 percent advance for the Standard & Poor’s 500 Index.
The group investing in ILFC includes New China Trust, China Aviation Industrial Fund and P3 Investments Ltd., AIG said. New China Life Insurance Co. (1336) and a unit of ICBC International Holdings Ltd., the investment banking arm of the world’s biggest bank, may also join once the deal is approved by regulators and the option to buy a further stake is exercised, it said.
ILFC will continue to be run by CEO Henri Courpron, 49, and President Frederick S. Cromer, according to the statement. It will remain as a U.S. corporation and be registered with the Securities and Exchange Commission.
A new board, which will include Benmosche, will be appointed following the completion of the transaction. Laurette Koellner, who was named executive chairman of the unit in June after Courpron was investigated over a relationship with an employee, will step down once the sale is completed, said Paul Thibeau, an ILFC spokesman. The deal is expected to close in the second quarter of next year, AIG said.
AIG’s Clarity
A deal would be “credit positive” for both AIG and ILFC, Moody’s Investors Service Inc. analysts Mark Wasden and Bruce Ballentine said in a weekly report. “AIG would shed a non-core operation with significant debt, while ILFC would benefit from clarity regarding its future ownership and potentially greater access to clients and funding sources in growing Asian markets.”
ILFC’s new owners will be poised to expand in China and other emerging markets in Asia, Latin America, the Middle East and Eastern Europe, Benmosche, 68, said in a memo to staff. The sale will help AIG narrow its focus on global property-casualty coverage and U.S. life insurance.
“AIG is a different company today than it was four years ago,” Benmosche said in a memo staff. “We’re leaner, more focused.”
New Staff
ILFC had stockholders’ equity of $7.9 billion at the end of the third quarter, the company said last month in a filing. The unit employs about 560 people, with more than 450 in the U.S., where it plans to hire more staff to replace AIG-supported operations, according to today’s statement.
The lessor owns or manages more than 1,000 planes with another 229 on order. It is also the largest aircraft lessor in China, with a 30 percent market share and more than 175 aircraft leased to 16 airlines in the Greater China region, according to the company. Globally, it trails General Electric Co. (GE)’s GE Capital Aviation Services.
“This transaction allows ILFC to continue to serve its worldwide partners in the aviation industry with world-class service while accelerating its growth in important markets, including Asia,” Weng said in the statement.
Asian Deals
Weng has been chairman of closely held investment company New China Trust since 2008, according to a biography on the website of Partnership for New York City. Prior to that, he helped set up and then ran the Chinese government’s first professional securities unit, before working for the National Development and Reform Commission and the Chinese securities regulator, it said. In 1993, he was named as founding CEO and chairman of China New Industries Investment Co.
Cash-rich Asian investors are expanding plane leasing as European banks cut lending amid a regional debt crisis. A group led by Sumitomo Mitsui Financial Group Inc. (8316) this year bought Royal Bank of Scotland Group Plc’s leasing unit for about $7.3 billion. Industrial & Commercial Bank of China (601398) Ltd.’s leasing arm signed an order for 50 Airbus SAS A320s in August. Bank of China Ltd. bought Singapore Aircraft Leasing Enterprise for $965 million in December 2006.
AIG filed for an initial public offering of ILFC last year, and said as recently as last month that an initial public offering may take place in 2013. The insurer had considered selling the lessor in 2009 to raise funds to repay a $182.3 billion U.S. bailout that saved the firm from collapsing amid the financial crisis. The company sold more than $60 billion in assets, including Asian insurers, a U.S. consumer lender, and its Japanese headquarters, to help repay the rescue.
Low Rates
AIG acquired ILFC in 1990 for $1.16 billion, data compiled by Bloomberg show. Under AIG’s ownership, the plane-leasing unit originally benefited from the ability to borrow money at low rates, an advantage that evaporated when the insurer was hobbled by losses tied to subprime mortgages.
Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS) are advising AIG on the transaction, with New York-based Citigroup providing a fairness opinion to the insurer, and Credit Suisse Group AG is representing the investor group, Jon Diat, an AIG spokesman, said in an e-mail. Debevoise & Plimpton LLP is providing AIG with legal advice, and Simpson Thacher & Bartlett LLP is doing so for the investors.
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IN OCTOBER 2012, CHINA HANDED POWER OVER FROM THE FOURTH TO THE FIFTH GENERATION LEADERSHIP.
CHINA WILL CONTINUE TO ACT IN 2012 TO MAXIMIZE ITS ADVANTAGES AS A RISING POWER WITH THE UNITED STATES AND EUROPE LOOKING WEAK. An embattled European Union, with its sovereign debt difficulties, will make it an easy target. China would offer Europe economic assistance if it could gain greater access to Europe on soft terms, and also see an end to the European Union ban on arm sales.
Further tension is expected in the East China Sea and South China Sea. Chinese President Hu Jintao urged the country’s navy to prepare for military combat. The probability of a major confrontation in the East China Sea and South China Sea will increase in 2012 and into 2013.
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CHINA IN TRANSITION
Published on Oct 12, 2012 by STRATFORvideo
Stratfor’s Vice President of East Asia Analysis Rodger Baker discusses the political and economic challenges that lie ahead for China following its leadership transition.
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SHIFTING FOREIGN POLICIES IN CHINA AND THE UNITED STATES
Published on Oct 17, 2012 by STRATFORvideo
Stratfor’s Vice President of International Projects Jennifer Richmond discusses emerging developments in Chinese and U.S. foreign policies and what these mean for Sino-U.S. relations.
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CHINESE COMMUNIST PARTY UNVEILS NEW LEADERSHIP
By John Chan
The Chinese Communist Party (CCP) unveiled a new Politburo Standing Committee (PBC) yesterday—a day after the conclusion of its 18th congress. As expected, the new 205-member Central Committee selected Vice President Xi Jinping as the party’s general secretary to succeed retiring President Hu Jintao.
Xi also immediately took over Hu’s post as Central Military Commission (CMC) chairman, ending speculation that Hu might retain the key position for a transitional period. This transfer of power was made even though Xi will not formally become president until March, when the National Peoples Congress is convened.
There had been media reports that Hu might offer to relinquish the CMC chairmanship, in a bargain with former President Jiang Zemin’s “Shanghai clique,” in return for the inclusion of two of Hu’s Young Communist League (YCL) protégés (Politburo members Li Yuanchao and Wang Yang) in a nine-member PBC.
Instead, the Politburo Standing Committee was reduced from nine to seven. Moreover, the line-up suggests that the YCL faction has been weakened significantly, with only one clear representative—No. 2 in the new hierarchy, Vice Premier Li Keqiang. Li is expected to succeed outgoing Premier Wen Jiabao.
Despite the show of unity at the end of the congress, it was preceded by months of intense factional struggles, highlighted by the purging of former Chongqing party secretary Bo Xilai, who had been a contender for the PBC. This infighting was driven by differences over a further wave of pro-market restructuring, and how to respond to the tightening geo-strategic encirclement by US imperialism through the Obama administration’s “pivot” to Asia. While Jiang’s faction emerged with a stronger hand, these economic and strategic pressures will only intensify, ensuring that inner-party conflicts will re-emerge in even more explosive forms.
All factions have agreed that the new leadership is heading for a confrontation with the working class. Xi was given immediate control of the armed forces because the congress set the stage for the further deregulation of large sections of the economy for the benefit of private and foreign capital, accompanied by the intensified exploitation of China’s 400 million workers.
Jiang’s faction’s return to dominance is a warning that the regime will not hesitate to resort to repression against any opposition. Jiang came to power following the 1989 Tiananmen Square massacre, in which the army was used to crush widespread protests by workers and youth over the lack of democratic rights and deteriorating living standards. This faction has always opposed any democratic concessions. It worked to exclude so-called “political reformers” associated with the YCL faction from the leadership for fear that any political liberalisation could open up the door for the working class to express its discontent, as began to happen in 1989.
Yesterday, in his first speech as CCP leader, Xi appealed to Chinese nationalism. “Our responsibility now is to rally and lead the entire party and the people of all ethnic groups in China in taking over the relay baton passed on to us by history, and in making continued efforts to achieve the great renewal of the Chinese nation,” he declared.
This appeal is primarily to the top 10 percent of the population, which according to one study, account for 57 percent of all income, with the wealthiest 5 percent taking 44 percent. At the very apex are 251 US dollar billionaires and 2.7 million dollar millionaires. At the same time, more than 150 million Chinese still live less than $1.25 a day.
The “fifth generation” of leaders rests upon these layers of the wealthy elite. Xi and the other incoming figures all emerged in the late 1970s and 80s, with no direct connection to the 1949 Chinese Revolution. Their outlook was fully shaped by Deng Xiaoping’s turn to capitalist restoration from 1978, and they personally share fortunes with the new bourgeoisie that arose from that process.
Xi is well aware of the massive popular discontent just beneath the surface. He warned that the party must be on “full alert” because of mounting problems, “particularly corruption, being divorced from the masses, and going through formalities and bureaucratism.”
At the same time, he promised to address the needs of working people. “They wish to have better education, more stable jobs, more income, greater social security, better medical and health care, improved housing conditions, and a better environment. They want their children to have sound growth, have good jobs and lead a more enjoyable life.”
In reality, the CCP leadership knows it can never meet these demands, as that would undermine China’s role as a giant cheap labour platform for global capitalism. International capital is demanding a new wave of restructuring to open up new investment opportunities and to boost profits as the global economic crisis worsens.
The World Bank’s China 2030 report—worked out with China’s State Council, presided over by incoming Premier Li, and released in late February—set down a blueprint that was basically accepted by the 18th congress. While the regime will maintain the largest strategic state enterprises, about 100,000 local government-owned companies will be fully privatised.
At the same time, Xi’s installation as chairman of the Central Military Commission (CMC) could indicate a foreign policy shift. President Hu’s doctrine of a “peaceful rise” for China has been undermined by Washington’s aggressive turn to utilise military alliances against China. Even as the CCP congress was being held, the US held joint military exercises with Japan in the West Pacific, reinforcing its backing for Japan in its dispute with China over the Senkaku/Diaoyu islands. President Obama is about to visit Burma, Thailand and Cambodia this week in a bid to further undermine China’s influence in the region.
Two deputy CMC chairmen were appointed just before the congress, underscoring the leadership’s thinking. One was Xu Qiliang, the former commander of the air force, which has been given enormous resources to develop new stealth fighters, on the understanding that air power will be decisive in any conflict with the US. The other was Fan Changlong, who commanded the Jinan Military Region, which had reportedly conducted “island seizing” exercises, essentially directed against Japan, in the East China Sea.
Far from being immune from the global crisis of capitalism, China is extremely vulnerable to it, precisely because of its heavy dependence on exports. From late 1997, China experienced two years of deflation, amid the Asian financial crisis. That forced the Jiang leadership to carry out wholesale privatisation of state-owned enterprises, destroying tens of millions of jobs in order to attract massive foreign investment. Xi’s leadership will likewise seek to defend the interests of the rich oligarchy at the expense of the working class under conditions of deepening global economic turmoil.
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CHINA’S NEW LEADERS
Stratfor’s Vice President of International Projects Jennifer Richmond discusses the challenges for China’s new leadership.
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ANALYSIS: VICTORY PUTS OBAMA IN POSITION TO EXPAND GOVERNMENT’S REACH
NOVEMBER 11, 2012
By David Lindsey
WASHINGTON (Reuters) – Both sides called it a generation-defining race for the White House: a choice between Democrat Barack Obama’s brand of government activism and Republican Mitt Romney’s commitment to reducing Washington’s role in Americans’ daily lives.
Obama’s victory, however, did not settle that question.
Instead, the hard-fought battle for the White House exposed an electorate deeply divided by race, age and party.
Tuesday’s elections – in which Republicans kept control of the U.S. House and Obama’s Democrats held on to the Senate – suggested that bitter partisanship would likely remain very much alive in Washington in the new year. They also revealed that there was no broad mandate for much beyond the broadly shared goals of improving the economy and reducing government debt.
That means that undertaking bold new initiatives comparable to healthcare reform, financial regulation and economic stimulus programs will be a great deal more complicated for Obama 2012 than they were for Obama 2008.
Even so, Obama – now unfettered by not having to face voters again – is in position to pursue an ambitious agenda that could leave his mark on government for a generation or longer, including a move to revamp the nation’s immigration laws.
Some analysts believe Obama is likely to spend much of his second term “locking down the achievements of his first term,” including ensuring that “we will have a functioning national healthcare system,” said Cal Jillson, a political science professor at Southern Methodist University in Dallas.
For some, that would be enough to secure his place in history.
“Just by re-electing Obama, that means the Affordable Care Act will continue to be implemented, and that’s very important because that’s one of the most important pieces of legislation in half a century,” Theda Skocpol, a political scientist at Harvard University, said of the law that helps extend health coverage to millions of uninsured Americans.
“Most of the action will occur between the president’s administration and states, and my guess is a lot of the Republican governors will find ways to accept parts of the Medicare expansion,” Skocpol said.
A BOOST FROM THE BAILOUT?
In at least one respect, Tuesday’s election results vindicated Obama’s belief in an activist government.
By supporting an $85 billion federal bailout of the auto industry in 2009, a measure that was not particularly popular at the time, Obama may have helped to save not just the industry, but his presidency.
The auto bailout – and the Obama campaign’s attacks on Romney over his opposition to it – appeared to be key factors in the president’s victory in the crucial battleground state of Ohio, where 1 in 8 jobs is connected to the auto industry.
Nationwide, Obama – the nation’s first black president – trailed Romney among working-class white male voters by 17 percentage points, according to Reuters/Ipsos Election Day polling.
But in Ohio, white men with incomes of $75,000 or less were split 49-49 between Obama and Romney in Reuters/Ipsos polling. Analysts said the disparity indicated that the auto bailout – which saved nearly 1.5 million jobs nationwide, according to the Center for Automotive Research – likely gave Obama a critical boost in just the right place.
“While Romney enjoys a large advantage among lower-income white males nationally, the trend reverses in Ohio,” Ipsos pollster Julia Clark said. “This underlines the importance of the auto bailout in Ohio, and perceptions of Romney as unsympathetic to the challenges faced by the working class in this state.”
SECOND-TERM AGENDA
Political analysts and strategists expect Obama’s second-term agenda to be layered with increased federal spending for education, job and energy programs.
But such an agenda will be complicated by the government’s $16 trillion debt and the looming “fiscal cliff” – a $600 billion tax increase scheduled to take effect along with mandatory spending cuts at the start of the new year unless Obama and Congress can agree on a deficit reduction deal.
Obama’s commitment to immigration reform – a key goal for Democrats who want to solidify their hold on the growing Latino vote – would seem to have an increasingly clear path to success, especially as Republicans seek ways to improve their appeal to that minority group.
But the biggest, most immediate challenge is the looming showdown with Republicans in Congress over spending and taxes, during which Obama will press to keep his campaign promise to raise taxes on the wealthy while retaining lower tax rates for others.
Obama has signaled he may try to force Republicans to accept his demand to increase taxes on those making $250,000 or more a year by threatening to veto any legislation aimed at preventing the tax increases and massive spending cuts that are slated kick in automatically at the end of the year.
The notion that one of Obama’s boldest second-term moves could be reinstating Clinton-era tax rates on the wealthy suggests that the president’s agenda could be significant but limited, some analysts say.
“It’s not like you’re going to have a new, New Deal,” said Julian Zelizer, a professor of history and public affairs at Princeton University, referring to the broad array of social programs enacted by President Franklin D. Roosevelt to help the nation recover from the Great Depression of the 1930s.
During the presidential campaign, “the rhetoric is so dramatic, you think you’re deciding between FDR and a (staunchly conservative) candidate from the 19th century,” Zelizer said. “I’m sure most Republicans see Obama as a big-government liberal and most Democrats see Romney as a right-wing, Tea Party zealot.”
In fact, Zelizer said, both Obama and Romney were “relatively in the middle of the political spectrum, with limits on what they (could) achieve in a gridlocked Washington.”
CHALLENGE FOR REPUBLICANS
It may be too soon to tell whether the 2012 election will be a turning point in how Americans view the role of government in society. But the election does appear to mark another type of political transition.
Romney, 65, could be the last Republican of his generation to make a serious bid for the White House. The Republicans who appear to be in position to run for president in 2016 represent a new generation of leaders who generally are more conservative than their predecessors.
They include Romney’s running mate, Wisconsin Representative Paul Ryan (42), Florida Senator Marco Rubio (41), Louisiana Governor Bobby Jindal (41), former Pennsylvania Senator Rick Santorum (54), New Jersey Governor Chris Christie (50) and House of Representatives Majority Leader Eric Cantor of Virginia (49).
For them and any other Republicans who might consider a run for the White House, Tuesday’s election results brought a sign of potential trouble ahead.
Obama won about 66 percent of the vote among Hispanics, who make up about 17 percent of the U.S. population and are projected by the Pew Research Center to account for nearly 30 percent by 2050.
The Republican Party’s harsh stance on immigration has hurt its ability to attract Latinos, according to analysts who say the new generation of Republican contenders will need to tone down the party’s harsh rhetoric on immigration or risk certain defeat in several states because of Hispanics siding with Democrats.
“We certainly seem to be at the end of something, and at the beginning of another, when it comes to Republican candidates,” SMU’s Jillson said. “The Republican Party is untenable in its current form and in serious trouble as a viable governing vehicle (because) the Democratic Party is more attractive to growing constituencies – anyone who feels vulnerable and as if they may need support.”
During the campaign, Obama signed an executive order granting temporary legal status and work permits to young undocumented immigrants brought to the United States as children. He also has said he would push Congress to pass the DREAM Act, which would make the order permanent and create a path to citizenship for many undocumented workers.
Romney said he opposed the DREAM Act and that he favored harsh immigration policies that would lead illegal immigrants to “self-deport.” He later seemed to back away from that stance, and said he would seek some form of immigration reform that tied U.S. citizenship to education and jobs.
If Republicans do not improve their image among Latinos, Jillson said, some solidly conservative states might not be that way much longer.
“The Republican Party absolutely will have to soften its message,” Jillson said. “Texas (now dominated by Republicans) is 15 years away from a two-party system” because of its growing Hispanic population.
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6,125 PROPOSED REGULATIONS AND NOTIFICATIONS POSTED IN LAST 90 DAYS – AVERAGE 68 PER DAY
In the past 90 days, it has posted 6,125 regulations and notices – an average of 68 a day.
The website allows visitors to find and comment on proposed regulations and related documents published by the U.S. federal government. “Help improve Federal regulations by submitting your comments,” the website says.
The thousands of entries run the gamut from meeting notifications to fee schedules to actual rules and proposed rule changes.
In recent days, for example, the EPA posted a proposed rule involving volatile organic compound emissions from architectural coatings: “We are approving a local rule that regulates these emission sources under the Clean Air Act (CAA or the Act),” the proposed rule states. “We are taking comments on this proposal and plan to follow with a final action.”
Another proposed rule will provide guidance for FDA staff on “enforcement criteria for canned ackee, frozen ackee, and other ackee products that contain hypoglycin A.” (Ackee is the national fruit of Jamaica; unripened or inedible portions can be toxic.)
Some of the proposed regulations revise regulations already on the books.
The website also links to a video of a speech President Barack Obama gave at the U.S. Chamber of Commerce in Washington, D.C. on Feb. 7, 2011, in which the president promised to remove “outdated and unnecessary regulations.”
“I’ve ordered a government-wide review, and if there are rules on the books that are needlessly stifling job creation and economic growth, we will fix them,” the president said.
A number of groups, including the Competitive Enterprise Institute, expect a rush of new regulations now that President Obama has won a second term:
CEI expects the EPA to move ahead on delayed rules on everything from greenhouse gas emissions to ozone standards. “Rules from the health care bill and the Dodd-Frank financial regulation bill will also likely make themselves known in the weeks to come,” the group said on its website.
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THE CURRENT NUMBER OF EXECUTIVE ORDERS BY BARACK OBAMA (2009–PRESENT)
President Obama has signed 147 Executive Orders to date during his Administration.
Executive Orders become law if unchallenged by the Congress 30 days after they are submitted. They must also be published in the Federal Register.
The Listing of Executive orders in the Congressional Library runs in a numeric order starting with the first Executive orders passed until the most current. When President Barack Obama took office his EO list started from #EO-13489
| No. | Title/Description | Date signed |
|---|---|---|
| 13489 | Presidential Records | 2009-01-21 |
| 13490 | Ethics Commitments by Executive Branch Personnel | 2009-01-21 |
| 13491 | Ensuring Lawful Interrogations | 2009-01-22 |
| 13492 | Review and Disposition of Individuals Detained at the Guantanamo Bay Naval Base and Closure of Detention Facilities | 2009-01-22 |
| 13493 | Review of Detention Policy Options | 2009-01-22 |
| 13494 | Economy in Government Contracting | 2009-01-30 |
| 13495 | Nondisplacement of Qualified Workers Under Service Contracts | 2009-01-30 |
| 13496 | Notification of Employee Rights Under Federal Labor Laws (Repealed Executive Order 13201 | 2009-01-30 |
| 13497 | Revocation of Certain Executive Orders Concerning Regulatory Planning and Review | 2009-02-05 |
| 13498 | Amendments to Executive Order 13199 and Establishment of the President’s Advisory Council for Faith-Based and Neighborhood Partnerships | 2009-02-06 |
| 13499 | Further Amendments to Executive Order 12835, Establishment of the National Economic Council | 2009-02-05 |
| 13500 | Further Amendments to Executive Order 12859, Establishment of the Domestic Policy Council | 2009-02-05 |
| 13501 | Establishing the President’s Economic Recovery Advisory Board | 2009-02-06 |
| 13502 | Use of Project Labor Agreements for Federal Construction Projects | 2009-02-06 |
| 13503 | Establishment of the White House Office of Urban Affairs | 2009-02-19 |
| 13504 | Amending Executive Order 13390 | 2009-02-19 |
| 13505 | Removing Barriers to Responsible Scientific Research Involving Human Stem Cells | 2009-03-09 |
| 13506 | Establishing a White House Council on Women and Girls | 2009-03-11 |
| 13507 | Establishment of the White House Office of Health Reform | 2009-04-08 |
| 13508 | Chesapeake Bay Protection and Restoration | 2009-05-12 |
| 13509 | Establishing a White House Council on Automotive Communities and Workers | 2009-06-23 |
| 13510 | Waiver Under the Trade Act of 1974 With Respect to the Republic of Belarus | 2009-07-01 |
| 13511 | Continuance of Certain Federal Advisory Committees | 2009-09-29 |
| 13512 | Amending Executive Order 13390 | 2009-09-29 |
| 13513 | Federal Leadership on Reducing Text Messaging While Driving | 2009-10-01 |
| 13514 | Federal Leadership in Environmental, Energy, and Economic Performance | 2009-10-05 |
| 13515 | Increasing Participation of Asian Americans and Pacific Islanders in Federal Programs | 2009-10-14 |
| 13516 | Amending Executive Order 13462 | 2009-10-28 |
| 13517 | Amendments to Executive Orders 13183 and 13494 | 2009-10-30 |
| 13518 | Employment of Veterans in the Federal Government | 2009-11-09 |
| 13519 | Establishment of the Financial Fraud Enforcement Task Force | 2009-11-17 |
| 13520 | Reducing Improper Payments | 2009-11-20 |
| 13521 | Establishing the Presidential Commission for the Study of Bioethical Issues | 2009-11-24 |
| 13522 | Creating Labor-Management Forums to Improve Delivery of Government Services | 2009-12-09 |
| 13523 | Half-Day Closing of Executive Departments and Agencies on Thursday, December 24, 2009 | 2009-12-11 |
| 13524 | Amending Executive Order 12425 Designating Interpol as a Public International Organization Entitled to Enjoy Certain Privileges, Exemptions, and Immunities | 2009-12-17 |
| 13525 | Adjustments of Certain Rates of Pay | 2009-12-23 |
| 13526 | Classified National Security Information | 2009-12-29 |
| 13527 | Establishing Federal Capability for the Timely Provision of Medical Countermeasures Following a Biological Attack | 2009-12-30 |
| 13528 | Establishment of the Council of Governors | 2010-01-11 |
| 13529 | Ordering the Selected Reserve and Certain Individual Ready Reserve Members of the Armed Forces to Active Duty | 2010-01-16 |
| 13530 | President’s Advisory Council on Financial Capability | 2010-01-29 |
| 13531 | National Commission on Fiscal Responsibility and Reform | 2010-02-18 |
| 13532 | Promoting Excellence, Innovation, and Sustainability at Historically Black Colleges and Universities | 2010-02-26 |
| 13533 | Providing an Order of Succession within the Department of Defense | 2010-03-01 |
| 13534 | National Export Initiative | 2010-03-11 |
| 13535 | Ensuring Enforcement and Implementation of Abortion Restrictions in the Patient Protection and Affordable Care Act | 2010-03-23 |
| 13536 | Blocking Property of Certain Persons Contributing to the Conflict in Somalia | 2010-04-12 |
| 13537 | Interagency Group on Insular Areas | 2010-04-14 |
| 13538 | Establishing the President’s Management Advisory Board | 2010-04-19 |
| 13539 | President’s Council of Advisors on Science and Technology | 2010-04-21 |
| 13540 | Interagency Task Force on Veterans Small Business Development | 2010-04-26 |
| 13541 | Temporary Organization to Facilitate a Strategic Partnership with the Republic of Iraq | 2010-05-07 |
| 13542 | Providing an Order of Succession Within the Department of Agriculture | 2010-05-13 |
| 13543 | National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling | 2010-05-21 |
| 13544 | Establishing the National Prevention, Health Promotion, and Public Health Council | 2010-06-10 |
| 13545 | President’s Council on Fitness, Sports, and Nutrition | 2010-06-22 |
| 13546 | Optimizing the Security of Biological Select Agents and Toxins in the United States | 2010-07-02 |
| 13547 | Stewardship of the Ocean, Our Coasts, and the Great Lakes | 2010-07-19 |
| 13548 | Increasing Federal Employment of Individuals With Disabilities | 2010-07-26 |
| 13549 | Classified National Security Information Program for State, Local, Tribal, and Private Sector Entities | 2010-08-18 |
| 13550 | Establishment of Pakistan and Afghanistan Support Office | 2010-08-18 |
| 13551 | Blocking Property of Certain Persons With Respect to North Korea | 2010-08-30 |
| 13552 | 2010 Amendments to the Manual for Courts-Martial, United States | 2010-08-31 |
| 13553 | Blocking Property of Certain Persons With Respect to Serious Human Rights Abuses by the Government of Iran and Taking Certain Other Actions | 2010-09-28 |
| 13554 | Establishing the Gulf Coast Ecosystem Restoration Task Force | 2010-10-05 |
| 13555 | White House Initiative on Educational Excellence for Hispanics | 2010-10-19 |
| 13556 | Controlled Unclassified Information | 2010-11-04 |
| 13557 | Providing an Order of Succession Within the Department of Justice | 2010-11-04 |
| 13558 | Export Enforcement Coordination Center | 2010-11-09 |
| 13559 | Fundamental Principles and Policymaking Criteria for Partnerships With Faith-Based and Other Neighborhood Organizations | 2010-11-17 |
| 13560 | White House Council for Community Solutions | 2010-12-14 |
| 13561 | Adjustments to Certain Rates of Pay | 2010-12-22 |
| 13562 | Recruiting and Hiring Students and Recent Graduates | 2010-12-27 |
| 13563 | Improving Regulation and Regulatory Review | 2011-01-18 |
| 13564 | Establishment of The President’s Council on Jobs and Competitiveness | 2011-01-31 |
| 13565 | Establishment of the Intellectual Property Enforcement Advisory Committees | 2011-02-08 |
| 13566 | Blocking Property and Prohibiting Certain Transactions Related to Libya | 2011-02-25 |
| 13567 | Periodic Review of Individuals Detained at Guantánamo Bay Naval Station Pursuant to the Authorization for Use of Military Force | 2011-03-07 |
| 13568 | Extending Provisions of the International Organization Immunities Act to the Office of the High Representative in Bosnia and Herzegovina and the International Civilian Office in Kosovo | 2011-03-08 |
| 13569 | Amendments to Executive Orders 12824, 12835, 12859, and 13532, Reestablishment Pursuant to Executive Order 13498, and Revocation of Executive Order 13507 | 2011-04-05 |
| 13570 | Prohibiting Certain Transactions with Respect to North Korea | 2011-04-18 |
| 13571 | Streamlining Service Delivery and Improving Customer Service | 2011-04-27 |
| 13572 | Blocking Property of Certain Persons with Respect to Human Rights Abuses in Syria | 2011-04-29 |
| 13573 | Blocking Property of Senior Officials of the Government of Syria | 2011-05-18 |
| 13574 | Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Sanctions Act of 1996, as Amended | 2011-05-23 |
| 13575 | Establishment of the White House Rural Council | 2011-06-09 |
| 13576 | Delivering an Efficient, Effective, and Accountable Government | 2011-06-13 |
| 13577 | Establishment of the SelectUSA Initiative | 2011-06-15 |
| 13578 | Coordinating Policies on Automotive Communities and Workers | 2011-07-06 |
| 13579 | Regulation and Independent Regulatory Agencies | 2011-07-11 |
| 13580 | Interagency Working Group on Coordination of Domestic Energy Development and Permitting in Alaska | 2011-07-12 |
| 13581 | Blocking Property of Transnational Criminal Organizations | 2011-07-24 |
| 13582 | Blocking Property of the Government of Syria and Prohibiting Certain Transactions With Respect to Syria | 2011-08-17 |
| 13583 | Establishing a Coordinated Government-Wide Initiative to Promote Diversity and Inclusion in the Federal Workforce | 2011-08-18 |
| 13584 | Developing an Integrated Strategic Counterterrorism Communications Initiative and Establishing a Temporary Organization to Support Certain Government-Wide Communications Activities Directed Abroad | 2011-09-09 |
| 13585 | Continuance of Certain Federal Advisory Committees | 2011-09-30 |
| 13586 | Establishing an Emergency Board to Investigate Disputes Between Certain Railroads Represented by the National Carriers’ Conference Committee of the National Railway Labor Conference and Their Employees Represented by Certain Labor Organizations | 2011-10-06 |
| 13587 | Structural Reforms to Improve the Security of Classified Networks and the Responsible Sharing and Safeguarding of Classified Information | 2011-10-07 |
| 13588 | Reducing Prescription Drug Shortages | 2011-10-31 |
| 13589 | Promoting Efficient Spending | 2011-11-09 |
| 13590 | Authorizing the Imposition of Certain Sanctions with Respect to the Provision of Goods, Services, Technology, or Support for Iran’s Energy and Petrochemical Sectors | 2011-11-20 |
| 13591 | Continuance of Certain Federal Advisory Committees | 2011-11-23 |
| 13592 | Improving American Indian and Alaska Native Educational Opportunities and Strengthening Tribal Colleges and Universities | 2011-12-02 |
| 13593 | 2011 Amendments to the Manual for Courts-Martial, United States | 2011-12-13 |
| 13594 | Adustments of Certain Rates of Pay | 2011-12-19 |
| 13595 | Instituting a National Action Plan on Women, Peace, and Security | 2011-12-19 |
| 13596 | Amendments to Executive Orders 12131 and 13539 | 2011-12-19 |
| 13597 | Establishing Visa and Foreign Visitor Processing Goals and the Task Force on Travel and Competitiveness | 2012-01-19 |
| 13598 | Assignment of Functions Relating to Certain Promotion and Appointment Actions in the Armed Forces | 2012-01-27 |
| 13599 | Blocking Property of the Government of Iran and Iranian Financial Institutions | 2012-02-05 |
| 13600 | Establishing the President’s Global Development Council | 2012-02-09 |
| 13601 | Establishment of the Interagency Trade Enforcement Center | 2012-02-28 |
| 13602 | Establishing a White House Council on Strong Cities, Strong Communities | 2012-03-15 |
| 13603 | National Defense Resources Preparedness | 2012-03-16 |
| 13604 | Improving Performance of Federal Permitting and Review of Infrastructure Projects | 2012-03-22 |
| 13605 | Supporting Safe and Responsible Development of Unconventional Domestic Natural Gas Resources | 2012-04-13 |
| 13606 | Blocking the Property and Suspending Entry into the United States of Certain Persons with Respect to Grave Human Rights Abuses by the Governments of Iran and Syria via Information Technology | 2012-04-23 |
| 13607 | Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and Other Family Members | 2012-04-27 |
| 13608 | Prohibiting Certain Transactions with and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria | 2012-05-01 |
| 13609 | Promoting International Regulatory Cooperation | 2012-05-01 |
| 13610 | Identifying and Reducing Regulatory Burdens | 2012-05-10 |
| 13611 | Blocking Property of Persons Threatening the Peace, Security, or Stability of Yemen | 2012-05-16 |
| 13612 | Providing an Order of Succession Within the Department of Agriculture | 2012-05-21 |
| 13613 | Providing an Order of Succession Within the Department of Commerce | 2012-05-21 |
| 13614 | Providing an Order of Succession Within the Environmental Protection Agency | 2012-05-21 |
| 13615 | Providing an Order of Succession Within the Office of Management and Budget | 2012-05-21 |
| 13616 | Accelerating Broadband Infrastructure Deployment | 2012-06-14 |
| 13617 | Blocking Property of the Government of the Russian Federation Relating to the Disposition of Highly Enriched Uranium Extracted From Nuclear Weapons | 2012-06-25 |
| 13618 | Assignment of National Security and Emergency Preparedness Communications Functions | 2012-07-06 |
| 13619 | Blocking Property of Persons Threatening the Peace, Security, or Stability of Burma | 2012-07-11 |
| 13620 | Taking Additional Steps to Address the National Emergency With Respect to Somalia | 2012-07-20 |
| 13621 | White House Initiative on Educational Excellence for African Americans | 2012-07-26 |
| 13622 | Authorizing Additional Sanctions With Respect to Iran | 2012-07-30 |
| 13623 | Preventing and Responding to Violence Against Women and Girls Globally | 2012-08-10 |
| 13624 | Accelerating Investment in Industrial Energy Efficiency | 2012-08-30 |
| 13625 | Improving Access to Mental Health Services for Veterans, Service Members, and Military Families | 2012-08-31 |
| 13626 | Gulf Coast Ecosystem Restoration | 2012-09-10 |
| 13627 | Strengthening Protections Against Trafficking In Persons In Federal Contracts | 2012-09-25 |
| 13628 | Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions with respect to Iran | 2012-10-09 |
- 13629 Executive Oder — Establishing the White House Homeland Security Partnership Council October 26, 2012
- 13630 Executive Order — Establishment of an Interagency Task Force on Commercial Advocacy December 06, 2012
- 13631 Executive Order — Reestablishment of Advisory Group December 07, 2012
- 13632 Executive Order — Establishing the Hurricane Sandy Rebuilding Task Force December 07, 2012
- 13633 Executive Order– Closing of Executive Departments and Agencies of the Federal Government on Monday, December 24, 2012 December 21, 2012
- 13634 Executive Order – Reestablishment of Advisory Commission December 21, 2012
- 13635 Executive Order — Adjustments of Certain Rates of Pay December 27, 2012
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CHARLES HURT: OBAMA VICTORY MEANS FOUR MORE YEARS WITH NO HOPE OF CHANGE
NOVEMBER 11, 2012
By Charles Hurt | The Washington Times
All that for nothing. It was the billion-dollar election that did not decide one single damned thing.
Republicans control the House. Democrats control the Senate. And the White House remains in Democratic hands with absolutely no mandate whatsoever.
Another four years with no hope of change.
In this environment with this economy and all the gravely important matters pressing against the very existence of this country, it should have been a tsunami election. It should have been a landslide that sent President Obama into the dust heap of failed presidencies. Instead, the election was about Big Bird.
It was the rape election. The contraception election. The binders full of women election.
It was about who was born where and whether she really could claim to be a Cherokee Indian.
It was about former President George W. Bush. And it was about gay marriage.
It was about the 1 percent and the 99 percent and the 47 percent.
It was about dancing freaking horses, for crying out loud!
Just about the only thing the election wasn’t about was the economy, which everyone agrees was the only thing voters actually cared about. People tend to really care about the economy when real unemployment reaches double digits, welfare rolls fatten by one-third, politicians rack up $16 trillion in national debt and the largest tax hike in the history of the world looms just weeks away.
Yet that obviously is not what decided this election. Politicians were too busy talking all about Big Bird, rape and dancing horses.
The most disturbing issue of the election was how President Obama managed to win re-election in places like Ohio and Pennsylvania and Michigan by talking about the highly unpopular bailout of General Motors. By taking billions of dollars in hard-earned money from taxpayers during a deep recession and giving it to a couple of huge companies, Mr. Obama managed to buy the votes he needed to eke out re-election. Taxpayers remain on the hook to the tune of $25 billion.
This is the Achilles heel of a democracy. Politicians simply tax those who do not support them and give the money to those who do. Or give the money to those they would like to have support them. It is the end of the line. Game over.
The weeks to come will feature endless finger-pointing and blame about how Republicans do not know how to speak to non-white voters and women and all that nonsense.
What happened Tuesday night is the same thing that has been happening for decades in America. Politicians deploy all this highly precise technology to slice and dice voters into little micro-groups and then talk to them all about dancing horses or Big Bird.
The result is you have all these states vote for one side and all these other states vote for the other side and it all comes down to Florida and Ohio. You could have given me a lot less than a billion dollars and I could have told you that.
The only way this gridlock is finally broken is when politicians grow up and decide to put away Big Bird and dancing horses and seriously address like adults the $16 trillion in debts they have racked up on our credit card.
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OBAMA WIN IS CONSTITUTION’S LOSS
Nat Hentoff shames Americans who have ‘discard the Declaration of Independence’
by NAT HENTOFF | World Net Daily
The enemy has certainly tried, but it was President Bush, following the advice of Dick Cheney and Donald Rumsfeld, who began the extensive attack on our individual liberties through the Patriot Act, which passed on Oct. 26, 2001.
Then, President Barack Obama went far beyond his predecessor’s administration to become the most destructive uprooter of our Constitution in our nation’s history.
Growing up as a student at Boston Latin School, one of whose alumni was Samuel Adams, a firebrand of our American Revolution, I read American history with excitement. I learned how we always overcame grimly looming threats to our self-governing republic to become a beacon to the world.
But never did I even imagine that an American president, without insuring due process in a court of law, would – as Obama does – use a kill list to target suspected terrorists for assassination. So far this list has also included three American citizens.
Obama has taken advantage of ever-advancing digital technology, using bottomless databases that keep track of those Americans he considers persons of subversive interest. During the presidential debates, did you hear anything about our vanishing privacy?
The secrecy with which Obama discards the Constitution to rule over us is evident in his dictatorial use of the “state secrets” privilege, which actually prevents judges from even hearing cases brought by citizens who claim their fundamental constitutional rights have been expunged by the president’s censors.
I now share with you, fellow American citizens, this chilling description of the essence of four more years of our maximum leader. In a recent op-ed for the Washington Post, Kurt Volker shows what that portion of the electorate who cared enough to vote gave us and the rest of the world. This is what America has now come to stand for:
“What do we want to be as a nation? A country with a permanent kill list? A country where people go to the office, launch a few kill shots (from pilotless drones) and get home in time for dinner?
“A country that instructs workers in high-tech operations centers to kill human beings on the far side of the planet because some government agency determined that those individuals are terrorists?” (“What the U.S. risks by relying on drones,” Kurt Volker, The Washington Post, Oct. 26).
A country also where its president makes the final choice for his faceless killers to rub out their targets.
I was not surprised to learn from a recent Washington Times column by Ilana Freedman that “the latest (dictator) to publicly announce his support for the commander-in-chief’s re-election bid was Venezuela’s Hugo Chavez, who … assured he’d vote for Obama if he were from the United States. …
“Earlier in the year the government-official daughter of Cuban military dictator Raul Castro proclaimed her country’s support for Obama during a visit to the U.S. ‘I believe that Obama needs another opportunity and he needs greater support to move forward with his projects and with his ideas, which I believe come from the bottom of his heart’” (“Chavez, Castro, Putin: Four more years!” Ilana Freedman, times247.com, Oct. 2).
In that dictatorship, Raul’s daughter surely spoke with permission from her father and uncle. It takes one to know one.
Freedman’s news story includes Russia’s Vladimir Putin as a member of the professed group “Dictators for Obama.” But I have no direct evidence of that. I’ll keep you abreast of any other dictators joining the celebratory chorus.
In any case, Obama is once more exultantly justifying anything he chooses to do from now on, because “We won!”
The fateful questions for the future of this nation are why did he win, and will his re-election show the victorious way for future presidents to come?
Many Americans’ choice to discard the Declaration of Independence reveals an alarming ignorance of their history, including why their country is – or is supposed to be – unique among all other nations in the world.
The depth of this ignorance explains why throughout the long, fiercely divisive presidential and congressional campaigns, there were hardly any references to Obama’s persistent contempt for the Constitution. This was the case among loyal Obama Democrats, of course, but also among Republicans and independents.
What makes us Americans was not an issue!
How grotesque it was for Obama to say in September – as he presented his beliefs for maintaining the principles of America’s rule of law while strengthening national security – that in going after American citizens involved with al-Qaida: “They are subject to the protections of the Constitution and due process” (“Death from afar,” The Economist, Nov. 3).
Had I been there looking at him, how could I not have burst out laughing?
How can we specifically get our country back? Whether you’re elderly or not, keep in mind that Obamacare could soon be coming after you full force – as it decides whether it costs his government too much to keep you alive!
In January 2003, Supreme Court Justice Ruth Bader Ginsburg spoke about the balance between liberty and security. “The security side is going to outweigh the other” – unless “people come forward and say we are proud to be living in a land that has been more free, and we want to keep it that way” (my book, “The War on the Bill of Rights and the Gathering Resistance,” Seven Stories Press, 2003).
How many of us are ready to rebel against this new King George III?
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OBAMA VICTORY COMES WITH NO MANDATE
NOVEMBER 11, 2012
By Ron Fournier | National Journal
Barack Obama won a second term but no mandate. Thanks in part to his own small-bore and brutish campaign, victory guarantees the president nothing more than the headache of building consensus in a gridlocked capital on behalf of a polarized public.
If the president begins his second term under any delusion that voters rubber-stamped his agenda on Tuesday night, he is doomed to fail.
Mandates are rarely won on election night. They are earned after Inauguration Day by leaders who spend their political capital wisely, taking advantage of events without overreaching. Obama is capable—as evidenced by his first-term success with health care reform. But mandate-building requires humility, a trait not easily associated with him.
“The mandate is a myth,” said John Altman, associate professor of political science at York College of Pennsylvania. “But even if there was such a thing as a mandate, this clearly isn’t an election that would produce one.”
He pointed to Obama’s small margin of victory and the fact that U.S. voters are divided deeply by race, gender, spirituality, and party affiliation. You can’t claim to be carrying out the will of the people when the populous has little shared will.
Andrew Jackson was the first president to claim that the desires of the public overrode Congress’s constitutional prerogatives. Virtually every president since Jackson has claimed the mantle, even while lacking two ingredients of an electoral mandate: a landslide victory and a specific agenda. More often than not, Congress trims the president’s sails, leaving both the leader and his followers disappointed.
“Presidential claims to a mandate, such as President [George] W. Bush in 2004, are misleading to the public and the officeholder,” said Anthony Brunello, professor of political science at Eckerd College in St. Petersburg, Fla.
Some mandates are easily and obviously claimed, usually as an extension of calamitous events. Examples: Franklin Roosevelt during the Great Depression, Lyndon Johnson after the assassination of John Kennedy, and Bush after 9/11.
Claiming a mandate can lead a president down policy paths that are reckless and unpopular. Bill Clinton overreached on health care reform in his first term and Bush misread his reelection as a mandate for Social Security reform in 2005.
In a capital as polarized as Washington, even a landslide victory and detailed campaign platform wouldn’t secure a president’s agenda.
“Mandates may not exist in Washington anymore with the hyper-partisanship we now see associated with every substantive or political move on the Hill,” said Steve McMahon, strategist for Howard Dean’s 2004 presidential campaign.
“I’m generally an optimist, but it’s hard to see how there is a mandate for anything other than more of what we’ve seen the last several years,” said GOP strategist Mark McKinnon, who helped elect and reelect the younger President Bush. “There’s not a good scenario for how this turns out.”
Obama hurt his cause by running a hard-edged and negative campaign against Republican Mitt Romney, hoping to convince recession-weary voters that his rival was unworthy of the job. He gave lip service to an agenda, publishing scaled-back and repackaged ideas from his first term in a 20-page pamphlet. Obama’s message was often microtargeted to Democratic coalitions rather than the broad electorate.
“To me, as a supporter, it’s been frustrating because President Obama had the opportunity … to make his campaign about something larger,” said Democratic consultant Carter Eskew, top strategist to Al Gore in 2000.
Mike McCurry, former press secretary for President Clinton, said it’s easy to criticize candidates for ducking solutions to the nation’s intractable problems such as budget deficits, social mobility, and poverty. But the fact is, any campaign proposal would have been grounds for attack.
“My guess is, neither candidate offered specifics because it would have been politically untenable,” McCurry said.
McKinnon said voters would have rewarded Obama or Romney for addressing hard truths. “People are hungry for an agenda, hungry for specifics, hungry for anything that looks like a solution,” McKinnon said. “I think there are ways to do it without painting yourself in a corner.”
So the vagaries of history, his times, and his message will deny Obama an automatic mandate. He has to earn it. The question is, how?
First, lower expectations. Obama promised voters he would change the nature of politics in his first term. He failed. Rather than promise the unattainable, Obama needs to acknowledge the difficulty of tasks ahead, starting with curbing the nation’s debt.
Eskew suggested Obama say something like: “Look, I learned some things in Washington. I thought we could all get along, and I learned that is not the case. I want to do some things for the country but I can’t do them unless people support me—not just in the election, but also after.”
Second, commit to the hard and humbling work of governing. Schmooze with lawmakers, hold regular news conferences, travel the country to tout legislation, and dig into the details of bills and regulations.
Karen Hughes, an adviser to George W. Bush, had this advice for the famously aloof president: “Get in the limo and go to the Hill and get seen working with lawmakers. People will appreciate the effort.”
Third, reach out to Republicans with concrete and symbolic gestures. “There is going to have to be compromise to get anything done, especially with big issues,” said Mike Feldman, another strategist on Gore’s 2000 campaign.
Obama may need to bring in new advisors who can work with Republicans. “He needs to ignore the blind partisans from either party, and find the uniters,” said Democratic consultant Chris Kofinis. “If he does he will become an even more historic president.”
McCurry noted that soon after his 1980 victory, Ronald Reagan reappointed popular former Democratic Sen. Mike Mansfield as ambassador to Japan. “Gestures like that build goodwill,” McCurry said. “It’s increasingly how you claim the mandate and how you move forward that determines the outcome.”
Altman, the political science professor from Pennsylvania, struggled for the advice he would give no-mandate Obama. “You are going to govern unsuccessfully. You are going to fail,” he said with a chuckle.
But then he hedged. Maybe expectations would be lower for Obama than they were in 2009, Altman said. “They expect him to just hang on for another four years and hopefully not screw it up too much,” Altman said. “They will take 2016 as a new day.”
That’s not much of a mandate. But it is a second chance.
Donna Brazile, campaign manager for Gore in 2000, said Obama should set his sights accordingly. “The only mandate that will be clear as daylight,” she said, “is to break the gridlock of Washington.”
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RE-ELECTED, OBAMA HEADS BACK TO DIVIDED GOVERNMENT
NOVEMBER 11, 2012
BY DAVID ESPO | AP SPECIAL CORRESPONDENT
WASHINGTON (AP) — One day after a bruising, mixed-verdict election, President Barack Obama and Republican House Speaker John Boehner both pledged Wednesday to seek a compromise to avert looming spending cuts and tax increases that threaten to plunge the economy back into recession.
Added Senate Majority Leader Harry Reid, D-Nev.: “Of course” an agreement is possible.
While all three men spoke in general terms, Boehner stressed that Republicans would be willing to accept higher tax revenue under the right conditions as part of a more sweeping attempt to reduce deficits and restore the economy to full health.
While the impending “fiscal cliff” dominates the postelection agenda, the president and Republicans have other concerns, too.
Obama is looking ahead to top-level personnel changes in a second term, involving three powerful Cabinet portfolios at a minimum.
And Republicans are heading into a season of potentially painful reflection after losing the presidency in an economy that might have proved Obama’s political undoing. They also have fallen deeper into the Senate minority after the second election in a row in which they lost potentially winnable races by fielding candidates with views that voters evidently judged too extreme.
One major topic for GOP discussion: the changing face of America.
“We’ve got to deal with the issue of immigration through good policy. What is the right policy if we want economic growth in America as it relates to immigration?” said former Republican Party Chairman Haley Barbour. Obama drew support from about 70 percent of all Hispanics. That far outpaced Romney, who said during the Republican primaries that illegal immigrants should self-deport, then spent the general election campaign trying to move toward the political middle on the issue.
The maneuvering on the economy – the dominant issue by far in the campaign – began even before Obama returned to the White House from his home town of Chicago.
After securing a second term, the president is committed to bipartisan solutions “to reduce our deficit in a balanced way, cut taxes for middle class families and small businesses and create jobs,” and he told congressional leaders as much in phone calls, the White House said.
Boehner, whose anti-tax Republicans renewed their House majority on Tuesday, said GOP legislators were “willing to accept new revenue under the right conditions.” That means tax reform and economic growth rather than raising rates, he emphasized, and accompanying steps to rein in the government’s big benefit programs.
“The question we should be asking is not `which taxes should I raise to get more revenue, but rather: which reforms can we agree on that will get our economy moving again?” the Ohio Republican said at the Capitol.
While both the president and Boehner sent signals of bipartisanship, there remain wide differences between the two on specifics. At the same time, each man has something of a postelection mandate, given Obama’s re-election and the Republicans’ successful defense of their House majority.
The reference to a balanced approach to deficit reduction reflected Obama’s campaign-long call for higher taxes on incomes above $200,000 for individuals and $250,000 for couples.
That was something Boehner made plain he opposes.
Reid told reporters that any solution should include higher taxes on “the richest of the rich.” That was in keeping with Obama’s election platform, which calls for the expiration of tax cuts on higher-income earners.
Barring legislation to avoid the “fiscal cliff” by year’s end, taxes are on course to rise by more than $500 billion in 2013, and spending is to be cut by an additional $130 billion or so, totals that would increase over a decade. The blend is designed to rein in the federal debt, but officials in both parties warn it poses a grave threat to an economic recovery that has been halting at best.
Obama and congressional leaders in both parties say they want an alternative, but serious compromise talks were non-existent during the fierce campaign season.
That ended Tuesday in an election in which more than 119 million votes were cast, mostly without controversy despite dire predictions of politically charged recounts and lawsuits while the presidency hung in the balance.
Obama won the popular vote narrowly, the electoral vote comfortably, and the battleground states where the campaign was principally waged in a landslide.
The president carried seven of the nine states where he, Romney and their allies spent nearly $1 billion on television commercials, winning Ohio, Wisconsin, Iowa, New Hampshire, Nevada, Colorado and Virginia.
The Republican challenger won North Carolina, and Florida remained too close to call
Obama also turned back late moves by Republicans in Pennsylvania, Michigan and Minnesota.
Hispanics account for a larger share of the population than the national average in Nevada and Colorado, two of the closely contested battleground states. The president’s outsized majority among Hispanics – in the range of 70 percent according to Election Day interviews with voters – helped him against a challenger who called earlier in the year for self-deportation of illegal immigrants.
Other factors in crucial states:
- In Ohio, roughly 60 percent of all voters said they favored the Obama administration’s auto bailout, and the president captured nearly three quarters of their votes, according to the survey, conducted for The Associated Press and a group of television networks. He stressed the rescue operation throughout the campaign. Romney opposed it, and in late campaign commercials suggested it had contributed to the loss of U.S. jobs overseas.
- In Virginia, the black vote was roughly half again as big in percentage terms as nationally, also an aid to Obama.
Changes are in store for the victorious administration. The election past, three members of Obama’s Cabinet have announced plans to leave their posts: Defense Secretary Leon Panetta, Treasury Secretary Tim Geithner and Secretary of State Hillary Rodham Clinton. Other changes would not be unusual in the second administration of any president.
As for Congress, Democrats improbably gained seats in re-establishing their Senate majority. Their final margin hinged on a decision by independent Sen.-elect Angus King of Maine, who has not yet said which party he will affiliate with.
There were nine House races that remained too close to call, not counting a Louisiana runoff next month that involves two Republicans. Overall, the GOP secured 234 seats and led for one more, a trend that would translate into a net loss of eight from the current lineup.
In defeat, Democrats pointed to races where they turned tea party-backed conservatives out of power as evidence they had stemmed a tide.
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OBAMA WINS, BUT WASHINGTON WILL REMAIN UNCHANGED AND DYSFUNCTIONAL
WASHINGTON (AP) – President Barack Obama’s victory means that everything he campaigned upon is alive and about to drive the political conversation with his adversaries. Every legacy of his first term is safe and enshrined to history.
Yet big honeymoons don’t come twice and Republicans won’t swoon. If Obama cannot end gridlock, his second term will be reduced to veto threats, empty promises, end runs around Congress and legacy-sealing forays into foreign lands.
Obama will push for higher taxes on the wealthy as a way to shrinking a choking debt and to steer money toward the programs he wants. He will try to land a massive financial deficit-cutting deal with Congress in the coming months and then move on to an immigration overhaul, tax reform and other bipartisan dreams.
He will not have to worry that his health care law will be repealed, or that his Wall Street reforms will be gutted, or that his name will be consigned to the list of one-term presidents who got fired before they could finish. Voters stuck with him because they trusted him more to solve the struggles of their lifetime.
America may not be filled with hope anymore, but it told Mitt Romney to keep his change. And voters sure didn’t shake up the rest of Washington, either.
They put back all the political players who have made the capital dysfunctional to the point of nearly sending the United States of America into default.
The president likely will be dealing again with a Republican-run House, whose leader, Speaker John Boehner, declared on election night that his party is the one with the mandate: no higher taxes.
Obama will still have his firewall in the Senate, with Democrats likely to hang onto their narrow majority. But they don’t have enough to keep Republicans from bottling up any major legislation with delaying tactics.
So the burden falls on the president to find compromise, not just demand it from the other side.
For now, he can revel in knowing what he pulled off.
Obama won despite an economy that sucked away much of the nation’s spirit. He won with the highest unemployment rate for any incumbent since the Great Depression. He won even though voters said they thought Romney would be the better choice to end stalemate in Washington.
He won even though a huge majority of voters said they were not better off than they were four years ago – a huge test of survival for a president.
The suspense was over early because Obama won all over the battleground map, and most crucially in Ohio. That’s where he rode his bailout support for the auto industry to a victory that crushed Romney’s chances.
The reason is that voters wanted the president they knew. They believed convincingly that Obama, not Romney, understood their woes of college costs and insurance bills and sleepless nights. Exit polls shows that voters thought far more of them viewed Obama as the voice of the poor and the middle class, and Romney the guy tilting toward the rich.
The voice of the voter came through from 42-year-old Bernadette Hatcher in Indianapolis, who voted after finishing an overnight shift at a warehouse.
“It’s all about what he’s doing,” she said. “No one can correct everything in four years. Especially the economy.”
Formidable and seasoned by life, Romney had in his pocket corporate success and a Massachusetts governor’s term and the lessons of a first failed presidential bid.
But he never broke through as the man who would secure people’s security and their dreams. He was close the whole time.
“I mean, I looked,” said Tamara Johnson of Apex, N.C., a 35-year-old mother of two young children. “I didn’t feel I got the answers I wanted or needed to hear. And that’s why I didn’t sway that way.”
The election was never enthralling, and it was fought for far too long in the shallow moments of negative ads and silly comments.
It seemed like the whole country endured it until the end, when the crowds grew and the candidates reached for their most inspiring words.
“Americans don’t settle. We build, we aspire, we listen to that voice inside that says ‘We can do better,” Romney pleaded toward that end.
Americans agreed. They just wanted Obama to take them there.
Incumbents get no transition, so Obama will be tested immediately.
A “fiscal cliff” of expiring tax cuts and budget cuts looms on Jan 1.
If they kick in, economists warn the economy will tank, again. Obama, at least, won the right to fight the fight on his terms.
“If I’ve won, then I believe that’s a mandate for doing it in a balanced way,” he said before the election – that is, fixing the budget problem by raising taxes on people instead of just cutting spending. Obama is adamant that he will not agree to extend tax cuts for people making above $200,000 or couples with incomes above $250,000.
He had not even been declared the winner before Boehner offered a warning that the House was still in Republican hands.
“With this vote,” Boehner said, “the American people have also made clear that there is no mandate for raising tax rates.”
Obama, never one to lack from confidence, is ready to take that fight to Congress. In his eyes, he just won it, thanks to the voters.
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22 SIGNS THAT VOTER FRAUD IS WILDY OUT OF CONTROL AND THE 2012 ELECTION WAS A TOTAL SHAM
Michael Snyder
The American Dream
November 14, 2012
After what we have seen this November, how is any American ever supposed to trust the integrity of our elections ever again? There were over 70,000 reports of voting problems on election day, and there are numerous eyewitnesses that claim that they saw voting machines change votes for one candidate to another candidate right in front of their eyes. In several of the swing states there were counties where the number of registered voters exceeded the total voting age population by a very wide margin. How in the world does that happen? Some of the vote totals that were reported in some of the most important swing states were completely and totally absurd, and yet we are just supposed to accept them on blind faith without ever being able to ask any questions. Of course the Romney campaign has already totally given up, so it isn’t as if there is any chance that the results of the presidential election could be overturned anyhow. But if massive election fraud did take place and nobody is held accountable, what kind of message will that send for the future? Will we ever be able to have faith in the integrity of our elections ever again?
The following are 22 signs that voter fraud is wildly out of control and the election was a sham…
#1 According to the Election Protection Coalition, voters across the United States reported more than 70,000 voting problems by 5 PM Eastern time on election day.
#2 There were 59 voting divisions in the city of Philadelphia where Mitt Romney did not receive a single vote. In those voting divisions, the combined vote total was 19,605 for Barack Obama and 0 for Mitt Romney.
#3 The overall voter turnout rate in Philadelphia was only about 60 percent. But in the areas of Philadelphia where Republican poll watchers were illegally removed, the voter turnout rate was over 90% and Obama received over 99% of the vote. Officials in Philadelphia have already ruled outan investigation.
#4 According to WND, one poll watcher in Pennsylvania actually claims that he witnessed voting machine software repeatedly switch votes from Mitt Romney to Barack Obama…
It was in Upper Macungie Township, near Allentown, Pa., where an auditor, Robert Ashcroft, was dispatched by Republicans to monitor the vote on Election Day. He said the software he observed would “change the selection back to default – to Obama.”
He said that happened in about 5 percent to 10 percent of the votes.
He said the changes appeared to have been made by a software program.
Ashcroft said the format for computer programming has a default status, and in this case it appeared to be designating a vote for Obama each time it went to default.
#5 Somehow Mitt Romney won 55 out of the 67 counties in the state of Pennsylvania and still managed to lose the entire state by a wide margin because of the absurd vote totals that Obama ran up in the urban areas.
#6 Barack Obama received more than 98 percent of the vote in 10 out of the 50 wards in the city of Chicago.
#7 Prior to the election, voters in the states of Nevada, North Carolina, Texas and Ohio all reported that voting machines were switching their votes for Romney over to Obama.
#8 There were more than 50 precincts in Cuyahoga County, Ohio where Mitt Romney received 2 votes or less.
#9 There were more than 100 precincts in Cuyahoga County, Ohio where Barack Obama received more than 99 times the votes that Mitt Romney did.
#10 Barack Obama also received more than 99% of the vote in a number of very important precincts down in Broward County, Florida.
#11 Wood County, Ohio (which Obama won) has a voting age population of 98,213, but somehow 106,258 voters were registered to vote on election day.
#12 Ten counties in the swing state of Colorado have a voter registration rate of more than 100%.
#13 Barack Obama did not win in a single state that absolutely requires a photo I.D. in order to vote.
#14 In Ohio, two election judges were caught allowing unregistered voters to cast ballots.
#15 Many Ohio voters that showed up at the polls on election day were surprised when they were informed that they had already voted.
#16 In fact, there were reports all over the nation of people being unable to vote because records showed that they had already voted.
#17 According to U.S. Representative Allen West, there were numerous “voting irregularities” in St. Lucie County, Florida on election day…
“The thing that spurred our curiosity in our race was the fact that at 1 o’clock in the morning on Election Night, all of a sudden there was a 4,000-vote swing that took me from being ahead to put the lead into my opponent’s hands.”
#18 In Wisconsin, there were allegations that Obama voters were actually being bussed in from out of state…
The Democrats stationed a self described “BIG Chicago pro bono attorney” as one of their two observers at this small polling place. He remained at the polling place from 7:00 a.m. until well after 8:p.m. …..A high priced CHICAGO attorney, sitting in a Sheboygan WISCONSIN polling place, observing wards comprised of 1500 voters? …. WHY???
Why would someone from Chicago be observing in Sheboygan Wisconsin? And WHY at such a small polling place? Finally, isn’t it interesting that this would occur at the VERY polling place in which all of the above described events ALSO occurred? AGAIN WHY WOULD A CHICAGO ATTORNEY BE OBSERVING AN ELECTION POLLING PLACE WITH FEWER THAN 1500 VOTERS IN IT, IN SHEBOYGAN WISCONSIN? Of all the places where there has been suspected voting irregularities, and OUTRIGHT FRAUD throughout the ENTIRE United States, WHY HERE? WHY SHEBOYGAN? WHY THIS SMALL WARD?This lawyer spent the day running in and out making, and taking calls, which coincidentally then coincided with influxes of groups of individuals by the van and bus loads, coming in to register, AND VOTE, using what appeared to be copied Allient energy bills. These individuals often did not have photo I.D.’s, could not remember their own addresses without looking at the paper, and became easily tripped, confused and annoyed when questioned.
Many of these same individuals, just so happened to be dressed in/wearing CHICAGO BEARS apparel, and whom openly discussed “catching busses back to Chicago” with each other, with poll workers, via their cell phones in the lobby area just outside the polling place, as well as in the parking lot, both before and AFTER registering and voting.
One woman was dressed head to toe in CHICAGO BEARS apparel including perfectly manicured BEARS fake fingernails!
She complained because registering was taking too long and she had to hurry up to catch her bus back to Chicago.
We have photos of these people in vehicles with plates from different states, photos of them leaving the polls, and other irregularities.
#19 Prior to election day, an Obama for America staffer was caught on video trying to help someone register to vote in more than one state.
#20 It is being alleged that unions in Nevada have been registering illegal immigrants and pressuring them to vote.
#21 According to townhall.com, there was a systematic effort by the Obama campaign to suppress the military vote because they knew that most military votes would go against Obama…
Aiding Obama’s win was a devious suppression of the conservative vote. The conservative-leaning military vote has decreased drastically since 2010 due to the so-called Military Voter Protection Act that was enacted into law the year before. It has made it so difficult for overseas military personnel to obtain absentee ballots that in Virginia and Ohio there has been a 70% decrease in requests for ballots since 2008. In Virginia, almost 30,000 fewer overseas military voters requested ballots than in 2008. In Ohio, more than 20,000 fewer overseas military voters requested ballots. This is significant considering Obama won in both states by a little over 100,000 votes.
#22 According to the Naval Enlisted Reserve Association, it appears that thousands of military votes from this election will never be counted at all.
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DEMOCRATS PUSH TO REDEPLOY OBAMA’S VOTER DATABASE
By Craig Timberg and Amy Gardner | The Washington Post
If you voted this election season, President Obama almost certainly has a file on you. His vast campaign database includes information on voters’ magazine subscriptions, car registrations, housing values and hunting licenses, along with scores estimating how likely they were to cast ballots for his reelection.
And although the election is over, Obama’s database is just getting started.
Democrats are pressing to expand and redeploy the most sophisticated voter list in history, beginning with next year’s gubernatorial races in Virginia and New Jersey and extending to campaigns for years to come. The prospect already has some Republicans worried.
“It’s always hard to play catch-up,” said Peter Pasi, a Republican direct marketer who worked on Rick Santorum’s presidential primary campaign. “It can be done by 2016. I’m much more doubtful it can happen by 2014.”
The database consists of voting records and political donation histories bolstered by vast amounts of personal but publicly available consumer data, say campaign officials and others familiar with the operation. It could record hundreds of pieces of information for each voter.
Campaign workers added far more detail through a broad range of voter contacts — in person, on the phone, via e-mail or through visits to the campaign’s Web site. Those who used its Facebook app, for example, had their files updated with lists of their Facebook friends, along with scores measuring the intensity of those relationships and whether they lived in swing states. If their last names sounded Hispanic, a key target group for the campaign, the database recorded that, too.
The result was a digital operation far more elaborate than the one mounted by Obama’s Republican rival, Mitt Romney, who collected less data and deployed it less effectively, officials from both parties say.
To maintain their advantage, Democrats say they must navigate the inevitable intraparty squabbles over who gets access now that the unifying forces of a billion-dollar presidential campaign are gone.
“If this is all we do with this technology, I think it will be a wasted opportunity,” said Michael Slaby, the Obama campaign’s chief integration and innovation officer.
Tests of whether Obama’s database can be successfully redeployed will come even sooner. Terence R. McAuliffe, a party insider who ran unsuccessfully for governor of Virginia in 2009, has inquired about the data for his gubernatorial campaign next year, say those familiar with the conversations.
“We have been communicating to Obama for America all along about the importance of receiving that data, since Virginia has a 2013 election,” said Brian Moran, the outgoing chairman of the Virginia Democratic Party.
Although McAuliffe is the early Democratic front-runner, many in the party say individual candidates should receive access to such data only after winning the nomination — something that in Virginia can’t happen before the June primary, leaving only a few months before the November general election. The short time frame may make a full data set, should McAuliffe get it, even more valuable.
All Democratic candidates have access to the party’s lists, which include voting and donation histories along with some consumer data. What Obama’s database adds are the more fine-grained analyses of what issues matter most to voters and how best to motivate them to donate, volunteer and vote.
But there are serious logistical challenges to keeping updated a database as large and as detailed as Obama’s, which is why campaign officials are debating how to proceed even though there is wide agreement on the desire to help fellow Democrats and like-minded independent groups.
Slaby, the campaign official, said the database in the near term could be used to organize support for the president’s legislative agenda but eventually might go to the Democratic National Committee or Obama’s presidential library committee once it is established. Or, he said, it could go to a group created to nurture and deploy the database most effectively. No existing group has the technical resources to manage the data, he said.
Slaby said of Obama, “A lot of this will rest on him and what he wants his legacy and the legacy of this organization to mean.”
The database powered nearly everything about Obama’s campaign, including fundraising, identifying likely supporters and urging them to vote. This resulted in an operational edge that helped a candidate with a slim margin in the overall national vote to trounce Romney in the state-by-state electoral college contests.
Obama was able to collect and use personal data largely free of the restrictions that govern similar efforts by private companies. Neither the Federal Trade Commission, which has investigated the handling of personal data by Google, Facebook and other companies, nor the Federal Election Commission has jurisdiction over how campaigns use such information, officials at those agencies say.
Privacy advocates say the opportunity for abuse — by Obama, Romney or any other politician’s campaign — is serious, as is the danger of hackers stealing the data. Voters who willingly gave campaigns such information may not have understood that it would be passed on to the party or other candidates, even though disclosures on Web sites and Facebook apps warn of that possibility.
Chris Soghoian, an analyst at the American Civil Liberties Union and a former FTC technologist, said voters should worry that the interests of politicians and commercial data brokers have aligned, making legal restrictions of data collection less likely.
“They’re going to be loath to regulate those companies if they are relying on them to target voters,” he said.
Slaby said the campaign took great care with the data it collected and will ensure that whoever takes it over will protect it. Such efforts, though, take unusual resources, he said. Building the campaign’s technological systems took nearly two years and, at their peak, involved about 120 paid employees working with data provided by hundreds of thousands of volunteers.
Republicans once held the edge in using technology to identify and motivate voters. After Sen. John F. Kerry (D-Mass.) lost to President George W. Bush in 2004, Democrats invested in building better voter lists and developing a new generation of political operatives skilled in the science of persuasion and motivation.
Although Obama’s 2008 election was hailed for its technological advances, campaign officials acknowledge that the operation fell far short of its hype.
With the benefit of four years of lead time, the campaign was determined to make better use of increasingly sophisticated technology. Driving this was Obama’s data-minded campaign manager, Jim Messina. Among his mentors was Google Executive Chairman Eric Schmidt, who was a regular visitor to what many have said resembled an Internet start-up company within the Chicago campaign headquarters.
The campaign invested heavily in engineers and technologists, including many who had never worked in politics, and used Amazon Web Services to host the voter database on its cloud servers. The key was a program the campaign built — called Narwhal after a predatory whale whose single tusk makes it look a bit like a fat, finned unicorn — that consolidated lists of voters and donors, often collected over years by state party officials and campaigns.
Narwhal allowed related pieces of software, such as those used by field organizers and call center workers, to draw on the information in the voter database and continually update it.
Slaby and others from the campaign said that although it relied on detailed analyses of cable television viewing habits and Web traffic, personal information from those sources was made anonymous and did not flow back into the voter database.
The most important information, officials said, was provided by voters themselves whenever they had contact with the campaign, in person or online, enriching the database with e-mail addresses, cellphone numbers and, crucially, information about what issues most concerned them.
This allowed the campaign’s analysts to test the effectiveness of messages aimed at narrow demographic slices — single women in their 30s worried about health care, for example. Although it was often described as “micro-targeting,” Slaby said the most important element was what he called “micro-listening.”
“If people tell us they’re interested in cats, we probably took that down,” he said.
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THE COMMUNISTS HAVE WON IN AMERICA WITH OBAMA BUT FAILED MISERABLY IN RUSSIA
By Xavier Lerma | Pravda <— A RUSSIAN NEWSPAPER
Putin in 2009 outlined his strategy for economic success. Alas, poor Obama did the opposite but nevertheless was re-elected. Bye, bye Miss American Pie. The Communists have won in America with Obama but failed miserably in Russia with Zyuganov who only received 17% of the vote. Vladimir Putin was re-elected as President keeping the New World Order out of Russia while America continues to repeat the Soviet mistake.
After Obama was elected in his first term as president the then Prime Minister of Russia, Vladimir Putin gave a speech at the World Economic Forum in Davos, Switzerland in January of 2009. Ignored by the West as usual, Putin gave insightful and helpful advice to help the world economy and saying the world should avoid the Soviet mistake.
Recently, Obama has been re-elected for a 2nd term by an illiterate society and he is ready to continue his lies of less taxes while he raises them. He gives speeches of peace and love in the world while he promotes wars as he did in Egypt, Libya and Syria. He plans his next war with Iran as he fires or demotes his generals who get in the way.
Putin said regarding the military,
“…instead of solving the problem, militarization pushes it to a deeper level. It draws away from the economy immense financial and material resources, which could have been used much more efficiently elsewhere.”
Well, any normal individual understands that as true but liberalism is a psychosis . O’bomber even keeps the war going along the Mexican border with projects like “fast and furious” and there is still no sign of ending it. He is a Communist without question promoting the Communist Manifesto without calling it so. How shrewd he is in America. His cult of personality mesmerizes those who cannot go beyond their ignorance. They will continue to follow him like those fools who still praise Lenin and Stalin in Russia. Obama’s fools and Stalin’s fools share the same drink of illusion.
Reading Putin’s speech without knowing the author, one would think it was written by Reagan or another conservative in America. The speech promotes smaller government and less taxes. It comes as no surprise to those who know Putin as a conservative. Vladimir Putin went on to say:
“…we are reducing taxes on production, investing money in the economy. We are optimizing state expenses.
The second possible mistake would be excessive interference into the economic life of the country and the absolute faith into the all-mightiness of the state.
There are no grounds to suggest that by putting the responsibility over to the state, one can achieve better results.
Unreasonable expansion of the budget deficit, accumulation of the national debt – are as destructive as an adventurous stock market game.
During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure no one would want history to repeat itself.”
President Vladimir Putin could never have imagined anyone so ignorant or so willing to destroy their people like Obama much less seeing millions vote for someone like Obama. They read history in America don’t they? Alas, the schools in the U.S. were conquered by the Communists long ago and history was revised thus paving the way for their Communist presidents. Obama has bailed out those businesses that voted for him and increased the debt to over 16 trillion with an ever increasing unemployment rate especially among blacks and other minorities. All the while promoting his agenda.
“We must seek support in the moral values that have ensured the progress of our civilization. Honesty and hard work, responsibility and faith in our strength are bound to bring us success.”- Vladimir Putin
The red, white and blue still flies happily but only in Russia. Russia still has St George defeating the Dragon with the symbol of the cross on its’ flag. The ACLU and other atheist groups in America would never allow the US flag with such religious symbols. Lawsuits a plenty against religious freedom and expression in the land of the free. Christianity in the U.S. is under attack as it was during the early period of the Soviet Union when religious symbols were against the law.
Let’s give American voters the benefit of the doubt and say it was all voter fraud and not ignorance or stupidity in electing a man who does not even know what to do and refuses help from Russia when there was an oil spill in the Gulf of Mexico. Instead we’ll say it’s true that the Communists usage of electronic voting was just a plan to manipulate the vote. Soros and his ownership of the company that counts the US votes in Spain helped put their puppet in power in the White House. According to the Huffington Post, residents in all 50 states have filed petitions to secede from the Unites States. We’ll say that these Americans are hostages to the Communists in power. How long will their government reign tyranny upon them?
Russia lost its’ civil war with the Reds and millions suffered torture and death for almost 75 years under the tyranny of the United Soviet Socialist Republic. Russians survived with a new and stronger faith in God and ever growing Christian Church. The question is how long will the once “Land of the Free” remain the United Socialist States of America? Their suffering has only begun. Bye bye Miss American Pie!
How long will America suffer and to what depths?
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PORTER STANSBERRY: GET READY FOR OBAMA’S THIRD TERM AS PRESIDENT IN 2016
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PORTER STANSBERRY: THE THIRD TERM – INSIDE THE SECRET PLAN FOR OBAMA TO RETAIN POWER THROUGH 2020
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THE TWENTY-SECOND AMENDMENT: No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once. But this article shall not apply to any person holding the office of President when this article was proposed by the Congress, and shall not prevent any person who may be holding the office of President, or acting as President, during the term within which this article becomes operative from holding the office of President or acting as President during the remainder of such term.
This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission to the States by the Congress.
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JOSE SERRANO INTRODUCES HR RES 15 THAT WOULD REPEAL THE 22ND AMENDMENT TO THE US CONSTITUTION
By Susanne Posel
Occupy Corporatism
January 7, 2013
Representative Jose Serrano introduced HJ Res 15 last week which is a proposal to repeal the 22nd Amendment to the US Constitution. Serrano has been trying to get such legislation passed since the 1990s. Serrano is bringing the proposal back; however it appears he no more wants Obama to extend his presidency than he wanted all the presidents before Obama to have a longer term.
The proposing and hopeful passage of HJ Res 15 is to install another aspect of social communism in America. Serrano is hoping to capitalize on the fear spreading throughout the population and get a bill passed that would transform our Constitutional Republic into a Communist dictatorship.
Serrano has a been involved in socialist organizations such as the Majority Coalition for a New New York which is a labor/community coalition that claims to have “the interests of working people at heart” while promoting socialist ideology.
In 2006, the Democratic Socialists of America (DSA) Political Action Committee supported and endorsed Serrano for Congressional elections. Once in office, Serrano co-sponsored HR 950, the Job Creation and Infrastructure Restoration Act of 1997. This communist inspired legislation brought together federal jobs with worker unions to ensure equality of pay while funding other socialist programs such as public schools, libraries and public transportation with $250 billion in taxpayer money.
Obama has spoken at events for the DSA as a candidate for senator in 1996. The DSA Democratic works in tandem with the Communist Party USA, the Green Party USA, as well as having ties to ACORN.
Serrano has been an active supporter of Castro by seeking to end the embargo against Cuba by claiming the action hurts American businesses and farmers.
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PRESIDENT OBAMA COULD GET THREE TERMS IF H.J. RES 15 ABOLISHES THE TWENTY-SECOND AMENDMENT TO THE CONSTITUTION
By: Angel Clark | The Examiner
January 5, 2013
Americans around the nation were shocked Friday as they heard about H.J.Res. 15. H.J.Res 15 proposes an amendment to the Constitution of the United States to repeal the Twenty-second Amendment. This would remove the limitation on the number of terms an individual may serve as President. Rep. José Serrano (D- NY15) introduced the controversial joint resolution on Friday, the second day of the 2013 legislative session.
The last President to serve more than two terms was Franklin D. Roosevelt. Roosevelt served three full terms as President and was elected to a fourth term. Roosevelt died 83 days into his fourth term in office.
Congress passed the Twenty-second Amendment on March 21, 1947. The required number of states ratified it in 1951. There have been numerous attempts to repeal the Twenty-second Amendment, including a previous attempt by Rep. José Serrano. Rep. Serrano attempted to repeal the Twenty-second Amendment with H.J.Res. 5 in 2009.
Opponents of H.J.Res. 15 are being urged to inform their representatives of their opinions and to voice their opinion on PopVox.com.
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H.J. RES. 15: PROPOSING AN AMENDMENT TO THE CONSTITUTION OF THE UNITED STATES TO REPEAL THE TWENTY-SECOND ARTICLE OF AMENDMENT
- Introduced: Jan 04, 2013 (113th Congress, 2013–2015)
- Sponsor: Rep. José Serrano [D-NY15]
- Status: Referred to Committee
- Status
- This resolution was assigned to a congressional committee on January 4, 2013, which will consider it before possibly sending it on to the House or Senate as a whole.
- Progress
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Introduced Jan 04, 2013 Referred to Committee Jan 04, 2013 Reported by Committee … Passed House … Passed Senate … Signed by the President … - Prognosis
- 0% chance of getting past committee.
0% chance of being enacted or passed.Only 15% of House joint resolutions made it past committee and only 10% were enacted or passed in 2009–2010. [show factors | methodology]
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SIX REASONS WHY BARACK OBAMA COULD BE ANOTHER THREE TERM POTUS IN THE MAKING
Author: Shred Pillai | Technocrati
For those who believe in celestial interventions in affairs on the earth, there were indications of the re election of President Barack Obama and even a third term in office. But for mundane observers, a look at the events to the run up of the presidential election, its conduct and the post election realities raise the question whether Barack Obama will be the next three term president of the U.S. In fact most of the issues Obama is likely to address might need well over a decade to solve and for a determined President too difficult to give up before he achieve.
A taller President.
By achieving the impossible and winning the re election, Barack Obama has grown taller in stature virtually dwarfing almost everyone else, not just in the U.S. but on the world scene.
“First, let’s remember what Obama did in the first term: he passed the most substantial new element in the American safety net in generations, Obamacare. He helped pass a massive re-regulation of the financial sector, the Dodd-Frank bill. He passed the biggest stimulus package in our history, which I believe–Ezra Klein convinced me of this–prevented the worst economic depression in four generations. He did these things in the first two years, of course, when Democrats controlled Congress, but he did them. They were not chopped liver, whether or not you liked them.” Q&As, Washington Post However, everyone tends to forget the enormity of the unprecedented Post Lehman gloom and doom and impending recession Barack Obama was send out to put right. What is not clear, at least to the rest of the world not familiar with the U.S. politics is the equally massive obstruction he faced from a republican majority in the House.
Add to all of those the spectacular annihilation of the number one enemy of the U.S.A he promised and carried out, matching the incredulity of the 9/11 attack on the nation which has raised the credibility and image of the US and its President as a force not to be taken lightly.
In short the stature of the President has grown beyond that of any of the potential contenders for a long time to come. If President Obama decides to contest a third term, for which he may have plenty of reasons, there won’t be many happy contenders.
Unique Bond of a Leader With His Social Web.
The truth is without the social web and its immense and electrifying power the mystery of Obama would never have happened. At least in such a short time. This special bond which shaped before the 2008 election, which owes to his youth and awareness of the potential of the social media to take his message to a young and savvy supporters will be stronger and forceful in imposing an obligation on himself to pursue the reforms and changing of the United States which he had undertaken but not quite finished. This is indeed the bond which has rendered Obama as the only a Super PAC slaying democrat. In fact, there is no leader in either party who can claim anything similar to this phenomenon which will end if Obama decides not to run for a third term. It is hard to see how the democrats will let that happen.
The Fiscal Deficit.
During the Democratic convention Bill Clinton asserted that one term is too short to remedy the fiscal damage created by the previous administration. But he didn’t say two terms are sufficient. Even the president estimates a minimum of a decade, that too if he can get on with it unhindered. As it is, with a majority in the house, it is questionable how much he can achieve. But if the electorate can see reason and buy the president’s argument to grant him a second term, they are very likely to go with him for a third if the going is good.
Will Hilary? Won’t Hilary?
The big question for the next election is who the Democratic Party candidate is going to be. It is said that Hilary Clinton will be the first choice if she will contest. But if she is ready for it, she couldn’t have stayed away from the campaign as she did, leaving Bill Clinton to let everyone second guess. If anything, Hilary has sent out the impression of an overworked diplomat who needs some rest and certainly not the sign of some one hungry for the power of the First Woman President of the U.S.A and ready to go for it. Hilary must know that at the age of seventy, putting up your feet is a lot more comfortable than the grueling chair in the oval office.
Changing Demographics.
“The demographic which gave the most support to the Republicans yesterday was elderly white people–not exactly the men and women of tomorrow. The age-group that gave Obama the most support was the young. White people supported Romney more than Obama; the country is becoming steadily less white. African-Americans, Latinos and Asian Americans overwhelmingly supported Obama. Latinos and Asian Americans are the fastest-growing categories of our population.”Much has been written about the demographic shift in the US electorate which has turned in favor of Obama on account of his policies and the indifference of the GOP. This shift which will widen in the next election will be another compulsion for a obliging and liberal president not to give up too soon.
Shrinking Election Cycle and The Number Crunchers.
“If only it was actually 4 years – 2 years is more like it. With so many people making a living talking and writing about politics, we’ll be starting the next election cycle in 2 years, max.”The impact of the social media, social web, and a huge number of people who have taken election related professions which consumed 2 Billion dollars in the recent election, the election cycle has been reduced to a perennial activity for analysts, strategists and others who predict the outcome. In a way, the next election cycle has already begun and an incumbent president becomes part of the cycle. President Obama has to weigh in if his next term will be enough, especially with the republican majority in the house and obvious absence of an able successor, to achieve his goals. Chances are he will see the need for a third term much like President Franklin Roosevelt before him.
For those willing to ponder, there could be any number of subtle signs of a prolonged Presidency of Barack Obama one can’t ignore. After all it is not as hard as searching for a needle in the hay stack.
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LINDSEY WILLIAMS: THE TIMELINE TO AMERICA’S TOTAL DESTRUCTION
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THE OPEN-AND-SHUT ADMINISTRATION
By Dana Milbank, The Washington Post
On Monday afternoon, open-government advocates assembled in a congressional hearing room to ponder what had become of the Obama administration’s lofty vows of transparency.
“It’s been a really tough slog,” said Anne Weismann of Citizens for Responsibility and Ethics in Washington. “The lack of effective leadership in the White House, in the executive branch, has really made it difficult to have more significant progress.”
“They’ve been reluctant to take positions,” said Hudson Hollister of the Data Transparency Coalition, “and translate that to real action.”
“In the beginning of 2010, [Obama] said he made a significant mistake by abandoning some of his pledges related to transparency,” said Josh Gerstein of Politico, “and that going forward they would do things differently. Seems to me we are forward and it seems to me we’re not doing things any differently.”
It was a more-in-sadness-than-in-anger critique of Obama often heard from the political left, and the moderator, theSunlight Foundation’s Daniel Schuman, was apologetic. “We’re placing a lot of blame at the administration,” he observed. “Or blame isn’t the right word — maybe responsibility.”
No, blame is just fine. The Obama administration’s high level of opacity, though typical of modern presidencies, is troubling precisely because the president was so clear about his determination to do things differently. As recently as early last year, some open-government advocates were still hopeful, presenting Obama with an anti-secrecy award at the White House. But even then, there were signs of trouble: The award presentation wasn’t on his schedule and was closed to reporters.
By certain measures, “overall secrecy has actually increased rather than declined,” said Steven Aftergood, who runs the Federation of American Scientists’ Project on Government Secrecy. “Criminalization of unauthorized disclosures of information to the press has risen sharply, becoming a preferred tactic. Efforts to promote public accountability in controversial aspects of counterterrorism policy such as targeted killing have been blocked by threadbare, hardly credible national security secrecy claims.”
A Washington Post report from this past summer concluded that “by some measures the government is keeping more secrets than before.” Those making Freedom of Information Act requests in 2011 were less likely than in 2010 to get material from 10 of 15 Cabinet agencies, which were more likely to exploit the law’s exemptions.
Also, the National Declassification Center, which Obama established in 2009, had by the summer of 2012 reviewed only 14 percent of the pages it was assigned to review and declassify by the end of 2013.
Now the administration is maintaining silence as lawmakers prepare to pass one of the gravest threats to government transparency in years. A bill passed by the Senate intelligence committee would ban anybody but the top officials and public-relations staff at intelligence agencies from speaking to the media. The proposal, intended to crack down on classified leaks, would significantly set back freedom of the press, thwart whistle-blowers and squelch the airing of dissenting views on intelligence issues. This is part of a broader effort to make it a crime for national security officials to talk to reporters.
The Obama administration has, to its credit, made progress in a few areas: releasing more of the White House visitor logs, disseminating more information about nuclear weapons, disclosing more about intelligence spending, and declassifying more historical records.
But these don’t amount to the “unprecedented level of openness” Obama promised. The few advances that have been made are mostly administrative changes that will end with the Obama administration. “We haven’t seen that many, if any, legislative initiatives from the White House,” Weismann lamented at Monday’s gathering of the open-government advocates.
Consider the Digital Accountability and Transparency Act, a bill with bipartisan support that would make it easier to track government spending by requiring agencies to report expenditures in a uniform way online. The legislation is so uncontroversial that it passed the House on a voice vote. But the Obama administration raised objections — and the transparency law has yet to see the light of day.
THE SUSPENSION OF HABEAS CORPUS IN AMERICA
Obama: a President Who Places Himself Above the Law
Far from having broken with his Republican predecessor, Democratic President Barack Obama has now reinforced the law of exception that he criticised when he was a senator. It is now possible to deprive United States citizens of their fundamental rights because they have taken part in armed action against their own country, but also when they take a political position favourable to those who use military action to resist the Empire. Worse – Barack Obama has added to the law John Yoo’s “Unitary Executive theory,” which puts an end to the principles of the separation of powers as defined by Montesquieu. The security policy of the United States President now escapes all control.
The Presidential elections, and the game of a possible changeover between Democrats and Republicans, cannot hide a marked tendency towards mutation in the form of the United States executive, regardless of the colour of the Presidential ticket. And it seems that the most significant change in the law has taken place under President Obama.
Barack Obama was elected by evoking a future based on respect for the fundamental rights of individuals and nations. But assessment of his presidency reveals an entirely different picture. The visible aspects of this, such as the failure to close down Guantánamo Bay, the maintenance of exceptional military tribunals or the practice of torture in Afghanistan, are only the tip of the iceberg. These elements only allow us to note the continuity between the Bush and Obama administrations. However, there has been such reinforcement of the previous political structure that the form of the state has now changed, creating a hitherto unseen modification of the relation between the authorities and the citizens of the United States.
The possibility of treating US citizens as foreign ’terrorists’ has been a constant objective of the government executive since the attacks of 9/11. By the new prerogative which has been awarded him by the National Defense Authorization Act – that of being able to nullify Habeas Corpus for US citizens and not just for foreign nationals – the Obama administration has achieved what the previous government had only planned but never instituted.
End of Habeas Corpus for foreigners
The Patriot Act, which became effective on the 26th October 2001, already authorised indefinite detention without indictment for foreigners suspected of having links to terrorist organisations.
In order to finally bring these prisoners to justice, special tribunals and military commissions were created by Presidential decree, the Military Order of 13th November 2001 [1]. This executive act enables the trial, by these military tribunals, of foreigners suspected of being in contact with Al Qaeda, or having “committed, prepared or helped to devise acts of international terrorism against the USA”.
The state of war was invoked to justify the institution of these laws, which are so harmful to liberty that they even violate the Military Code itself. These tribunals were set up to judge foreigners suspected of terrorism, and no proof which could invalidate such charges is admissible by either civil or military tribunals.
By voting for the Military Commissions Act [2], in September 2006, the Congress chambers legitimised the military commissions. The law considerably extends the notion of “illegal enemy combatant”, which no longer describes only foreigners captured on the field of battle, but also foreigners or US citizens who have never left their country of origin. While US citizens indicted on the basis of this notion of illegal enemy combatant must be deferred before civil courts, it is not the case for foreigners, who may be judged by military commissions.
In these exceptional courts, defendants do not have the right to choose their own lawyer – instead, the defense lawyer will be a military person designated by the President, who also designates the military judges and determines the degree of “physical coercion” that can be applied to the prisoner. The lawyer also has no access to evidentiary elements of the case which may be classified as “secret”.
Inscription of the ’enemy’ in criminal law
The Military Commissions Act introduces the notion of enemy into criminal law. It gives the President of the United States the power to so designate not only his own citizens, but also any nationals of countries with which the USA is not at war. A person may be prosecuted as an “illegal enemy combatant” not on the basis of proof, but simply because they have been labelled as such by the executive of the United States. Integrated in the law, the charge no longer refers only to a state of emergency, like the Military Order of 2001, but becomes permanent. The inscription of this anomie into the law establishes the exception as a constant. It mutates the judicial and political order by creating a purely subjective law which is at the entire discretion of the executive.
On the 28th October 2009, President Obama signed the Military Commissions Act of 2009 [3] which amended the Military Commissions Act of 2006. The reform was formally necessary for the new administration, because in 2006, Barak Obama was one of 34 senators who opposed the old legislation.
The new law no longer mentions ’illegal enemy combatants’, but “hostile non-protected enemies”. However, the main thrust remains – the inscription of the notion of ’enemy’ into criminal law, and thus the fusion of criminal and military law. But the term “belligerent”, which characterises the notion of ’enemy’, widens the field of incrimination. It no longer concerns only combatants, but also “persons who are engaged in conflict against the USA”. The new definition also applies not only to people captured on or near a field of battle, but also to any individuals who act or even express solidarity with those opposing the US armed forces, or even simply the aggressive policies of the US governement.
The end of Habeas Corpus for US citizens
The National Defense Authorization Act [4] signed by President Obama on the 31st December 2011 authorises the indefinite detention, without trial or indictement, of any US citizens designated as enemies by the executive. The individuals concerned are not only those who have been captured on the field of battle, but also those who have never left the United States or participated in any military action. The law concerns any person designated by the administration as “a member of Al-Qaeda or the Taliban, and who takes part in hostile action against the United States”, but also anyone who “substantially supports these organisations”. This formula enables an extensive and flexible use of the law. For example, it would enable the government to lash out at any civil defence organisations who seek to protect the constitutional rights of US citizens who have been designated by the executive as enemies of the USA.
Primacy of values over the law
By signing this document, Obama has declared that his administration will not authorise the unlimited military detention without trial of US citizens, stating that this possibility would not be contrary to US law, but only to “American values”. It is in the name of these values that he will refrain from using the opportunity offered by the law, but not because this form of imprisonment would be unconstitutional. He confirms that the National Defense Authorization Act does not in fact provide any new prerogatives. The President has had these extraordinary powers since the 14th September 2001, when Congress adopted a resolution stipulating: “that the President is authorised to use all necessary and appropriate force against nations, organisations or persons who have planned, authorised, committed or assisted the terrorist attacks of the 11th September 2001….” So, in opposition to the framework of the text, he aligns himself with G. Bush’s statement that the agreement enabling the President to engage force offers him unlimited authority, in space and time, to act against any potential aggressor, and not only those implicated in the attacks of 9/11.
The authorisation itself is preceded by a foreword stating: “it is recognised that the President has the authority under the Constitution to dissuade and defend against acts of international terrorism against the United States”. G. Bush regularly used this phrase to justify the violations of constitutional rights of US citizens. President Obama has adopted the same interpretation in order to deny the innovative nature of a law which enables him to do away with Habeas Corpus for any US citizen.
A President who places himself above the law
Here, primacy no longer resides in the legal text, but in presidential initiative. It’s entirely at his own discretion that Obama may choose to refrain from using the authorisation, conferred by the law, to imprison US citizens indefinitely and without indictment. In the same way, he opposes the obligation for military detention of foreign terrorists. Speaking of this, he confirms that his administration will “interpret and apply the clauses described below in such a way as to preserve the flexibility upon which our security depends, and to maintain the values on which this country is founded”. Thus he has deliberately side-stepped the rule that once he has signed a text of law, the President will apply it loyally. Obama has reversed the restrictive character of the legal text in favour of Presidential freedom. In the same way, the concept of “American values” takes precedence over the law.
If the National Defense Authorization Act only serves to ratify the prerogatives already possessed by the executive, the problem only concerns the modalities of implementation. The President must not be limited in the fight against terrorism. For Obama, the disputed articles are unconstitutional, not because they concentrate power in his hands, but because they limit his field of action. The contested clauses institute military detention, which limits the required action “flexibility” on the part of the administration – for example, the possibility of detaining foreign prisoners in CIA camps. The articles in question would “contravene the principle of the separation of powers.”
A reversal of the principle of separation of powers
Obama has reversed the method of organisation which was handed down by the Age of Enlightenment. For Montesquieu [5], the objective was to prevent the concentration of political power in a single authority. In order to do this, the powers balance and limit each other. Obama, on the contrary, has opened a breach in the exercise of state power in such a way that the legal authorities can no longer exercise control over the power of the executive. The separation of powers has been abandoned in favour of an absence of limits for Presidential action. This form of organisation is valid for a nation in a state of open war, whose existence is threatened by an external power. The Bush or Obama administrations consider that the authorisation granted by Congress in 2001 for the use of force against the authors of the 9/11 attacks is the equivalent of a declaration of war, like those which were voted during the Second World War. The field of application is however much wider, since the authorisation of 2001 permits the use of force not only against other nations, but also against organisations or even simple individuals.
The National Defense Authorization Act operates a mutation of the legal notion of hostility. Its declared aim is conflict against non-specified adversaries who do not threaten the integrity of the national territory. The struggle against terrorism provides a constantly renewed image of the enemy. It declares a permanent state of war, unbounded by frontiers, which blurs the distinction between interior and exterior, since it does not distinguish between US citizens and soldiers of a foreign power. The political and legal structure, built from this new and asymmetric war, reverses the form of the rule of law. The law is no longer a reduction of the exception, but its continual extension.
OBAMA’S POST ELECTION MILITANCY
By Stephen Lendman | Global Research
Obama didn’t miss a beat. He picked up where he left off. He’s America’s most belligerent leader. He’s waging multiple direct and proxy wars abroad and at home by other means.
Despite pressing unresolved domestic issues, he celebrated his electoral victory belligerently.
On November 7, he bombed Yemen. Washington’s been waging proxy war there for years. Daily attacks occur. Drones are the weapon of choice.
Remote warriors conduct sanitized killing on the cheap. Death and injury tolls rise. Mostly civilians are harmed. On November 8, Press TV headlined “US drone kills three in Yemen.” US mainstream media ignored it.
Hours after Obama’s reelection, a “drone strike near the Yemeni capital has killed three people and injured two others.”
Deadly attacks persist. International, constitutional, and US statute laws are violated. Ordinary people are harmed most. Civilian men, women and children are terrorized and traumatized.
Obama’s victory lap also included more Iranian sanctions. Multiple rounds imposed are illegal. A November 8 State Department press release announced the latest measure, headlining:
“Designations of Iranian Individuals and Entities for Censorship Activities Under the Iran Threat Reduction and Syria Human Rights Act and Executive Order 13628.”
Five Iranian entities and four individuals were targeted. Accusations are part of America’s longstanding anti-Iranian hostility.
Washington claims they engage in “censorship or other activities that prohibit, limit, or penalize freedom of expression or assembly by citizens of Iran, or that limit access to print or broadcast media, including by jamming international satellite broadcasts into Iran, and related activities.”
“U.S. persons are prohibited from engaging in transactions involving the designated individuals or entities, and all designated individuals and members of designated entities are subject to a ban on travel to the United States. This action also blocks, or freezes, the property and interests in property of designated individuals or entities.”
The press release disingenuously claimed Washington “will continue to stand with the Iranian people in their quest to protect their dignity and freedoms and prevent the Iranian Government from creating an ‘electronic curtain’ to cut Iranian citizens off from the rest of the world.”
Sanctions in place impose enormous hardships on Iranian civilians. A health crisis exists. Vital medications aren’t available or are in short supply. Medical equipment breaks down for lack of spare parts.
Human suffering and deaths result. Crimes against humanity breach fundamental international law. Civilians must be protected at all times.
Targeting nonbelligerent countries is lawless and unconscionable. Washington prioritizes it. Obama is America’s most belligerent president in history. He exceeded the worst of his predecessor. His second term may eclipse his war on humanity so far.
A previous article explained US and Israeli anti-Iranian red lines, timelines, deadlines, sanctions, sabotage, subversion, cyber attacks, assassinations, saber rattling, falsified IAEA hype, ad nauseam warmongering, Obama/Netanyahu bluster, spurious accusations, manipulated to fail P5+1 talks, and inflammatory headlines intended to promote regime change and war.
Iran and Syria top America’s target list. Syrian opposition groups wrap up their Doha meeting Friday. AFP said opposition elements are “under pressure to unite and bring in all parties (under) new leadership with Islamists heavily represented.”
On Thursday, a 40-member general secretariat was elected. On Friday, a president will be chosen. Dissension and disarray marked days of discussions.
Washington wants officials in place serving US interests. Russia’s Foreign Ministry said Clinton issued “direct orders about what the Syrian opposition should do to form a ‘government in exile’ and” who’d be permitted to join it.
Syrian National Council (SNC) head Abdelbaset Sieda objected to being marginalized and perhaps shut out. It’s unclear what’s in place.
On November 7, the UK Telegraph headlined “Syrian opposition plan falls apart on eve of Doha conference,” saying:
Ahead of Thursday’s meeting, three dissident factions pulled out. Representatives from the National Coordinating Committee, Syrian Democratic Platform, and Kurdish minority rejected Clinton’s plan. An unnamed Western source said, “There are too many people against this initiative for it to work now.”
SNC military representative Jamal al-Wa’ard said, “The components that were not in the SNC are not coming. The idea of a bigger coalition initiative has failed.”
SNC members rejected Western efforts to impose a solution on Syria. Deputy Revolutionary Council head Ahmed Zaidan said, “Everyone feels that this initiative is imposed. They’ve weaved the cloth but now there is no one to wear it.”
Washington-style diplomacy imposes its will on others whether or not they concur. America, Britain and France announced their support for newly appointed Secretariat members “as the legitimate representative of the Syrian people.”
Financial and military support will be provided. It’s been ongoing since last year. Most weapons used come from Washington, Britain, France, and other NATO members.
British Prime Minister David Cameron toured Middle East countries to sell arms. He also wants the 2011 Syrian weapons embargo lifted. The measure’s text in part says:
“By way of derogation….the competent authorities in the Member States….may authorize the sale, supply, transfer or export of equipment which might be used for internal repression, under such conditions as they deem appropriate, if they determine that such equipment is intended solely for humanitarian or protective use.”
Cameron wants the meaning twisted to do openly what’s been ongoing covertly since conflict began last year. The London Guardian said he’ll press Obama to prioritize Syria. He wants stepped up efforts to oust Assad.
He said he’s determined to act. “That means more help for the opposition, more pressure at the UN, more help for the refugees, more work with the neighbors but also a general sort of:”
“Look, let’s be frank what we’ve done for the last 18 months hasn’t been enough. The slaughter continues. The bloodshed is appalling, the bad effects it’s having on the region, the radicalization but also the humanitarian crisis that is engulfing Syria.”
“So let’s work together on really pushing what more we can do, what other steps we can take to hasten the end of this regime.”
He wants more aggressive options on the table. Expect direct Western intervention if what he has in mind fails. With US elections concluded, it’s more likely. It could happen early next year or sooner.
On November 8, Russia Today interviewed Assad. He’ll not leave Syria, he stressed. He’ll live or die there. He was frank and clear, saying:
“We are the last stronghold of secularism and stability in the region and coexistence, let’s say, it will have a domino effect that will affect the world from the Atlantic to the Pacific and you know the implication on the rest of the world.”
“I am not a puppet. I was not made by the West to go to the West or to any other country,” he said. “I am Syrian, I was made in Syria, I have to live in Syria and die in Syria.”
He doesn’t expect direct Western intervention, but isn’t sure what’s next. He calls “the price of (possible foreign) invasion….more than the whole world can afford.”
“My enemy is terrorism and instability in Syria.”
“The West creates enemies. In the past, it was the communism then it became Islam, and then it became Saddam Hussein for a different reason. Now, they want to create a new enemy represented by Bashar.”
“The fight now is not the president’s fight – it is Syrians’ fight to defend their country.”
It’s “not about the power of the President. It is about the whole society.”
“Syria faces not a civil war, but terrorism by proxies….(F)oreign fighters (came) from abroad.”
“Without foreign rebel fighters and smuggled weapons, we could finish everything in weeks.”
“Al-Qaeda’s final aim is an Islamic emirate in Syria.”
He’ll talk with anyone willing to help Syrians. He won’t waste time with elements wanting conflict to persist for their own interests.
“We are fighting terrorism. We are implementing our constitution by protecting the Syrian people.
Asked if he’d do anything differently from when protests began last March, he said, “I would do what I did on March 15 (2011).”
“Exactly the same. (He’d) ask different parties to have dialogue and stand against terrorists because that is how it started. It did not start as marches.”
“The umbrella or cover was the marches, but within those marches you had militants who started shooting civilians and the army at the same time.”
“Maybe on the tactical level, you could have done something different but as a president you are not tactical. You always take the decision on a strategic level which is something different.”
He hopes Syria will emerge from conflict safe, stable, secure, and more prosperous. He knows it won’t happen soon. Washington’s regime change plans won’t change. Achieving them is something else entirely.
A Final Comment
Daily violence rages in Syria. Terror attacks are a way of life. Car bombs and other violence happen regularly. No place is safe.
The longer conflict persists, the more public support grows for Assad. He’s the last line of defense for ordinary Syrians. Even those against him rely on security forces for help.
Western-backed foreign mercenaries lack support and credibility. Syrians deplore who they are and what they stand for. They want Syria transformed into a fundamentalist caliphate. They want Sharia replacing secular law.
Syrians want to choose their own form of government. They don’t want outsiders doing it for them. Foreign invader control will make Syria ungovernable like Libya. People know what’s going on there and want no part of it.
Even The New York Times expressed some rare candor. It admitted that “rebel fighters….are losing crucial support from a public increasingly disgusted by the actions of some rebels, including poorly planned missions, senseless destruction, criminal behavior and the coldblooded killing of prisoners.”
The shift in public sentiment is palpable. Radicalized opposition elements scare people. Daily bloodshed reminds everyone of what’s coming if they gain control.
An unnamed Saraqib Syrian said, “They were supposed to be the people on whom we depend to build a civil society.” Instead, they’re destroying it.
An Aleppo resident “begged rebels not to camp in a neighborhood telecommunications office. But they did, and government attacks knocked out phone service.”
“One fighter shot into the air when customers at a bakery did not let him cut into a long line for bread. Another was enraged when a man washing his car accidentally splashed him. He shot at him.” He escaped unharmed.
Twenty months after conflict began, people “are trapped in a darkening mood of despair, revulsion and fear that neither side can end the conflict.”
“The most significant change is (that people openly) criticize rebels.”
“Small acts of petty humiliation and atrocities like executions have led many more Syrians to believe that (many) rebels are (morally) depraved….”
They “forced government soldiers from a milk factory, then destroyed it, even though residents needed the milk and had good relations with the owner.”
“They shelled the factory and stole everything. Those are repulsive acts.”
Syrians also know who bears responsibility for months of conflict and what’s at stake. LIke others throughout the region, they deplore Washington for good reason. They want to live free from Western dominance. They may end up dying for it.
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BARACK OBAMA GUILTY OF INTERNATIONAL WAR CRIMES
Alex Jones talks with Rep. Walter Jones (R-N.C.) about Obama’s unconstitutional effort to involve the United States in a possible Syrian intervention under the guise of preventing the use of chemical weapons.
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U.S. GIVES IRAN UNTIL MARCH 2013 TO COOPERATE WITH IAEA
By Fredrik Dahl
VIENNA (Reuters) – The United States set a March deadline on Thursday for Iran to start cooperating in substance with a U.N. nuclear agency investigation, warning Tehran the issue may otherwise be referred to the U.N. Security Council.
The comments by U.S. diplomat Robert Wood to the board of the International Atomic Energy Agency signaled Washington’s growing frustration at a lack of progress in the IAEA’s inquiry into possible military dimensions to Tehran’s nuclear program.
Iran – which was first reported to the U.N. Security Council over its nuclear program by the IAEA’s 35-nation board in 2006 and then was hit by U.N. sanctions – rejects suspicions it is on a covert quest for atomic bomb capability.
But its refusal to curb nuclear work with both civilian and military applications, and its lack of openness with the IAEA, have drawn tough Western punitive measures and a threat of pre-emptive military strikes by Israel.
A year ago, the IAEA published a report with a trove of intelligence indicating past, and some possibly continuing, research in Iran that could be relevant for nuclear weapons.
The IAEA has since tried to gain access to Iranian sites, officials and documents it says it needs for the inquiry, but so far without any concrete results in a series of meetings with Iran since January. The two sides will meet again in December.
In his statement, Wood requested IAEA Director-General Yukiya Amano to say in his next quarterly report on Iran, likely due in late February, whether Tehran has taken “any substantive steps” to address the agency’s concerns.
“If by March Iran has not begun substantive cooperation with the IAEA, the United States will work with other board members to pursue appropriate board action, and would urge the board to consider reporting this lack of progress to the U.N. Security Council,” Wood said, according to a copy of his statement.
“Iran cannot be allowed to indefinitely ignore its obligations … Iran must act now, in substance,” Wood said.
Amano earlier told the board that there had been no progress in his agency’s year-long push to clarify concerns about suspected atom bomb research in Iran, but said he would continue his efforts.
EU SEES IRANIAN “PROCRASTINATION”
A simple majority in the IAEA board would be required to refer an issue to the U.N. Security Council, which has imposed four sanctions resolutions on Iran since 2006.
It is unclear whether Russia and China – which have criticized unilateral Western sanctions on Iran – would back any U.S. initiative to report Iran again to the Security Council.
Wood later told reporters he hoped the December talks between the IAEA and Iran would be fruitful. But, he added, “I have my doubts about the sincerity of Iran.”
The 27-nation European Union told the board that Iran’s “procrastination” was unacceptable. “Iran must act now, in a substantive way, to address the serious and continuing international concerns on its nuclear program,” it said.
Iran’s ambassador to the IAEA, Ali Asghar Soltanieh, criticised what he called “political noise” and “pressure” from the United States and the EU.
Diplomacy between Iran and the powers – the United States, China, Russia, France, Germany, and Britain – has been deadlocked since a June meeting that ended without success.
Both sides now say they want to resume talks soon, after the re-election of U.S. President Barack Obama, and diplomats expect a new meeting in Istanbul in December or January.
Iran is ready for a “face-saving” negotiated solution to the nuclear dispute, but the West must accept the reality that Tehran would never suspend uranium enrichment, Soltanieh said.
Refined uranium can be used to fuel nuclear energy plants, Iran’s stated aim, and also provide bomb material if processed further, which the West suspects is Iran’s ultimate aim.
The West wants Iran to suspend enrichment, but Iran is showing no sign of backing down.
Iran “has provocatively snubbed the international community by expanding its enrichment capacity in defiance of multiple United Nations Security Council resolutions,” Wood said.
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NETANYAHU TO DELAY IRAN ATTACK UNTIL 2013
Paul Joseph Watson
Infowars.com
Wednesday, April 4, 2012
A senior Likud politician has revealed that Israeli Prime Minister Benjamin Netanyahu has decided to delay an attack on Iran until weeks or months before next year’s scheduled Israeli election, dovetailing with other reports that the military assault targeting Iran’s nuclear facilities has been postponed until 2013.
“A senior Likud politician told my confidential Israeli source that Bibi Netanyahu has decided to delay an Israeli attack on Iran until some weeks or possibly months before the next scheduled Israeli election. That will happen by October 2013 unless Bibi determines he wants to go to the nation earlier,”writes Richard Silverstein.
According to the source, Netanyahu is preparing to take a huge gamble by following the strategy of Menachem Begin, whose decision to attack Saddam Hussein’s Osirak nuclear plant shortly before the election in 1981 was a key factor in securing victory at the polls.
Netanyahu will be able to position himself as a war leader and rally the population around getting behind him to face an external threat if he launches the attack prior to the election.
Silverstein’s report coincides with an article published today by the Jerusalem Post which also cites anonymous defense establishment officials who suggest the attack will not take place this year.
“It could happen this year, but also 2013 is a possibility,” said the source. “We will need to wait to see the effect sanctions and diplomacy have on Iran and what the regime decides to do.”
According to the report, Israel is waiting on the outcome of talks between Iran and the P5+1 group comprised of the US, UK, France, Germany, Russia and China, discussions set to begin in mid-April, before making a firm decision.
However, if Iran begins the enrichment of high grade uranium and clearly takes steps to build a nuclear device, Israel could change the timeline and swiftly launch the attack.
Haaretz correspondent Amir Oren’s assertion that the attack had been delayed until spring 2013 as a consequence of a joint US-Israeli wargame that did not produce the desired results.
Oren also claimed that Israeli Defense Minister Ehud Barak’s acknowledgment that Israel would not launch the attack without U.S. support before the American presidential election represented, “An announcement that this war was being postponed until at least the spring of 2013.”
However, with two U.S. aircraft carriers currently positioned in the Persian Gulf, and with another, the USS Enterprise, on its way, along with a number of smaller warships in the region, it remains to be seen whether this is all just a bluff to take the Iranians by surprise.
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Paul Joseph Watson is the editor and writer for Prison Planet.com. He is the author of Order Out Of Chaos. Watson is also a regular fill-in host for The Alex Jones Show and Infowars Nightly News.
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IRAN ATTACK POSTPONED UNTIL SPRING 2013
Paul Joseph Watson
Infowars.com
Thursday, March 29, 2012
Israel’s plan to attack Iran has been postponed until spring 2013 following a war simulation that showed Iran could kill 200 Americans with a single missile strike, according to a report by senior Haaretz correspondent Amir Oren.
“At 8:58 P.M. on Tuesday, Israel’s 2012 war against Iran came to a quiet end. The capricious plans for a huge aerial attack were returned to the deep recesses of safes and hearts. The war may not have been canceled but it has certainly been postponed. For a while, at least, we can sound the all clear: It won’t happen this year. Until further notice, Israel Air Force Flight 007 will not be taking off,” writes Oren.
According to the report, a war simulation conducted by the U.S. Central Command found that an Israeli attack on Iran’s nuclear facilities would immediately be followed by an Iranian missile launch that would kill 200 Americans, a price deemed not worth paying by U.S. generals.
During the same meeting, Israeli Defense Minister Ehud Barak also acknowledged that Israel would not act alone in striking Iran before the U.S. presidential elections in November, according to Oren, meaning that, “For all intents and purposes, it was an announcement that this war was being postponed until at least the spring of 2013.”
A delay in launching the attack until next spring would scupper expectations that the military assault was set to take place before the end of this year, a time frame that Russia understood the Israelis were working to. Last month, Chief of the General Staff of the Russian Armed Forces Nikolai Makarov stated that an Israeli decision on whether or not to attack would be made before the summer.
In January, the U.S. cancelled a joint military exercise with Israel which was perceived by many as a sign that the Americans were getting cold feet.
Earlier this month it was also reported that Israel had “agreed to hold off a strike on Iran’s nuclear sites this year in exchange for receiving U.S. military equipment,” including bunker-busting bombs and refueling planes. The deal was seen as a tacit admission that the Obama administration would support Israel in launching the attack but only after the election in November.
If a decision has been made to postpone the attack, expect the United States to withdraw at least some of its naval might from the Persian Gulf. The U.S. currently has the USS Carl Vinson and the USS Abraham aircraft carriers patrolling the Strait of Hormuz, along with the USS Makin Island, a Wasp-class amphibious assault ship. Earlier this month it was announced that four additional mine countermeasure ships were also heading for the region.
As the Stratfor Naval Update map below illustrates, the USS Enterprise, which many speculated was also heading to the Strait of Hormuz in preparation for a strike on Iran, is now scheduled to visit Piraeus, Greece instead, suggesting a cooling of tensions could be taking place – at least for the time being.
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MARTIN INDYK: THE UNITED STATES WILL GO TO WAR WITH IRAN BY 2013
Martin Indyk believes US likely to go to war with Iran in 2013; says Israel’s insistence that US publicly declare ‘red line’ for Iran an ‘unreasonable requirement’
Former US Ambassador to Israel Martin Indyk predicts that the United States will go to war with Iran as early as 2013. “I’m afraid that 2013 is going to be a year in which we’re going to have a military confrontation with Iran,” he said in an interview on CBS’ “Face the Nation.”
During the interview, Indyk pointed out that the time has not come, yet, for the US to take military action. “Iran doesn’t have a nuclear weapon. While there’s still time, there’s not a lot of time,” he said.
Indyk’s remarks came during a discussion with foreign policy experts on the latest protests in the Middle East and Israel’s public statements pressuring the United States over Iran.
As for the public dispute between Prime Minister Benjamin Netanyahu and President Barack Obama over Iran, Indyk said he does not think that “the difference between Netanyahu and Obama on this is that great, in terms of the President’s commitment not to allow Iran to acquire nuclear weapons.”
On Israel’s insistence that Washington publicly declare a “red line’” that Iran will not be permitted to cross, Indyk said “that is an unreasonable requirement.The idea of putting out a public red line – in effect issuing an ultimatum – is something that no president would do,” he said.
“If you noticed, Governor Mitt Romney is not putting out a red line; Senator McCain didn’t, either. And neither is Netanyahu for that matter, in terms of Israel’s own actions,” he added.
Richard Haas, president of the Council on Foreign Relations, echoed Indyk’s assessment that negotiations with Iran have not dissuaded the Iranians to halt their nuclear program. He said Netanyahu has sought to increase pressure publicly because “he doesn’t want these things to be drawn out indefinitely.”
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MIDDLE EAST WAR COULD ERUPT RIGHT AFTER U.S. PRESIDENTIAL ELECTION
by Vladimir Sazhin | Global Research
While Israel’s right-wing politicians consolidate, the military makes no effort to conceal its active preparations for combat. Military exercise follows military exercise. Some experts even concede that the al-Hartum factory strike, widely attributed in the press to Israel, could have been a rehearsal of sorts.
Iranians are not sleeping through the crisis either; in early October they initiated the launch into Israel’s airspace of the Iranian drone aircraft Hesballoy. On October 29 a large-scale military exercise began in the region along the Iraqi border.
Some political experts claim there will be a risk that a new “big wave” in the Middle East could reach its peak after the American presidential elections, and that the region might plummet into the abyss. They say that Israel is ready to attack Iran’s nuclear facilities.
At the same time the Islamic Republic, whose economy is on the verge of collapse due to sanctions, is also prepared to stand up to Israel.
So far, uncertainty in the US presidential race has served as a containment factor. But what will happen after the elections?
Irina Fedorova, a specialist in Iranian-US relations, delivers a “partly cloudy” forecast for the near future; “Before the Inauguration on January 20 it is hardly possible to anticipate any sudden political moves from the US president, who will be elected on November 6. The main task of the new, or old, president with the US political elite will be the formation of a new government. That is why foreign policy issues will not take precedence in that period.
“The issue that will influence the US president’s opinion on the possibility of a military strike against Iran will be the crisis in Syria, including the problem of Bashar al-Assad. Until those problems are resolved, the US president’s attention will be focused on Syria.”
The Israeli factor cannot be ignored either: the current situation in Israel provides much food for thought. The Knesset is dissolved and elections are set for January 22, the day after the new president of the USA is inaugurated. There are two politicians who are ready for a war against Iran; Benjamin Netanyahu from Likud and Avigdor Lieberman of Israel is Our Home [Yisrael Beiteinu], and there is a very real possibility that one of them will win.
The likelihood of finding a solution to the Iranian problem between the US and Israeli elections cannot be ruled out completely, but during that period, anti-war pressure on the Cabinet will dwindle to almost zero. That is because, although Knesset deputies continue with their duties, they are essentially already “lame ducks” in the absence of a sitting parliament. The current Knesset cannot be expected to address the issue of a no-confidence vote before the elections and, in the event of a successful strike against Iran, as anticipated by its proponents, it would be seen as a vote winner in the election run-up.
While Israel’s right-wing politicians consolidate, the military makes no effort to conceal its active preparations for combat. Military exercise follows military exercise. Some experts even concede that the al-Hartum factory strike, widely attributed in the press to Israel, could have been a rehearsal of sorts.
Iranians are not sleeping through the crisis either; in early October they initiated the launch into Israel’s airspace of the Iranian drone aircraft Hesballoy. On October 29 a large-scale military exercise began in the region along the Iraqi border.
It is not however the growing military activity in Iran that worries Israel, but the Iranian nuclear programme. Recently, there was an announcement that Iran had finished the installation of a centrifuge at the Fordo underground military facility. Western experts believe that Iranian nuclear specialists can now produce uranium enriched not only to 60%, but the 90% purity required for weapons grade material. If true that can only serve to encourage Israel to strike first.
Irina Fedorova observed: “There can be unpredictable decisions in politics and it is possible that the situation could arise when the Israeli military, without Washington’s approval, would start an operation against Iran. In that case the USA would, without doubt, support Israel.”
And many experts believe that that is just what is likely to happen, right after the US presidential elections.
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FOUR SIGNS THAT ISRAEL’S SHOWDOWN WITH IRAN IS ALMOST HERE
By The Week’s Editorial Staff | The Week
Israel warns that the clock is ticking, and that Iran is dangerously close to acquiring nuclear weapons. Is a long-feared military clash looking more and more likely?
Over the last several days, Israeli Prime Minister Benjamin Netanyahu has loudly and repeatedly urged that President Obama draw a “red line” that Iran’s nuclear program can’t cross, warning that without such a line, the Islamic Republic will likely be within reach of building its first atomic bomb in six or seven months. Obama administration officials say Netanyahu’s timetable is wrong, and that Tehran will need at least a year to gather the nuclear fuel it would need, and even longer to fit a warhead onto a missile. Is a violent showdown between Iran and Israel nearly here? Many analysts see Netanyahu’s increasingly vocal demands as proof that conflict is looming. Here, four other signs that the clock might really be running out:
1. Iran is getting more and more belligerent
Tehran hasn’t exactly been mending its ways in the face of aggressive warnings and tightening sanctions, says Tyler Durden at Zero Hedge. In fact, Iran’s Revolutionary Guard recently stoked tensions even further by admitting that “its troops are now on the ground in Syria,” helping the embattled regime in its effort to wipe out the pro-democracy opposition. Of all the disturbing developments surrounding Iran’s refusal to curb its nuclear program, that could be the one “to light this whole mess on fire.”
2. And accusing nuclear inspectors of sabotage
Iran’s nuclear program chief, Fereydoon Abbasi-Davani, says “only mutual trust” will allow his country to soothe the West’s fears about his country’s nuclear program, say Najmeh Bozorgmehr and James Blitz in Britain’s Financial Times, which Iran insists is for peaceful purposes. But it’s becoming pretty clear that neither side believes a word the other says. This week, Abbasi-Davani even accused International Atomic Energy Agency inspectors of having been infiltrated by “terrorists and saboteurs” who in August used explosives to knock out power to one of Iran’s uranium enrichment facilities. The IAEA, of course, denies the charge, and says Iran is simply unwilling to cooperate to provide “credible assurance” that it’s not trying to build a bomb.
3. The West is gathering an armada off Iran
If you need proof that Western leaders think Israel is getting ready to strike Iran, take a look at the Persian Gulf, says Sean Rayment at Britain’s Telegraph. The U.S. and Britain are massing an armada of warships because they believe that Tehran would respond to an attack on its nuclear facilities by mining or blockading the Strait of Hormuz, a shipping lane that handles 35 percent of the world’s oil distributed by sea. This “unprecedented show of force” is a clear sign that the long-feared showdown might be near.
4. Diplomacy is going nowhere
“There is still time” to work out a negotiated solution and avoid war, Martin Indyk, America’s former ambassador to Israel tells CBS News. “I’m pessimistic about that,” though, as Iran hasn’t budged. If nothing changes, “then I am afraid that 2013 is going to be a year in which we’re going to have a military confrontation with Iran.”
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EX-GOLDMAN SACHS ANALYST CHARLES NENNER PREDICTS DOW JONES AT 5,000 AND A MAJOR WAR AT THE END OF 2012
March 10, 2011
When cycle forecaster Charles Nenner told the Fox Business network that the Dow Jones was set to collapse to the 5,000 level on the back of a “major war” that will shake the globe at the end of 2012, hosts David Asman and Elizabeth MacDonald sat in stunned silence.
Nenner, a former technical analyst for Goldman Sachs, is head of the Charles Nenner Research Center, which purports to be able to predict market trends with a computer program based around pattern forecasting and securities analysis. Nenner predicted the stock market and housing collapse two years before the fall of Lehman Brothers.
Nenner now predicts that the Dow Jones Industrial Average is heading down to 5,000 points, a gargantuan drop given that it now hovers above the 13,000 level as well as a major war at the end of 2012 and into 2013.
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CHOSSUDOVSKY: UNITED STATES WILL START WORLD WAR III BY ATTACKING IRAN
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DAVID ICKE: WORLD WAR III WILL BEGIN IN THE MIDDLE EAST
JOEL SKOUSEN: THE GLOBALISTS PLAN TO ATTACK THE UNITED STATES WITH NUCLEAR WEAPONS REVEALED
Published on Oct 20, 2012 by TheAlexJonesChannel
The world is getting increasingly unstable. Debt levels are unsustainable, world financial markets are calling for constant bailouts, and the US is continuing to antagonize the Middle East with military intervention. Any number of these crises can lead to a break down in the social order of the high density urban areas of the United States. Could you survive without public utilities or supermarkets through a winter? Are there enough people around you that are prepared to band together and help one another during social unrest? More and more people are reevaluating their living arrangements to be prepared for prolonged disasters. But what if you have to stay in a big city for work? Have you developed some contingency plans? Are you located in a part of the city that will allow escape through the rural byways? Have you made a transportation plan? And, what can be done to secure your home now in case you can’t get out in a crisis? Strategic Relocation has the answers.
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LYNDON LAROUCHE: ‘GLOBAL THERMAL NUCLEAR WAR UNDER PRESIDENT OBAMA WOULD BE UNSURVIVABLE’
Thermonuclear war and the power to destroy the American people. That power is now in the hands of Barack Obama. LaRouche warns, “If that President is reelected, you are dead! … You have no other issue to celebrate or to even worry about. It will all be taken off your shoulders when they kill you.”
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If the masses of American voters are stupid enough to reelect Barack Obama as president, then the scenario depicted in Unsurvivable will not only be likely, but virtually inevitable.
ELECTROMAGNETIC PULSE ATTACK: ’90% OF AMERICANS WOULD BE DEAD’
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Just think. A nuclear device carried aloft by an Iranian rocket somewhere near the Gulf of Mexico and a blinding flash is seen in the skies.
Within 12 to 18 months, experts predict, 90 percent of Americans would be dead.
That’s the catastrophic threat from the resulting electromagnetic pulse signal, or EMP, that an conference addressed in August 2012.
Computers would cease functioning, and every system that relies on those components – food and fuel deliveries, communications, production, manufacturing, travel and everything associated – would halt.
Forstchen cited a 2004 study on the impact of such an assault on America.
“Testimony in that study said 90 percent, let me repeat that, 90 percent of all Americans would die within 12-18 months of an EMP attack,” he said.
Kahlili warns that Iran already has been practicing with missile launches from ships that simply put the payload straight up and high in the sky.
“That is the signature … of training for an EMP launch.”
Kahlili confirmed it would take only 60 seconds for such a warhead to be launched, and the result would “destabilize the entire infrastructure of the United States within hours.”
GEORGE GREEN: THE ELITE’S PLAN FOR TOTAL GLOBAL DOMINATION
As America and European economies are destroyed, and the current unrest continues in the Middle East and Africa, it will lead Russia, China, and the entire world into World War III. The war will bring about a final nuclear exchange that will be so catastrophic that the world population will demand that world conflict never happen again. This will involve implementing a centralized World Government, with a one world army, a one world currency, and a one world religion that will have complete and total control over every single society.
World War III is being planned and designed to change the face of society forever. The global elite want societies to stay in a world war long enough to change them in such a way that they will never change back again. If you look at the world after a major war like World War I or World War II, societies were never the same again.
The purpose then of World War III, will be to change the face of global society to the point where the elite can introduce a centralized World Government in a way that members of society no longer have their individual freedom, and it will never be able to change back again.
OBAMA’S ECONOMIC POLICIES EXPLAINED FOR EARTHLINGS
Debt multiplication, the quantum multiverse and transdimensional accounting
Mike Adams
Natural News
NOVEMBER 11, 2012
In case you haven’t noticed, the U.S. populace — as well as its delusional political leadership — has resigned itself to the intellectual lazy-ism of “Let’s just SPEND our way out of this mess!”
The mind-numbing re-election of President Obama in the wake of trillions of dollars in new debt created by the man is the death knell for fiscal responsibility in the United States of America. Only under Obama does Big Government not only think it can spend money more wisely than the businesses and workers from which it confiscates wealth; it also believes government is so wise and arrogant that it can confidently spend trillions of dollars today which have yet to be confiscated from taxpayers in the future!
This belief in economic time travel is the fairytale fantasy of the self-congratulatory Washington tax-and-spend elite whose cognitive superiority should be self-evident, they insist, by the mere fact that they have graduate degrees from Harvard and Yale. But if these genius decision makers are so smart, you might wonder, why have all the economic problems of America only gotten worse over the last four years?
If things are bad now, just give it a little more time…
The answer, we are led to believe, is that America hasn’t been expanding government quickly enough. That’s what Obama means when he says he needs four more years to “finish his work” in America. As long as there’s still at least one private sector company, entrepreneur or industry that hasn’t been taken over by the giant sucking sound of Big Government, the work of socialism never really is done, is it?
As Lew Rockwell correctly points out, the secret desire of all government parallels that of a cancer tumor: To grow to infinite size, to commandeer all available resources, and to take over the landscape until nothing is left standing other than itself. If anyone anywhere is still making a decision without the boundaries and nannyspeak of Big Government telling them what to do, then the work of Big Government expansion is never quite finished, it seems.
For God’s sake, if some individual or entrepreneur is somehow allowed to make a decision without the limiting framework of regulations, laws and bureaucracy, the very fabric of reality might tear itself apart, requiring the signing of an executive order commanding the reversal of time itself in order to salvage the universe.
And so Big Government marches forward in a sort of strangulation hobble, squeezing the life out of everything in its path and then marveling at “how much work needs to be done” to reverse the devastation it alone has caused. When Obama claimed he needed “for more years” to get the job done for America, his assumption was that his first four years of economic lunacy were moving things in the right direction but just hadn’t been given enough time to “kick in” yet. This is the intellectual equivalent of thinking that if shooting off one your own feet slows your stride, then shooting off the other foot would magically transform you into a world-class triathlete.
If spending four trillion dollars of money — which will, by definition, need to be confiscated from future taxpayers of America — isn’t working, then the obvious answer is to double down on the government roulette wheel and find out what happens when you spend EIGHT trillion dollars!
And if spending eight trillion dollars doesn’t solve health care, banking, education and the environment, then have no fear, my friends: There’s another democrat waiting in line, right behind Obama, who would gladly take the reins and spend sixteen trillion dollars in the subsequent presidential term. Behind that lunatic is another candidate ready to spend thirty-two, then sixty-four trillion, doubling the debt every four years until the golden stairway of good monetary intentions reaches into the shiny, aura-magical Gates of Heaven itself.
Government jobs save the economy!
Debt doesn’t really matter, the lie goes, as long as we just keep spending because — get this – the growth of government is synonymous with growth of the economy.
Only government is so foolishly delusional that it would report the rise in government jobs as evidence the economy is booming. If government is hiring more TSA workers to rifle through more carry-on bags (or even more travelers’ underpants while they’re still being worn by travelers), then by God something good must be happening in the land of the free, mustn’t it? The busy-ness of the bureaucracy is self-evident proof of its own importance in the grand scheme of things, is it not?
Of course, if this were really true, then we could all experience the ecstasy of economic Valhalla by simply resigning ourselves from all private sector activity and signing up for government jobs en masse. This would lead to government existing for the sole purpose of regulating other parts of government… the bureaucracy resuscitating the bureaucracy, if you will, and never mind that sick gurgling sound that grows more faint with each raspy breath.
This is the ultimate goal of not just Obamism, but of every socialist-leaning government throughout world history: A citizen awakens each morning in his government-subsidized house, drives to work in his government-invested vehicle, arrives at his government job, shuffles a sufficient amount of government paperwork to count as productivity for government bean counters, picks up his child in the afternoon from government-run (indoctrination) schools, buys some genetically modified corn-based groceries made affordable only through government subsidies to selected farmers, and then spends his evening enjoying the programming of government-directed television and government-contrived news.
Is this not pure ecstasy for the intellectually lazy? Heck, why bother with the job part of it at all? It’s so much easier — and nearly just as productive — to live on government-funded food stamps which are used to purchase government-approved junk foods via electronic EBT card transactions processed by government-bailed-out banks.
Your dream government is only moments away…
Hold on… Why limit government to only the waking hours, anyway? Why not have government-mandated sleepy-time dreams where dream behavior is regulated, reviewed and approved by a federal “Department of Somnia” which also, cleverly, counts any dream-state activity toward the GDP? In this manner, those who live on government welfare during their waking hours can “earn back” their daytime handouts by, for example, slaving away in a dream-state Nike shoe factory between the non-conscious hours of two and six a.m.
Enron would have adored such an accounting innovation: Growth is realized in the instant it is imagined! What better way to describe the economic genius of modern-day leftist economics? The sheer IDEA of abundance overrides reality simply because it is decreed as such. And if reality refuses to obediently play along with the desirable economic fairytale, it can simply be killed and resurrected over and over again much like Osama Bin Laden, the proverbial “Weekend at Bernie’s” corpse with a thousand and one uses.
And heck, why limit the genius of Obamanomics to only dream-state activities? Why not invoke the spooky world of the quantum multiverse which physicists say exists as an infinite number of standalone universes, each of which expresses every possible outcome of every life of every conscious being alive today? “In another parallel universe, I work for a living” would be the trendy new line of reasoning for Obama’s ever-expanding class of welfare recipients. “The laws of quantum physics say I am contributing to society in another slice of reality.”
Government economic statistics, therefore, should take into account the efforts, imaginary or otherwise, of workers in ALL realms, not just the one we think of as “reality.” And if economic activity is taking place in an infinite number of parallel universes, then shouldn’t that count as income for the purposes of establishing a whole new line of wealth-multiplying derivates that we might call “quantum wealth instruments?”
Don’t give Ben Bernanke any such ideas, lest he actually threaten to try them. The economic destruction of our own universe is enough damage for now, I’d say. No need to go borrowing money against the future productivity of 10 to the nth dimensions, too.
Introducing your multidimensional President!
Unless of course you entertain the idea that Barack Obama is a multidimensional being with the God-like power of being able to teleport into a dimension where the economy doesn’t suck, grab a few amazing ideas and return to deposit them in our own universe… via the Oval Office which is of course the Stargate portal to the center of the multiverse.
No doubt many of his followers would acknowledge such god-like powers as already being possessed by the man — an idea which is irreconcilable with the realization that Obama must therefore be “holding back” because he hasn’t magically transformed our world into that seductive, feel-good mirage that was promised during the campaign and which might as well have been suspended in the air right in front of the black box voting machines, holding out the promise that if you just click the box beside the name Obama, salvation can soon be yours.
Our savior, Obama, who art in Heaven, is a multidimensional time traveler with economic policies of such otherworldly genius that we Earthly beings just haven’t been able to grasp the brilliance of it all yet.
And for that, we need just four more years, didn’t you know?
THE REAL WINNER OF THE 2012 PRESIDENTIAL ELECTION: THE FEDERAL RESERVE
By Washington’s Blog | Global Research
US News and World Report notes that Bernanke helped Obama to get re-elected by juicing the economy… at least temporarily:
The Federal Reserve had a key role in the presidential election—possibly even a decisive one.
Exit poll results show that, not surprisingly, a majority of voters said the struggling economy was their top concern …. In the end, voters seemed to believe the economy was gradually getting better, and Obama deserved more time to make things right.
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Without question, the biggest factor impacting the economy this fall was the Federal Reserve’s decision in September to extend its controversial quantitative easing program indefinitely, until the economy is back on track for good. This type of monetary easing is an arcane strategy that doesn’t directly impact consumers. But it can have a powerful effect on the economy that filters through to ordinary people in many important ways. And the biggest advocate of quantitative easing has been Fed Chairman Ben Bernanke.
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Consumer confidence, in fact, rose sharply in the weeks leading up to the election, even as business leaders were becoming more worried about problems such as the looming fiscal cliff. That’s one thing that pushed our Obamanometer reading onto Obama’s side. The Fed probably had as much to do with that as anything else.
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Bernanke has also shown himself to be a pragmatist determined to do whatever is necessary to help the economy recover today, even if it risks unpleasant consequences—such as higher inflation—in the future. Voters seem to approve. So maybe the politicians ought to listen.
While Romney is as mainstream economically as Obama, he did make noises about auditing the Fed, criticized additional Fed easing, called Fed stimulus “artificial”, “ineffective” and “just making it up”, promised to appoint some monetary hawks, and said that he would challenge Bernanke’s re-appointment.
Some of it was undoubtedly attempting to appease Ron Paul supporters (and other libertarians), who hate the Fed. But at least some of it appears to have been genuine.
As such, the big winner from the election is the Federal Reserve.
Postscript: Numerous economists say that we must end or substantially rein in the Fed. Both liberal and conservative protesters – Occupy and Tea Party alike – have railed against the unchecked power of the Federal Reserve.
BEN SWANN: WHAT IS QE3 AND WHAT DOES IT MEAN FOR THE UNITED STATES ECONOMY?
Published on Sep 19, 2012 by BenSwannRealityCheck
PETER SCHIFF: THE FEDERAL RESERVE GOES ALL IN ON UNLIMITED QUANTITATIVE EASING, SHOULD HAVE BEEN CALLED OPERATION SCREW
Published on Sep 14, 2012 by SchiffReport
The geniuses at the Federal Reserve have concocted a bold new plan to revive the U.S. economy — print a bunch of money, loan it to Americans at super low interest rates so they can speculate on rising real estate prices, extract the appreciated equity and spend it on consumer goods. In other words, build an economy of real estate, by real estate, and for real estate. The only problem is we’ve been there and done that. The last time it almost destroyed the U.S.economy. I guess almost isn’t quite good enough for the Fed, so now it’s determined to finish the job. These actions will destroy the dollar, Americans’ savings and hurt people on fixed incomes.
JOHN WILLIAMS: FED MONEY PRINTING WILL TRIGGER A SELL-OFF PROVIDING START TO HYPERINFLATION BY 2014
Greg Hunter’s USAWatchdog.com
Economist John Williams says the latest round of “open-ended” QE has set the table for a global “dollar sell-off” and“hyperinflation” no later than 2014. Williams says, “There’s no way the consumer can fuel the economic recovery, and there is no way we’re going to see one in the near future.” Williams predicts, “The Treasury is going to have funding problems, and that means the deficit gets a lot worse.”
Now, there is talk the Fed might increase the money printing. Williams charges, “The Fed’s primary concern is to keep the banking system afloat, and they’re not doing so well with that.” Williams contends there is 12 trillion in liquid dollar assets held outside the U.S. Williams says it is only a matter of time before all the Fed money printing will “trigger a sell-off . . . and that will provide the early start of the hyperinflation.” You think the U.S. is better off today than it was in the last meltdown? Not according to Williams, he thinks, “. . . things have gotten a lot worse.” Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
RON HERA: FOUR WAYS THE U.S. DOLLAR COULD DIE
Published on Oct 31, 2012
Ron Hera of HeraResearch.com joins me to discuss the FOUR ways the Dollar could die. Ron believes the most frightening and imminent possibility leading to the death of the Dollar is not lost confidence in the Dollar or in the Treasury market, but rather in the financial markets as a whole — as Ron puts it, it is the unpunished Financial Crimes that will likely lead directly to a Black Swan event which in turn will lead to a total collapse.
DOLLAR FALLS AS OBAMA WIN PAVES WAY FOR MONETARY EASING
Challenger Mitt Romney disagreed with current Fed policy
BY LUCY MEAKIN AND MONAMI YUI
The dollar dropped the most in a week against the euro on speculation Barack Obama’s re-election as president will boost chances the U.S. will maintain monetary stimulus policies that tend to weaken the greenback.
The U.S. currency fell versus all except two of its 16 major peers as Obama defeated Republican challenger Mitt Romney, who disagrees with current Federal Reserve policy. Obama now faces the so-called fiscal cliff, $600 billion in tax increases and spending cuts due to be implemented in 2013. Australia’s dollar rose for a third day as stocks rallied, boosting demand for higher-yielding assets. The euro gained against the dollar as the Greek parliament prepared to vote on austerity measures.
“The size of the victory was perhaps at the upper end of what people were expecting, so that may mean that his negotiations with the Republicans to stop us going over the fiscal cliff might be a bit easier,” said Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “The idea of unchanged Fed policy is slightly supportive for equities, slightly weaker dollar, and I think that’s how people are playing it today.”
The dollar declined 0.3 percent to $1.2848 per euro at 10:25 a.m. London time after falling 0.1 percent yesterday. The U.S. currency was little changed at 80.37 yen after dropping to 79.81 yen, the weakest level since Nov. 1. The euro rose 0.3 percent to 103.25 yen.
Obama prevailed over Romney narrowly in the popular vote, yet achieved an electoral sweep by carrying the crucial states of Colorado, Ohio and Virginia. With Florida too close to call, Obama had captured 303 Electoral College votes, well beyond the 270 needed to win the White House, compared with 206 for Romney.
‘Dollar Selling’
“Monetary policy will remain loose under Obama so the dollar will be sold,” said Michiyoshi Kato, senior vice president of foreign-currency sales at Mizuho Corporate Bank Ltd. in Tokyo. “Dollar selling may not last that long as the U.S. faces the fiscal cliff.”
Romney had said he disagreed with the Fed’s measures to stimulate the economy and would replace Chairman Ben S. Bernanke at the end of the latter’s term in January 2014. The central bank unveiled a plan in September to buy $40 billion of mortgage-backed securities every month in a third round of so- called quantitative easing after $2.3 trillion purchases of bonds from December 2008 and June 2011.
“Obama’s re-election is likely to boost expectations of continued easing by the Fed,” said Junya Tanase, chief currency strategist at JPMorgan Chase & Co. in Tokyo. “If it leads to lower U.S. yields and higher stock prices, the bias will be for the dollar-yen to fall.”
Extra Yield
The extra yield investors demand to hold two-year U.S. Treasuries instead of similar-maturity Japanese government bonds shrank to 17 basis points, the least since Oct. 16, curbing the allure of the dollar over the yen.
The Australian dollar rose to a six-week high against the U.S. currency as the MSCI Asia Pacific Index of shares gained 0.7 percent and the Stoxx Europe 600 Index advanced 0.6 percent.
“The Aussie has popped in a very short-term market reaction,” said Sacha Tihanyi, a senior currency strategist at Scotiabank in Hong Kong. With Obama poised to begin another four-year term, “the consistent approach that will be executed by the current administration is positive. The one thing we don’t need these days is uncertainty.”
The Australian currency gained 0.2 percent to $1.0453 after rising to $1.0480, the strongest since Sept. 21.
Euro Gains
The euro advanced for a second day versus the dollar as Greek lawmakers prepared to vote on austerity measures needed to keep its bailout on track.
The 238 pages of additional austerity plans, ranging from raising the retirement age to eliminating holiday payments for pensioners, will be debated by the Greek parliament today with a roll-call vote expected after 8 p.m. today. Approval is the first of the parliamentary votes required by Nov. 12 to unlock a 31 billion-euro portion of international aid.
“There is an expectation that will pass, and that again just takes yet another tail risk away from the euro,” Royal Bank of Scotland’s Robson said.
The euro declined 1.2 percent over the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar rose 0.5 percent and the yen fell 1.9 percent.
FED EXIT PLAN MAY BE REDRAWN AS ASSETS NEAR $3 TRILLION
A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month-old blueprint for an exit from record monetary stimulus.
Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit — increasing the risk that a jump in interest rates would crush the economic recovery.
“There is certainly an issue about unwinding the balance sheet” in a way that “is effective and continues to support the recovery without creating inflation,” St. Louis Fed Bank President James Bullard said in an interview in October. The central bank might have to “revisit” the 2011 strategy, he added.
The Fed is already buying $40 billion a month in mortgage- backed securities to boost the economy, and policy makers meeting Dec. 11-12 will consider whether to purchase more assets. John Williams, president of the San Francisco Fed, has proposed adding $45 billion of Treasury securities a month.
The bigger the balance sheet, “the riskier the exit becomes,” Richmond Fed President Jeffrey Lacker said during a Nov. 20 speech in New York. “That is something we need to think carefully about.”
Krishna Memani, director of fixed income at OppenheimerFunds Inc., said a too-rapid sale of assets risks disrupting the $5.2 trillion market for agency mortgage debt.
Finding Ways
“They have to find ways of unwinding the balance sheet without dumping all of it in the marketplace,” said Memani, who oversees a bond portfolio of about $70 billion, including about $6 billion of mortgage-backed securities.
The central bank has been extending the maturities of its assets with Operation Twist, a program to replace $667 billion of short-term debt with the same amount of longer-term bonds that expires this month.
A decision to expand purchases could push the total assets to $4 trillion by the end of 2013, said Michael Hanson, a senior U.S. economist at Bank of America Corp. Total assets stand at $2.86 trillion, up from $869 billion at the end of June 2007.
“The more they add to the balance sheet, the longer it will take to normalize,” said Hanson, who worked on designing tools that will be used in the Fed’s exit strategy as an economist in the monetary affairs division at the Board of Governors in 2009.
Holdings Expand
The central bank’s holdings expanded during the financial crisis as the Fed created several emergency loan programs. Chairman Ben S. Bernanke in November 2008 ordered the purchase of debt issued by housing agencies and mortgage-backed securities in a strategy that he called credit easing.
After the benchmark lending rate was cut almost to zero in December 2008, the Fed continued buying bonds as its primary easing tool. The Fed announced its third round of purchases in September without specifying a total quantity or end date.
Those central bank initiatives have helped push yields on Treasury and housing debt to record lows. The average fixed rate on a 30-yearmortgage fell to 3.31 percent last month, according to a Freddie Mac index.
The yield on the 10-year Treasury note reached 1.39 percent on July 24 and, at 10:24 a.m. in New York, rose 0.03 percentage point to 1.62 percent after a report showed U.S. payrolls expanded last month more than forecast. U.S. Labor Department figures showed the U.S. added 146,000 jobs in November and the unemployment rate fell to 7.7 percent.
Transparency Push
The Fed announced the exit strategy in June 2011 as it sought to assure investors that it had the means to avoid igniting inflation once job growth, wages, and demand started moving up. The plan was part of Bernanke’s push for greater transparency and predictability.
The goal is to return the balance sheet to a pre-crisis size in two to three years and eliminate holdings of housing debt “over a period of three to five years.”
First, the Fed would allow assets to mature without being replaced, a process that will be slower now that the Fed has extended the average duration of its holdings. It would then modify its guidance on how long it plans to keep the federal funds rate near zero and begin temporary operations to drain excess bank reserves.
The Fed would next raise the federal funds rate, and finally, it would start selling securities.
The balance sheet averaged about 6.3 percent of nominal gross domestic product during the decade before the financial crisis. Today, a balance sheet of that size would be around $995 billion rather than $2.86 trillion.
Long Exit
“The exit is going to take a long time,” said Stephen Oliner, a resident scholar at the American Enterprise Institute in Washington and former Fed Board senior adviser. He estimates the Fed’s holdings could rise to more than $4 trillion.
If the Fed were to start bringing its holdings back to their pre-crisis level today, it would have to sell almost $2 trillion over a period of two to three years under its current exit plan. Assuming holdings grow to $4 trillion, asset sales could come to $3 trillion over the same period.
Fed officials haven’t publicly discussed an alternative plan for shrinking the balance sheet. One possibility, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, would be to enlist the help of the U.S. Treasury.
One-time Swap
The Fed could ask to swap longer-term Treasury debt for short-term bills and notes, thus reducing the maturity of its portfolio to accelerate the runoff. The Fed and Treasury could do this partly in a one-time swap, and partly by allowing the Fed to bid on new issues and pay with its holdings of long-term Treasuries, Crandall said.
Because the Fed would have less debt to sell to return its portfolio to a normal size, it could be “more aggressive in the liquidation” of housing-agency securities, he said, which was a priority for Fed officials when they announced the exit strategy.
Asset purchases have made it harder to change the federal funds rate when the time comes to raise borrowing costs.
In the five years before the crisis, excess bank reserves averaged $1.7 billion, so the Fed could alter interest rates by buying or selling comparatively small amounts of short-term debt in open-market operations.
Those reserves are now more than 800 times larger at $1.4 trillion. To move the fed funds rate, the central bank will have to drain or lock up the supply of excess reserves.
Current Plan
Under the current exit plan, the Fed would soak up reserves by using reverse repurchase agreements or offering term deposits.
“I’m not sure we’ll really know, until they undertake a real program, what the effectiveness is” of such measures, said Bank of America’s Hanson. “The amount of reserves could be so large that the draining doesn’t do a whole lot.”
The central bank could lose credibility if its policy actions don’t move the federal funds rate, said Marvin Goodfriend, a former adviser at the Richmond Fed.
“The Fed needs to delicately acquire inflation credibility in the exit,” said Goodfriend, a professor at Carnegie Mellon University’s Tepper School of Business in Pittsburgh. “We are used to tightly managed short-term interest rates.”
The Fed’s other tool is to extinguish reserves by selling bonds back to dealers. Even a fully-explained plan could push up home borrowing costs as traders account for hundreds of billions of dollars of new supply flowing back into the market.
“We are deep into experimentation at this point,” Oliner said. “It’s understandable that people are worried.”
PUMP DELUXE: FEDERAL RESERVE TO SPEND $45 BILLION A MONTH TO BUY BONDS
WASHINGTON — The Federal Reserve sent its clearest signal to date Wednesday that it will keep interest ratessuper-low to support the U.S. economy even after the job market has improved significantly.
The Fed said it plans to keep its key short-term rate near zero until the unemployment rate reaches 6.5 percent or less — as long as expected inflation remains tame. Unemployment is now 7.7 percent.
That plan adds detail to what the Fed had said before: that it expects to keep the rate low until at least mid-2015. For the first time, the Fed is making clear to investors and consumers that it will link its actions to specific economic markers.
“This approach is superior” to setting a timetable for a possible rate increase, Chairman Ben Bernanke said at a news conference. “It is more transparent and will allow the markets to respond quickly and promptly to changes” in the Fed’s economic outlook.
Bernanke made clear that even after unemployment falls below 6.5 percent, the Fed might decide that it needs to keep stimulating the economy. Other economic factors will also shape its policy decisions, he said.
“The Fed has become more explicit and more transparent,” said Steven Wood, chief economist at Insight Economics. “This should provide the markets with much more clarity around monetary policy action in the upcoming year.”
In a statement after its final policy meeting of the year, the Fed said it will also keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth.
The Fed will spend $45 billion a month on long-term Treasury purchases to replace a previous bond-purchase program of an equal size. And it will keep buying $40 billion a month in mortgage bonds.
Those purchases, and the Fed’s commitment to low rates, are intended to spur borrowing and spending in an economy still growing only modestly 3½ years after the Great Recession ended.
Still, Bernanke warned that none of the Fed’s actions could outweigh the economic pain that would be caused by sharp tax increases and government spending cuts that are set to kick in next month. The standoff between President Barack Obama and Republican lawmakers over how to resolve the “fiscal cliff” is already hurting the economy and threatens to push it into a recession next year, he said.
Fed policymakers are hopeful that the crisis can be resolved without significant long-term economic damage, Bernanke said. They foresee slightly faster growth next year and a gradual decline in unemployment.
Bernanke’s comments about the impact of the fiscal cliff seemed to raise some concern among investors.Stocks had risen after the Fed’s statement was released. But by the end of Bernanke’s news conference,market averages were mixed. The Dow Jones industrial average closed down about 3 points. The Standard & Poor’s 500 index rose fractionally.
With its new purchases of long-term Treasurys, the Fed’s investment portfolio, which is nearly $3 trillion, will swell to nearly $4 trillion by the end of 2013 if its bond purchase programs remain fully in place.
The Fed’s plan to keep stimulating the economy at least until unemployment has reached 6.5 percent is intended to reassure consumers, companies and investors about the health of the economy, said Joseph Gagnon, a former Fed official who is a senior fellow at the Peterson Institute for International Economics.
Having only a target date of mid-2015 for any increase in interest rates “sounded gloomy,” as if the economy would remain weak until then, Gagnon said. Specifying an unemployment rate — one close to a normal rate of 6 percent or less — makes clear that the Fed will keep supporting the economy even after the job market has strengthened significantly.
“This is trying to get away from that sense of ‘Oh, my God, this is all about gloom and doom,’ ” Gagnon said.
The Fed’s new plan to link any rate increase to specific levels of unemployment and inflation mirrors a proposal pushed by Charles Evans, president of the Federal Reserve Bank of Chicago.
Updated forecasts that the Fed released Wednesday illustrate why it thinks it should continue helping the economy. It expects unemployment to remain at least 7.4 percent next year and 6.8 percent by the end of 2014. The earliest it sees unemployment dropping below 6.5 percent is the end of 2015.
It predicts the economy will grow no more than 3 percent next year before picking up to as much as 3.5 percent growth in 2014 and as much as 3.7 percent in 2015.
FIVE REASONS WHY THE GOVERNMENT IS DESTROYING THE U.S. DOLLAR
AUGUST 19, 2012
Overview
The United States government has five interrelated motivations for destroying the value of the dollar:
1. Creating money out of thin air on a massive basis is all that stands between the current state of hidden depression, and overt depression with unemployment levels in excess of those seen in the US Great Depression of the 1930s.
2. It is the most effective way to meet not just current crushing debt levels, but to deal with the rapidly approaching massive generational crisis of paying for Boomer retirement promises.
3. It creates a lucratively profitable $500 billion a year hidden tax for the benefit of the US government which is not understood by voters or debated in elections.
4. It is the weapon of choice being used to wage currency war and reboot US economic growth; and
5. It is an essential component of political survival and enhanced power for incumbent politicians.
In this article we will take a holistic approach to how individual short term, medium and long term pressures all come together to leave the government with effectively no choice but to create a substantial rate of inflation that will steadily destroy the value of the dollar.
If you have savings, if you rely on a pension, if you are a retiree or Boomer with retirement accounts – any one of these five fundamental motivations is by itself a grave peril to your future standard of living. However, it is only when we put all five together and see how the motivations reinforce each other, that we can understand what the government has been and intends to continue doing, and then begin the search for personal solutions.
Reason One: The Political Interests Of Self-Serving Politicians
As further covered herein, almost 9% of the US economy is currently funded by deficit spending. From a political perspective, this $1.3 trillion a year is “free money” that politicians get to disburse on a political district and favored special interest group basis. In other words, roughly $1,000 per month, per American household can be used to reward friends and can be withheld from enemies, with personal credit being taken by the benevolent politicians for this never-ending largess.
In past decades, politicians were restricted to spending perhaps $200 or $300 per month per household over and above what the government was collecting in taxes, with the difference being borrowed in the bond market. Anything above that would require the unpleasantness of raising taxes, which might put individual politicians in danger of actually losing their position and privileged lifestyle if he or she wasn’t in a “safe” district. However, in the current climate all limitations are gone, the pork is rolling out on a historically unprecedented basis, and the politicians are wielding unprecedented power.
So why do the limitations usually exist on at least some level, and why are they gone now? Historically, the US government has directly created money out of thin air on a massive basis to fund deficit spending during the Civil War, and also during the Revolutionary War. There is a very good reason such governmental actions are so rare: the value of the US dollar was rapidly destroyed in both instances. So, this spending without limit would not ordinarily be a sensible path. Unless, from the government’s perspective, there were other dangers that were considered a greater threat, that could be addressed only through destroying the value of the dollar.
Reason Two: To Hide A Depression
I have written numerous articles about various aspects of Reasons Two through Five for some years now, and my long term readers and subscribers have been well aware of the building pressures. While the emphasis of this article is on the interweaving of the short, medium and long-term relationships between the five reasons, we will first set the stage by taking a few paragraphs each to briefly review the individual government motivation, with a link to a full length article that covers the problem in more depth.
While you wouldn’t know it from government press releases or media headlines, there has been a gaping hole in the US economy since 2008, as illustrated below:
During the first round of the financial crisis, the US private economy nearly collapsed, threatening to send the US economy straight into deep depression. We’re talking about a $1.3 trillion private sector collapse that was contained only by the government fantastically increasing the money it spent, even while tax revenues were falling. The creation of huge government deficits has been all that has maintained even a facade of semi-normalcy. Remove the mechanism of the government creating money so that it can spend what it doesn’t have, and it is straight to official Great Depression-level unemployment in months.
Even as the true gravity of the situation is hidden from the general public, so too is the true cost of the grossly irresponsible short-term “band-aid” that is being used to cover the hole in the US economy. The destruction of the value of savings in general, as well as the impoverishment of Boomers and retirees in particular, is explained in my article linked below, “Hiding A Depression: How The US Government Does It.”
http://danielamerman.com/articles/Hiding.htm
Reason Three: A Desperate Attempt To Escape Depression By Waging Currency War
The US government has been waging currency war since September of 2010. Simply put, the US would have great difficulty emerging from the depression described above so long as the US dollar is “strong”, because a strong dollar translates to “expensive” US workers who have difficulty competing for market share even in the US economy, let alone abroad. One solution is that when a nation slashes the value of its currency, its workers become relatively cheaper, and they then cannot only better defend their domestic market share, but can begin to take market share in foreign economies as well. However, when a major nation goes on the offensive, many trading partners will counterattack and try to defend their economies, not by making their own currencies stronger, but by making their own currencies weaker, so that their domestic workers remain relatively inexpensive and will be better able to compete for market share.
To successfully go on the currency offensive and negate attempted counterattacks, Federal Reserve Chairman Bernanke chose a radical tool – he publicly announced that the Fed would be directly creating money on a massive scale equal to 9% of the US economy, with the proceeds going to purchase US government debt in the secondary markets. Ultimately, the only protections for a symbolic currency (such as the US dollar) are the policies deployed by the central bank to maintain that value. And when the nation’s chief central banker directly threatens to use his power to destroy the symbol rather than preserve it – the threat is extraordinarily effective.
There is no free lunch, however. While the US government is insisting to the world-at-large that it is not engaged in currency warfare, in order to maintain the plausible deniability that is essential to diplomatic doublespeak, it is also hiding the heavy cost from its own citizens. The US standard of living since the late 1990s has been based on having a “strong” dollar and huge trade deficits – meaning we haven’t actually been able to pay for what we consume for a long time. Therefore, even as jobs and the real economy grow, there is a drop in the overall standard of living, that is not evenly weighted – but is disproportionately born by savers, Boomers and retirees.
Much more information on how this works and the specific ways that older citizens will be bearing most of the pain can be found in my article linked below, “Bullets In The Back: How Boomers & Retirees Will Become Stimulus, Bailout & Currency War Casualties”.
http://danielamerman.com/articles/Bullets.htm
These second and third elements of hiding a depression and waging currency war are tightly interwoven, and could even be called “killing two birds with one stone”. The money doesn’t exist to keep the US from openly plunging into depression, it simply isn’t there for a fiscally responsible government. And covering the economic hole by creating money out of thin air at a rate equal to 9% of the total US economy is so fiscally irresponsible that few nations dare a counterattack of such magnitude. For now, massive monetary creation allows the US to not only cover over the current hidden depression, but also to wage all-out currency war to try to emerge from that depression.
However, to fully understand the agenda of the US government, we have to look at the greatest financial problem of all, and how destroying the value of the dollar is the intended solution.
Reason Four: Dodging National Bankruptcy
Sometimes households reach the unfortunate point where when they add up the credit cards, mortgage payments, and 2nd mortgage payments – they realize that they will never be able to pay their bills. They know they are bankrupt and there is no way of dodging that. But instead of reducing their spending – they may even step up the spending, until all the lines of credit are maxed out, and the bills are all in arrears. Because, once you know bankruptcy is inevitable anyway – why slash your standard of living before you absolutely have to? Partying it up now for another few months won’t change the destination, so why not?
Fortunately, relatively few ordinary people think that way. There is ample evidence, however, that a good number of politicians hold that mindset when it comes to budget deficits that appear impossible to repay, at least in the conventional manner.
There is a lie that is being frequently repeated, which is that our children and grandchildren will be slaving away for decades to pay back the money that we’ve been borrowing to fund this reckless deficit spending. The assumption underlying the lie is that if it weren’t for the current spending, the nation would be fine, and therefore increased taxes will be needed to pay back the borrowing.
Except that the nation isn’t fine. Like most other major developed nations in the world, the United States has been effectively bankrupt for quite some time, with a day of reckoning that is approaching fast with or without the current outrageous level of deficit spending.
The graph below is from my article, “Six Layers Of Deficit Impossibilities Mean Retirement Catastrophe”.
http://danielamerman.com/articles/2011/LdeficitC.html
As developed step by step in “Six Layers”, when we add up current and future Federal deficits, as well as unfunded Social Security, Medicare and other unfunded government promises, the total comes to over $785,000 per non-retired household (over the coming years) that has an above poverty line income. And this isn’t even the total cost – it is the excess cost over and above current estimated tax receipts, which assumes a healthy and growing economy. When we drop the assumption of an economy growing at the same rates of the last 50 years, then the shortfall goes far higher – perhaps over $200 trillion for Social Security and Medicare alone by some recent estimates. That would raise the total shortfall to over $2 million per non-retired and above-poverty-line household.
If taxes can’t pay (and it’s ludicrous to think they can), and the US doesn’t declare bankruptcy, then just how do we cover the gap?
Short answer: pay in full, but make the dollar worth five cents. This drops the per household cost for everything from almost $800,000 down to about $40,000. Painful, but manageable over a period of 20-30 years.
Merely make a dollar worth five cents, and impossible government promises become quite payable. The problem with this “solution” is that it also requires making most people’s life savings worth five cents on the dollar.
Reason Five: Create A Massive Hidden Tax
The Federal Reserve effectively controls short, medium and long-term interest rates in the United States, and this means that it controls the borrowing costs of the United States government. As developed my article linked below, “Hiding A $500 Billion Tax On Savings: How The Government Deceives Millions”, by forcing interest rates below the rate of inflation, the Federal Reserve creates about a half trillion dollar per year “windfall” gain for the Federal government.
http://danielamerman.com/articles/2011/SaveTaxC.html
This is not “free money”, far from it. Every dollar of benefit for the government from interest rate manipulations comes directly out of the pockets of savers. That is, for the government to come out ahead by $500 billion per year requires savers and pension funds to come up short by $500 billion per year. This makes it a tax in all but name. It is also essential to note that two elements have to come together to make this hidden tax work: 1) there have to be low interest rates, and 2) there also has to a substantive real rate of inflation (which can be quite different from the official rate).
From a politician’s perspective this massive tax - almost three times the size of federal corporate taxation - is a “dream tax”. Half a trillion dollars a year is available to spend without raising taxes or increasing deficits. Sure, there is a cost, which is the entirely deliberate destruction of retirement dreams and promises for tens of millions of US workers and retirees – particularly Boomers – as well as pushing forward the insolvency of state and local government pension funds around the country. But the deliberate bankrupting of a generation is a long term problem with no clear accountability and almost no voter understanding, which means it is more or less irrelevant for how political decisions are made today.
The Convergence Of The Five Overwhelming Governmental Motivations
The Long-Term
Let’s add our five powerful motivations together, and see how they interrelate. The truly big picture for both the United States and most other major developed nations is that population growth has been shrinking, long term promises to current and future retirees have been extravagant, and for the most fundamental of demographic and economic reasons, the nations simply can’t afford to pay for those promises.
On a global basis, governments are left with a choice between breaking promises openly – reneging on their legal commitments on a massive scale, possibly having to actually declare bankruptcy in many cases (effectively) – or they can follow the time-honored route that almost every nation which has found itself in the situation and has had the ability do so has done: they can pay their promises in form, but not in substance. They can inflate away the value of their national currency, and pay everything in full, but that currency will only be worth a fraction of what it is right now.
So the larger the future shortfall, the more overwhelming the motivation to destroy the value of the currency, and the greater the degree of destruction of the currency that is necessary in order to turn impossible promises into possible promises.
The Short Term
Let’s look at the short term in the United States. As previously discussed, there is currently a gaping hole in the US economy that is equal to about 9% of the size of the economy if we look to official deficits, and about 12% if we include the hidden $500 billion tax on savings. This economic hole in the private sector is being covered over by massive overt deficit spending and hidden taxation which account for about one in every eight dollars spent in the nation this year. If this massive deficit spending were to cease abruptly, then the US would go straight to an overt Great Depression level of unemployment.
So, if you’re in the political establishment and you don’t want outright political revolution, then you have enormous incentives to try to keep an appearance of normalcy in the economy, no matter how much damage you need to do to the long-term value of your nation’s currency.
Tying Together Long-Term & Short-Term
Short term interests are served by recklessly risking the long-term value of the nation’s currency, thereby providing the funding to cover over the hole in the economy. Long term interests in terms of impossible government promises that must be inflated away, are served by the destruction of the value of the nation’s currency. The more severe this destruction, the less the cost of repaying impossible promises. Arguably then, the more risk that is taken in “papering” over the hole in the current economy, and the more severe the long term consequences, the better off the government will be in the future when it comes to its ability to cheaply repay debts that are otherwise unpayable.
The Medium-Term & The Real Economy
Now, let’s go to the medium term and consider the real world factor that bridges the current economic crisis and the long term economic crisis. That bridge is ultimately all that really matters, and it is the real economy. Without a powerful and rapidly growing real economy, there is no way out of the hidden depression in which the United States currently finds itself. American workers must be competitive if they are to regain both domestic and international market share (a situation many other nations are in as well).
Mixing Medium & Long Term
Nobody knows the true extent of the trouble the US economy is in over the next ten, twenty and thirty years as Boomer retirement promises come due in full. But we do know that:
1) It would take a historically unprecedented rate of economic growth to meet the promises in current dollars without bankrupting the nation; and
2) The financial devastation could be far, far worse than most estimates if the US economy does not perform like it has historically, but instead continues the downward spiral of a wounded empire that is losing prominence and economic power on the world stage.
When we strip away the common assumption of endlessly compounded 3% real economic growth, and say that we are either losing economic growth or just breaking even, then the future shortfalls grow even more staggering. Indeed, when we include the academic evidence of the growth-slowing effects of large government deficits, and then add in the reduction in consumption expected for an aging population, then we may already be in an effectively zero per capita growth mode, as covered in my article linked below.
http://danielamerman.com/articles/2012/OverC.html
Bridging Medium, Long & Short-Term
What the short-term and long-term both have in common is that the only true solution is ultimately to grow the real economy. The real economy has been hampered since the mid-1990s by a short sighted “strong dollar” policy that has enormously benefited major international corporations and major banks, while creating a debt-driven illusion of personal prosperity for many of the citizens of the United States. It’s a standard of living that could never be paid for, but rather was reliant on other nations lending the US the money to fund that lifestyle, so long as we agreed to keep the dollar “strong”. The effective terms were that certain other nations lent us the money to live it up without our being able to pay for the goods that delivered our subsidized standard of living, and in exchange we let them take our industries and jobs.
To re-grow the real economy and regain economic competitiveness, the US must remove the handcuffs on American workers, which requires driving down the value of the US dollar. This has to be done in a competitive world, where other nations want to defend their own market share by driving down the value of their own currencies. So for the US to be “successful” – it has chosen a strategy of taking more radical actions in a threat to destroy the value of its currency than other nations dare counter.
In other words, the other nations aren’t as willing to recklessly and rapidly wipe out the value of their citizen’s savings as the United States is, which gives the US a temporary “advantage” in currency brinksmanship.
Most conveniently, the otherwise impossible cost of covering over the gaping hole in the US economy can be paid for through open monetization on deliberate, prominent display for the whole world to see. The strategy is to simply manufacture the money out of nothingness, which then lets the rest of the world know that the US dollar is in grave peril of swiftly diving in value. This then drives down the value of the dollar, and reboots the real economy and real American competitiveness, even as the hole in the economy is temporarily covered over. Perhaps most important of all, this begins the rapid destruction of the value of the dollar as necessary to avert formal US bankruptcy when it comes to paying the enormous retirement and health care obligations that are coming due over the next ten, twenty and thirty years.
To understand the true extent of the danger to your savings, you need to see how all three of these levels work together: hiding the depression in the short-term, rebooting the real economy in the medium-term, and the long-term destruction of the value of the dollar so that impossible promises can be paid in form, but not in substance. All three strategies effectively require the destruction of the value of the savings of older Americans and retirees in particular. It is your future lifestyle that must be sacrificed for all of these goals to happen together.
Adding In Short-Term Political Benefits
And finally, and not of incidental importance although perhaps not quite as fundamental as the other factors, there are enormous political rewards for those currently in power when it comes to pursuing this approach. As covered in the “Hiding A Depression” article, the government’s share of the US economy swiftly went (with very little commentary) from 35% of the total economy to 43% of the total economy. In the real world of politics, what is most important is that this growth comes in the form of discretionary spending, that (normally) rare commodity that is the currency of pure power. In normal circumstances, between government transfer payments, the military, and the established bureaucracy, there isn’t all that much discretionary money for politicians to channel for their partisan desires. That has turned upside down, as discretionary money was created so fast, that Congress and the Administration initially had trouble figuring out how to spend it.
The government has enormously increased its control over the day-to-day economic life of the nation. This control is not being exercised on an altruistic basis, but is being used in the exercise of raw political power. Politicians have the unprecedented ability, almost without limitation, to take the $1000+ per month per American household in money that is being created out of the void ($1,300 with the hidden savings tax), and to use it to reward their friends and hurt their enemies. And many are doing so.
These five motivations all exist simultaneously, they all wrap around each other in their numerous interrelationships, and they all reinforce each other. What they all have in common is an overwhelming incentive to make sure that a dollar does not remain worth a dollar.
The Personal Implications
The implications of the five powerful motivations all coming together are that we have multiple overwhelming reasons to believe that the value of the US dollar (and many other currencies) will be mostly or near entirely destroyed in coming years. Now, when paper wealth is wiped out for much of the population, and real wealth (goods and services) for a nation has taken a blow – but is not wiped out – then what we necessarily have is a massive redistribution of wealth. And there is very good reason to believe that the largest redistribution of wealth that has been seen in modern times is likely to be occurring over the coming years.
Inherently, the older that you are – the more likely that wealth will be redistributed away from you instead of towards you. A giant “Reset Button” will likely be pressed for the dollar, and with it the value of your savings and investments will likely evaporate – that is, if you have been following the conventional wisdom for retirement investing. You may not have that many working years left to recover from the damage, and jobs may be difficult to come by even if you want to work.
So you are competing against younger workers not just for jobs, but for goods and services, where they have the current income in inflation-adjusted terms to buy these desirable goods – and you don’t. Thus, the older citizens become impoverished relative to the younger citizens. This is a history that has been repeated time and again across nations and across the centuries – it is the pensioners that get nailed when the currency reset button gets pressed.
Making it even more difficult is that the hidden savings tax acts as a giant anchor, making it near impossible for fixed income savers to break even on an inflation-adjusted basis, let alone compound their wealth like all the financial planning models promised. Simultaneously, the likely reduced economic growth rate associated with a heavily indebted and aging nation will likely slash further stock returns, or even turn them negative in after-inflation and after-tax terms.
Both of the pillars underlying conventional financial planning have shattered and fallen, which leaves traditional retirement investors with two negative return asset classes (in inflation-adjusted terms) that are steadily destroying wealth over the long term rather than compounding it. Even as the slick investment firm ads featuring vibrantly healthy and wealthy retirees enjoying their active and prosperous retirements, continue to fill the airwaves and financial media.
11 INTERNATIONAL AGREEMENTS THAT WILL BE THE DEATH OF THE U.S. DOLLAR
The Economic Collapse
July 18, 2012
The U.S. dollar isn’t dead yet, but the nails are being hammered into the coffin even as you read this article. For decades, most of the nations of the world have used the U.S. dollar to buy oil and to trade with each other. In essence, the U.S. dollar has been acting as a true global currency.
Virtually every country on the face of the earth has needed big piles of U.S. dollars for international trade. This has ensured a huge demand for U.S. dollars and U.S. government debt. This demand for dollars has kept prices and interest rates low, and it has given the U.S. government an incredible amount of power and leverage around the globe. Right now, U.S. dollars make up more than 60 percent of all foreign currency reserves in the world. But times are changing. Over the past couple of years there has been a whole bunch of international agreements that have made the U.S. dollar less important in international trade. The mainstream media in the United States has been strangely quiet about all of these agreements, but the truth is that they are setting the stage for a fundamental shift in the way that trade is conducted around the globe. When the petrodollar dies, it is going to have an absolutely devastating impact on the U.S. economy. Sadly, most Americans are totally clueless regarding what is about to happen to the dollar.
One of the reasons the Federal Reserve has been able to get away with flooding the financial system with U.S. dollars is because the rest of the world has been soaking a lot of those dollars up. The rest of the world has needed giant piles of dollars to trade with, but what is going to happen when they don’t need dollars anymore?
Could we see a tsunami of inflation as demand for the dollar plummets like a rock?
The power of the U.S. dollar has been one of the few things holding up our economy. Once that leg gets kicked out from under us we are going to be in a whole lot of trouble.
The following are 11 international agreements that are nails in the coffin of the petrodollar….
#1 China And Russia
China and Russia have decided to start using their own currencies when trading with each other. The following is from aChina Daily article about this important agreement….
China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
#2 China And Brazil
Did you know that Brazil conducts more trade with China than with anyone else?
The largest economy in South America has just agreed to a huge currency swap deal with the largest economy in Asia. The following is from a recent BBC article….
China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.
It will allow their respective central banks to exchange local currencies worth up to 60bn reais or 190bn yuan ($30bn; £19bn).
The amount can be used to shore up reserves in times of crisis or put towards boosting bilateral trade.
#3 China And Australia
Did you know that Australia conducts more trade with China than with anyone else?
Australia also recently agreed to a huge currency swap deal with China. The following is from a recent Financial Express article….
The central banks of China and Australia signed a A$30 billion ($31.2 billion) currency-swap agreement to ensure the availability of capital between the trading partners, the Reserve Bank of Australia said.
“The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms, and to strengthen bilateral financial cooperation,” the RBA said in a statement on its website. “The agreement reflects the increasing opportunities available to settle trade between the two countries in Chinese renminbi and to make RMB-denominated investments.”
China has been expanding currency-swap accords as it promotes the international use of the yuan, and the accord with Australia follows similar deals with nations including South Korea, Turkey and Kazakhstan. China is Australia’s biggest trading partner and accounts for about a quarter of the nation’s merchandise sales abroad.
#4 China And Japan
The second and third largest economies on the entire planet have decided that they should start moving toward using their own currencies when trading with each other. This agreement was incredibly important but it was almost totally ignored by the U.S. media.
According to Bloomberg, it is anticipated that this agreement will strengthen ties between these two Asian giants….
Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.
Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs, the Japanese and Chinese governments said.
China is Japan’s biggest trading partner with 26.5 trillion yen ($340 billion) in two-way transactions last year, from 9.2 trillion yen a decade earlier.
#5 India And Japan
It is not just China making these kinds of currency agreements. According to Reuters, India and Japan have also agreed to a very large currency swap deal….
India and Japan have agreed to a $15 billion currency swap line, Japan’s Prime Minister Yoshihiko Noda said on Wednesday, in a positive move for the troubled Indian rupee, Asia’s worst-performing currency this year.
#6 “Junk For Oil”: How India And China Are Buying Oil From Iran
Iran is still selling lots of oil. They just aren’t exchanging that oil for U.S. dollars as much these days.
So how is Iran selling their oil without using dollars?
A Bloomberg article recently detailed what countries such as China and India are exchanging for Iranian oil….
Iran and its leading oil buyers, China and India, are finding ways to skirt U.S. and European Union financial sanctions on the Islamic republic by agreeing to trade oil for local currencies and goods including wheat, soybean meal and consumer products.
India, the second-biggest importer of Iran’s oil, has set up a rupee account at a state-owned bank to settle as much as much as 45 percent of its bill, according to Indian officials. China, Iran’s largest oil customer, already settles some of its oil debts through barter, Mahmoud Bahmani, Iran’s central bank governor, said Feb. 28. Iran also has sought to trade oil for wheat from Pakistan and Russia, according to media reports from the two countries.
#7 Iran And Russia
According to Bloomberg, Iran and Russia have decided to discard the U.S. dollar and use their own currencies when trading with each other….
Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade, Iran’s state-run Fars news agency reported, citing Seyed Reza Sajjadi, the Iranian ambassador in Moscow.
The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization, the ambassador said.
#8 China And Chile
China and Chile recently signed a new agreement that will dramatically expand trade between the two nations and that is also likely to lead to significant currency swaps between the two countries….
The following is from a recent report that described this new agreement between China and Chile….
Wen called on the two nations to expand trade in goods, promote trade in services and mutual investment, and double bilateral trade in three years.
The Chinese leader also said the two countries should enhance cooperation in mining, expand farm product trade, and promote cooperation in farm product production and processing and agricultural technology.
China would like to be actively engaged in Chile’s infrastructure construction and work with Chile to promote the development of transportation networks in Latin America, said Wen.
Meanwhile, Wen suggested that the two sides launch currency swaps and expand settlement in China’s renminbi.
#9 China And The United Arab Emirates
According to CNN, China and the United Arab Emirates recently agreed to a very large currency swap deal….
In January, Chinese Premier Wen Jiabao visited the United Arab Emirates and signed a $5.5 billion currency swap deal to boost trade and investments between the two countries.
#10 China And Africa
Did you know that China is now Africa’s biggest trading partner?
For many years the U.S. dollar was dominant in Africa, but now that is changing. A report from Africa’s largest bank, Standard Bank, says the following….
“We expect at least $100 billion (about R768 billion) in Sino-African trade – more than the total bilateral trade between China and Africa in 2010 – to be settled in the renminbi by 2015.”
#11 Brazil, Russia, India, China And South Africa
The BRICS (Brazil, Russia, India, China and South Africa) continue to become a larger factor in the global economy.
A recent agreement between those nations sets the stage for them to increasingly use their own national currencies when trading with each other rather than the U.S. dollar. The following is from a news source in India….
The five major emerging economies of BRICS — Brazil, Russia, India, China and South Africa — are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade at the fourth summit of their leaders here Thursday.
The two agreements that will enable credit facility in local currency for businesses of BRICS countries will be signed in the presence of the leaders of the five countries, Sudhir Vyas, secretary (economic relations) in the external affairs ministry, told reporters here.
The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28 percent over the last few years, but at $230 billion, remains much below the potential of the five economic powerhouses.
So what does all of this mean?
It means that the days of the U.S. dollar being the de facto reserve currency of the world are numbered.
So why is this important?
In a previous article, I quoted an outstanding article by Marin Katusa that detailed many of the important benefits that the petrodollar system has had for the U.S. economy….
The “petrodollar” system was a brilliant political and economic move. It forced the world’s oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world’s oil for free, since oil’s value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.
The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.
So what happens when the petrodollar dies?
The following are some of the things we are likely to see….
-Oil will cost a lot more.
-Everything will cost a lot more.
-There will be a lot less foreign demand for U.S. government debt.
-Interest rates on U.S. government debt will rise.
-Interest rates on just about everything in the U.S. economy will rise.
And that is just for starters.
As I wrote about earlier today, the Federal Reserve is not going to save us. Ben Bernanke is not somehow going to pull a rabbit out of a hat that will magically make everything okay. Fundamental changes to the global financial system are happening right now that are impossible for Bernanke to stop.
We should have never gone into so much debt. Up until now we have gotten away with it, but when demand for U.S. dollars and U.S. debt dries up we are going to experience a massive amount of pain.
Keep your eyes and ears open for more news stories like the ones referenced above. The end of the U.S. dollar is going to be a very significant landmark on the road toward the total collapse of the U.S. economy.
BEN SWANN: FIAT DOLLAR IS THE REAL REASON FOR HIGH GAS PRICES
WHY NOT PRINT MORE MONEY?
OUR COLLAPSING ECONOMY AND CURRENCY
By Dr. Paul Craig Roberts | Global Research
Is the “fiscal cliff” real or just another hoax? The answer is that the fiscal cliff is real, but it is a result, not a cause. The hoax is the way the fiscal cliff is being used.
The fiscal cliff is the result of the inability to close the federal budget deficit. The budget deficit cannot be closed because large numbers of US middle class jobs and the GDP and tax base associated with them have been moved offshore, thus reducing federal revenues. The fiscal cliff cannot be closed because of the unfunded liabilities of eleven years of US-initiated wars against a half dozen Muslim countries–wars that have benefitted only the profits of the military/security complex and the territorial ambitions of Israel. The budget deficit cannot be closed, because economic policy is focused only on saving banks that wrongful financial deregulation allowed to speculate, to merge, and to become too big to fail, thus requiring public subsidies that vastly dwarf the totality of US welfare spending.
The hoax is the propaganda that the fiscal cliff can be avoided by reneging on promised Social Security and Medicare benefits that people have paid for with the payroll tax and by cutting back all aspects of the social safety net from food stamps to unemployment benefits to Medicaid, to housing subsidies. The right-wing has been trying to get rid of the social safety net ever since Franklin D. Roosevelt constructed it, out of fear or compassion or both, during the Great Depression.
Washington’s response to the fiscal cliff is austerity: spending cuts and tax increases. The Republicans say they will vote for the Democrats’ tax increases if the Democrats vote for the Republican’s assault on the social safety net. What bipartisan compromise means is a double-barreled dose of austerity.
Ever since John Maynard Keynes, economists have understood that tax increases and spending cuts suppress, not stimulate, economic activity. This is especially the case in an economy such as the American one, which is driven by consumer spending. When spending declines, so does the economy. When the economy declines, the budget deficit rises.
This is especially the case when an economy is weak and already in decline. A declining economy means less sales, less employment, less tax revenues. This works against the effort to close the federal budget deficit with austerity measures. Instead of strengthening the economy, the austerity measures weaken it further. To cut unemployment benefits and food stamps when unemployment is high or rising would be to provoke social and political instability.
Some economists, such as Robert Barro at Harvard University, claim that stimulative measures, the opposite of austerity, don’t work, because consumers anticipate the higher taxes that will be needed to cover the budget deficit and, therefore, reduce their spending and increase their saving in order to be able to pay the anticipated higher taxes.
In other words, the Keynesian effort to stimulate spending causes consumers to reduce their spending. I don’t know of any empirical evidence for this claim.
Regardless, the situation on the ground at the present time is that for the majority of people, incomes are stretched to the limit and beyond. Many cannot pay their bills, their mortgages, their car payments, their student loans. They are drowning in debt, and there is nothing that they can cut back in order to save money with which to pay higher taxes.
Many commentators are complaining that Congress will refuse to face the difficult issues and kick the can down the road, leaving the fiscal cliff looming. This would probably be the best outcome. As the fiscal cliff is a result, not a cause, to focus on the fiscal cliff is to focus on the symptoms rather than the disease.
The US economy has two serious diseases, and neither one is too much welfare spending.
One disease is the offshoring of US middle class jobs, both manufacturing jobs and professional service jobs such as engineering, research, design, and information technology, jobs that formerly were filled by US university graduates, but which today are sent abroad or are filled by foreigners brought in on H-1B work visas at two-thirds of the salary.
The other disease is the deregulation, especially the financial deregulation, that caused the ongoing financial crisis and created banks too big to fail, which has prevented capitalism from working and closing down insolvent corporations.
The Federal Reserve’s policy is focused on saving the banks, not on saving the economy. The Federal Reserve is purchasing not only new Treasury bonds issued to finance the more than one trillion dollar annual federal deficit but also the banks’ underwater financial instruments, taking them off the banks’ books and putting them on the Federal Reserve’s books.
Normally, debt monetization of this amount results in rising inflation, but the money that the Federal Reserve is creating in its attempt to manage the public debt and the banks’ private debt is hung up in the banking system as excess reserves and is not finding its way into the economy. The banks are too busted to lend, and consumers are too indebted to borrow.
However, the debt monetization poses a second threat that is capable of biting the US economy and consumer living standards very hard. Foreign central banks, foreign investors in US stocks and financial instruments, and Americans themselves observing the Federal Reserve’s continuous monetization of US debt cannot avoid concern about the dollar’s value as the supply of ever more dollars continues to pour out of the Federal Reserve.
Already there is evidence of central banks and individuals moving out of dollars into gold and silver bullion and into other currencies of countries that are not hemorrhaging debt and money. According to John Williams of Shadowstats.com, the US dollar as a percentage of global holdings of reserve assets has declined from 36.6% in 2006 to 28.7% in 2012. Gold has increased from 10.5% to 12.8% and other foreign currencies except the euro increased from 38.4% to 44.4%.
Russia, China, Brazil, India, and South Africa intend to conduct trade among themselves in their own currencies without use of the dollar as reserve currency. The EU countries conduct their trade with one another in euros, and although not reported in the US media, Asian countries are discussing a new common currency for trade among themselves.
The world is abandoning the use of the dollar to settle international accounts, and the demand for dollars is falling as the Federal Reserve increases the supply of dollars.
This means that the price of the dollar is threatened.
Concern over the dollar means concern over dollar-denominated financial instruments such as stocks and bonds. The Chinese hold some $2 trillion in US financial instruments. The Japanese hold about $1 trillion in US Treasuries. The Saudis and the oil emirates also hold large quantities of US dollar financial instruments. At some point the move away from the dollar also means a move away from US financial instruments. The dumping of US stocks and bonds would destabilize US financial markets and wipe out the remainder of US wealth.
As I have previously written, the Federal Reserve can create new money with which to purchase the dumped financial instruments, thus maintaining their prices. But the Federal Reserve cannot print gold or foreign currencies with which to buy up the dollars that foreigners are paid for their US stocks and bonds. When the dollars in turn are dumped, the exchange value of the dollar will collapse, and US inflation will explode.
The onset of hyperinflation can be as sudden as the collapse of a currency’s exchange value.
The real crisis facing the US is the impending collapse of the US dollar’s foreign exchange value. The US dollar’s value in relation to silver and gold has already collapsed. In the past ten years, gold’s price in US dollars has increased from $250 per ounce to $1,750 per ounce, an increase of $1,500. Silver’s price has risen from $4 per ounce to $34 per ounce. These price rises are not due to a sudden scarcity of gold and silver, but to a flight from the dollar into the two forms of historical money that cannot be created with the printing press.
The price of oil has risen from $20 a barrel ten years ago to as high as $120 per barrel earlier this year and currently $90 a barrel. This price rise has come about despite a weak world economy and without any supply restrictions other than those caused by the attempted US occupation of Iraq, the Western assault on Libya, and the self-harming Western sanctions on Iran, impacts most likely offset by the Saudis, still Washington’s faithful puppet, a country that pumps out its precious life fluid in order to save the West from its own mistakes. The moronic neoconservatives wish to overthrow the Saudi Arabian government, but what more faithful servant has Washington ever had than the Saudi royal house?
What can be done? For a number of years I have pointed out that the problem is the loss of US employment, consumer income, GDP, and tax base to offshoring. The solution is to reverse the outward flow of jobs and to bring them back to the US. This can be done, as Ralph Gomory has made clear, by taxing corporations according to where they add value to their product. If the value is added abroad, corporations would have a high tax rate. If they add value domestically with US labor, they would face a low tax rate. The difference in tax rates can be calculated to offset the benefit of the lower cost of foreign labor.
As all offshored production that is brought to the US to be marketed to Americans counts as imports, relocating the production in the US would decrease the trade deficit, thus strengthening belief in the dollar. The increase in US consumer incomes would raise tax revenues, thus lowering the budget deficit. It is a win-win solution.
The second part to the solution is to end the expensive unfunded wars that have ruined the federal budget for the past 11 years as well as future budgets due to the cost of veterans’ hospital care and benefits. According to ABC World News, “In the decade since the Sept. 11, 2001 terrorist attacks on the World Trade Center, 2,333,972 American military personnel have been deployed to Iraq, Afghanistan or both, as of Aug. 30, 2011 [more than a year ago].” These 2.3 million veterans have rights to various unfunded benefits including life-long health care. Already, according to ABC, 711,986 have used Veterans Administration health care between fiscal year 2002 and the third-quarter of fiscal year 2011.
The Republicans are determined to continue the gratuitous wars and to make the 99 percent pay for the neoconservatives’ Wars of Hegemony while protecting the 1 percent from tax increases.
The Democrats are little different.
No one in the White House and no more than one dozen members of the 535 member US Congress represents the American people. This is the reason that despite obvious remedies nothing can be done. America is going to crash big time.
And the rest of the world will be thankful. America along with Israel is the world’s most hated country. Don’t expect any foreign bailouts of the failed “superpower.”
34 SIGNS THAT AMERICA IS IN DECLINE
Michael Snyder
Economic Collapse
DECEMBER 5, 2012
The United States is clearly in an advanced state of decline. Many people around the world (and even inside America) rejoice at this, but not me. I mourn for the country that I was born in and that I still love.
The following are 34 signs that America is in decline…
#1 According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001. That number dropped to 21.6 percent in 2011. That is not just a decline – that is a freefall. Just check out the chart inthis article.
#2 According to The Economist, the United States was the best place in the world to be born into back in 1988. Today, the United States is only tied for 16th place.
#3 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
#4 According to the Wall Street Journal, of the 40 biggest publicly traded corporate spenders, half of them plan to reduce capital expenditures in coming months.
#5 More than three times as many new homes were sold in the United States in 2005 as will be sold in 2012.
#6 America once had the greatest manufacturing cities on the face of the earth. Now many of our formerly great manufacturing cities have degenerated into festering hellholes. For example, the city of Detroit is on the verge of financial collapse, and one state lawmaker is now saying that “dissolving Detroit” should be looked at as an option.
#7 In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
#8 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.
#9 If you can believe it, approximately one out of every four American workers makes 10 dollars an hour or less.
#10 Sadly, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percentof the jobs created since then have been low wage jobs.
#11 Median household income in America has fallen for four consecutive years. Overall, it has declined by over $4000 during that time span.
#12 The U.S. trade deficit with China during 2011 was 28 times larger than it was back in 1990.
#13 Incredibly, more than 56,000 manufacturing facilities in the United States have been shut down since 2001. During 2010, manufacturing facilities were shutting down at the rate of 23 per day. How can anyone say that “things are getting better” when our economic infrastructure is being absolutely gutted?
#14 Back in early 2005, the average price of a gallon of gasoline was less than 2 dollars a gallon. During 2012, the average price of a gallon of gasoline has been $3.63.
#15 In 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 55.1 percent are covered by employment-based health insurance.
#16 As I have written about previously, 61 percent of all Americans were “middle income” back in 1971 according to the Pew Research Center. Today, only 51 percent of all Americans are “middle income”.
#17 There are now 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.
#18 According to the U.S. Census Bureau, the poverty rate for children living in the United States is about 22 percent.
#19 Back in 1983, the bottom 95 percent of all income earners in the United States had 62 cents of debt for every dollar that they earned. By 2007, that figure had soared to $1.48.
#20 Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
#21 Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.
#22 The value of the U.S. dollar has declined by more than 96 percent since the Federal Reserve was first created.
#23 According to one survey, 29 percent of all Americans in the 25 to 34 year old age bracket are still living with their parents.
#24 Back in 1950, 78 percent of all households in the United States contained a married couple. Today, that number has declined to 48 percent.
#25 According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government. Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.
#26 In 1980, government transfer payments accounted for just 11.7 percent of all income. Today, government transfer payments account for more than 18 percent of all income.
#27 In November 2008, 30.8 million Americans were on food stamps. Today, 47.1 millionAmericans are on food stamps.
#28 Right now, one out of every four American children is on food stamps.
#29 As I wrote about the other day, according to one calculation the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”
#30 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6Americans is on Medicaid, and things are about to get a whole lot worse. It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
#31 In 2001, the U.S. national debt was less than 6 trillion dollars. Today, it is over 16 trillion dollars and it is increasing by more than 100 million dollars every single hour.
#32 The U.S. national debt is now more than 23 times larger than it was when Jimmy Carter became president.
#33 According to a PBS report from earlier this year, U.S. households that make $13,000 or less per year spend 9 percent of their incomes on lottery tickets. Could that possibly be accurate? Are people really that foolish?
#34 As the U.S. economy has declined, the American people have been downing more antidepressants and other prescription drugs than ever before. In fact, the American people spent 60 billion dollars more on prescription drugs in 2010 than they did in 2005.
So what are our “leaders” doing about all of this?
Not much.
They just continue to insist that everything is “just fine”.
Sadly, the truth is that they live in a world that is very different from most of the rest of us.
Barack Obama is getting ready to take a 20 day vacation to Hawaii.
When was the last time you got to take a 20 day vacation?
And most of our “leaders” have no idea what it is like to struggle from month to month on a paycheck.
Overall, more than half of the members of Congress are millionaires. We are led by wealthy men who are serving the interests of other wealthy men.
But the problem with our system is not limited to the president and the members of Congress. The truth is that the political system in America has become a colossal beast that just continues to grow no matter who is in power. The political establishment of both parties is totally dependent on this beast, and they will continue to feed it and serve it because it has been very good to them. The following is from an outstanding article by Steve McCann…
The Republican and Democratic political establishments are made up of the following:
1) many current and nearly all retired national office holders whose livelihood and narcissistic demands depends upon fealty to Party and access to government largesse;
2) the majority of the media elite, including pundits, editors, writers and television news personalities based in Washington and New York whose proximity to power and access is vital to their continued standard of living;
3) academia, numerous think-tanks, so-called non-government organizations, and lobbyists who fasten onto those in the administration and Congress for employment, grants, favorable legislation and ego-gratification;
4) the reliable deep pocket political contributors and political consultants whose future is irrevocably tied to the political machinery of the Party; and
5) the crony capitalists, i.e. leaders of the corporate and financial community as well as unions whose entities are dependent on or subject to government oversight and/or benevolence .
Do you think that there is any chance that this insidious system will be uprooted any time soon?
Of course not.
We will continue on the same path that we are on right now and America will continue to decline.
Many will rejoice as America falls, but I will not.
I will mourn for a mighty Republic that has fallen and for a dream that has been lost.
GUIDE TO THE FISCAL CLIFF
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HOW BIG IS THE UNITED STATES DEBT?
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THE UNITED STATES NATIONAL DEBT WILL BE OVER $19 TRILLION AT THE END OF PRESIDENT OBAMA’S FIRST TERM. THE NATIONAL DEBT WILL BE OVER 100% OF THE UNITED STATES GROSS DOMESTIC PRODUCT (GDP). THE DEBT IS MONEY THE UNITED STATES GOVERNMENT DOES NOT HAVE AND WILL NOT BE ABLE TO PAY BACK. ONCE THE NATIONAL DEBT OF A COUNTRY RISES ABOVE 100% OF GDP, THE ECONOMY BEGINS TO COLLAPSE.
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55 FACTS ABOUT THE DEBT AND U.S. GOVERNMENT FINANCES THAT EVERY AMERICAN SHOULD KNOW
The future of the United States of America is being systematically destroyed by our politicians, but unfortunately most Americans don’t really grasp exactly what is happening. 30 years ago, our national debt had just crossed the one trillion dollar mark. Just recently, it crossed the 16 trillion dollar mark. Prior to every election, politicians from both parties swear up and down that they will do something about our exploding debt, but it never happens. Once again this year, our politicians are making all kinds of grand promises about getting U.S. government finances under control. But they are also promising all kinds of new plans and programs which are going to cost a lot more money on top of what we are already spending. For the average American, all of this can be incredibly confusing. That is why I have put together a list of facts about the debt and U.S. government finances below. These are things that every voter should know. The federal government is stealing more than a trillion dollars a year from our children and our grandchildren, and they are spending that money in some of the most foolish ways that you could ever imagine. We have accumulated the largest mountain of debt in the history of the world, but our politicians just can’t help themselves – they appear to be absolutely addicted to spending money. If we continue on the path that we are currently on, our entire financial system and our entire economy will be destroyed by all of this debt. Time is running out and urgent action is needed to address this crisis.
Many of our founding fathers attempted to warn us about the dangers of government debt. For example, Thomas Jefferson once said the following…
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
Where would we be today if such an amendment had been added to our Constitution?
How much brighter would our future be if the federal government had been forced to only spend what it took in all these years?
Those are very good questions.
The following are 55 facts about the debt and U.S. government finances that every American voter should know….
#1 While Barack Obama has been president, the U.S. government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in.
#2 During the fiscal year that just ended, the U.S. government took in 2.449 trillion dollars but it spent 3.538 trillion dollars.
#3 During fiscal year 2011, over a trillion dollars of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.
#4 Over the past four years, welfare spending has increased by 32 percent. In inflation-adjusted dollars, spending on those programs has risen by 378 percent over the past 30 years. At this point, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. Once again, these figures do not even include Social Security or Medicare.
#5 Over the past year, the number of Americans getting a free cell phone from the federal government has grown by 43 percent. Now more than 16 million Americans are enjoying what has come to be known as an “Obamaphone”.
#6 When Barack Obama first entered the White House, about 32 million Americans were on food stamps. Now,nearly 47 million Americans are on food stamps. And this has happened during what Obama refers to as “an economic recovery”.
#7 The U.S. government recently spent 27 million dollars on pottery classes in Morocco.
#8 The U.S. Department of Agriculture recently spent $300,000 to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.
#9 During 2012, the National Science Foundation spent $516,000 to support the creation of a video game called “Prom Week”, which apparently simulates “all the social interactions of the event.”
#10 The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build “a Greek yogurt factory in New York.”
#11 The National Science Foundation recently gave researchers at Purdue University $350,000. They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.
#12 If you can believe it, $10,000 from the federal government was actually used to purchase talking urinal cakes up in Michigan.
#13 The National Science Foundation recently gave a whopping $697,177 to a New York City-based theater company to produce a musical about climate change.
#14 The National Institutes of Health recently gave $666,905 to a group of researchers that is studying the benefits of watching reruns on television.
#15 The National Science Foundation has given 1.2 million dollars to a team of “scientists” that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.
#16 The National Institutes of Health recently gave $548,731 to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.
#17 The National Science Foundation recently spent $30,000 on a study to determine if “gaydar” actually exists. This is the conclusion that the researchers reached at the end of the study….
“Gaydar is indeed real and… its accuracy is driven by sensitivity to individual facial features”
#18 Back in 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#19 The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATOcombined. In fact, the United States accounts for 41.0% of all military spending on the planet. China is next with only 8.2%.
#20 In a previous article, I noted that close to 500,000 federal employees now make at least $100,000 a year.
#21 In 2006, only 12 percent of all federal workers made $100,000 or more per year. Now, approximately 22 percent of all federal workers do.
#22 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.
#23 During 2010, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.
#24 The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005. When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more. By June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.
#25 During 2010, compensation for federal employees came to a grand total of approximately 447 billion dollars.
#26 If you can believe it, close to 15,000 retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually. That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.
#27 During 2010, the federal government spent $33,387 on the hair care needs of U.S. Senators.
#28 During 2010, U.S. Senators pulled $72,370 out of the “Senate Restaurant Fund”.
#29 During 2010, an average of $4,005,900 of U.S. taxpayer money was spent on “personal” and “office” expenses per Senator.
#30 In 2013, 3.7 million dollars will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.
#31 During 2011, the federal government spent a total of 1.4 BILLION dollars just on the Obamas.
#32 When you combine all federal government spending, all state government spending and all local government spending, it comes to approximately 41 percent of U.S. GDP. But don’t worry, all of our politicians insist that this is not socialism.
#33 As I have written about previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983. Today, that number is sitting at an all-time high of 49 percent.
#34 Back in 1990, the federal government accounted for just 32 percent of all health care spending in America. This year, it is being projected that the federal government will account for more than 50 percent of all health care spending in the United States.
#35 The number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
#36 In one of my previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
#37 If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for each and every household in the United States.
#38 In the United States today, more than 61 million Americans receive some form of Social Security benefits. By 2035, that number is projected to soar to a whopping 91 million.
#39 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
#40 When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars. Now it is about 16.2 trillion dollars. That is an increase of 5.6 trillion dollars in less than 4 years.
#41 The federal government has now run a budget deficit of more than a trillion dollars for four years in a row.
#42 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#43 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#44 Some suggest that “taxing the rich” is the answer. Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
#45 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been 5 trillion dollars instead of 1.3 trillion dollars.
#46 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
#47 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.
#48 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
#49 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
#50 The U.S. national debt is now more than 37 times larger than it was when Richard Nixon took us off the gold standard.
#51 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reservewas first created.
#52 The U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.
#53 Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent. If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.
#54 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
#55 Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay. Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”. His calculations have led him to the conclusion that the federal government is facing a fiscal gap of 222 trillion dollars in the years ahead.
Please share this article with as many people as you can. Time is running out to fix these problems.
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DOES STIMULUS SPENDING WORK?
BOEHNER EXTENDS OLIVE BRANCH ON ‘FISCAL CLIFF’
Quickly pivoting the political conversation from President Obama’s reelection to Washington’s looming budget battles, House Speaker John A. Boehner on Wednesday offered a potential path to compromise, saying Republicans are “willing to accept new revenue” to tame the soaring national debt and avert an ugly battle over the approaching “fiscal cliff.”
With Obama’s decisive electoral victory and Republicans’ hold on the House, with a slightly smaller majority, Boehner (R-Ohio) said Tuesday’s election amounted to a plea from voters for the parties to lay down their weapons of the past two years and “do what’s best for our country.”
“That is the will of the people. And we answer to them,” Boehner said at an afternoon news conference at the Capitol. “For purposes of forging a bipartisan agreement that begins to solve the problem, we’re willing to accept new revenue, under the right conditions.”
In phone calls made overnight and this morning from Chicago, Obama said much the same thing to Boehner, Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.). He said he believed that the American people sent a message that leaders in both parties need to put aside their partisan interests and work with common purpose to put the interests of the American people and the American economy first.
While Boehner suggested that Republicans would still oppose Obama’s plan to take “a larger share of what the American people earn through higher tax rates,” he said the party is open to “increased revenue . . . as the byproduct of a growing economy, energized by a simpler, cleaner, fairer tax code, with fewer loopholes, and lower rates for all.”
It was not immediately clear whether Boehner meant that Republicans would acquiesce only to fresh revenues generated through economic growth rather than actual tax increases. Republicans have long argued that reforming the tax code would generate revenue by improving the economy, an assertion that budget analysts say is difficult to measure. Democrats have insisted that any deal must include tax code changes that would add to government coffers whether or not they help the economy.
But Boehner hinted that he is open to the latter, citing a Republican offer during the negotiations of the congressional supercommittee last fall, as well as his own negotiations with Obama during the 2011 debt-limit battle. At that time, Boehner had tentatively agreed to support $800 billion in additional revenue over the next decade in exchange for Obama’s commitment to let the top tax rate fall below the current 35 percent. Obama and other Democrats have long insisted that the George W. Bush-era tax cuts should be permitted to expire for the nation’s top earners, raising the top rate to 39.6 percent.
Boehner mentioned his negotiations with Obama in the speech Wednesday, saying: “We’re closer than many think to the critical mass needed legislatively to get tax reform done.”
In exchange, however, Boehner said Democrats must not “continue to duck the matter of entitlements,” referring to the rising cost of Social Security and federal health programs, which he called “the root of the problem.”
Boehner offered no details about the scope of GOP demands to rein in those programs. But he suggested a model for negotiations in the legislative session scheduled to begin Tuesday, proposing that policymakers enact a deficit-reduction plan aimed at replacing about $100 billion in automatic spending cuts set to kick in at the end of the year. This plan should be coupled with a framework for broader tax and entitlement reforms next year, in his view.
“We won’t solve the problem of our fiscal imbalance overnight, in the midst of a lame duck session of Congress. And we certainly won’t solve it by simply raising tax rates or taking a plunge off the fiscal cliff,” he said. “What we can do is avert the cliff in a manner that serves as a downpayment on — and a catalyst for — major solutions, enacted in 2013, that begin to solve the problem.”
Obama is proposing about $1.5 trillion in new tax revenue over a decade, largely by raising rates to 39.6 percent for wealthy Americans and eliminating tax deductions and loopholes.
On MSNBC before election results were in Tuesday night, the president said he would interpret a win as “a mandate for doing it in a balanced way. We can do some more cuts. We can look at how we deal with the health-care costs in particular under Medicare and Medicaid in a serious way. But we are also going to need some revenue.”
Exit polling Tuesday showed that more than half of Americans believe the economy is poor or worsening, and the nation remains sharply divided on whether government should do more or is already doing too much.
Well more than half of those polled said they trust Obama in a crisis. But the president’s support came from an America very much split by geography, race, religion and sex, according to exit poll data.
Obama won the Northeast and West Coast, while Romney took the South and much of the nation’s midsection. Obama won large majorities among black, Hispanic, Asian and multiracial voters; Romney easily carried the white vote. Obama’s haul among Hispanics — a key and expanding demographic — was overwhelming: About seven in every 10 voters sided with the president after Romney repeatedly promised to adopt policies that would get illegal immigrants to “self-deport.”
Romney won among Protestants; the president found majorities among Catholics, Jews and members of other faiths. Men sided more with Romney; women solidly favored Obama.
After billions of dollars in campaign spending, more than a year of fiery rhetoric and four years of stubbornly high unemployment, the balance of power in Washington remained largely intact, raising the spectre of an immediate return to budget gridlock.
Obama, 51, scored his decisive electoral college victory by stringing together narrow wins in hotly contested states. The president won at least five of this year’s seven major battleground states; Romney beat him in North Carolina, and Florida remains too close to call. But Obama’s popular vote win was slim, reflecting a nation that remains deeply divided.
The president acknowledged and even embraced that division in a victory speech at 1:40 a.m. Eastern time.
“I know that political campaigns can sometimes seem small, even silly,” he said, before making the counterargument that passions and controversy can be a good thing. “These arguments we have are a mark of our liberty.”
Obama then reached out to Romney, saying he would seek to consult with his challenger, and to Republicans, asking them to work with him to reduce the deficit, reform the tax code and fix the nation’s immigration system.
“We can seize this future together because we are not as divided as our politics suggests,” Obama told ecstatic supporters in the cavernous McCormick Place Lakeside Center in Chicago. “We’re not as cynical as the pundits believe. We are greater than the sum of our individual ambitions, and we remain more than a collection of red states and blue states.
“We are and forever will be the United States of America.”
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BOEHNER OPENS DOOR TO ‘NEW REVENUE’ TO CURB DEBT
“Mr. President, this is your moment,” Boehner told reporters, speaking about the “fiscal cliff” that will hit in January. “We want you to lead.”
Boehner said House Republicans are asking Obama “to make good on a balanced approach” that would including spending cuts and address government social benefit programs.
“Let’s find the common ground that has eluded us,” Boehner said while congratulating the president on winning a second term.
The Ohio Republican spoke a day after the president’s clear re-election victory. He said conditions on higher taxes would include a revamped tax code to make it cleaner and fairer, fewer loopholes and lower rates for all.
The speaker noted that during one-on-one budget talks with the president in the summer of 2011, Obama had “endorsed the idea of tax reform and lower rates, including a top rate of lower than 35 percent,” the present top rate.
“We’re closer than we think to the critical mass needed legislatively to get tax reform done,” he said.
Boehner did not specify what loopholes House Republicans might consider trimming. Nor did he take questions.
His comments were generally along the lines of proposals by vanquished Republican presidential candidate Mitt Romney that also were vague on specifics. Still, the speaker’s comments signaled a willingness to enter into talks. He suggested Congress could use its upcoming lame-duck session to get the ball moving on such a compromise.
“We can’t solve the problem of our fiscal imbalance overnight…This is going to take time,” he said.
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PETER SCHIFF: OBAMA 2.0 AND THE FISCAL CLIFF: IMPLICATIONS FOR AMERICA, THE MARKETS, AND THE DOLLAR
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DOES THE GOVERNMENT HAVE A REVENUE OR SPENDING PROBLEM?
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U.S. BORROWS 46 CENTS OF EVERY DOLLAR IT SPENDS
By Stephen Dinan | The Washington Times
The federal government borrowed 46 cents of every dollar it has spent so far in fiscal 2013, which began Oct. 1, according to the latest data the Congressional Budget Office released Friday.
The government notched a $172 billion deficit in November, and is already nearly $300 billion in the hole through the first two months of fiscal year 2013, underscoring just how deep the government’s budget problems are as lawmakers try to negotiate a year-end deal to avoid a budgetary “fiscal cliff.”
Higher spending on mandatory items such as Social Security, Medicare and interest on the debt led the way in boosting spending compared with the previous year, which also highlights the trouble spots Congress and President Obama are struggling to grapple with.
All sides agreed to discretionary spending cuts and automatic spending cuts last year, but have been unable to agree on ways to control entitlement costs, which are the long-term drivers of deficits and debt.
Fiscal year 2013 began on Oct. 1 and so far the government has spent $638 billion and taken in just $346 billion in revenue.
That tax revenue is up by $30 billion compared with last year, or about 10 percent.
But spending is up even more — a staggering $87 billion, or 14 percent. The CBO said much of that higher spending total is due to timing of payments month-to-month. Without those shifts, spending would be up $22 billion, or 4 percent.
Overall, CBO analysts said that, accounting for shifts in both revenue and spending, the deficit would be $8 billion lower this year than it was last year at this time.
The agency, Congress’s nonpartisan budget scorekeeper, releases preliminary estimates of the government’s fiscal position each month. Final figures will come later this month from the Treasury Department.
The government is poised to post another $1 trillion deficit in fiscal year 2013, which would mark the fifth straight year. Before that, the record was $438 billion, which came in 2008, President George W. Bush’s last full year in office.
Congress and the White House are trying to hash out a long-term fiscal framework that could lead to higher taxes and limits on future spending.
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WHAT CAN WE CUT TO BALANCE THE BUDGET?
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OBAMA SAYS DEFICIT PLAN MUST INCLUDE HIGHER TAXES FOR THE WEALTHY
President Obama called on Congress on Friday to reduce the deficit in “a balanced and responsible way” in his first public remarks since winning reelection.
The president said Congress should extend the current tax rates for 98 percent of Americans, but raise taxes on households with annual income of more than $250,000.
Obama did not talk about higher tax rates in his speech, but said he would not accept a deal that cut spending and entitlements but did not ask wealthier households to pay more taxes.
“If we’re serious about reducing the deficit, we have to combine spending cuts with revenue and that means asking the wealthiest Americans to pay a little more in taxes,” Obama said. “That’s how we did it in the 1990s when Bill Clinton was president, that’s how we can reduce the deficit while still making the investments we need to build a strong middle class and a strong economy.”
Obama invited lawmakers to the White House next week to begin discussing how to “build consensus on the challenges that we can only solve together.”
He also said he was pleased that Speaker John Boehner (R-Ohio) this week said additional tax revenue would be a part of a deficit-cutting deal.
“I was encouraged to hear Speaker Boehner agree that tax revenue has to be part of this equation, so I look forward to hearing his ideas when I see him next week,” he said.
In a press conference that concluded about an hour before Obama spoke, Boehner said it was up to the president to lead on the “fiscal cliff” of spending cuts and tax hikes set to be implemented in January.
“This is an opportunity for the president to lead,” Boehner said. “This is his moment to engage the Congress and work toward a solution that can pass both chambers.”
Neither Boehner nor Obama offered any details Friday on what higher taxes might be acceptable as part of a deal.
Both have talked about raising tax revenue without raising rates, but it is unclear whether this would forbid higher tax rates on investment income such as capital gains and dividends, or on the estate tax.
In both the substance of their comments and their tone, however, Obama and Boehner have suggested it is possible the two sides could reach a deal in the lame-duck session set to begin next week.
Republican officials believe Obama and senior Democrats have left enough room to find a deal that meets the president’s demand to force wealthy Americans to pay more in taxes while not increasing the top marginal income tax rates.
In particular, they were encouraged by comments Friday morning by Sen. Charles Schumer (D-N.Y.), the third-ranking Senate Democrat, who said the party could accept a top marginal rate of 35 percent if tax deductions for the wealthy were reduced. Before the election, Schumer had ruled out tax reform that did not increase income rate for the top earners.
Bush-era individual tax rates as well as current tax rates on capital gains and dividends are set to expire at the end of the year. So are a host of tax credits and a payroll tax cut ushered in two years ago. The estate tax would also increase.
Boehner repeated his longstanding opposition to increasing tax rates at Friday’s press conference. But when asked to provide details, Boehner kept his cards close to his vest.
“I would really rather not do that because I don’t want to limit the options that would be available to me or the options that might be available to the White House,” Boehner said in a press conference at the Capitol. “There are a lot of ways to get there, and I don’t want to preclude anyone who might have a good idea of how we move forward.”
The fiscal cliff is a mix of tax increases and spending cuts set to take effect at the end of the year that could sink the economy back into recession. Boehner told Sawyer he imagines that negotiations on a bipartisan deal will begin soon, although he did not reveal whether any talks had already been scheduled.
Still, he said he hoped the framework of a deal could be completed by the end of the year in order to direct the next Congress to work out the details.
“The American people elected new representatives,” he said. “They’re the ones who ought to be the ones to do this.
Boehner has called for tax reform that would involve lowering rates while eliminating tax deductions. He suggested this week that this could lead to higher tax revenue for the government, meaning at least some people or businesses would pay higher taxes.
Senate Majority Leader Harry Reid (D-Nev.) called on the House to immediately pass a Senate bill extending current tax rates for those with annual income below $250,000.
“Our bill cuts taxes for small businesses. When Republicans talk about small businesses, they are really trying to protect millionaires like Donald Trump,” Reid said. “It is time for us to put politics aside and give the American people the balanced approach they are demanding. I am optimistic that we can meet this challenge before the end of the year.”
Senate Minority Leader Mitch McConnell (R-Ky.) in a statement reiterated his opposition to any tax rate increases.
“I was glad to hear the president’s focus on jobs and growth and his call for consensus,” McConnell said. “But there is no consensus on raising tax rates, which would undermine the jobs and growth we all believe are important to our economy.”
In a statement after Obama’s remarks, Boehner didn’t directly criticize the president but reiterated that the Senate-passed bill on middle class tax rates would “allow” tax increases that he said would “destroy jobs.” The legislation does not address the upper-income rates, but Republicans have long opposed decoupling the income brackets under the assumption they would lose all leverage on the top rates if they locked in tax cuts for the middle class separately.
The Speaker is likely to come under pressure from members of his conference not to give in on any tax hikes. Lawmakers return to Washington next week to begin a lame-duck session.
On Friday, however, Boehner received a statement of support Friday from Rep. Jim Jordan (R-Ohio), the outgoing chairman of the conservative Republican Study Committee.
“Speaker Boehner is absolutely right. It’s time for President Obama to show he can lead,” Jordan said. He called on Obama to submit a specific proposal in the form of legislation to Congress. As leader of the large bloc of conservatives, Jordan has frequently opposed deals Boehner has struck with the White House
“At a time when our economy is still recovering from the great recession, our top priority has to be jobs and growth,” Obama said in the East Room of the White House. “That’s the focus of the plan that I talked about during the campaign.”
While he reiterated his intention to work with members of both parties, Obama said, “we can’t just cut our way to prosperity.”
He did not talk about having a mandate, but said Tuesday’s election results show the “majority of Americans agree with my approach.”
Obama highlighted his own plan to reduce the deficit, but said he was willing to negotiate, saying he is not “wedded to every detail” of his plan.
“I’m open to compromise,” he said. “I’m open to new ideas. I’m committed to solving our fiscal challenges. But I refuse to except any approach that isn’t balanced.”
But Obama warned that if Congress fails to come to an agreement on an overall deficit package by the end of the year, everybody’s taxes would automatically go up at the start of the new year.
“And that makes no sense,” he said. “It would be bad for the economy and would hit families that are already struggling to make ends meet … We shouldn’t need long negotiations and drama to solve that part of the problem.”
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BOEHNER: RAISING TAX RATES ‘UNACCEPTABLE’
“Raising tax rates is unacceptable,” Boehner, R-Ohio, said in his first broadcast interview since the election Tuesday.
“Frankly, it couldn’t even pass the House. I’m not sure it could pass the Senate.”
That stance could set up a real showdown with the White House given that the president has said he would veto any deal that does not allow tax cuts for the rich to expire. But the speaker said that Republicans would put new tax revenue on the table as leaders work toward a deal.
“I would do that if the president was serious about solving our spending problem and trying to secure our entitlement programs,” Boehner said. “If you’re increasing taxes on small-business people, it’s the wrong approach.”
Nevertheless, Boehner added that he is at least willing to listen to the president’s proposals, even if they clash with his party’s principles.
“Of course, we’ll talk about it. We talk about all kinds of things we may disagree on,” Boehner said. “I’m the most reasonable, responsible person here in Washington. The president knows it. He knows that he and I can work together. The election’s over. Now it’s time to get to work.”
“There are things that we can do in the lame duck to avert the fiscal crisis, but we want to do this the right way. We don’t want to rush through this in the next two to three weeks. And what do you get? You can’t rewrite the tax code in the next two or three weeks. And, so, there’s a lot of possibilities in terms of how we proceed, and I’m confident that we can.”
Boehner also said he welcomes back Rep. Paul Ryan, whose profile has exploded since he was chosen by Mitt Romney as the vice presidential nominee. Ryan won re-election to his House seat in Wisconsin at the same time he lost the vice presidency, but Boehner demurred when asked whether his place on the presidential ticket would increase his leadership profile.
“Because he ran for the vice presidency, is he the leader of the Republican party now?” Sawyer asked.
“Oh, I wouldn’t think so. Paul Ryan’s a policy wonk,” Boehner said. “He’s involved in the cause of trying to bring us pro-growth economic agendas for America and making sure that we’re doing this in a fiscally responsible way.
“I’m glad that Paul Ryan’s coming back to the Congress. I would expect he would continue as chairman of the Budget Committee,” he said.
“Probably nobody in the Congress knows more about pro-growth economic policies other than Paul Ryan. I don’t think there’s many people in the Congress who understand the entitlement crisis that we’re facing more than Paul Ryan. I think he’ll be an important voice in this discussion and in this debate.”
Boehner also said that once he saw that Mitt Romney would lose the race for the White House, he went to sleep at about 11:15 p.m. on election night with the realization that he would wake up to divided government, but still “slept like a baby.”
“I may not like the five cards that have been dealt to me, but those are the cards I’ve got in my hand, and my job on behalf of the American people is to find a way to vote with my Democratic colleagues and a Democratic president to solve America’s problems,” he said. “If there was one mandate that came out of the election, it was find a way to work together to address our problems.”
Sawyer asked the speaker whether Romney should take responsibility for those election results, but Boehner said he is proud of his campaign.
“I’ll let all the political prognosticators figure out how the election went and why it went the way it did because Mitt Romney and Paul Ryan did a very nice job carrying our banner,” he said. “But we lost. The other side did a much more effective job in getting their votes out to them, out to the polls. And as I’m fond of saying, ‘Polls don’t decide elections, voters do,’ and more of their voters showed up than ours.”
Asked whether he will make another attempt to fully repeal the Affordable Care Act, Boehner said “the election changes that” and “Obamacare is the law of the land.”
Still, there are some parts of the law, he said, that should be on the table as lawmakers work toward a balanced budget.
The speaker also revealed that comprehensive, bipartisan immigration overhaul would be a top priority of his agenda during the 113th Congress.
“This issue has been around far too long,” he said. “A comprehensive approach is long overdue, and I’m confident that the president, myself, others can find the common ground to take care of this issue once and for all.”
The speaker also downplayed the influence of the Tea Party on his Congress, even though at least 49 members of the Tea Party caucus won re-election.
“This has been the most misreported story of my two years’ tenure. We don’t have a Tea Party caucus to speak of in the House,” Boehner said. “All of us who were elected in 2010 were supported by the Tea Party.
“These are ordinary Americans who’ve taken a more active role in their government. They want solutions, but we’ve all come a long way over the last two years. I think we all understand each other a lot better.”
With minorities and women comprising of a majority within the House Democratic Caucus during the next session, Sawyer asked Boehner whether the Republican Party is too white, too old and too male. The speaker acknowledged that the GOP has work ahead to appeal to other demographics.
“What Republicans need to learn is how do we speak to all Americans. You know, not just the people who look like us and act like us, but how do we speak to all Americans,” Boehner said.
“Listen, we believe in the American dream. We believe in individual freedom, and we believe in empowering all citizens. I think there’s a message there that resonates with all Americans, but we need to do a much more effective job in communicating it.”
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HOW RAISING TAXES WILL NOT BALANCE THE BUDGET
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WILL TAXING THE RICH FIX THE DEFICIT?
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PETER SCHIFF: THE FANTASY OF A 91% TOP INCOME TAX RATE
A liberal article of faith that confiscatory taxes fed the postwar boom turns out to be an Edsel of an economic idea.
By PETER SCHIFF
Democratic Party leaders, President Obama in particular, are forever telling the country that wealthy Americans are taxed at too low a rate and pay too little in taxes. The need to correct this seeming injustice is framed not simply in terms of fairness. Higher tax rates on the wealthy, we’re told, would help balance the budget, allow for more “investment” in America’s future and foster better economic growth for all. In support of this claim, like-minded liberal pundits point out that in the 1950s, when America’s economic might was at its zenith, the rich faced tax rates as high as 91%.
True enough, the top marginal income-tax rate in the 1950s was much higher than today’s top rate of 35%—but the share of income paid by the wealthiest Americans has essentially remained flat since then.
In 1958, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%.
So if the top marginal tax rate has fallen to 35% from 91%, how in the world has the tax burden on the wealthy remained roughly the same? Two factors are responsible. Lower- and middle-income workers now bear a significantly lighter burden than in the past. And the confiscatory top marginal rates of the 1950s were essentially symbolic—very few actually paid them. In reality the vast majority of top earners faced lower effective rates than they do today.
In 1958, an 81% marginal tax rate applied to incomes above $140,000, and the 91% rate kicked in at $400,000 for couples. These figures are in unadjusted 1958 dollars and correspond today to nominal income levels that are about eight times higher. That year, according to Internal Revenue Service records, about 10,000 of the nation’s 45.6 million tax filers had income that was taxed at 81% or higher. The number is an estimate and is inexact because the IRS tables list the number of tax filers by income ranges, not precisely by the number who paid at the 81% rate.
In contrast, the share of taxes paid by the bottom two-thirds of taxpayers has fallen dramatically over the same period. In 1958, these Americans accounted for 41.3% of adjusted gross income and paid 29% of all federal taxes. By 2010, their share of adjusted gross income had fallen to 22.5%. But their share of taxes paid fell far more dramatically—to 6.7%. The 77% decline represents the single biggest difference in the way the tax burden is shared in this country since the late 1950s.
The changes came about not so much by movements in rates but by the addition of tax credits for the poor and the elimination of exemptions for the wealthy. In 1958, even the lowest-tier filers, which included everyone making up to $5,000 annually, were subjected to an effective 20% rate. Today, almost half of all tax filers have no income-tax liability whatsoever, and many “taxpayers” actually get a net refund from the government. Those nostalgic for 1950s-era “tax fairness” should bear this in mind.
The tax code of the 1950s allowed upper-income Americans to take exemptions and deductions that are unheard of today. Tax shelters were widespread, and not just for the superrich. The working wealthy—including doctors, lawyers, business owners and executives—were versed in the art of creating losses to lower their tax exposure.
For instance, a doctor who earned $50,000 through his medical practice could reduce his taxable income to zero with $50,000 in paper losses or depreciation from property he owned through a real-estate investment partnership. Huge numbers of professionals signed up for all kinds of money-losing schemes. Today, a corresponding doctor earning $500,000 can deduct a maximum of $3,000 from his taxable income, no matter how large the loss.
Those 1950s gambits lowered tax liabilities but dissuaded individuals from engaging in the more beneficial activities of increasing their incomes and expanding their businesses. As a result, they were a net drag on the economy. When Ronald Reagan finally lowered rates in the 1980s, he did so in exchange for scrapping uneconomical deductions. When business owners stopped trying to figure out how to lose money, the economy boomed.
It’s hard to determine how much otherwise taxable income disappeared through tax shelters in the 1950s. As a result, direct comparisons between the 1950s and now are difficult. However, it is worth noting that from 1958 to 2010, the taxes paid by the top 3% of earners, as a percentage of total personal income (which can’t be reduced by shelters), increased to 3.96% from 2.72%, while the percentage paid by the bottom two-thirds of filers fell to 0.51% in 2010 from 2.7%. This starker division of relative tax burdens can be explained by the inability of upper-income groups to shelter income.
It is a testament to the shallow nature of the national economic conversation that higher tax rates can be justified by reference to a fantasy—a 91% marginal rate that hardly any top earners paid.
In reality, tax policies that diminish the incentives and capacities of innovators, business owners and investors will not spur economic improvement. Such policies will, however, satisfy the instincts of those who want to “stick it to the rich.” Never mind that the rich have already been stuck fairly well.
Mr. Schiff is the author of “The Real Crash: America’s Coming Bankruptcy” (St. Martin’s Press, 2012) and host of the daily radio program “The Peter Schiff Show.”
Editor’s note: This article has been amended as per the following correction:
Peter Schiff’s Dec. 7 op-ed, “The Fantasy of a 91% Top Income Tax Rate,” included some faulty data due to a misreading of IRS tax tables.
In 1958, an 81% marginal tax rate applied to income of $140,000 and the 91% rate at $400,000 for married couples, which would correspond to income levels about eight times higher today. The article misstated the income thresholds and the comparison to income today.
In the same year, roughly 10,000 of the nation’s 45.6 million tax filers had income subject to a rate of 81% or higher. The number is an estimate and is inexact because the IRS tables list the number of tax filers by income ranges, not precisely by the number who paid at the 81% rate. The original article said the number of such filers was 236.
Also in 1958, about two million filers (4.4% of all taxpayers) earned the $12,000 for married filers needed to face marginal rates as high as 30%. These Americans paid about 35% of all income taxes but could not all be defined as genuinely wealthy. The article misstated these numbers.
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HARRY REID ON HIKING DEBT LIMIT TO $18.794 TRILLION: ‘WE’LL RAISE IT’
(CNSNews.com) – Senate Majority Leader Harry Reid (D-Nev.) said on Wednesday that if the $16.394 trillion current legal limit on the federal government’s debt must be raised in the next few months by another $2.4 trillion, “We’ll raise it.”
That would set the debt limit at $18.794 trillion.
During a Capitol Hill press conference on Wednesday, CNSNews.com asked: “Senator Reid, the Treasury Department said last week that we will hit the debt ceiling again near the end of the year. Are you prepared—will you support—”
“I think the debt ceiling will come after the first of the year,” Reid said. “But please everyone accept this: They tried it before—they, the Republicans.”
“They tried it before – ‘We’re going to shut down the government, and we’re not going to raise the debt ceiling,’” he said. “If they want to go through that again, fine.”
“But we’re not going to be held subject to something that was done as a matter of fact in all previous administrations,” Reid said.
CNSNews.com then asked, “But will you support raising it by another $2.4 trillion?”
“If it has to be raised, we’ll raise it,” he said.
On Aug. 2, 2011, Congress and President Barack Obama reached a deal to raise the debt ceiling by $2.4 trillion. Now, after only 15 months, almost all of that additional borrowing authority has been exhausted, according to the U.S. Treasury Department.
CNSNews.com reported that Treasury quietly announced a week ago that it expects the federal government to hit its legal debt limit before the end of this year.
“Treasury continues to expect the debt limit to be reached near the end of 2012,” said the 10th paragraph of the “Quarterly Refunding Statement” put out by Assistant Secretary of the Treasury for Financial Markets Matthew Rutherford.
“However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America,” the statement said.
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EXCLUSIVE** SENATE MINORITY LEADER: NO TAX HIKES
With conservatives across the country concerned about a rumored Republican cave-in in Washington, D.C. over tax policy, Senate Minority Leader Mitch McConnell (R-KY) is speaking out. Read his lips: no tax hikes.
McConnell said in an exclusive statement to Breitbart News:
One issue I’ve never been conflicted about is taxes. I wasn’t sent to Washington to raise anybody’s taxes to pay for more wasteful spending and this election doesn’t change my principles. This election was a disappointment, without doubt, but let’s be clear about something: the House is still run by Republicans, and Republicans still maintain a robust minority in the Senate. I know some people out there think Tuesday’s results mean Republicans in Washington are now going to roll over and agree to Democrat demands that we hike tax rates before the end of the year. I’m here to tell them there is no truth to that notion whatsoever.
The media has already taken House Speaker John Boehner out of context to claim that he is willing to cave on raising tax rates. In point of fact, Boehner has spoken about closing tax loopholes while lowering tax rates as part of a balanced approach to spending to avoid the much-dreaded fiscal cliff. Both House and Senate Republicans are united in their opposition to tax hikes.
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TREASURY QUIETLY WARNS: ‘EXPECT DEBT LIMIT TO BE REACHED NEAR END OF 2012′
(CNSNews.com) – The U.S. Treasury quietly warned at the end of a statement issued last Wednesday that it expects the federal government to hit its legal debt limit before the end of this year–which means before the new Congress is seated–and that “extraordinary measures” will be needed before then to keep the government fully funded into the early part of 2013.
On Aug. 2, 2011, President Obama signed a deal he had negotiated with congressional leaders to increase the debt limit of the federal government by $2.4 trillion. But, now, after only 15 months, almost all of that additional borrowing authority has been exhausted.
Although Treasury revealed in its statement on Wednesday that it was likely to hit the debt limit by the end of the year, Treasury Secretary Geithner failed to respond to a letter that Senate Finance Ranking Member Orrin Hatch and Senate Budget Ranking Member Jeff Sessions sent to him on Oct. 15 demanding that he notify them by Nov. 1 what he believes to be the exact date Treasury will hit the debt limit and the date he expects to begin using “extraordinary measures” to avoid it.
“Treasury continues to expect the debt limit to be reached near the end of 2012,” says the tenth paragraph of the “Quarterly Refunding Statement” put out by Assistant Secretary of the Treasury for Financial Markets Matthew Rutherford.
“However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America,” said the statement. “We continue to expect that these extraordinary measures would provide sufficient ‘headroom’ under the debt limit to allow the government to continue to meet its obligations until early in 2013.”
Prior to the release of this statement, Sen. Hatch and Sen. Sessions sent Treasury Secretary Tim Geithner a letter asking him specific questions about the approaching debt limit and the administration’s plans for dealing with it. Hatch’s and Sessions’s questions included these two: 1) “What is Treasury’s forecast of the date upon which Treasury will find it necessary to use extraordinary measures to manage to keep federal debt at or below the statutory debt limit?” 2) “What is Treasury’s forecast of the date upon which the U.S. government will reach the statutory debt limit given use and exhaustion of these extraordinary measures?”
The senators gave Geithner a “hard deadline” of Nov. 1 for providing an initial response to these questions. Julia Lawless, spokesperson for the Republicans on the Senate Finance Committee, confirmed that as of Nov. 6 the committee had received no response from the Treasury secretary.
As of Oct. 31, according to the Daily Treasury Statement (DTS), the portion of the federal debt subject to the legal limit was $16,222,235,000,000–just $171.765 billion below the $16,394,000,000 debt limit.
In October alone, according to the DTS, the debt subject to the limit increased by $195.214 billion.
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FISCAL CLIFF WORRIES DRIVE GOLD TO $1,731
Kurt Nimmo
Infowars.com
Safe-haven demand for gold has pushed prices higher on the Comex. Kitco reports December gold traded up $5.10 at $1,731.10 an ounce and spot gold was quoted down $1.40 at $1,731.25.
The increase arrives as Obama plans to deliver a speech on the fiscal cliff later today. David Plouffe, a top Obama adviser, believes Obama’s re-election is a mandate to raises taxes on the wealthy, thus ensuring a fight with the Republican-controlled House of Representatives and its leader, SpeakerJohn Boehner, who said on Thursday he is steadfastly opposed to any increase in tax rates.
Dire economic news from the European Union is also driving gold higher. On Friday, the German finance ministry added to projections of a serious economic downturn in Europe by stating that in the months ahead Germany’s economy could “noticeably” weaken. On Thursday, the euro fell to a two-month low against the dollar following a move by the European Central Bank to artificially lower interest rates to 0.75 percent.
In the United States, continued support for Federal Reserve monetary policy has also helped move gold prices higher. “With Mr. Obama back, Mr. Bernanke is safe for the moment and we should see continued stimulus. That’s supportive for the gold market here,” Frank Lesh, futures analyst and broker at FuturePath Trading, told the Wall Street Journal.
Analysts, however, believe $1,800 is a formidable barrier. On Thursday, Credit Suisse said that the political status quo is “broadly positive for the gold price” and declines below $1,600 are not likely.
Kitco believes a bullish weekly high for gold signals further price increases in the weeks ahead. “The gold bulls’ next upside price breakout objective is to produce a close above solid chart resistance at $1,755.00,” Jim Wycoff writes this morning.
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The premise of Dishonest Money is simple: Very smart and powerful people are robbing you of your wealth, freedom and future. The system they’ve created to accomplish this is both ingenious and 100% legal. The average citizen, unaware of how the system works, cannot effectively fight it. If the premise of this book is simple, then its purpose is even simpler: Help the average citizen learn “the system” so they can protect their wealth, freedom and future. Stop the thieves before they steal everything. By the end of this short book, the average citizen will be familiar with these terms, will know “who benefits” and (more importantly) will know who pays…
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JAMES TURK ON THE FISCAL CLIFF AND THE OVERESTIMATED GOLD STOCK
President Obama won re-election last night and during his victory speech he declared “What makes America exceptional are the bonds that hold together the most diverse nation on earth.” Bonds? Does he mean Treasury Bonds perhaps?
This is what makes America exceptional: the ability to issue bonds in exchange for the global reserve currency, which allows the US government to spend despite running trillion dollar deficits. We talk to James Turk about what happens when the “bonds” holding us together are no longer exceptional.
And gold and silver prices rallied ahead of the elections. We talk to James Turk about the recent spike in precious metals. Also, according to an essay published by the Gold Money Foundation, the stock of gold is over-estimated by sixteen-thousand tons, with a nominal value of over 800 billion dollars. We talk to one of the authors, James Turk, Gold Money founder and chairman, about his piece and why it matters.
Plus, the US elections are over but the economic problems facing the country are not. Former Federal Reserve Chairman, Alan Greenspan, told Bloomberg this morning that he does not think the elections will help avert the Fiscal Cliff: “I’m concerned that the election per se has really not changed the balance very much of what’s going on and I think it will come down to the very last minute before particular action is taken… I think we underestimate the underlying momentum of this deficit and the building up of debt and its consequences.” We don’t underestimate the momentum of the debt and its consequences, nor the expansionary policies we have seen under an ‘Obama central bank.’ Is this reflected in the price of gold? Gold prices jumped 2 percent in the past few days. Also the S&P 500 saw its biggest decline since June, according to Bloomberg. We talk to James Turk, author of “The Collapse of the Dollar, and How to Profit From It,” about what is behind these market moves.
Barack Obama defied history to win re-election yesterday, as he is the first president to stay in the Oval office with a 7.9 percent unemployment rate since Franklin Roosevelt in 1936. But while everyone is wondering about Obama’s second term, many are also wondering who is going to fill Timothy Geithner’s position. Lauren and Demetri discuss the possibility of Laurence Summers or Jack Lew heading the US Treasury. Also, Treasurys have a new rival for safe-haven status: U.S. corporate bonds. According to the Wall Street Journal, bonds of Exxon coming due in 13 months were 0.01 percentage point less than comparable US Treasurys, while bonds of Johnson & Johnson due in May 2014 traded at 0.01 percentage point less than Treasurys. Lauren and Demetri discuss if money pouring into corporate bonds is another sign of investors reaching for yield in today’s Loose Change.
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HERE IS WHY A MONUMENTAL MOVE IS COMING IN GOLD AND SILVER
Ron Rosen says, the price of gold in 2012 is exactly where it was in 1972 relative to the US Debt & Debt Limit. When the current corrections in gold and silver bullion are complete, an explosion to the upside will take place in my opinion. It should be a monumental move, one that we won’t soon forget.
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NICK BARISHEFF – $10,000 GOLD WITHIN FIVE YEARS
Published on Aug 21, 2012 by usawatchdog
The CEO of Bullion Management Group, Nick Barisheff, says the yellow metal will hit “$1,900 per ounce by year end” and “$10,000″ per ounce within five years. He lays out his case in a new book titled “$10,000 Gold.” You think that is an overly bullish prediction? Not if there is hyperinflation. Barisheff says, “If we get into hyperinflation, $10,000 will be a conservative estimate.” How likely is hyperinflation? According to Mr. Barisheff, “There’s never been a fiat currency that didn’t end in hyperinflation and then complete collapse, not one in all of history.” Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Nick Barisheff.
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GOLD HITS THREE-WEEK HIGH ON OBAMA VICTORY
* Geopolitical tensions rise after Pentagon news on Iran
* Worries over U.S. “fiscal cliff” support gold
* China seen surpassing India as top gold consumer
By Josephine Mason and David Brough
NEW YORK/LONDON, Nov 8 (Reuters) – Gold rose to three-week highs on Thursday as investors continued to bet on easier U.S. fiscal policy following President Obama’s victory, and prices also got a bounce from fears about increased tensions between the United States and Iran.
Prices extended gains in afternoon trade, jumping just over $10 to $1,734 ounce – their highest level since Oct. 19 – after the Pentagon said Iran fired on a U.S. unmanned, unarmed surveillance drone on Nov. 1.
Safe-haven buying held prices up even though there appeared to be little cause for immediate concern. The authorities said the incident took place over a week ago, with the craft undamaged and returned safely to its base.
“Something popped after the Pentagon confirmed Iran shot on a drone last week,” said a New York-based broker.
Spot gold was at $1,731.61 an ounce by 4:23 p.m. EST (2123 GMT), up $15.30. After four days of gains, the market was on track for its biggest weekly rise since the end of August.
U.S. gold futures for December delivery settled up $12, or 0.70 percent, at $1,726 an ounce.
Earlier in the day, expectations that four more years of a Democrat in the White House would contribute to an extension ofthe Federal Reserve’s easy monetary policy continued to provide upward momentum.
“This is the longs coming back because of the continued perception that easier money will be in place,” said Frank McGhee, head metals trader of Integrated Brokerage Services LLC.
Worries about the “fiscal cliff” provided support for safe-haven gold, even as a strong dollar offset upward pressure on prices by making it more expensive for buyers holding other currencies.
Europe’s crisis moved back into the spotlight, with the euro falling to a two-month low against the dollar after the European Central Bank held interest rates at a record low and said the euro zone’s economy showed little sign of recovering before
year-end.
In the longer term, traders said gold is likely to benefit from uncertainty over the looming “fiscal cliff” when nearly $600 billion worth of spending cuts and tax increases kick in with the risk of pushing the U.S. economy into deep recession.
“We will continue with support around $1,700 and $1,680, but before the end of the year, gold should gradually rise because we have liquidity (quantitative easing), and low yields,” said Andrey Kryuchenkov, analyst with VTB Capital.
INDIAN DEMAND HURT BY HIGH PRICES
Signs emerged though that high prices may hurt demand, with gold importers in India, the world’s biggest buyer, holding off buying even as the country’s festival season approaches its peak next week with Diwali.
China may help to offset weakness in consumption over the Indian wedding season, which typically the strongest time of year for gold purchases.
China’s gold demand is expected to grow 1 percent this year to a record of around 860 tonnes, overtaking India as the world’s biggest consumer of gold for the first time on a yearly basis, the global head of metals at consultancy Thomson Reuters GFMS said on Thursday.
“China will overtake India … both in overall demand terms and as the world’s largest jewellery market,” he told the online Reuters Global Gold Forum.
Spot platinum was down 0.15 percent at $1,541.25 and spot palladium was up 0.41 percent to $611.97.
Silver rose 1.83 percent to $32.34 an ounce.
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THE RETURNS OF EVERY MAJOR FINANCIAL ASSET IN THE WORLD DURING OBAMA’S PRESIDENCY
Deutsche Bank macro strategist Jim Reid’s daily note looks at the best-performing asset classes since President Obama was elected on November 4, 2008. Reid writes, “In brief you’ve wanted to be in Silver and Gold and not in Greece, Italian or European bank equities during Obama part 1.” Read more here-http://read.bi/PCyDsU
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20 YEAR ANNUALIZED RETURNS BY ASSET CLASS 1992-2011
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MIKE MALONEY ON THE FISCAL CLIFF AND THE BANKRUPTCY OF AMERICA
House Speaker John Boehner and President Obama outlined plans for reducing the national debt, setting the stage for a contentious debate over the Fiscal Cliff. This morning Boehner announced “I outlined a responsible path forward to avert the fiscal cliff without raising tax rates.” Meanwhile, a few hours later, Obama told reporters “If we’re serious about reducing the deficit, we have to combine spending cuts with revenue. That means asking the wealthy to pay a little more in taxes.” It seems politicians are nowhere near reaching a compromise anytime soon. Would it be so bad if the US fell off the Fiscal Cliff? According to a new Congressional Budget Office report the impact from going over the fiscal cliff would be recession in the US economy next year and an increase in the jobless rate from 7.9 to 9.1 percent by the end of 2013. A deal to avert this would mean a deficit of 503 billion dollars higher than it would otherwise have been in fiscal year 2013. We talk to Mike Maloney of Gold Silver about what the Fiscal Cliff would entail for the long term picture of the US economy, and if going off the cliff could at least be a wake-up call for politicians to do something at long last.
We also speak with Mike Malony, author of “The Guide to Investing in Gold and Silver,” about the “Holy Shit” demographic, as he calls it. This is the demographic of retirees or those nearing retirement, who wake up one day and realize that they have no savings, and that they can’t rely on the government to protect them as they head into their later years.
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GREGORY MANNARINO: THE FINANCIAL AND ECONOMIC IMPACT OF THE FISCAL CLIFF
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FOR INVESTORS, MORE FED EASING, CLIFF ‘HEART ATTACK’
In the aftermath of President Barack Obama’s successful re-election bid Tuesday, market experts prepared for an accelerated push of easy Federal Reserve monetary policy.
That likely will clash against even more uncertainty in Washington as en election that produced little more than the status quo failed to resolve the burgeoning fiscal issues that threaten the U.S. economy. (Read More: Next Up for Markets? The Fiscal Cliff)
While investors know what they have and may draw some relief, the morning-after stock market plunged as traders prepared for a second four years under the Democratic incumbent. The Dow fell more than 300 points, the most in more than a year, as traders worried over what was next in Washington’s ongoing political war.
“The question is, does either side have the upper hand?” said Quincy Krosby, chief market strategist at Prudential Annuities in Newark, N.J. “Ultimately, the market has the upper hand.”
The stock market has climbed about 76 percent over the past four years. Commodities have soared even higher, with gold and silver up more than 100 percent, and even bonds have maintained their value as a safe-haven trade for investors too afraid of market volatility.
Yet the investing climate has proven easily shakable, rising and falling on the fortunes of both the domestic variables as well as the tenuous situation in Europe, where a debt crisis has plunged the continent into recession.
Fresh comments from European Central Bank President Mario Draghi about slowness rattled traders Wednesday morning, reversing what had been a positive outlook for the market open.
Lack of demand from Europe was cited by U.S. companies during this earnings season, in which 63 percent topped analyst profit expectations but just 39 percent beat sales estimates.
“You’re seeing the slowdown in European demand transmitted to U.S. corporate balance sheets,” Krosby said. “You can’t afford to have the U.S. go into recession, because the market will sell off at least 20 percent. You’ll get the first hint of recession from demand as manifested in top-line growth.”
Much of the trading over the past four years has been based off Fed policy, which in turn is driven by those economic risk factors that Krosby discussed.
The central bank during Obama’s presidency has expanded its balance sheet from about $800 billion to approaching $3 trillion, with even more growth to come as the Fed cranks up the third round of its quantitative easing debt purchasing program.
“With Obama getting re-elected it’s sort of the status quo and the QE carries on,” said Lee Ferridge, head of macro strategy for North America at State Street Global Markets. “The result is positive for risk generally — negative for the dollar but positive for risk. We know the extremely loose monetary policy we’ve been used to so far will continue.”
The election aftermath immediately saw speculation that the Fed even may amp up its QE efforts.
“The market reaction might be quite positive because the Europeans are clearly voting with relief that this seems the U.S. isn’t going to go down the austerity route,” Chuck Gabriel at Capital Alpha Partners told CNBC. “And it looks as though QE4 will be fine as early as the end of the fourth quarter.”
For most market pros, there was little do except dance to the music the band will be playing.
“It might be good for Mr. Obama’s friends, but it’s not good for the world,” widely followed investor Jim Rogers complained on CNBC in reference to the cheap-money policies of the past four years.
His strategy: “Today I’m going to short more bonds, more U.S. government bonds. I’m going to buy more commodities, both base metals and precious metals. It looks to me like money printing is going to run amok now, spending is going to run amok.”
Indeed, along with the growth of Fed money printing came the continuation of massive public debt and deficits.
The budget deficit stayed above $1 trillion for the duration of Obama’s first term while the national debt swelled from the $10 trillion range to nearly $16 trillion, with projections toward $20 trillion by 2016.
All of that could come to a screeching halt if Congress and Obama cannot resolve what is known as the “fiscal cliff,” a blend of tax increases and spending cuts set to take effect next year unless deficit-reduction targets can be met.
The market continues to hope for some type of resolution and has not priced in a worst-case scenario.
“The history of the relationship between Obama and the congressional leadership is one of eventual compromise, though not in the absence of circumstances forcing both parties to the table,” said Tina Fordham, senior global political analyst at Citigroup.
She added: “Our expectation continues to be that the trail of last-minute, heart-attack compromises will continue, given the same actors retaining their positions, with appetite for comprehensive reform limited.”
Vulture fund investor Wilbur Ross said he thinks more compromise is likely as Obama starts to worry about “the history books” and his legacy.
“What we’re trying to figure out is what will be the initial move that the president will make. Will he reach across?” Ross said. “There’s no reason for the president and Congress not to be beginning to interact constructively, even during the so-called lame-duck period.”
From a market perspective, the attitude towards investing as well as the resolution of the fiscal cliff may have been “better the devil you know,” said Jim O’Neill, head of Goldman Sachs Asset Management in London.
“One would hope looking from overseas that somehow your Congress … these guys have somehow got to come up with a compromise,” he said, adding: “I’m not so sure” that will happen.
In fact, the status quo election did little to assuage near-term worries about growth and the political stalemate that threatens the economy.
Economists estimate that going over the cliff could sap half a trillion dollars or more from the U.S. economy, something it can ill afford after a quarter of just 2 percent growth and some forecasting flat or negative growth to start 2013.
“Both sides can claim some support from the election results,” Nomura Securities economist Lewis Alexander said. “We believe the debate over the fiscal cliff will be contentious and a drag on both growth and asset markets until it is resolved.”
Michelle Meyer, senior U.S. economist at Bank of America/Merrill Lynch, said the economy could start the year out slowly, but rebound into the second half as some of the outstanding issues get resolved.
“I don’t think we get to 3 percent GDP growth, but we break this high-1 percent, low-2 percent range,” she said.
“There are a lot of challenges in terms of the growth outlook,” Meyer added. “In the short term you still have challenges from fiscal cliff uncertainty and election uncertainty and working through the Hurricane (Sandy) effect. But I’m starting to feel a lot more positive about growth starting in the spring or the second half of the year.”
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FORECASTING FOR THE POST-ELECTION ECONOMY AND A POST-BERNANKE FEDERAL RESERVE
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GENERATION DEBT: EVERY AMERICAN UNDER 18 NOW OWES $216,676 TO THE FEDERAL GOVERNMENT
If Americans under the age of 18 were required as a group to pay off the entirety of the federal government’s debt in equal shares, each would now need to pay about $218,676.
That is more than the $130,468 average price tag for four years at a private college or the $173,100 median price for an existing one-family home in the United States.
During the time Barack Obama has been president, the U.S. government debt has increased from approximately $143,255 per American under 18 to approximately $218,676 per American under 18–a climb of $75,421 or about 53 percent.
Neither borrowing all the money needed to pay for a four-year private-college education nor borrowing all the money needed to buy a median-priced home would put as much debt on the shoulders of young Americans as the federal government already has.
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A NATION OF DENIAL
By Greg Hunter’s USAWatchdog.com
October 31, 2012
There is no bigger sign post about the state of the U.S. economy than the Federal Reserve’s announcement in September of “open ended”QE. This is unlimited money printing that is being done by the Fed until further notice. All the talk of the so-called “recovery” was reduced to a gigantic lie perpetrated on the American people. If the economy was in a “real recovery,” the Fed would be raising interest rates, and there would be no need to create $85 billion each and every month to “stimulate” the economy. Former Reagan budget director David Stockman says the Fed is on a “money printing binge.” He said three weeks ago on FOX,“We’ve never had a central bank that has printed this much money. . . . I don’t think they can whistle this tune very much longer.” To that, host Neil Cavuto said, “So if you had a lead suit, you would buy it. If you had a cyanide pill you would take it.” I think Mr. Cavuto was trying to make a joke, but nothing is funny about a dying empire.
Renowned investor Jim Sinclair explained money printing by the Fed on his JSMinenset.com website recently by saying, “The economy is a drug addict. The creation of money is history making in a modern economy and money creation acts exactly like a drug. Like a drug the more you take, the more you need. The more money you create, the more money you must continue to create until it goes to infinity. You go cold turkey on money creation, you unleash the economic wrath of hell in the entire Western world. It all comes down in one great implosion.” How much trouble is the U.S. economy in that its central bank has to create unprecedented amounts of currency to keep it from “one great implosion”? Is there any wonder why Mr. Sinclair predicts gold is going about $3,000 per ounce in the not-so-distant future, and will ultimately hit $12,000 per ounce. (I would take Mr. Sinclair seriously. He has a track record of making very big calls on gold that date back to the 1970′s. I wrote about this 2 years ago.)
Countries around the world are shunning the dollar in trade. The biggest blow to the buck came earlier this year with a trade agreement between China and Japan. These are the second and third biggest economies in the world behind the U.S. Other countries such as Russia, India and Brazil are just a few more countries moving away from the dollar in trade. As the dollar loses world reserve currency status, it will decline in value. Its buying power will be reduced. The only question is how much will it fall? Will we see $8 a gallon gasoline or $18? Remember, the Fed’s money printing policies are “open-ended.” In 2011, the Fed bought61% of America’s debt. At a rate of $85 billion a month, it will be buying more than $1 trillion a year. How long will this go on?
Forget all the rigged government numbers on unemployment. If calculated the way Bureau of Labor Statistics did it in 1994 and earlier, it would be near 23% (according to Shadowstats.com). Don’t look for an improvement there because business spending just took a nose dive. Last week, the Associated Press reported “. . . equipment and software likely declined 4.9 percent in the July-September quarter, economists noted. It would represent the first drop in that category since the recession. Corporate investment helped the U.S. economy emerge from the Great Recession three years ago. But businesses have grown more cautious since spring, seeing tepid growth in consumer spending and declines in exports.” (Click here for the complete AP story.) A slowdown in business spending and exports spells future layoffs.
Layoffs will in turn begin a new daisy chain of defaults in the housing market that are already buckling under the weight of 5 million delinquent mortgages. The banks are chocked full of foreclosures, but are holding them in what is called “shadow inventory” for fear of crashing an already weak market. In July, AOLrealestate.com reported, “As many as 90 percent of REOs are withheld from sale, according to estimates recently provided to AOL Real Estate by two analytics firms. It’s a testament to lenders’ fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.” (Click here for the complete AOL story.) What kind of a recovery sports 5 million delinquent mortgages and millions of foreclosures the banks are afraid to sell?
John Williams of Shadowstats.com calls what the economy is doing right now “bottom bouncing.” Will it one day bounce right over a cliff? In his latest report, Williams says some sections of the economy have already started their descent. According to his analysis, “Durable goods orders contracted quarter-to-quarter and year-to-year.” Real incomes are also contracting, Williams says, “. . . the indications here certainly are suggestive of a quarterly contraction, not expansion, in both nominal and real wages and salaries, as well as in real disposable income.” (Click here to go to Shadowstats.com home page.)
Huge amounts of fraud and criminal Wall Street activity have gone unchecked and unprosecuted. Our own government turns a blind eye to the taxpayer rip-offs of the corporate bankers and campaign donors. Liar loans were packaged into mortgage-backed securities. These “securities” were rated “triple A.” They were later deemed “toxic.” When it all blew up, bankers committed forgery, perjury and fraud on the court that was politely characterized as “robo-signing.” The whole enterprise was so fraudulent even the mob would envy it.
Now, there is a lawsuit that alleges bankers and government officials stole the American dream and much of its wealth. It is asking a federal court to halt all “mortgage foreclosures by the Banksters nationwide.” According to Marketwatch.com, “Spire Law Group, LLP’s national home owners’ lawsuit, pending in the venue where the “Banksters” control their $43 trillion racketeering scheme (New York) – known as the largest money laundering and racketeering lawsuit in United States history and identifying $43 trillion ($43,000,000,000,000.00) of laundered money by the “Banksters” and their U.S. racketeering partners and joint venturers – now pinpoints the identities of the key racketeering partners of the “Banksters” located in the highest offices of government and acting for their own self-interests. . . . James N. Fiedler, Managing Partner of Spire Law Group, LLP, stated: “It is hard for me to believe as a 47-year lawyer that our nation’s guardians have been unwilling to stop this theft.” (Click here for the complete Marketwatch.com story.)
The $43 trillion lawsuit underscores the enormity of the problems America is facing. There is no recovery, at least not yet. No economy can truly grow under a backdrop of crime. Our mainstream media lies by omission. There is no wonder so many good citizens of the United States are oblivious and completely unprepared for the coming calamity. The ones that are in the know refuse to see the light of the oncoming train. Instead, they play on the tracks. America is in deep financial trouble, and we have become a nation in denial.
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KARL DENNINGER ON THE HIDDEN GDP TAX AND LOSING THE DEFICIT DEBATE
Published on Oct 1, 2012 by CapitalAccount
Presidential candidates Mitt Romney and Barack Obama may be gearing for a “face-off” in their first presidential debate this Wednesday, but are they both already losers in the deficit debate? Can any amount of rhetoric fill the gaps in their deficit plans, and where is the country headed without sound math, let alone sound MONEY! And what about the hidden GDP tax? We’ll hear from blogger, author and radio host Karl Denninger of the Market Ticker, for his take.
And while the budget plans of presidential candidates may not add up, we already know the *lack of government planning entirely* has the US to head off the so-called “fiscal cliff,” in January of 2013. Daunting names aside, what exactly is the fiscal cliff, and what does falling off it entail? We’ll break down the potential damage in word of the day and give our audience a glaring example of the wasteful costs of political uncertainty already documented.
Plus we have a manufacturing data dump out today, but some of it points in opposite directions. We have a slew of negative numbers out of Europe, too (PMI, inflation and unemployment). Our guest will help make sense of these ingredients and tell us why he thinks a US recession is already baked into the cake.
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MICHAEL PENTO: THE REAL FISCAL CLIFF – A CURRENCY AND BOND COLLAPSE
Published on Oct 28, 2012
By Greg Hunter’s USAWatchdog.com
Economist Michael Pento says forget the “Fiscal Cliff” you have been told about. Pento charges, “The real ‘Fiscal Cliff’ is the coming currency and bond market collapse.” Pento says if we stay on our current path, “We are in for an interest rate shock that will make the Great Depression look like the days of wine and roses.” The open-ended Fed money printing is creating “. . . a fictitious world of artificially low interest rates,” according to Pento. He says, “We need to move quickly towards a balanced budget . . . yes, it will be painful for a lot of people.” If we don’t change course, Pento says, “A financial collapse is inevitable . . . the free market will force this Fiscal Cliff upon us. There is no way around it.” If you ever wanted to hear Mr. Pento uninterrupted and unfiltered by mainstream financial media, here’s your chance. Join Greg Hunter as he goes One-on-One with Michael Pento of Pento Portfolio Strategies.
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U.S. TO HIT BORROWING CEILING AT THE END OF 2012
The United States will hit its statutory borrowing limit near the end of 2012, just as a new Congress gears up to do battle over the country’s huge debt burden and fiscal deficits.
The country’s current debt is around $16.2 trillion, and continued borrowing needs to finance the budget shortfall will send the government past the fixed $16.39 trillion sometime in the final days of the year.
The limit will be struck between the November 6 presidential and congressional elections and the time when the new Congress is sworn in in early January 2013.
If Republican Mitt Romney defeats President Barack Obama in the White House race, it would also come while Obama serves as a lame duck president before his successor takes office on January 20.
That raises the prospect of a possible political battle spanning both the old, outgoing Congress and a possibly reshaped new legislature, over how to finance the deficit, which hit $1.1 trillion in the fiscal year that just ended.
And it would also come as Republicans and Democrats seek a compromise on an alternative to the “fiscal cliff” crash austerity plan of budget cuts and tax hikes that will be implemented from January 1, threatening to send the country back into recession.
In July 2012 Washington went through a vicious political battle over raising the debt ceiling. In the end, the fight culminated in the poison pill compromise that has become the fiscal cliff trajectory.
Without a timely increase to the ceiling, the Treasury said it would likely be able to take “extraordinary measures” to sustain government spending without adding to the debt into January 2013.
“Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America,” the department said.
“We continue to expect that these extraordinary measures would provide sufficient ‘headroom’ under the debt limit to allow the government to continue to meet its obligations until early in 2013.”
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VAN HOISINGTON: ONCE THE U.S. HITS THE DEBT ‘BANG POINT’ WE’RE SCREWED
Money management firm Van Hoisington is out with its latest Quarterly Review and Outlook.
Authored by Van R. Hoisington and Lacy Hunt, the letter fires a warning about elevated government debt levels, echoing the work of Carmen Reinhart and Ken Rogoff.
They start by arguing that all this debt has done us no favors.
The standard of living of the average American continues to fall. Real median household income today is near the same level as it was fifteen years ago, a remarkable statistic since the debt to GDP ratio is 100 points higher. The cause of this deterioration in living standards can be traced to the excessive accumulation of debt, as well as the debt proportion that has turned increasingly unproductive, or even counterproductive. When debt is utilized to finance nonproductive assets, an economic process is initiated that undermines prosperity.
Even worse, is “the negative feedback loop arising from the unproductive nature of this debt accumulation.” They identify and break down three problems with debt-financing:
- “First, United States government spending carries a zero expenditure multiplier, as do operating expenditures of state and local governments. Thus, each dollar spent by the federal government creates no sustainable income, yet the interest payment incurred with each borrowed dollar creates a subtraction from future revenue streams of the private sector.”
- “Second, much of the massive debt increase over the past decade has been in the form of mortgage debt. Jobs and income were created with the expansion of the housing stock. However, no productivity gains are evident in this housing stock increase, which means future incomes have not expanded. Nevertheless, the repayment of principal and interest weighs down the system, and the consequences of delinquency, foreclosure, default and bankruptcy compound the problem.”
- “Third, debt that is utilized to finance consumers’ daily needs obviously fails to generate any productivity or future income growth. Efforts by fiscal and monetary authorities to sustain growth by further debt accumulation may produce some short- term benefit. Sadly, these interludes fade quickly as the debt becomes more destabilizing. The net result of increased indebtedness then becomes the opposite of what policymakers intend when they promote economic growth by either borrowing funds for increased government expenditures or encourage consumers to borrow with artificial and temporary incentives.”
The real worry is that the mounting debt could lead to the “bang point”:
There is a longer-term negative feedback loop that has been referred to as the “bang point” by economists Reinhart and Rogoff, and it occurs when government or private borrowers are denied access to further credit because the marketplace has no confidence that new or existing debt can be repaid. At this point interest rates soar and debt issuance becomes impractical; therefore, the government or private borrower is forced to live on current revenues. As recent cases in Europe have documented, this is painfully disruptive, with high social costs.
The good news is that Van Hoisington think we’re at the “bang point” just yet.
We do not believe this point is at hand for the United States, but it has occurred many times historically, including in contemporary Europe. If it were to happen in the U.S. now, the consequences would be traumatic since 42 cents of every dollar spent by the federal government in the first six months of the current fiscal year was borrowed. The chaos that would be created by a reduction in federal government spending of 42% is unimaginable.
Ultimately, the authors warn that the U.S. needs to act before we actually hit the “bang point.” There prescription:
From both economic theory and historical experience the answer is clear; austerity is the solution to too much debt.
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BUDGET WAR THREATENS AMERICA’S SURVIVAL
Greg Hunter’s USA Watchdog.com
President Barak Obama gave a speech to newspaper executives about the recently passed Republican budget in the House of Representatives. It proposes to cut spending by more than $5 trillion over the next ten years. Yesterday’s speech was, basically, a declaration of war against the GOP and its vision of the government’s budget. The President said, “This Congressional Republican budget is something different altogether. It is a Trojan horse disguised as deficit reduction plans. It is really an attempt to impose a radical vision on our country. It is thinly veiled social Darwinism. It is antithetical to our entire history as a land of opportunity and upward mobility for everybody who is willing to work for it. A place where prosperity doesn’t trickle down from the top but grows outward from the heart of middle class.”
It didn’t take long for the Republicans to fire back. The AP reports, “House Speaker John Boehner said Obama is resorting to ‘distortions and partisan potshots’ — while standing behind policies that the speaker says ‘have made our country’s debt crisis worse.’ And a Mitt Romney spokeswoman says Obama’s in no position to lecture about ‘responsible federal spending.” Folks, it is officially “game on,” and every American should be scared speechless about this budget showdown. It is unlike any the nation has ever faced.
The country has never been more in debt, and this comes at a time when countries like China are shunning U.S. Treasuries. There are more than 12 million “officially unemployed.” (The unofficial is 22 million.) Home prices are falling despite near record low mortgage rates. The BRICS nations are actively seeking an alternative to the U.S dollar for settlement of trade, which could threaten the dollar’s reserve currency status. We are threatening financial war with any country that trades with Iran, and the nation is facing yet another shooting war in the Middle East. The only question is will it come before or after the election.
Last August, Congress raised the debt ceiling by $2.1trillion in exchange for at least $2.1 trillion in budget cuts over the next 10 years. A so-called “Super Committee” of Democrats and Republicans was supposed to agree on a deficit reduction plan, but they couldn’t agree on a single dime of spending cuts or tax increases. That’s right, the deficit was not cut, but the nation went in the hole by another $2.1 trillion. Currently, the deficit is more than $15.6 trillion, and the debt ceiling stands at nearly $16.4 trillion. (Click here to see the U.S. debt clock.)
Can you see the budget battle shaping up in this election year? Republicans will want deep cuts to social programs and not a lot of tax increases. Democrats will want tax increases and to minimize cuts to social programs. Neither side wants to give an inch, especially in an election year. This is the exact same deadlock that took shape last year. Now, both sides want to play political football with the nation’s finances, and the country is running out of time to get its financial house in order before we suffer the same fate as Greece. This will be a monumental budget battle that may crush the nation as we know it. I think it is a safe bet the next increase to the debt ceiling will be in the neighborhood of $2 trillion.
In the aftermath of the budget battle last year, the credit rating of the U.S. was downgraded. There is no doubt it will be downgraded again. Only this time, will the government, also, be shut down? Will the dollar tumble in value? Will the present administration take the money of federal retirement accounts to keep the country from falling into the black hole of insolvency? Will the 47 million people on food stamps be cut off? Will the stock market crash? Will the government stop paying some or all of its bills? Will this turn into a national security issue? Will enemies of the U.S. attack while the donkeys and elephants play chicken with the lives and fortunes of more than 300 million Americans? Will the coming budget war threaten America’s survival? The answer to these questions may all be YES, and no one should be under the illusion that this nightmare could not become reality. I’ve said it before, and I’ll say it again: The country needs statesmen, but what we have are bagmen who are pandering to the special interests that fund them.
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HUGE NEW YORK TIMES EXPOSE REVEALS WHY THE FISCAL TIMEBOMB IN AMERICA WILL EXPLODE IN 2013
Nobody wants much to think about it yet, but it’s well understood by everyone in Washington and on Wall Street, that a potentially massive fiscal problem is looming for the economy next year.
The issue is divided into three parts:
- Sometime in late 2012 or early 2013, Congress will have to approve another debt ceiling hike.
- At the same time, all of the Bush tax cuts are set to expire — not just the tax cuts for the rich.
- Thanks to the last debt ceiling deal, some big time spending cuts are due to go into effect starting in 2013. In theory, these could be reversed by Congress, but in the context of everything else it will be challenging.
Trying to figure out how it will shake down is especially difficult since it’s an election year.
But in the worst case scenario we could have bracing austerity (tax hikes and spending cuts) coupled with another heart-stopping debt ceiling fight. Or we could have some kind of reversal of the spending cuts and a debt ceiling fight, and perhaps another downgrade from ratings agencies, another potential confidence blast.
Just in terms of the drag on growth, recent analysis by Barclays (according to BW) puts the hit at around 3% of GDP.
Furthermore, whereas in the last debt ceiling fight, Obama was eager to ensure that there would be no cuts in 2012 (an election year), it’s not clear that he’d make the same bet this time, as a lame duck (if he wins, or even just in the lame duck session), as he’s apparently open to the idea of seeing all the Bush tax cuts expire on everyone.
All this was already known.
You’ll probably feel even worse about things after you read the latest cover story by Matt Bai in The New York Times Magazine on the failure of Obama and Boehner to strike a “Grand Bargain” in the summer of 2010.
It’s a very long, and detailed story, but one key point is that yes, Obama and Boehner, for whatever reason, did think they could work with each other, and were tantalizingly close at times to a real deal. Obama was willing to concede on spending and entitlements, and Boehner was actually willing to concede on raising revenue, a decision that could prompt a revolt within a GOP that had just been swept to power with the exact opposite mandate.
What’s also clear is that all the cliches about Boehner not really being in command of his ship, and Eric Cantor wanting to undermine him seem to be true.
For example, in describing the negotiations, Bai writes:
Like much of Washington, White House aides were perplexed by the relationship between Boehner and the man who was 14 years younger and next in line for his job, Eric Cantor. During one of a series of tense White House meetings with Congressional leaders in July, Obama’s aides had been stunned — even a little embarrassed — to see Cantor, when asked for his opinion, directly contradict the speaker in front of the president. He insisted that the caucus would not accept the kind of sweeping deal that both leaders wanted. It struck Obama’s aides as breach of Washington decorum, and it appeared to betray deeper divisions inside the Republican caucus. When Daley and Geithner were first invited by Boehner to his Capitol office to restart the negotiations in mid-July, they were surprised to find Cantor there too. It was one of the main reasons that the White House dared to hope a deal might work. They assumed that Cantor’s presence meant that the two Republican leaders were now speaking with the same voice.
However, what’s really worrisome is that chastened by the events of the debt ceiling debacle, nobody seems to have any hope that DC is going to have a better go of it this time around.
Now, with another debt battle looming, the chance of resurrecting some kind of grand bargain doesn’t seem very promising. Obama and Boehner have spoken only a handful of times. The administration’s most driven dealmaker, Bill Daley, never recovered from the episode, which poisoned his relationship with Harry Reid, who blamed Daley for having kept him and other Senate leaders in the dark as the negotiations unfolded. Daley resigned in January and was replaced by Jack Lew — the guy whom Boehner and his aides tried to sideline.
When I talked to Boehner about the two potential crises coming at year’s end (the possibility of automatic budget cuts and, weeks later, another vote on the debt ceiling), he told me he was placing his hopes on getting a new president. “I don’t see any real evidence that this president has the courage to lead,” he growled. He added that any comprehensive deal might be even harder to sell to his members this time around.
This is why, in the end, there’s a good argument to be made that a Romney election would be much better for the economy, in that in all likelihood, a unified GOP Washington would forget about spending cuts and austerity, and quickly focusing on making sure nothing bad happens to the economy, defusing the fiscal bomb by punting.
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EVERYTHING YOU NEED TO KNOW ABOUT THE POLITICAL EVENT THAT COULD PLUNGE AMERICA INTO A NEW CRISIS
The Fiscal Times
What is the fiscal cliff?
The “fiscal cliff” is what Federal Reserve Board Chairman Ben Bernanke has called the many major fiscal events that could happen simultaneously at the close of 2012 and the dawning of 2013. The events include the expiration of the Bush era tax cuts, the payroll tax cut and other important tax-relief provisions. They also include the first installment of the $1.2 trillion across-the-board cuts of domestic and defense programs required under last summer’s bipartisan deficit reduction agreement. At the same time, lawmakers may have to raise the debt ceiling once again, potentially triggering another standoff in Congress.
What happens if we fall off the fiscal cliff?
If all these tax increases and spending cuts take effect, the government could save nearly $600 billion starting next year, but the impact on the economy would likely mean a new recession, according to the Congressional Budget Office.
Democrats tend to be concerned about abrupt and austere deficit reduction based on the theory that government spending helps to stimulate the economy. Republicans are more enthusiastic about deficit reduction, but mainly by cutting or slowing the rate of growth of domestic programs and entitlements. They oppose cuts in defense spending and support extending the Bush-era tax cuts for all Americans, including the wealthiest.
Bernanke has also expressed concern that so much fiscal tightening at once will slow the economy further from an already anemic growth rate. The Congressional Budget Office estimates that reducing the deficit so quickly will reduce growth next year from 4.4 percent to just 0.5 percent.
What is Congress doing about it?
Few political analysts believe Congress and the White House will reach an early accommodation on the path needed to avoid the fiscal cliff, which would be a moderation in the spending cuts and enacting broad-based tax reform. Sen. Patty Murray of Washington State and other senior Democrats say they are prepared to weather a fiscal crisis at year’s end unless Republicans drop their opposition to higher taxes for individuals with incomes over $200,000 a year and households with incomes above $250,000 annually. The most likely scenario is postponing consideration of the measures until after the election, which means another nearly five months of economic uncertainty and sluggish growth.
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100 DAYS REMAINING UNTIL TAX ARMAGEDDON
SEPTEMBER 22, 2012
Sunday, September 23, 2012, will mark the start of the 100-day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2013:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors (later re-upped by President Obama and Democrat Congress in 2010). The following tax hikes will occur on January 1, 2013:
Personal income tax rates will rise on January 1, 2013. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
-The 10% bracket rises to a new and expanded 15%
-The 25% bracket rises to 28%
-The 28% bracket rises to 31%
-The 33% bracket rises to 36%
-The 35% bracket rises to 39.6%
Higher taxes on marriage and family coming on January 1, 2013. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level.
Middle Class Death Tax returns on January 1, 2013. The death tax is currently 35% with an exemption of $5 million ($10 million for married couples). For those dying on or after January 1 2013, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors on January 1, 2013. The capital gains tax will rise from 15 percent this year to 23.8 percent in 2013. The top dividends tax will rise from 15 percent this year to 43.4 percent in 2013. This is because of scheduled rate hikes plus Obamacare’s investment surtax.
Second Wave: Obamacare Tax Hikes
There are twenty new or higher taxes in Obamacare. Some have already gone into effect (the tanning tax, the medicine cabinet tax, the HSA withdrawal tax, W-2 health insurance reporting, and the “economic substance doctrine”). Several more will go into effect on January 1, 2013. They include:
The Obamacare Medical Device Tax begins to be assessed on January 1, 2013. Medical device manufacturers employ 409,000 people in 12,000 plants across the country. This law imposes a new 2.3% excise tax on gross sales – even if the company does not earn a profit in a given year. Exempts items retailing for <$100.
The Obamacare Medicare Payroll Tax Hike takes effect on January 1, 2013. The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Starting in 2013, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate.
The Obamacare “Special Needs Kids Tax” comes online on January 1, 2013. Imposes a cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare cap harms these families.
The Obamacare “Haircut” for Medical Itemized Deductions goes into force on January 1, 2013. Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only.
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2013, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These tax increases will be in force for BOTH 2012 and 2013. The major items include:
The AMT will ensnare over 31 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 31 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Full business expensing will disappear. In 2011, businesses can expense half of their purchases of equipment. Starting on 2013 tax returns, all of it will have to be “depreciated” (slowly deducted over many years).
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
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TAXES GO UP IN 2013 FOR 163 MILLION WORKERS
Stephen Ohlemacher, Associated Press
WASHINGTON (AP) — President Barack Obama isn’t talking about it and neither is Mitt Romney. But come January, 163 million workers can expect to feel the pinch of a big tax increase regardless of who wins the election.
A temporary reduction in Social Security payroll taxes expires at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn’t get through Congress anyway, with lawmakers in both parties down on the idea.
Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.
Before he was named as Romney’s running mate, Rep. Paul Ryan, R-Wis., disparaged the payroll tax cut, calling it “sugar-high economics” that wouldn’t promote long-term growth.
Social Security is funded by a 12.4% tax on wages up to $110,100, rising to $113,700 in 2013. Half is paid by employers and the other half is paid by workers. For 2011 and 2012, Congress and Obama cut the share paid by workers from 6.2% to 4.2%.
A worker making $50,000 saved $1,000 a year, or a little more than $19 a week. A worker making $100,000 saved $2,000 a year.
The beauty of the tax cut is that is shows up in weekly paychecks, giving workers more money to spend or save. The downside is that some workers may not have noticed a $19-a-week increase in pay, making them unlikely to credit the politicians who made it happen.
As the tax cut expiration approaches, Republicans question whether it has done much the past two stimulate the sluggish economy. Politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security.
They are backed by powerful advocates for seniors, including AARP, who adamantly oppose any extension.
“The payroll tax holiday was intended to be temporary and there is strong bipartisan support to let that tax provision expire,” said Sen. Orrin of Utah, the top Republican on the Senate Finance Committee. “The continued extension of a temporary payroll tax holiday has serious long-term implications for Social Security and, frankly, it’s not even clear that it has helped to boost our ailing economy.”
The question of renewing the payroll tax cut has been overshadowed by the expiration of a much bigger package of tax cuts first enacted under President George W. Bush. The Bush-era tax cuts also expire at the end of the year, and Congress is expected to try to address them after the election, in a lame-duck session.
The payroll tax cut could become part of the mix in negotiations that could go in many directions. But lawmakers in both political parties say they doubt it.
“There’s a growing consensus that Congress and the president can’t continue to divert such a critical revenue stream from Social Security,” said Rep. Kevin Brady of Texas, a senior Republican on the tax-writing House Ways and Means Committee. “More and more Americans understand that that payroll tax cut, while politically unappealing, is endangering Social Security.”
Under the law, Congress is reimbursing Social Security for the lost revenue, estimated at $103 billion in 2011 and $112 billion in 2012. But Congress didn’t cut spending or raise other taxes to offset the lost revenue, so the payroll tax cut is being financed with borrowed money, adding to the national debt.
Democrats are more willing to defend the tax cut, saying it helped prop up the economy during a rough stretch while providing what amounted to a 2% pay increase to millions of middle-income workers. But they, too, are concerned about maintaining Social Security’s source of revenue.
“I think people realize that was a temporary thing,” said Sen. Mark Begich, D-Alaska.
Rep. Richard Neal of Massachusetts, a senior Democrat on the Ways and Means Committee, said he thinks there is evidence that the tax cut helped the economy. But, he added, “I’m not sure that it met expectations.”
House Democratic leader Nancy Pelosi of California said she, too, wants to let the tax cut expire.
Larry Summers, Obama’s former economic adviser, is a lonely voice in Washington calling to extend the payroll tax cut. He said in a recent speech that the economy is too fragile to reduce workers’ incomes.
Obama pushed for the tax cut in late 2010 as a way to increase workers’ take-home pay to help boost consumer spending and provide a spark for the economy. Economists were divided on the economic benefits. Many said it probably helped increase consumer spending but there was no consensus on the magnitude.
The initial tax cut was for only a year, and many Republicans in Congress wanted to let it lapse at the end of 2011. But Obama and Democratic lawmakers successfully fought to extend it through 2012.
Obama, however, didn’t include the tax cut in his 2013 budget proposal, and Treasury Secretary Timothy Geithner told Congress this year that he saw no reason to extend it again.
White House spokeswoman Amy Brundage wouldn’t rule out an extension but wouldn’t commit to one, either.
“The president fought extremely hard last year in the face of Republican opposition to ensure that the payroll tax cut was extended,” Brundage said. “There are a number of tax issues that Congress will have to deal with at the end of the year, this being one of them, and we will continue to evaluate all of the options available to us at that time.”
Romney’s campaign hammers Obama almost every day for proposing to let Bush-era tax cuts expire for individuals making more than $200,000 and married couples making more than $250,000. But Romney’s tax plan would let the payroll tax cut expire, an issue he doesn’t mention on the stump.
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LOOMING TAX HIKE MOTIVATES BUSINESS OWNERS TO SELL
By JOHN D. MCKINNON | The Wall Street Journal
November 1, 2012
A looming increase in the capital-gains tax rate next year is fueling sales of some privately-held businesses.
Many business owners—mostly founders who could gain a lot from a sale—are looking to close deals before next year, when the maximum tax on investment income is scheduled to rise from 15% currently to at least 23.8% on most capital gains, at least for higher-income households. Many sellers intend to convert their equity into retirement funds or just start anew.
![[image]](http://si.wsj.net/public/resources/images/MK-BY412_TAXSEL_D_20121031182456.jpg)
Bert Wolf of Acetylene Oxygen in Harlingen, Texas, says he plans to sell his compressed-gas business before 2013. Many business owners are looking to close deals by year’s end.
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“It just made more sense for me to take my chips off the table and go do something else,” said Bert Wolf, 60 years old, who has an agreement to sell his compressed-gas business, Acetylene Oxygen Co. of Harlingen, Tex., before year-end.
Mr. Wolf added that if he waited until after the tax increase to sell, he would have to expand the business at the current rate “for at least 3 or 4 more years to achieve the same after-tax sales dollar.” He is profiting on the sale of his business to Praxair Inc., a public company.
“There’s a kind of a panic on to get things done,” said Beatrice Mitchell, co-founder of Sperry, Mitchell & Co. Inc., a New York investment bank that is advising Mr. Wolf on the sale.
To be sure, the weak economy has been difficult for many small-business owners across the board. The median selling price for U.S. small businesses in the quarter ended Sept. 30 was $174,000 down 8.2% from four years earlier, according to BizBuySell.com, an online small-business marketplace. The firm’s findings are based on sales, reported voluntarily by business brokers and mostly of less than $1 million, in 70 major markets.
In the three quarters so far this year, 3,536 small businesses exchanged hands, down 34% from the first three quarters of 2008, when sales of small businesses were at a record high, it found.
Yet, some companies’ bottom lines are in better shape now than during the recession. That has improved their valuations. Investment bankers say they believe sales of companies whose asking prices are $10 million to $250 million have been boosted for the past two years by pending increases in the capital-gains rates.
The top tax rate will go up at year-end by at least 3.8 percentage points because of a provision in President Barack Obama’s health-care overhaul law. But that will be added onto a top rate that will depend on negotiations between Mr. Obama and Congress after the November election, when they are expected to seek a deal on numerous tax and spending measures.
Mr. Obama and Congress agreed in late 2010 to extend the current 15% capital-gains tax rate through this year. Absent further action, the top capital gains tax rate will rise to 20% on Jan. 1. After adding the extra charge from the health-care law for higher-income households, the maximum tax on investment income would be 23.8%. When combined with the scheduled expiration of some other tax breaks for high earners, the maximum tax on investment income would be as high as 25%.
Many Republican lawmakers want to extend the 15% rate. If they prevail, the maximum tax likely would rise to at least 18.8% because of the health-care charge.
Mr. Obama proposes to let the top capital gains tax rate rise to 20% on income above $250,000 for couples, but hold it to 15% on income below that threshold.
Republican presidential candidate Mitt Romney has said that if elected, he would seek to eliminate taxes on all investment income, including capital gains, for taxpayers with incomes below $200,000. He proposes to maintain the 15% maximum rate on income above that level. He also plans to repeal parts of the health-care law, including the investment-tax increase.
Leonard Ramirez and his wife built up their Houston-based oil drilling supply business, Drilling & Production Resources Inc., over 25 years. They sold it last year to PGI International, a manufacturer of precision parts and systems, partly to avoid the possible capital-gains increase, according to Mr. Ramirez.
The owners of IM Solutions LLC, a Dallas-based online marketing company that serves the legal industry, figured the expected tax increases in 2013 would eat up about 8.8% of the proceeds from selling their business, said company president John Emerick. That 8.8% chunk could be up to $1 million or more of his share, he said.
“It was pretty clear to us that it made more sense for us to pull the trigger early,” Mr. Emerick said. “For me—I’m 49—I’m thinking I might not earn that much for the rest of my life. The earnings for the rest of my life would be equivalent to the tax I’d be paying by waiting until 2013.” The owners sold the business to LeadingResponse LLC in a deal financed by Huron Capital Partners, a private-equity group, closing on the sale in July.
Generally, there are more sellers than buyers of small businesses. Investment bankers and brokers say both are being motivated by taxes to some degree. Sellers are looking at the scheduled increase in capital gains rates, and buyers are being discouraged by the overall uncertainty over tax policy.
When Congress last raised capital gains tax rates in 1986, lifting the top rate to 28% from 20%, the change triggered a wave of asset sales, including securities and companies, in the months before it took effect.
The top rate had been scheduled to rise to 20% from 15% at the end of 2010, before the White House and Congress agreed in December 2010 to extend the lower rate for two years. In the fourth quarter of 2010, there were 928 sales of companies priced between $10 million and $250 million, for instance, compared with 660 sales of companies in that range in the third quarter, and with 548 sales of companies in that range a year earlier, according to data from S&P Capital IQ.
Sales of companies in this range have stayed reasonably strong, averaging 728 per quarter since the start of 2011, according to S&P Capital IQ data. But such sales have slipped a bit this year compared with 2011, largely because of broader uncertainty about the economy as well as tax policy, investment advisers say.
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WHY YOU MIGHT ONLY BE ABLE TO GET PART-TIME WORK IN 2013
Robert Wenzel
economicpolicyjournal.com
December 3, 2012
Operators of small businesses are going to be cutting full time employees throughout 2013 to under 50, to stay under the Obamacare tax.
Here’s the thinking of one small business owner:
Here is what I am doing for the rest of the year — working with every manager in my company so that as of January 1, 2013, none of our employees are working more than 28 hours a week. I think most readers know the reason — we have got to get our company under 50 full time employees or else I am facing a bill from Obamacare in 2014 that will be several times larger than my annual profit. I love my workers. They make me a success. But most of my competitors are small businesses that are exempt from the Obamacare hammer. To compete, I must make sure my company is exempt as well. This means that our 400+ full time employees will have to be less than 50 in 2013, so that when the Feds look at me at the start of 2014, I am exempt. We will have more employees working fewer hours, with more training costs, but the Obamacare bill looks like about $800,000 a year for us, at least, and I am pretty sure the cost of more training will be less than that.
This will be unpopular but tolerable to most of my employees. The vast majority of them are retired and our company is merely an excuse to stay busy, work outdoors, and get a little extra money.
But this is going to be an ENORMOUS change in the rest of the service sector. I have talked to a lot of owners of restaurants and restaurant chains, and the 40-hour work week is a thing of the past in that business. One of my employees said that in Hawaii, it was all the hotel employees could talk about. Many chains are working on mutli-team systems where two teams of people working part-time replace the former group of full-time employees. 2013 is going to see a lot of people (who are not paid very well to begin with) getting their hours and pay cut by 25%. At the same time that they are required, likely for the first time since many are relatively young, to purchase health insurance.
It is really going to get crazy, as the owner above speculates:
It will be interesting to see what solutions emerge. My bet is that it will become standard for people in the service sector to work two different jobs for 20-25 hours each with two different companies. This will be a pain for them, but allow them to keep their income up. The hard part may be coordinating shifts between companies. For example, a company that divides their shifts into mon-tue-wed vs. thu-fri-sat cannot share employees with one who divides their shifts between morning and afternoon. If given time, I would guess that just as the mon-fri workweek emerged as a standard, companies may adopt standard ways of dividing up the work weeks for part-timers, making it easier for schedules to mesh.
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AMERICANS WHO VOTED FOR OBAMA NOW SEEKING WEEKLY JOB HOURS SLASHED BELOW 30 AS OBAMACARE KICKS IN
By Mike Adams, the Health Ranger
Editor of NaturalNews.com
(NaturalNews) It is the ultimate example of how you reap what you sow: Huge numbers of American workers who voted for Obama are now seeing their own jobs slashed below 30 hours a week as employers desperately try to avoid “Obamacare bankruptcy.”
Obamacare mandates for businesses only apply to those working 30 hours a week or more, and while many businesses do not want to cut workers’ hours, they are being forced to in order to stay afloat. This necessary action is causing businesses to lose money and become less competitive while at the same time destroying American jobs.
Some businesses are also slashing job positions in an effort to get below the 50-employee threshold above which Obamacare mandates kick in. So across the country, we’re not only seeing workers lose hours thanks to Obamacare; we’re also seeing workers losing their jobs.
But the Obama administration will announce these results to be a huge “job creation success!” because workers must now find two part-time jobs that usually pay less than the one full-time job they used to have. The raw job numbers, however, will be spun by the White House into a victory pronouncement of “twice as many jobs exist now!”
Be careful what you vote for
A note to Obama supporters: When you thought you were voting for “free health care,” you were actually voting to get yourself “downsized.” Your vote was an act of economic suicide. That’s because no government can force a business to pay for something that will put it out of business. When government mandates become too expensive for a business to afford, it will simply stop conducting business and that means cutting jobs or job hours.
Imagine: If Obama announced a new initiative called “double pay for all workers” and made it a federal law, he would of course win another popular vote. But employers wouldn’t be able to afford the double pay mandate, so they would start slashing jobs or offshoring jobs, and that’s exactly what we see today. Every employer in America is right now asking himself these three questions in order to stay above water and not go bankrupt:
#1) How can we slash workers to under 30 hours a week?
#2) How can we offshore jobs to India or other countries?
#3) How can we cut our total number of employees to under fifty?
This is the upshot of Obamacare: the destruction of America’s small businesses.
The largest businesses pay almost no tax
At the same time small businesses are struggling to afford Obamacare, mega-corporations like Google are proudly announcing they’re paying only 3.5% in taxes thanks to a complex array of global tax-shifting strategies with names like the “Double Irish” and “Dutch Sandwich.” As Bloomberg recently reported:
Google Inc. (GOOG) avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show. By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.
So while Google, one of the wealthiest corporations in the world, pays just 3.5% in TOTAL tax, small businesses across America find themselves paying 30%, 40%, even 50% of their earnings in total taxes, including FICA, social security, inventory tax, capital gains and now Obamacare surcharges and taxes. This is how Obamacare works: Protect the corporate giants while socking it to small and medium-sized businesses.
Obamacare is gutting America’s economy and throwing a wrench into the economic machinery that keeps America working. You know why service is so slow at retailers these days? Because Obamacare forced the employer to slash workers’ hours. Why do car parts take so long to order and deliver? Because Obamacare gutted the human resources of the parts manufacturers. Why is everything becoming slower, more expensive and more frustrating across the economy? Because Obamacare mandates have forced employers to downsize or lay off their most productive workers.
I ask: What good is a health insurance mandate if it destroys your job in the process of being enforced?
Obamacare supporters have little understanding of economic reality
The simple truth of all this is that economics is a subject best left to those people capable of understanding mathematics, and that precludes the vast majority of voters of either political party. Mathematically speaking, Obama’s so-called “mandate” isn’t even a real mandate: Less than half of eligible voters actually voted in this recent election, and barely half of those voted for Obama. This means thatroughly 75% of eligible voters didn’t vote for Obama, yet they must suffer under his economic policies which are based in pure fantasy and delusion.
Obama has zero business experience. He has no clue how economics really works and no knowledge of how to run a successful business, much less the executive branch of government. I know what it takes to create multi-million-dollar companies because I’ve done it successfully and repeatedly, and I can assure you that the economic policies currently being pursued in Washington will only destroy jobs, destroy America’s economy and destroy our economic future.
Democrats, it seems, believe the solution to all this is to make taxpayers pay even more money to the federal government. As we are told by the lamestream media, apparently the only reason the economy isn’t celebrating a rapid expansion right now is because workers and businesses are allowed to keep too much of their own incomes. If only Washington D.C. had more of your money, they would use it more wisely, we’re told, and fix all our problems. Obamacare is just the beginning: power-hungry zealots like Obama have plans for centralizing control and running everything in your life: health care, food choices, educational choices, private property, energy consumption, home gardening and anything else you might imagine.
So rather than thinking of ways to cut cancerous government out of the economy like a deadly tumor, the people who run the government can only imagine variations of ways to keep expanding it. (This is true across both Republicans and Democrats.) Government expansion necessarily requires an expansion of confiscation from businesses and workers. This action, of course, destroys international competitiveness and American jobs.
How to really create economic abundance in America
It’s all cause and effect, folks. If you really want to uplift America’s economy, create millions of quality jobs and put the kind of money into the hands of workers that can help them afford private health insurance, you’ve got to slash the size of government by 80% across the board. Let businesses and workers keep 80% of what they normally send to Washington. With that kind of money in their pockets and bank accounts, workers would EASILY be able to afford health insurance. They would also spend their newly-expanded discretionary incomes on all sorts of products and services that would be a boon to the economy.
Government, you see, is the eternal enemy of economic prosperity. Government has been and always will be a parasite on the economy. Obama and his worshippers don’t understand economics. They don’t understand what it takes to create abundance out of hard work, dedication and honest savings and investment. It’s all summed up in Obama’s atrociously insulting quote, “If you have a business, you didn’t built that… somebody else made that happen!”
That’s a lie. Government builds nothing. It only destroys that which others have built. And Obamacare has succeeded in only one thing: the “scorched Earth” destruction of American jobs and the rapid erosion of economic prosperity.
If you voted for Obama and you’re now unemployed or had your hours cut, you are getting a first-hand view of economic cause and effect. I’m not saying Romney would have been any better, because he was just another Goldman Sachs puppet. The real solution to all this is Ron Paul, who wanted to slash the size of government and send people’s money back home so they could spend it the way they choose instead of having a bunch of over-fed, over-paid bureaucrats spending their money in D.C.
Instead of blaming Obama, of course, the vast majority of the recently-unemployed will blame their employer! ”How dare you cut my hours!” they will scream, oblivious to the fact that their employer did NOT want to cut their hours but was forced to by a cabal of economic morons in Washington who are dismantling America’s economy one piece of legislation at a time.
Putting Democrats in charge of the economy is kind of like putting kindergarteners in charge of nuclear missiles. The outcome can never be good… a lot of people are going to get hurt… and somebody else sooner or later has to clean up the mess.
In four years, things will be far worse
As bad as you might think things are right now, in four more years under Obama, they will be far, far worse.
Unemployment will continue to rise. Millions more Americans will desperately turn to food stamps. Crime waves will hit cities like Detroit, Chicago, New York and Los Angeles. Homelessness will spread, and people who used to have one good job will find themselves working two or three part-time jobs instead, none of which offer real benefits.
Like a heroin addict who can’t quit his cycle of self-destruction, the Obama administration will then insist, two or three years from now, that the problem is caused by government still not confiscating enough money from taxpayers and small businesses. The call for raising more taxes, growing more government and dictating economic policy to the nation will be parroted across the lamestream media.
In the end, the system will collapse. When that day comes, don’t be anywhere near a large U.S. city.
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THE TRAGIC DOWNFALL OF THE AMERICAN WORKER
Michael Snyder
The Economic Collapse
Dec 6, 2012
There was a time in America when virtually anyone that wanted a job could go out and get one and the United States boasted the largest and most prosperous middle class in the history of the world. Sadly, those days are long gone. Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job. But now there are millions of Americans in their prime working years that cannot find a job. Millions of others are working low wage jobs or part-time jobs because that is all they can get. The other day I went to a large retail store and I got into a conversation with the lady who was checking me out. She said that she had worked professional jobs all her life, and that she had taken this job to tide her over as she searched for a new job, but now she had been there for two years with no end in sight. I felt really bad for her, because she was obviously a sharp lady with a lot of skills. But this is the new reality. Good paying manufacturing and professional jobs are being replaced by low paying service jobs. We are transitioning from an economy with plenty of good jobs to an economy with plenty of bad jobs. The next stage in our transition will be to an economy where it seems like there are no jobs for anyone. We are witnessing the tragic downfall of the American worker, and it is heartbreaking.
Many of our politicians insist that things are getting better for American workers, but that is simply not true. Just look at the chart below. Back at the start of 2008, the percentage of working age Americans with a job was sitting at about 63 percent. Since then it has fallen below 59 percent and it has stayed there for over 3 years. After every other recession in the post-World War II era the employment-population ratio has always bounced back. That has not happened this time…
If this number was going to recover, it would have done so by now. We are rapidly approaching the next major economic crisis and the percentage of working age Americans with a job is going to go even lower.
And our politicians are certainly not helping matters. Many of the things that they have done are actually going to accelerate the loss of good jobs. For example, as one small business owner recently pointed out, Obamacare is going to force businesses all over the United States to minimize the number of full-time workers they are using and replace them with part-time workers…
Here is what I am doing for the rest of the year — working with every manager in my company so that as of January 1, 2013, none of our employees are working more than 28 hours a week. I think most readers know the reason — we have got to get our company under 50 full time employees or else I am facing a bill from Obamacare in 2014 that will be several times larger than my annual profit. I love my workers. They make me a success. But most of my competitors are small businesses that are exempt from the Obamacare hammer. To compete, I must make sure my company is exempt as well. This means that our 400+ full time employees will have to be less than 50 in 2013, so that when the Feds look at me at the start of 2014, I am exempt. We will have more employees working fewer hours, with more training costs, but the Obamacare bill looks like about $800,000 a year for us, at least, and I am pretty sure the cost of more training will be less than that.
This will be unpopular but tolerable to most of my employees. The vast majority of them are retired and our company is merely an excuse to stay busy, work outdoors, and get a little extra money.
But this is going to be an ENORMOUS change in the rest of the service sector. I have talked to a lot of owners of restaurants and restaurant chains, and the 40-hour work week is a thing of the past in that business. One of my employees said that in Hawaii, it was all the hotel employees could talk about. Many chains are working on mutli-team systems where two teams of people working part-time replace the former group of full-time employees. 2013 is going to see a lot of people (who are not paid very well to begin with) getting their hours and pay cut by 25%. At the same time that they are required, likely for the first time since many are relatively young, to purchase health insurance.
How could we be so foolish?
Unfortunately, this is not something new. Our economy has been replacing good jobs with bad jobs for quite some time. If you can believe it, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.
Will nearly all of us eventually be working in fast food restaurants or stocking shelves at retail giants like Wal-Mart?
Amazingly, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.
No wonder our middle class is being absolutely destroyed.
At this point, wages as a percentage of GDP are at an all-time low in America. As millions more good jobs are shipped out of the country, the competition for the remaining jobs will become incredibly fierce and that number will get even lower.
Many Americans that actually do have jobs right now find that they simply don’t make enough to take care of themselves and their families. They are called “the working poor”, and their ranks are growing steadily. Today, aboutone out of every four workers in the United States brings home wages that are at or below the federal poverty level.
American households are getting poorer at a time when prices continue to rise. Median household income in America has declined for four years in a row. Overall, it has fallen by over $4000 during that time span.
But have the prices in the stores declined?
Of course not.
No wonder middle class families are feeling more financial stress than ever before. A survey conducted by the Pew Research Center found that 85 percent of middle class Americans say that it is harder to maintain a middle class standard of living today than it was 10 years ago.
The transition from good jobs to bad jobs in our economy has been taking place for a very long time, and it is not going to be reversed overnight. Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs. There are less tickets to the middle class than there used to be, but neither political party seems interested in stopping the flow of good jobs out of the country.
If we keep doing the same things that we have been doing, we will continue to get the same results.
When I was young, I was told that there would always be “good jobs” available for anyone that got a good education and that worked hard.
What a crock of baloney that turned out to be.
According to a paper that was recently released by the Center for Economic and Policy Research, only 24.6 percentof all jobs in the United States qualify as “good jobs” at this point.
In a previous article, I detailed the three criteria that they used to define what a “good job” is….
#1 The job must pay at least $18.50 an hour. According to the authors, that is the equivalent of the median hourly pay for American workers back in 1979 after you adjust for inflation.
#2 The job must provide access to employer-sponsored health insurance, and the employer must pay at least some portion of the cost of that insurance.
#3 The job must provide access to an employer-sponsored retirement plan.
More than 75 percent of all jobs in the U.S. today are not “good jobs”, and things are not looking promising for the future.
No wonder so many families are barely surviving these days. Right now, approximately 77 percentof all Americans are living paycheck to paycheck at least some of the time. That is a dreadful number.
But if you still do have a job, you should consider yourself to be fortunate.
There are millions upon millions of Americans out there without any job at all.
Did you know that 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed during 2011?
Hordes of fresh college graduates are entering the marketplace each year only to find that the good jobs that they were promised simply are not there.
And now it looks like things are getting even worse. This week Citigroup announced that it plans to eliminate 11,000 jobs in an attempt to reduce costs. But Citigroup is far from alone. We have seen dozens of major layoff announcements since the election. If you doubt this, just see this article and this article.
It is time to wake up and admit that our economy is in an advanced state of decline, that we need to quit shipping our jobs out of the country, and that what we are doing now is clearly not working.
If we are “the greatest economy on earth”, then why are approximately 48 percent of all Americans either considered to be “low income” or are living in poverty?
We need to return to the principles that our Founding Fathers founded this country on or else things are going to get a lot worse and people are going to get very, very angry.
Our politicians have been pitting different groups of people against one another and many of them have been blaming the wealthy for all of our problems. Never before in my lifetime have I seen so much anger directed toward those that have money. This anger is even being expressed in ways that you would not normally expect. For example, the California Federation of Teachers recently produced a video that portrays wealthy people peeing on poor people. That shocked me.
Eventually, all of this anger is going to lead to violence if we are not careful. When the next major wave of the economic crisis strikes and unemployment gets significantly worse, I fear for what might happen. I believe that it is very possible that we may see mobs of struggling people storm into wealthy neighborhoods and play “Robin Hood” with their possessions.
Instead of hating one another, we need to return to the principles that once made our economy so great. Those principles would enable everyone to prosper.
Unfortunately, this country continues to turn away from those principles and hate and anger continue to grow.
If we continue down this path, the end result is going to be a complete and total nightmare.
It is possible to turn this economy around. But we can’t do the same things that we have been doing. We have to start making better decisions.
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THIS IS WHY AMERICANS HAVE LOST THE DRIVE TO EARN MORE
zerohedge.com
December 3, 2012
In the recent past we noted the somewhat startling reality that “the single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.” While mathematics is our tool – as opposed to the mathemagics of some of the more politically biased media who did not like our message – the painful reality in America is that: for increasingly more Americans it is now more lucrative – in the form of actual disposable income – to sit, do nothing, and collect various welfare entitlements, than to work. This is such an important topic that we felt it necessary to warrant a second look. The graphic below quite clearly, and very painfully, confirms that there is an earnings vacuum of around $40k in which US workers are perfectly ambivalent toward inputting more effort since it does not result in any additional incremental disposable income. With the ongoing ‘fiscal cliff’ battles over taxes and entitlements, this is a problematic finding, since – as a result – it is the US government that will have to keep funding indirectly this lost productivity and worker output (via wealth redistribution).
As we noted before (details below):
We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and… have the same disposable income at the end of the day.
Naturally, the topic of wealth redistribution is paramount one now that America is entering the terminal phase of its out of control spending, and whose response to hike taxes in a globalized, easily fungible world, will merely force more of the uber-wealthy to find offshore tax jurisdictions, avoid US taxation altogether, and thus result in even lower budget revenues for the US. It explains why the cluelessly incompetent but supposedly impartial Congressional Budget Office just released a key paper titled “Share of Returns Filed by Low- and Moderate-Income Workers, by Marginal Tax Rate, Under 2012 Law” which carries a chart of disposable income by net income comparable to the one above.
But perhaps the scariest chart in the entire presentation is the following summarizing the unsustainable welfare burden on current taxpayers:
- For every 1.65 employed persons in the private sector, 1 person receives welfare assistance
- For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.
The punchline: 110 million privately employed workers; 88 million welfare recipients and government workers and rising rapidly.
And since nothing has changed in the past two years, and in fact the situation has gotten progressively (pardon the pun) worse, here is our conclusion on this topic from two years ago:
We have been writing for over a year, how the very top of America’s social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn’t, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.
But for now, just pretend all is good. Self-deception is now the only thing left for the entire insolvent entitlement-addicted world.
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THE BIG WALL STREET BANKS ARE ABOUT TO ENTER A DEATH SPIRAL
THE COMING DERIVATIVES PANIC THAT WILL DESTROY GLOBAL FINANCIAL MARKETS
Michael Snyder
Economic Collapse
Dec 5, 2012
When financial markets in the United States crash, so does the U.S. economy. Just remember what happened back in 2008. The financial markets crashed, the credit markets froze up, and suddenly the economy went into cardiac arrest. Well, there are very few things that could cause the financial markets to crash harder or farther than a derivatives panic. Sadly, most Americans don’t even understand what derivatives are. Unlike stocks and bonds, a derivative is not an investment in anything real. Rather, a derivative is a legal bet on the future value or performance of something else. Just like you can go to Las Vegas and bet on who will win the football games this weekend, bankers on Wall Street make trillions of dollars of bets about how interest rates will perform in the future and about what credit instruments are likely to default. Wall Street has been transformed into a gigantic casino where people are betting on just about anything that you can imagine. This works fine as long as there are not any wild swings in the economy and risk is managed with strict discipline, but as we have seen, there have been times when derivatives have caused massive problems in recent years. For example, do you know why the largest insurance company in the world, AIG, crashed back in 2008 and required a government bailout? It was because of derivatives. Bad derivatives trades also caused the failure of MF Global, and the 6 billion dollar lossthat JPMorgan Chase recently suffered because of derivatives made headlines all over the globe. But all of those incidents were just warm up acts for the coming derivatives panic that will destroy global financial markets. The largest casino in the history of the world is going to go “bust” and the economic fallout from the financial crash that will happen as a result will be absolutely horrific.
There is a reason why Warren Buffett once referred to derivatives as “financial weapons of mass destruction”. Nobody really knows the total value of all the derivatives that are floating around out there, but estimates place the notional value of the global derivatives market anywhere from 600 trillion dollars all the way up to 1.5 quadrillion dollars.
Keep in mind that global GDP is somewhere around 70 trillion dollars for an entire year. So we are talking about an amount of money that is absolutely mind blowing.
So who is buying and selling all of these derivatives?
Well, would it surprise you to learn that it is mostly the biggest banks?
According to the federal government, four very large U.S. banks “represent 93% of the total banking industry notional amounts and 81% of industry net current credit exposure.”
These four banks have an overwhelming share of the derivatives market in the United States. You might not be very fond of “the too big to fail banks“, but keep in mind that if a derivatives crisis were to cause them to crash and burn it would almost certainly cause the entire U.S. economy to crash and burn. Just remember what we saw back in 2008. What is coming is going to be even worse.
It would have been really nice if we had not allowed these banks to get so large and if we had not allowed them to make trillions of dollars of reckless bets. But we stood aside and let it happen. Now these banks are so important to our economic system that their destruction would also destroy the U.S. economy. It is kind of like when cancer becomes so advanced that killing the cancer would also kill the patient. That is essentially the situation that we are facing with these banks.
It would be hard to overstate the recklessness of these banks. The numbers that you are about to see are absolutely jaw-dropping. According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives. Just check out how exposed they are…
JPMorgan Chase
Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)
Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)
Citibank
Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)
Bank Of America
Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)
Goldman Sachs
Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)
That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.
To get a better idea of the massive amounts of money that we are talking about, just check out this excellent infographic.
How in the world could we let this happen?
And what is our financial system going to look like when this pyramid of risk comes falling down?
Our politicians put in a few new rules for derivatives, but as usual they only made things even worse.
According to Nasdaq.com, beginning next year new regulations will require derivatives traders to put up trillions of dollars to satisfy new margin requirements.
Swaps that will be allowed to remain outside clearinghouses when new rules take effect in 2013 will require traders to post $1.7 trillion to $10.2 trillion in margin, according to a report by an industry group.
The analysis from the International Swaps and Derivatives Association, using data sent in anonymously by banks, says the trillions of dollars in cash or securities will be needed in the form of so-called “initial margin.” Margin is the collateral that traders need to put up to back their positions, and initial margin is money backing trades on day one, as opposed to variation margin posted over the life of a trade as it fluctuates in value.
So where in the world will all of this money come from?
Total U.S. GDP was just a shade over 15 trillion dollars last year.
Could these rules cause a sudden mass exodus that would destabilize the marketplace?
Let’s hope not.
But things are definitely changing. According to Reuters, some of the big banks are actually urging their clients to avoid new U.S. rules by funneling trades through the overseas divisions of their banks…
Wall Street banks are looking to help offshore clients sidestep new U.S. rules designed to safeguard the world’s $640 trillion over-the-counter derivatives market, taking advantage of an exemption that risks undermining U.S. regulators’ efforts.
U.S. banks such as Morgan Stanley (MS.N) and Goldman Sachs (GS.N) have been explaining to their foreign customers that they can for now avoid the new rules, due to take effect next month, by routing trades via the banks’ overseas units, according to industry sources and presentation materials obtained by Reuters.
Unfortunately, no matter how banks respond to the new rules, it isn’t going to prevent the coming derivatives panic. At some point the music is going to stop and some big financial players are going to be completely and totally exposed.
When that happens, it might not be just the big banks that lose money. Just take a look at what happened with MF Global.
MF Global has confessed that it “diverted money” from customer accounts that were supposed to be segregated. A lot of customers may never get back any of the money that they invested with those crooks. The following comes from a Huffington Post article about the MF Global debacle, and it might just be a preview of what other investors will go through in the future when a derivatives crash destroys the firms that they had their money parked with…
Last week when customers asked for excess cash from their accounts, MF Global stalled. According to a commodity fund manager I spoke with, MF Global’s first stall tactic was to claim it lost wire transfer instructions. Then instead of sending an overnight check, it sent the money snail mail, including checks for hundreds of thousands of dollars. The checks bounced. After the checks bounced, the amounts were still debited from customer accounts and no one at MF Global could or would reverse the check entries. The manager has had to intervene to get MF Global to correct this.
How would you respond if your investment account suddenly went to “zero” because the firm you were investing with “diverted” customer funds for company use and now you have no way of recovering your money?
Keep an eye on the large Wall Street banks. In a previous article, I quoted a New York Times article entitled “A Secretive Banking Elite Rules Trading in Derivatives” which described how these banks dominate the trading of derivatives…
On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.
The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
According to the article, the following large banks are represented at these meetings: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.
When the casino finally goes “bust”, you will know who to blame.
Without a doubt, a derivatives panic is coming.
It will cause the financial markets to crash.
Several of the “too big to fail” banks will likely crash and burn and require bailouts.
As a result of all this, credit markets will become paralyzed by fear and freeze up.
Once again, we will see the U.S. economy go into cardiac arrest, only this time it will not be so easy to fix.
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DERIVATIVES: THE UNREGULATED GLOBAL CASINO FOR BANKS
A month ago Infowars.com presented the latest derivatives update from the OCC, according to which the Top 5 US banks held 95.7%, or $221 trillion of the entire US derivative universe (which in turn is just a modest portion of the entire $707 trillion in global derivatives as of June 30, 2011). And while the numbers of all this credit money, because that’s what it is, and the variation margin associated with all these trillions in bets is all too real, appeared impressive on paper, they did not do this story enough service.
So to present, visually this time, the US derivatives problem, we go to our friends from Demonocracy, who put the $229 trillion derivative ‘issue’ in its proper context. For those curious what a paper equivalent of bailing out the US derivatives market would look like, you will soon know.
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| LONG STORY: A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else. Ex- A derivative buys you the option (but not obligation) to buy oil in 6 months for today’s price/any agreed price, hoping that oil will cost more in future. (I’ll bet you it’ll cost more in 6 months). Derivative can also be used as insurance, betting that a loan will or won’t default before a given date. So its a big betting system, like a Casino, but instead of betting on cards and roulette, you bet on future values and performance of practically anything that holds value. The system is not regulated what-so-ever, and you can buy a derivative on an existing derivative. Most large banks try to prevent smaller investors from gaining access to the derivative market on the basis of there being too much risk. Deriv. market has blown a galactic bubble, just like the real estate bubble or stock market bubble (that’s going on right now). Since there is literally no economist in the world that knows exactly how the derivative money flows or how the system works, while derivatives are traded in microseconds by computers, we really don’t know what will trigger the crash, or when it will happen, but considering the global financial crisis this system is in for tough times, that will be catastrophic for the world financial system since the 9 largest banks shown below hold a total of $228.72 trillion in Derivatives – Approximately 3 times the entire world economy. No government in world has money for this bailout. Lets take a look at what banks have the biggest Derivative Exposures and what scandals they’ve been lately involved in. Derivative Data Source: ZeroHedge. |
One Hundred Dollars |
| $100 – Most counterfeited money denomination in the world. Keeps the world moving. |
Ten Thousand Dollars |
| $10,000 – Enough for a great vacation or to buy a used car. Approximately one year of work for the average human on earth. |
100 Million Dollars |
| $100,000,000 – Plenty to go around for everyone. Fits nicely on an ISO / Military standard sized pallet.$1 Million is the cash square on the floor. |
1 Billion Dollars |
| $1,000,000,000 – This is how a billion dollars looks like. 10 pallets of $100 bills. |
1 Trillion Dollars |
| $1,000,000,000,000 – When they throw around the word “Trillion” like it is nothing, this is the reality of $1 trillion dollars. The square of pallets to the right is $10 billion dollars. 100x that and you have the tower of $1 trillion that is 465 feet tall (142 meters). |
Bank of New York Mellon |
| BNY has a derivative exposure of $1.375 Trillion dollars. Considered a too big to fail (TBTF) bank. It is currently facing (among others) lawsuits fraud and contract breach suits by a Los Angeles pension fund and New York pension funds, where BNY Mellon allegedly overcharged the funds on many millions of dollars and concealed it. |
State Street Financial |
| State Street has a derivative exposure of $1.390 Trillion dollars. Too big to fail (TBTF) bank. It has been charged by California Attorney General (among other) lawsuits for massive fraud on California’s CalPERS and CalSTRS pension funds – similar to BNY. |
Morgan Stanley |
| Morgan Stanley has a derivative exposure of $1.722 Trilion dollars. Its a too big to fail (TBTF) bank. It recently settled a lawsuit for over-paying its employees while accepting the tax payer funded bailout. Vice Chairman of Morgan Stanley had a license plate that said “2BG2FAIL” on his Porsche Cayenne Turbo. All this while $250 million of bailout money ended up in the hands of Waterfall TALF Opportunity, run by the Morgan Stanley’s owners’ wives– Marry a banker for a $250M tax-payer cash injection. The bank also got a SECRET $2.041 Trillion bailout from the Federal Reserve during the crisis, beyond the tax payer bailout. |
Wells Fargo |
| Wells Fargo has a derivative exposure of $3.332 Trillion dollars. Its a too big to fail (TBTF) bank. WF has been charged for its role in allegedly pursuing illegal foreclosures and deceptive loan servicing. Wells Fargo was just slapped with a $85 million fine by Federal Reserve for putting good credit borrowers into bad-credit rating (high rate) loans. In March 2010, Wachovia (owned by Wells Fargo) paid $110 million fine for allowing transactions connected to drug smuggling and a $50 million fine for failing to monitor cash used to ship 22 tons of cocaine. It also failed to monitor $378.4 billion (that’s $378400 millions dollars) worth of transactions to Mexican “casas de cambio” (think WesternUnion, anonymous cash transfer) usually linked to drug cartels. Beyond that, WF lets its’ VIP employees live in foreclosed mansions. WF knows how to cash your legit check, then claim “fraud” and close your account. WF also re-orders your transactions to create more overdraft fees. Wells Fargo’s Wachovia also got aSECRET $159 billion bailout from the Federal Reserve.Wells Fargo paid NO taxes in 2008-2010 and had a tax rate of NEGATIVE 1.4% while making $49 billion in profit during the same time. |
HSBC |
| HSBC has a derivative exposure of $4.321 Trilion dollars. HSBC is a Hong Kong based bank and its original name is The Hongkong and Shanghai Banking Corporation Limited.You will find HSBC working a lot with JP Morgan Chase. Both HSBC and JP Morgan Chase have strong interest in gold & precious metals. HSBC and JP Morgan Chase are often involved together in financial scandals. Lately HSBC has been sued for allegedly funneling more than $8.9 billion to the largest ponzi-scheme in history - Bernie Maddof’s investment business. HSBC (along w/ JP Morgan Chase) has been sued for alleged conspiracy suppressing the price of silver and gold, partially through precious metal DERIVATIVES and making billions of dollars on it. State of Hawaii is suing HSBC (and other banks) for deceptive credit card lending practices. DZ Bank in Germany is suing HSBC (and JP Morgan) for deceptive (lying) practices when selling home-loan-backed securities. HSBC is also under investigation for laundering billions of dollars. |
Goldman Sachs |
| Goldman Sachs has a derivative exposure of $44.192 Trillion dollars. The $1 Trillion pillars towers are double-stacked @ 930 feet (248 m). The White House is standing next to the Statue of Liberty.Goldman Sachs has advantage over other banks because it has awesome connections in US Government. A lot of former Goldman employees hold high-level US Government positions (chart).Mitt Romney’s top donor is Goldman Sachs, and one of Obama’s best donors. Ex-CEO of Goldman Sachs, Hank Paulson became the Secretary of Treasury under Bush and during the 2008 financial crisis authored the TARP bill demanding $700 billion bail-out. In UK, Goldman Sachs escaped £10 million bill on a failed tax avoidance scheme with help of good connections. The bank is the largest player in the food commodities market, earned $955m from food speculation in 2009” – That’s your $$$. Goldman Sachs employees are arming themselves with guns in case there is a populist uprising against the bank. Goldman Sachs calls their investors ”muppets“. and use clients to make money for themselves, disregarding the clients. The bank was fined $22 million for sharing valuable nonpublic information with top clients (Think insider trading with best clients). Goldman Sachs was part-owner America’s leading website for prostitution ads until the ownership stake was exposed. Goldman Sachs helped Greece conceal its debt with secret loans, while simultaneously taking advantage of Greece. Goldman Sachs got a $814 billion SECRET bailout from the Federal Reserve during the 2008 crisis. Goldman Sachs got $10 billion of the 2008 TARP bailout, and in the same year paid $10.9 billion in employee compensation and “benefits”, while paying a tax rate of 1%. That means an average of $327,000 to each Goldman Sach’s employee. |
Bank of America |
| Bank of America has a derivative exposure of $50.135 Trillion dollars.BofA is sticking the tax-payers with a MASSIVE bill, by moving derivatives to accounts insured by the federal government @ total of $53.7 trillion as of 06/2011. During 2011-12 BofA has been in need of cash, so Warren Buffett gave BofA $5 billion. Same year BofA sold its stake in China Construction Bank to raise $1.8 billion in cash.Bank of America paid $22 million to settle charges of improperly foreclosing on active-duty troops BofA recruited 3 cyber attack firms to attack WikiLeaks. but the Anonymous hacker group hacked the security firms first. BofA was sued for $31 billion in home-loan losses in 2011, the bank is involved in many lawsuits, too many to document. BofA also received a SECRET $1.344 trillion dollar bailout from the Federal Reserve. |
Citibank |
| Citibank has a derivative exposure of $52.102 Trillion dollars. The $1 Trillion dollar towers are double-stacked @ 930 feet (248 m).Citibank customers have been arrested for trying to close their accounts, while in in Indonesia a man was interrogated to death in Citibank’s special “questioning room”. In 2011 Citibankpaid a fine of $285 million for selling home-loan backed bonds to investors, while betting they would lose value (think derivatives/insurance). The man in charge of the unit at Citibank became Obama’s Chief of Staff. 2 weeks before getting hired by Obama he got $900,000 from Citibank for great performance. This was after Citigroup took out $45 billion in bailout money. Citibank knowingly passed over bad loans to the Federal Housing Administration to insure.Citigroup also received a SECRET $2.513 trillion dollar bailout from the Federal Reserve. |
JP Morgan Chase (JPM) |
| JP Morgan Chase has a derivative exposure of $70.151 Trillion dollars. $70 Trillion is roughly the size of the entire world’s economy. The $1 Trillion dollar towers are double-stacked @ 930 feet (248 m).JP Morgan is rumored to hold 50->80% of the copper market, and manipulated the market by massive purchases. JP Morgan (JPM) is also guilty of manipulating the silver market to make billions. In 2010 JP Morgan had 3 perfect trading quarters and only lost money on 8 days. Lawsuits on home foreclosureshave been filed against JP Morgan. Aluminum price is manipulated by JP Morgan through large physical ownership of material and creating bottlenecks during transport. JP Morgan was among the banksinvolved in the seizure of $620 million in assets for alleged fraud linked to derivatives. JP Morgan got $25 billion taxpayer in bailout money. It has no intention of using the money to lend to customers, but insteadwill use it to drive out competition. The bank is also the largest owner of BP – the oil spill company. During the oil spill the bank said that the oil spill is good for the economy. JP Morgan Chase also received a SECRET $391 billion dollar bailout from the Federal Reserve. In 2012, JP Morgan (JPM) took a $2 billion loss on ”Poorly Executed” Derivative Bets. |
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FINANCIAL IMPLOSION: GLOBAL DERIVATIVES MARKET AT $1,200 TRILLION DOLLARS…20 TIMES THE WORLD ECONOMY
by Washington’s Blog
How Large Is the Derivatives Market? Everyone paying attention knows that the size of the derivatives market dwarfs the global economy. But how big is it really? For years, there have been rumors that there is over a quadrillion – one thousand trillion – dollars in notional value of outstanding derivatives. But no one really knew.
Even though the Bank of International Settlements regularly publishes tables showing the amounts of different types of derivatives, some of the categories are ambiguous, and so it has been hard to get a good handle on what’s really out there. For example, one blogger wrote last year: Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion. Smart guys like bond trader Jeffrey Gundlach said last year that we’ve got a quadrillion dollar derivative overhang, the government hasn’t done anything to fix the basic problems in our economy, and so we’ll have another crash.
But I’ve now found an estimate from a top derivatives expert who confirms the claim. Specifically, Paul Wilmott – who has written numerous books on the subject – estimated the number last year at $1.2 quadrillion: The… derivatives market … is 20 times the size of the world economy. According to one of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University (and whose speaking voice sounds eerily like John Lennon’s), $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world’s annual gross domestic product is between $50 trillion and $60 trillion.
A Clear and Present Danger to the World Economy
The size of the derivatives market is a huge threat to the world economy: One of the biggest risks to the world’s financial health is the $1.2 quadrillion derivatives market. It’s complex, it’s unregulated, and it ought to be of concern to world leaders …. How big is the risk to the world economy from these derivatives? According to Wilmott, it’s impossible to know unless you understand the details of the derivatives contracts.
But since they’re unregulated and likely to remain so, it is hard to gauge the risk. But Wilmott gives an example of an over-the-counter “customized” derivative that could be very risky indeed, and could also put its practitioners in a position of what he called “moral hazard.” Another kind of market conduct that makes markets volatile is what Wilmott calls positive and negative feedback loops. These relatively bland-sounding terms mask some really scary behavior for investors who are not clued into it. Wilmott argues that a positive feedback loop contributed to the 22.6% crash in the Dow back in October 1987.
As we noted last year: Bloomberg reported in May: Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved. “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said …“Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The global financial crisis was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008. Credit default swaps were largely responsible for bringing down Bear Stearns, AIG (and see this), WaMu and other mammoth corporations. And unexpected changes in interest rates could cause a major bloodbath in interest rate derivatives.
And, no, there have not been any reforms or attempts to rein in derivatives, and the Dodd-Frank financial legislation was really just a p.r. stunt which didn’t really change anything. But the big banks and their minions claim that the huge amounts of derivatives themselves is unimportant because these are only “notional” values, and – after netting – the notional values are deflated to much more modest numbers. But as [Tyler] Durden – who has a solid background in derivatives – notes: At this point the economist PhD readers will scream: “this is total BS – after all you have bilateral netting which eliminates net bank exposure almost entirely.”
True: that is precisely what the OCC will say too. As the chart below shows, according to the chief regulator of the derivative space in Q2 netting benefits amounted to an almost record 90.8% of gross exposure, so while seemingly massive, those XXX trillion numbers are really quite, quite small… Right? …Wrong. The problem with bilateral netting is that it is based on one massively flawed assumption, namely that in an orderly collapse all derivative contracts will be honored by the issuing bank (in this case the company that has sold the protection, and which the buyer of protection hopes will offset the protection it in turn has sold).
The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. And while the argument can further be extended that in bankruptcy a perfectly netted bankrupt entity would make someone else whole on claims they have written, this is not true, as the bankrupt estate will pursue 100 cent recovery on its claims even under Chapter 11, while claims the estate had written end up as General Unsecured Claims which as Lehman has demonstrated will collect 20 cents on the dollar if they are lucky.
The point of this detour being that if any of these four banks fails, the repercussions would be disastrous. And no, Frank Dodd’s bank “resolution” provision would do absolutely nothing to prevent an epic systemic collapse.
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DAVID QUINTIERI: THE COMING DERIVATIVES NIGHTMARE: A FRAUD FAR BEYOND FRACTIONAL RESERVE BANKING
David Quintieri about the Derivatives nightmare, which is a blatant Wall Street fraud that goes far beyond the fraud of fractional reserve banking. Derivatives are the titanic of the world’s financial system and we have already hit the iceberg. With more than $1,000 Trillion in outstanding Derivatives worldwide, the system cannot be “unwound” and it’s impossible to save.
READ FREE: THE MONEY GPS BY DAVID QUNTIERI
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MAX KEISER PLANTS HIS FLAG: TOTAL GLOBAL ECONOMIC COLLAPSE BY APRIL 2013; COUNTRIES WILL BEGIN TO IMPLODE ONE BY ONE; ONE WORLD GOVERNMENT IS HERE; WORLD TAX IS HERE
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MAX KEISER PREDICTS GREAT BRITAIN, GREECE AND SPAIN ARE ON THE VERGE OF HISTORIC COLLAPSE; TOTAL GLOBAL ECONOMIC COLLAPSE BY APRIL 2013
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MAX KEISER: 2013 WILL BE THE YEAR OF THE GREAT GLOBAL ECONOMIC COLLAPSE; TOTAL GLOBAL ECONOMIC COLLAPSE BY APRIL 2013
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RELATED POSTS:
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U.S. BANKS TOLD TO MAKE PLANS FOR PREVENTING COLLAPSE
(Reuters) – U.S. regulators directed five of the country’s biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
The two-year-old program, which has been largely secret until now, is in addition to the “living wills” the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.
Officials like Lehman Brothers former Chief Executive Dick Fuld have been criticized for having been too hesitant to take bold steps to solve their banks’ problems during the financial crisis.
According to documents obtained by Reuters, the Federal Reserve and the U.S. Office of the Comptroller of the Currency first directed five banks – which also include Citigroup Inc,, Morgan Stanley and JPMorgan Chase & Co – to come up with these “recovery plans” in May 2010.
They told banks to consider drastic efforts to prevent failure in times of distress, including selling off businesses, finding other funding sources if regular borrowing markets shut them out, and reducing risk. The plans must be feasible to execute within three to six months, and banks were to “make no assumption of extraordinary support from the public sector,” according to the documents.
Spokespeople for the five banks declined to comment. The Federal Reserve also declined to comment.
Recovery plans differ from living wills, also known as “resolution plans,” which are required under the 2010 Dodd-Frank financial reform law. Living wills aim to end bailouts of too-big-to-fail banks by showing how they would liquidate themselves without imperiling the financial system.
“Recovery plans are about protecting the crown jewels,” said Paul Cantwell, a managing director at consulting firm Alvarez & Marsal. “It’s about, ‘How do I sell off non-core assets?’ The priority is to the shareholders. A resolution plan is about protecting the system, taxpayers and creditors.”
The recovery plans are being used as part of regulators’ ongoing supervisory process. In Britain, recovery and resolution plans have both been part of the living will requirements for large banks.
Mike Brosnan, senior deputy comptroller for large banks at the OCC, said the regulator continuously evaluates contingency planning at the banks and savings associations it supervises.
“Recovery plans required of the largest banks are helpful in ensuring banks and regulators are prepared to manage periods of severe financial distress or instability affecting the banking sector,” he said.
This summer, nine global banks submitted living wills to the Fed and Federal Deposit Insurance Corp, and regulators released the public portion of the documents.
The recovery plans requested in 2010, meanwhile, have received little publicity. The names of the banks required to submit them have not been previously disclosed, and Reuters obtained them only through a Freedom of Information Act request.
The Fed supplied Reuters with the letters requesting plans from banks, but not the banks’ actual plans because they were deemed confidential supervisory information. The regulator said it was withholding 5,100 pages of information.
MOVING FURTHER FROM DISASTER
Five years after the financial crisis, concerns remain about whether blow-ups at big banks could lead to another round of taxpayer bailouts. Trading losses have cost JPMorgan nearly $6 billion so far, and scandals such as the alleged rigging of an international interest rate benchmark have only highlighted the risks lurking inside big banks.
These disasters have damaged banks’ reputations, but not their balance sheets. Most are still profitable, and in recent years the five banks have improved their capital bases and liquidity. They also have been subjected to annual Federal Reserve stress tests that measure whether the banks have sufficient capital to weather severe economic scenarios.
Bank of America and Citigroup, in a sense, have already been executing the kind of moves called for in the recovery plans. Both have been selling off non-core operations and assets to streamline their sprawling businesses, after receiving multiple bailouts during the financial crisis.
Bank of America in June 2011 told Fed officials that it could shed branches in some parts of the country if it needed to raise capital in an emergency, a person familiar with the matter said in January. The proposal was part of a series of options provided to the Fed, including issuing a tracking stock for Bank of America’s Merrill Lynch operations.
But just because the bank proposed selling branches does not mean it’s a desirable move or highly probable, the person said. In the past year, Bank of America has shown progress in building capital without such actions. Its Tier 1 common capital ratio increased to 11.24 percent of risk-weighted assets as of June 30 from 8.23 percent a year earlier.
Tier 1 refers to a bank’s core capital and has been the main focus of regulators in assessing a bank’s capital adequacy.
MENTIONED IN PASSING
The banks’ chief risk officers, and in the case of Citigroup, Chief Executive Vikram Pandit, received letters in May 2010 instructing them on what to include in the recovery plans. The requests stemmed from January 2010 crisis management meetings held by regulators. The letters sent to the five banks were nearly identical.
Each plan was to address severe financial stress at the firm, as well as “general financial instability.” The plans should be capable of being executed ideally within three months, but no longer than six months, the documents said.
The plans should “make appropriate assumptions as to the valuations of assets and off-balance sheet positions,” the documents said.
Recovery plans have been mentioned in public before, but only in passing. In testimony to Congress in July 2010, Fed Governor Daniel Tarullo said the “largest internationally active U.S. banking organizations” were working on recovery plans. The initiative stemmed from work led by the Financial Stability Board, a body that coordinates the work of international financial regulators, he said.
In a presentation in March, JPMorgan Chase said it had a recovery plan in place and said it was ordered by regulators. The presentation was organized by Harvard Law School and was closed to the media at the time, but is available online.
(http://www.law.harvard.edu/programs/about/pifs/symposia/europe/baer.pdf)
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SUSANNE POSEL: BANKING CRISIS WILL BE USED TO ROLL OUT MARTIAL LAW IN THE UNITED STATES
Writer and researcher Susanne Posel of Occupycorporatism.com joins SGT for an in-depth conversation about the government’s plans for martial law in the United States. Susanne shares her insights about the preparatory measures the DHS and military are taking, and why: “They know the collapse is coming,” says Susanne. “So they are preparing for it.” Susanne also shares shocking information about a computer banking virus that may be used as the excuse to shut down banks internationally. “If you hear about this in the news, you have 72 hours to do whatever you plan to do before the collapse.”
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SUSANNE POSEL: CUSTOMER DEPOSITS ARE PROPERTY OF THE BANK: CLOSE YOUR ACCOUNT NOW
Susanne Posel
Infowars.com
August 24, 2012
In June of 2012, Eric Bloom, former chief executive, and Charles Mosely, head trader ofSentinel Management Group (SMG) were indicted for stealing $500 million in customer secured funds. Both Mosely and Bloom were accused of “exposing” customer segregated funds “to a portfolio of highly risky derivatives.”
These customer funds were used to “back up personal investments” which were part of “collateral for a loan from Bank of New York Mellon” (BNYM). This loan derived from stolen customer monies was “used to purchase millions of dollars worth of high-risk, illiquid securities, including collateralized debt obligations, or CDOs, for a trading portfolio that benefited Sentinel’s officers, including Mosley, Bloom and certain Bloom family members.”
Fast forward to August 9th of 2012, and the 7th Circuit Court of Appeals (CCA) rules that BNYM can be moved to first in line of creditors over the customers that had their funds stolen by SMG.
When a banking customer deposits their money into their bank account, the Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SPIC) are in place to protect the customer from fraud or theft. The ruling from the CCA means that these regulatory systems will not insure customer funds, investments, depositors and retirees who hold accounts in banks. In fact, the banking institution is now legally allowed to use those customer funds deposited as collateral, payment on debts for loans made, or free use on the stock market to purchase investments as the bank sees fit.
Fred Grede, SMG trustee, explained that brokers are no longer required to keep customer money separate from their own. “It does not bode well for the protection of customer funds.”
Since the ruling gives banks the right to co-mingle customer funds with their own, no crime can be committed for the use of customer deposited monies.
According to Walker Todd , former lawyer for the Federal Reserve Bank of New York and Cleveland: “Basically, there is a new 7th Circuit opinion saying that there is no reason to impose a constructive trust on a lender’s takings of customers’ funds from client commodity firms that were used (inappropriately) to secure the firms’ borrowings, as long as the lender can say that it did not know WITH CERTAINTY that customers’ funds were being repledged. Negligence and misappropriation (vs. knowing criminal intent) are now a sufficient excuse for letting the lender keep the money and go to the head of the line for distributions in bankruptcies of the client commodity firms.”
When a customer deposits money into a bank, the bank essentially issues a promise to have those funds available when the customer returns to withdraw the deposited amount. When the same customer withdraws funds from their account (whether checking or savings) the customer assumes that the bank has enough funds to cover their withdrawal; including the presumption that their monies are separate from the bank’s assets.
Now, those funds are up for grabs by the bank at their discretion without explanation to the customer – nor is the bank obligated to recoup the customer should they “lose” those funds due to bad loans, bankruptcy or stock market loss.
In Texas, Pamela Cobb, manager of Bank of America (BoA), stole an estimated $2 million from customer funds for personal use. Cobb had been taking customer segregated funds since 2002.
Customers have complained of fraudulent charges placed on their accounts that BoA cannot explain. When the customer brings these charges to the in-house fraud department, they are given the run-around until they acquiesce.
Other customers have had their private possessions stolen right out of their safety deposit box held at BoA. The safety deposit box was drilled into and the contents shipped to the BoA corporate holding center in South Carolina.
In 1992 to 2003, Citibank called their theft of customer funds “account sweeping” wherein they stole more than $14 million from customers nationally. Using computerized credit card processes to remove positive and negative balances from customers, the scheme included double payments or funds paid out on returned purchases that were then attributed back to the customer.
At Chase bank, an anonymous employee opened an account under a customer name (targeting an Alzheimer’s sufferer), complete with a personal debit card. An estimated $300 per day was withdrawn on the fraudulent account. When family representing the victim alerted Chase, they brushed them off with an internal investigation claim – even as the family sought legal action.
Banking fraud against the elderly has risen of late, since banks realize they can steal massive amounts of cash from their aging customers with little to no repercussions.
The recent ruling on SMG has given the banking industry the legal backing they have been lacking when stealing from their customers.
Our financial institutions have been planning for a financial collapse wherein the US government will not offer assistance. The resolution plans required by the Federal Reserve Bank, described schemes to have the major domestic banks remain afloat by selling off assets, finding alternative sources of funding, reducing risky measures that make a quick buck. These strategies were to be perfected with “no assumption of extraordinary support from the public sector.”
The mega-banks, through Wall Street, are also acquiring firearms, ammunition and control over private mercenary corporations like DynCorp and ‘Blackwater” as authorized by the Department of Defense (DoD) directive 3025.18 .
DynCorp is a military-based private mercenary contractor that provides (among other services) intelligence training and support, international security, contingency plans and operations. Ninety-six percent of their funding is based on annual revenues from the US federal government. The international branch of DynCorp has operated as a “police force” even assisting local law enforcement during Hurricane Katrina.
Named as investors for the amassing of gun and ammunition manufacturers are Citibank, BoA, Barclays and Deutsche Bank who are pouring money into Cerebus and Veritas Equity who have taken over private corporations involved in the controlling riot situations.
The Federal Reserve Bank, one of the heads of banking cartels, has their own police force which operates as a protective security for the Fed against the American public. As part of the Federal Reserve Act signed in 1913, the designation of a Federal Law Enforcement – special police officers that are exclusively regulated by authority of the Fed (whether in uniform or plain clothes. These specialized police officers (who train with Special Response Teams) can work in tandem with local law enforcement or US federal agencies. These officers are heavily armed with semi-automatic pistols, sub machine guns and assault rifles as well as body armor.
Of recent, when withdrawing cash from an ATM, the daily allotted amount has decreased with some banks, thereby forcing the customer to go into the branch and extract the difference with a teller. At this point, according to anonymous informants, the customer is taken into a backroom to be questioned as to why they want the cash, what they are purchasing with the cash, why they are not choosing to use a debit card or another form of digital trade to make the purchase. These questions are not only intrusive, they are illegal.
Some anonymous sources have said that banking representatives who conduct the integrations are directed to keep a record of customer responses on an online application that will be sent to the FBI in conjunction with Patriot Act mandates on tracking banking activity.
Customer funds are no longer secure, no longer backed by the FDIC or other insurance corporations, and banks are legally allowed to co-mingled customer money with other funds of the bank. The only safe place for your money is with you.
Now is the time to close your bank account.
Susanne Posel’s post first appeared on her blog, Occupy Corporatism.
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SUSANNE POSEL: IT’S OFFICIAL: KEEP YOUR MONEY IN THIS SYSTEM AND YOU WILL LOSE IT ALL; THE GLOBAL ELITE WANT YOUR LAND, YOUR COUNTRY AND YOUR SOVEREIGNTY
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LINDSEY WILLIAMS: BEGINNING IN 2012, AS THE U.S. DOLLAR BEGINS TO DIE, THE GOAL OF THE ELITE IS TO ACQUIRE ALL PRIVATE WEALTH FROM CITIZENS INCLUDING MONEY IN CHECKING ACCOUNTS, SAVINGS ACCOUNTS, COMPANY 401K PROGRAMS, INDIVIDUAL RETIREMENT ACCOUNTS, AND PENSION FUNDS. THE ELITE HAVE ALREADY BEGUN ABANDONING FIAT CURRENCY AND HAVE MOVED ALMOST ENTIRELY INTO GOLD AND SILVER.
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UNITED STATES GOVERNMENT SETS ITS SIGHTS ON PRIVATE RETIREMENT ACCOUNTS: “GIANT EFFORT TO REDISTRIBUTE THE WEALTH OF AMERICA’S OLDER CITIZENS”
Mac Slavo
SHTFplan.com
NOVEMBER 25, 2012
A new effort by the Obama administration, Congress, the Treasury Department and labor unions aims to fundamentally alter how Americans plan and save for retirement.
Warnings have been popping up over the last several years about the possibility of re-appropriating the $3.5 Trillion sitting in private retirement and spreading those funds around to Americans who are deemed less fortunate.
This couldn’t possibly happen in America, right? At one time, most Americans also believed heath care mandates that force Americans at the barrel of a gun to surrender portions of their earnings into a universal system for all would never happen. Well, it did.
And now, those who would control and regulate every aspect of our lives are making a new push; one whose efforts will ultimately end in the seizure and redistribution the personal retirement savings of every American who has ever put money into a 401(k) or IRA.
This is no longer in the realm of conspiracy, but rather, public record.
A recent hearing sponsored by the Treasury and Labor Departments marked the beginning of the Obama Administration’s effort to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k plans, NSC is warning.
The hearing, held in the Labor Department’s main auditorium, was monitored by NSC staff and featured a line up of left-wing activists including one representative of the AFL-CIO who advocated for more government regulation over private retirement accounts and even the establishment of government-sponsored annuities that would take the place of 401k plans.
“This hearing was set up to explore why Americans are not saving as much for their retirement as they could,” explains National Seniors Council National Director Robert Crone, “However, it is clear that this is the first step towards a government takeover. It feels just like the beginning of the debate over health care and we all know how that ended up.”
…
A representative of the liberal Pension Rights Center, Rebecca Davis, testified that the government needs to get involved because 401k plans and IRAs are unfair to poor people. She demanded the Obama administration set up a “government-sponsored program administered by the PBGC (the governments’ Pension Benefit Guarantee Corporation).”
…
Such “reforms” would effectively end private retirement accounts in America, Crone warns.
“These people want the government to require that ultimately all Americans buy these government annuities instead of saving or investing on their own.The Government could then take these trillions of dollars and redistribute it through this new national retirement system.”
…
“This effort ultimately is designed to grab the retirement nest eggs of America’s senior citizens. This new government annuity scheme, even if it is at first optional, will turn into a giant effort to redistribute the wealth of America’s older citizens,” explains Crone. “This scheme mirrors what I expect the President will try to do with Social Security. He wants to turn that program into a welfare program, too.”
With the re-election of President Obama, a majority Democrat Senate and powerful organization and lobbying from labor unions, we can fully expect legislation that will shift private accounts into the public coffers to become reality in the not too distant future.
In fact, the push to mold the perceptions surrounding this issue is already on, as highlighted in a recent Market Watch article which claims to explain the 10 Things 401(k) Plans Won’t Tell You.
Did you know, for example, that 401(k) plans aren’t supposed to provide you with full retirement benefits, and that they were originally intended to be “mere supplements” to other plans, and that they only “benefit the rich?” Not only that, but according to the article, no one can really tell you how much money you’re going to need; all of those math formulas and expert calculations were all wrong. Additionally, there are so many hidden fees that you’re losing hundreds of thousands of dollars to Wall Street (most of us knew that one).
And all this time, the millions of Americans who contributed their money to these accounts over the last three decades were under the impression that their accounts would one day grow into a retirement nest egg from which retirees could spend their days in comfort and relaxation.
Nope. We had it all wrong. Private retirement accounts were never actually designed to ensure that you could retire! Only a government managed retirement plan can ensure that you will have the money you need when you turn 59 1/2. Only they will be able to ensure you don’t pay excessive, hidden fees (even though they could have created legislation to require firms to overtly disclose this information int he first place). And, only the government can provide 100% full retirement coverage, not just supplemental funds. Oh, and they also know WHEN you should retire, currently 65 years of age.
It’s on folks. They are going to hit Americans from all angles on this one.
First, the political hearings that will claim only the rich are benefiting from private retirement accounts.
Then they’ll point out how stock market crashes and volatility put your money at risk. In fact, if we do have another market crash, look for this to be a key reverberation.
Then they put the spin machine into action, so that you think you’re getting unbiased analysis and truth.
Then they open the guilt spigot and make those who have personal retirement savings wonder if they are being greedy, and those who don’t have savings will direct their anger not just at the rich, but anyone who has put any money away.
Finally, they will pass a bill, which we have to pass first in order to know what’s in it, and it’ll be a done deal.
The United States government is coming for everything they can get their hands on.
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THE GLOBAL DEMISE OF PENSION PLANS
Raúl Ilargi Meijer, The Automatic Earth
August 28, 2012
We have been saying for a long time that anyone in the western world who’s 10-15 years away from collecting their first pension payments, shouldn’t expect to get much, if anything, when the time comes. This is because, obviously, the economy has deteriorated as much as it has. It’s also because, in essence, pensions plans are the ultimate Ponzi schemes.
What doesn’t help are the central bank and government policies that are in fashion today that are based on pushing interest rates about as low as they can get.
The reactions to all this are interesting in their range of variation. Last week I picked up an article (more on that later) that made me refer back to a series of bookmarks I had made over the past month or so. Here are a few quotes that, when put together, paint the picture pretty accurately; you add up the details and numbers and you get an idea of what’s going on. Not necessarily for the faint of heart. First, Michael Aneiro for Barron’s:
Top Pension Fund Sends a Warning
The California Public Employees’ Retirement System, the nation’s biggest public pension fund at $233 billion, reported a mere 1% return on its investments in its fiscal year ended June 30. Earlier this year, in an attempted acknowledgment of today’s realities, Calpers had lowered its discount rate–an actuarial figure determining the amount that must be invested now to meet future payout needs—for the first time in a decade, to 7.5% from 7.75%. That represents combined assumptions of a 2.75% rate of inflation and a 4.75% rate of return.
Needless to say, a 1% annual return didn’t come close to hitting any of those figures and doesn’t engender confidence in the assumptions of institutional or individual investors alike. Calpers was quick to note that its 20-year investment return is still 7.7% and that the past year was challenging for everyone. But Calpers is a bellwether, and other systems are expected to report similarly disappointing returns, necessitating higher annual contributions in the years ahead to meet funding needs.
Later in the week, S&P Dow Jones Indices said that the underfunding of S&P 500 companies’ defined-benefit pensions had reached a record $354.7 billion at the end of 2011, more than $100 billion above 2010′s deficit. The organization reported that funding levels at the end of 2011 ran around 75%, on average, and that future contributions will constitute a “material expense” for many companies.
Fitch Ratings later released its own study of 230 U.S. companies with defined-benefit pension plans and found that median funding had dropped to 74.4% in 2011 from 78.5% in 2010, and that corporate pension assets grew just 2.9% in 2011 amid sluggish returns and a 6% decline in contributions.
This is not pretty. What we see is hugely unrealistic annual return assumptions combined with equally huge underfunding. Both ends burning. More from Marc Lifsher at the Los Angeles Times:
Pension funds seriously underfunded, studies find
Corporate and public pension funds across the country are seriously underfunded, threatening the retirement security of workers and straining the financial health of state and local governments, according to a pair of independent studies.
In 2011, company pensions and related benefits were underfunded by an estimated $578 billion, meaning they only had 70.5% of the money needed to meet retirement obligations, according to a report by S&P Dow Jones Indices.
Funds generally don’t need to have all the money needed pay future pensions because returns on investments vary over the years and people retire at different ages and with different levels of benefits, experts said. But a funding level in the 70% zone is considered dangerously low.
The looming shortfall, and the move by corporations to 401(k)-type plans in which the level of investment is controlled by employees, could keep many aging baby boomers from retiring, said Howard Silverblatt, a senior S&P Dow Jones Indices analyst and the report’s author.
“The American dream of a golden retirement for baby boomers is quickly dissipating,” Silverblatt said. “Plans have been reduced and the burden shifted with future retirees needing to save more for their retirement.
“For many baby boomers it may already be too late to safely build up assets, outside of working longer or living more frugally in retirement.”
While the cost of retirement is out of reach for many older workers and growing more expensive for younger ones, it’s becoming less of a burden for employers, according to the report issued Tuesday.
Employers are paying less into pension funds despite the fact that company cash levels remain near record highs and cash flows are at an all-time high,” Silverblatt said.
Meanwhile in the public sector, a separate pension-related report by the national State Budget Crisis Task Force warned that public pension funds in the U.S. are underfunded by $1 trillion to $3 trillion, depending on who’s making the estimate.
There’s no consensus on the amount by which pensions funds are underfunded. According to Reuters’ Jilian Mincer, the funding shortfall may be as high as $4.6 trillion (2011 numbers).
Public pension funds to face calls to set realistic targets
Public pension funds are expected to report poor annual returns in the coming weeks, results that are likely to increase calls for more realistic retirement promises for teachers, police officers and other public workers.
At least three of the nation’s largest U.S. public pension funds have already announced returns of between 1% and 1.8%, far below the 8% that large funds have typically targeted.
The fund’s targets have been “unrealistic,” said Michael Lewitt, a portfolio manager at Cumberland Advisors in Sarasota, Florida. “They’ve been fooling themselves because there is no realistic case they can make that.” [..]
Low returns will further aggravate funding shortfalls for hundreds of pension plans, adding to pressure on cities, counties and states that are already facing lower tax revenue and rising costs.
The vast majority of states have cut pension benefits or increased contributions from workers, or are trying to.
“Failing to understand the scope of the pension crisis sets taxpayers up for a bigger catastrophe in the future,” said Bob Williams, president of free-market think-tank State Budget Solutions, in Washington. “Without government action, states, counties, cities and towns all over America will go bankrupt,” he said. [..]
Major public pensions typically assume an average return of about 8%, but the median annual return in 2011 for large pension funds was roughly half that amount, 4.4%, according to data provided to Reuters by Callan Associates.
Median returns were only 3.2% for the last five years and 6% for the last 10. Before the 2007-09 recession, market performance was often above the 8% assumptions. Average returns for the last 20 or 25 years as a whole still reach that level. But with losses in 2008 and 2009 and uneven returns since then, analysts say pension funds should adjust to what seems to be a new reality. [..]
The funding status of public pensions has dramatically slipped over the last decade. Barely more than half were fully funded in 2010. At the end of that year, the gap between public sector assets and retirement obligations had grown to $766 billion, according to a report by the Pew Center on the States.
Ratings agency Moody’s Investors Service calculated this month that if it used a 5.5% discount rate, a rate closer to the way private corporations value their pensions, it “would nearly triple fiscal 2010 reported actuarial accrued liability” for the 50 states and rated local governments to $2.2 trillion.
Other estimates put the shortfall even higher. State Budget Solutions estimated it in a recent study at $4.6 trillion as of 2011.
In San Francisco, they don’t mince words, writes Heather Knight at SFGate:
More bad news for San Francisco’s city pension fund
A preliminary report of how the city’s pension fund performed in the fiscal year 2011-12, which ended June 30, shows it earned a meager 1.6% — far below the assumed rate of return of 7.5%. For a fund currently worth $15.3 billion, that’s a big difference.
“This is even worse than anyone predicted,” said Public Defender Jeff Adachi, who offered a competing, failed pension reform measure that would have raised more money through employee contributions. “If this was a movie, it would be a disaster movie called ‘Pension Armageddon.’”
Canada, which faces similar problems (“massive shortfalls”), despite an ostensibly far better performing economy (how on earth does that add up?), apparently takes a somewhat different approach than the US, where, essentially, the favorite approach is moving the goalposts, which “lets companies use a 25-year average of the discount rate rather than two years”.
You don’t have to be a genius to see that the – financial – world was a totally different place 25 years ago than it is today. So using 25 year old stats to calculate today’s required pension funding rates is a highly risky affair. If you find two years too short a period, you can go for 5 years, perhaps, I can see an argument being made for that. But 25? That looks like a desperate attempt at a cover-up more than a serious effort to find accurate accountancy methods.
Well, Canada resists such desperation. So far, at least, and despite strong opposition, that wants a sweet deal like the US gets. Louise Egan and Susan Taylor for Reuters:
Ottawa shrugs off pleas for pension fund relief amid massive shortfalls
Canada is taking a different tack than Washington on the thorny issue of helping companies fund their widening pension gaps, shrugging off corporate pleas for relief even as the United States lets businesses slash their contributions.
A frightening prospect for workers, retirees and companies, yawning pension deficits have gone from arcane accounting entries to front page news on fears that massive shortfalls could even cause some corporations to fail.
As a growing number of employers look to roll back benefits to the alarm of unions, others are pouring cash into their pensions funds only to see the hole get deeper.
Canada is not unique, and as in the United States, generous public sector pensions are a hot-button issue. But the federal government is taking a more hands-off stance than U.S. President Barack Obama, who signed a bill last month that changes how companies calculate what they must contribute to their pension funds, effectively allowing them to pay less.[..]
Softening the rules implies letting plans stay underfunded for longer, a risk financially prudent Ottawa may be reluctant to accept. After all, the country’s conservative banking culture helped it survive the global financial crisis better than most.
As in other countries, the scope of the Canadian problem is huge. 90% of the roughly 400 defined-benefit pension plans overseen by Canada’s federal regulator are underfunded, meaning they cannot meet their liabilities should their plans be wound up today, as is required by law. [..]
Historically, Canada has preferred relief measures such as lengthening amortization periods. Permanent rule changes in 2010 let companies average their solvency ratios over a three-year period instead of one, so that a sudden bad year doesn’t force them to make big cash infusions.
But some critics say it is dancing around the real problem – the very low “discount rate” used to assess a plan’s solvency, which is the focus of the recent measures in the U.S., Denmark and Sweden. This rate, based on long-term government bonds, helps actuaries judge how much assets will earn over time.
Companies complain the rate has never been lower and artificially inflates a plan’s deficit. The lower the discount rate, the bigger the deficit. Air Canada’s chief financial officer, Michael Rousseau, told analysts on a recent conference call that a 1.5% or 2% rise in the rate would eliminate more than $3-billion from the airline’s deficit.
That wishful thinking effectively became reality last month, not for Canadian companies but for their U.S. competitors. The new law there lets companies use a 25-year average of the discount rate rather than two years.
In Europe, Denmark and Sweden have tinkered with how the discount rate is used and the United Kingdom is thinking of following in their footsteps. [..]
Bob Farmer, who represents 250,000 pensioners as president of the Canadian Federation of Pensioners, says softer rules for companies mean bigger risks for workers. Tough luck about the low yields, he says. “That happens to be the world we’re living in.” [..]
“The biggest social issue in the next 10 years is going to be pensions,” said Rick Robertson, associate professor at the Richard Ivey School of Business, part of the University of Western Ontario. “What do I tell the 64-year-old person who may not have a chance to rebound if the company doesn’t succeed. Who’s my duty to? There’s no easy answer.”
Whereas in Japan, with the world’s fastest ageing population, the world’s biggest pension fund has taken a dramatic route: selling off assets. It hopes to make up for this by moving into riskier assets. That’s of course a big gamble no matter how you look at it. Monami Yui and Yumi Ikeda at Bloomberg:
World’s Biggest Pension Fund Sells JGBs To Cover Payouts
“Payouts are getting bigger than insurance revenue, so we need to sell Japanese government bonds to raise cash,” said Takahiro Mitani, president of the Government Pension Investment Fund, which oversees 113.6 trillion yen ($1.45 trillion). “To boost returns, we may have to consider investing in new assets beyond conventional ones,” he said in an interview in Tokyo yesterday.
Japan’s population is aging, and baby boomers born in the wake of World War II are beginning to reach 65 and become eligible for pensions. That’s putting GPIF under pressure to sell JGBs to cover the increase in payouts. The fund needs to raise about 8.87 trillion yen this fiscal year, Mitani said in an interview in April. As part of its effort to diversify assets and generate higher returns, GPIF recently started investing in emerging market stocks.
Now, remember that the level of funding for US public pension plans has fallen as low as 70% or thereabouts. And that brings me to the article from last week which made me return to the pension topic.
In the Netherlands, pension funds are by law required to maintain a 105% funding level. And there is little enthusiasm for changing this. Right after the autumn 2008 crisis peak, some leeway was provided by the government, but only for a short period. Now, there are other steps being taken:
Civil service pension fund ABP may cut pay outs by up to 15%
One of the biggest pension funds in the world, the Dutch civil service fund ABP, may have to cut pensions next year and again in two years time in order to keep its finances in order, the Volkskrant reports on Wednesday.
The paper bases its claim on confidential documents from the pension fund, which covers some three million workers and pensioners.
The current method of calculating pension funds’ coverage ratio - the amount of assets needed to meet pension obligations - could mean ‘reductions mount up to between 10% and 15%’, the document states.
The fund has already agreed to cut pensions by 0.5% next year. However, talks are under way between ministers and the central bank on changing the way interest rates used to determine the coverage ratio is calculated.
The document also states that if nothing is done to change the calculations, premiums for 17 big funds could rise by 28.5%.
Hundreds of thousands of pensioners are likely to get smaller pay-outs next year because pension funds have been hit by lower interest rates and the economic downturn.
There is no need to explain how tough it will be for many people to see 15% cut off their fixed income. And that will be just the beginning. Some pensions plans may temporarily do better if and when they’re allowed to invest in risk(ier) assets, but just as many will do worse for that exact same reason. Changing coverage ratio calculations is not a magic wand; it’s just another layer of creative accounting, and we’ve already got plenty of that.
For younger generations, which over a broad range have lower income jobs, if they have any, seeing pension plan premiums rise 28%, and then some more and so on, will become unacceptable, fast. They will soon figure out that the chances they will ever get any pension decades from now are close to zero. So they’ll ask themselves why they should pay any premiums, from the pretty dismal wages they make in the first place.
Over the next few years, this is a battle that will play out in our societies, and it will have no winners. We need to be very careful not to let it tear those societies apart. In a world where just about everyone has to settle for much less than they have or thought they would have, that will not be easy. Realistic accounting standards would be a good first step, but they will also be very painful. It will be very tempting to hide reality for as long as we can, in the same way we already do with issues ranging from Greece to real estate prices to bank losses to derivatives to our own personal debts.
The best, or even only, advice for those of us who belong to younger generations is: don’t count on getting a pension when you reach retirement age. It’ll probably have been moved to age 85 or over by the time you get there anyway.
This is not something that can or will be fixed overnight. It was doomed from the moment baby boomers started producing the number of children they have. It simply hasn’t been enough to keep the pension Ponzi going. And those baby boomers, with far too few children to provide for their pensions, have only just started to retire now, as the plans are already in such disarray. I’m sure you can see where this will lead.
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HOW THE FEDERAL GOVERNMENT IS COMING AFTER YOUR IRA AND 401(K) PLAN
by Robert Wenzel
December 10, 2012
Recent evidence suggests government officials continue to eye the multi-trillion dollar private retirement savings market, including IRAs and 401(k) plans, eyeing the opportunity to redistribute private retirement savings to less affluent Americans and to force the retirement savings out of the private market and into government-controlled programs investing in government-issued debt…Since 2010, the U.S. Treasury Department and the Department of Labor have been holding combined hearings on various plans designed to introduce government-mandated retirement plans and investment options, including government annuities invested primarily in U.S. Treasury debt, into the private retirement savings market.
“This hearing was set up to explore why Americans are not saving as much for their retirement as they could,” explained National Seniors Council National Director Robert Crone, describing a recent Treasury-Labor hearing held in the Labor Department’s main auditorium.
“However it is clear that his is just the first step toward a government takeover. It feels like the beginning of the debate over health care and we all know how that ended up.”
With the issuance of the White House 256-page Budget Proposal for Fiscal Year 2013, the Obama administration endorsed “Automatic IRAs,” a plan introduced into Congress in 2010 by Sens. John Kerry, D-Mass, and Jeff Bingaman, D-N.M., in which private companies would be automatically enrolled into government-mandated IRAs, forcing those businesses to contribute on behalf of their employees a “default amount” equal to 3 percent of an employees pay, unless an employee specifically opts out of the plan.
The FY 2013 Budget proposal notes that currently 78 million working Americans, roughly half of the work force, lack employer-based retirement plans…
The Service Employee International Union, or SEIU, a key labor union ally of the Obama administration, has mounted an effort to create government-mandated worker retirement accounts as an entitlement program, with the possibility that a portion of all private retirement funds could be forced into U.S. Treasury debt.
Branding the program “Retirement USA,” the SEIU has joined with the AFL-CIO, the Economic Policy Institute, a Washington-based economic left-leaning think tank that receives substantial labor funding, and two other left-leaning interest groups, the Pension Rights Center and the National Committee to Preserve Social Security.
The Retirement USA idea is promote the concept that all workers in the U.S. have a right to a government retirement account that would fund a secure retirement with adequate dollars, in addition to Social Security and private ERISA-retirement workplace retirement programs such as 401(k) programs.
“Our goal is to involve all workers and all employees in a government-mandated retirement program, with the government putting up the difference for lower paid employees,” Nancy Hwa, a spokeswoman for the participating Pension Rights Center, told WND in 2010.
Put simply, the Retirement USA government-mandated workplace retirement account would require by law employers and employees to contribute to a retirement account for every employee and demand that a portion of that contribution go into a federal-government created annuity that would be funded by purchasing Treasury debt…
Under the guise of making workplace retirement savings accounts available to all Americans and insuring that existing retirement savings accounts pay lifetime income, the SEIU-led Retirement USA effort is quietly exploring strategies that would create “Universal IRAs” or “Guaranteed Retirement Accounts” for all workers.
Following lead of Argentina
Writing in the London Telegraph in October 2008, business and economics editor Ambrose Evans-Pritchard warned that G7 nations, including the United States, may begin following the path of Argentina in forcing privately managed pension funds to be invested in government-issued debt.
Bottom line: The government may not tax your money, it may instead force you to buy Treasury securities with your money. For the government, it is pretty much the same thing as a tax. It results in your money ending up in government coffers to spend at will by government. In turn you will receive government IOU’s, i.e., Treasury securities, which may be among the worst investments in the years ahead as interest rates go up and price inflation eats away at the buying power of those IOUs.
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BABY BOOMERS REPORT NO SAVINGS AT ALL
With fewer pensions and more debt, they face retirement challenges their parents didn’t
by: Carole Fleck | AARP Bulletin
The generation that gave rise to Hula-Hoops, Woodstock and Jimi Hendrix is reaching America’s traditional retirement age this year woefully unprepared. As the oldest of the boomers turn 65, they face a retirement that is unlikely to go as smoothly as their parents’ did.
The lingering pain from the most severe recession since World War II is partly to blame. Many boomers are on the verge of ending their work lives without fully recovering fortunes lost in the housing and stock markets.
That translates to less money to fund their retirement years, which could stretch for three decades given that boomers can expect to live into their 90s.
A poll released Wednesday found that a whopping 25 percent of people ages 46 to 64 say they have no retirement savings — and 26 percent have no personal savings.
The situation is almost as grim for adults 65 and older: 22 percent have no retirement savings and 14 percent have no personal savings, according to the poll of 2,151 adults conducted in November by Harris Interactive.
Similarly, a Pew Research survey in May reported that half of all boomers say their household’s financial picture has worsened in the last year. A fifth say they have a lower standard of living than their parents had at their age.
‘Can I still retire?‘
“The recession contributed to a general feeling of uncertainty,” says Rob Hoxton, a certified financial planner and president of Hoxton Financial in Shepherdstown, W.V. “We have people who’ve come to us and said, ‘Can you fix me and can I still retire?’
“People believe that they deserve to have a retirement and it ought to be somewhat similar to what their parents had,” he says. “We constantly have to reconcile their expectations of what they believe they’re entitled to with the reality that it’s very expensive to retire and have 30 years of life after that, at least.
“There’s a lot of dialogue,” Hoxton adds, “and we come to a workable solution. But it may not be what they originally envisioned.”
Indeed, for America’s postwar generation, born between 1946 and 1964, life in retirement will surely bring more financial challenges than their parents faced.
Stagnant wages, heavy debt
To some extent, boomers are more encumbered by debt because their wages remained relatively stagnant for years, says Christian Weller, a public policy professor at the University of Massachusetts at Boston and a senior fellow at the Center for American Progress, a research group in Washington.
Add to that their penchant to spend beyond their means while saving less than what’s considered adequate for retirement, and a questionable outlook emerges.
Running out of money
When the “silent generation” began retiring more than 20 years ago, they were the last group to be widely covered by traditional pensions. Today just 10 percent of private companies provide employees with guaranteed lifelong income when they retire, according to the Bureau of Labor Statistics.
Consequently, 401(k) plans have become the main source of retirement income for workers of all ages. But because such plans are tied to the market, it’s somewhat of a guess how well they’ll perform.
If investors haven’t saved enough, or their portfolios and housing values decline just as they hit retirement age, they may end up carrying more debt in retirement. Worse, they could run out of money in their later years.
“People are reacting to this by working longer. They’re realizing that they can’t retire as young as their parents did,” says Richard Johnson, a senior fellow at the Washington-based Urban Institute.
“Since the early 1990s, men’s labor participation rates have increased. More people are not retiring, or they’re retiring later and it’s driven by economics.”
Health care costs a big worry
Many workers are staying on the job longer just to keep health insurance, especially as companies increasingly do away with retiree coverage to contain costs.
By some projections, boomers will need between $200,000 and $500,000 during retirement to pay for deductibles and expenses not covered by Medicare, including dental care, hearing aids and other treatment.
Social Security benefits won’t go as far, either. In 2002, benefits replaced 39 percent of the average retirees salary, and that will decline to 28 percent in 2030, when the youngest boomers reach full retirement age, according to the Center for Retirement Research at Boston College.
“When people retire today, their standard of living is more likely to fall compared with those who retired 30 years ago,” says Johnson of the Urban Institute.
“Also, the process of retiring has become more complex,” Johnson says. “It used to be people left their jobs and moved into full-time retirement. Now people are phasing in retirement, switching to part-time jobs, moving from full retirement back into the labor force. That’s not something you saw nearly as much in 1980s.”
Working longer to afford retirement
In 1985, just over 18 percent of people ages 65 to 69 were in the labor force. By 2010, the percentage of workers in that age group nearly doubled to 32 percent, says Sara Rix, a senior strategic policy adviser at AARP.
She predicts that the generation that came of age in the 1960s will embrace advances in technology, stay fit and healthy well into their later years, and won’t likely compromise on how they want to live their lives in retirement.
“I don’t see boomers scaling back or willing to do without the way their parents’ generation did,” Rix says. “They’re going to continue working so they can ultimately afford the retirement they want.”
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A MAJOR CRISIS INDICATOR JUST HIT ITS HIGHEST LEVEL EVER
By Tyler Durden, Zero Hedge
Nov. 20, 2012
When one thinks of America, the word “savings” is likely the last thing to come into a person’s head, for the simple reason that the vast majority of Americans don’t save: recall that in September the personal savings rate dipped to 3.3%, the lowest since 2009 save for one month.
On the surface this makes sense: the average US consumer, tapped out, with more spending than income, has no choice but to max out their credit card, and eat into whatever savings they may have.
This is usually as far as most contemplations on savings go. And this is a mistake, because at least according to official Fed data reported weekly as part of the H.6, which lists the data on the various components of M1 and, more importantly, M2, the real story with US savings is something totally different.
As a reminder, the H.6 lists the bank sector “liability” equivalents of the components that make up M2, which as most know comprises of M1, or physical currency in circulation at just over $1 trillion as well as Checkable and Demand deposits, amounting to $1.4 trillion, and the various M2 components which comprises of Savings Deposits, the largest component of M2 at $6.6 trillion, a modest amount of Time Deposits, and an even more modest amount of Retail Money Funds.
It is the Savings Deposits component that is of most interest. Recall that the primary definition of a savings account is, naturally, an amount of cash parked with an institution for a longer period of time, in exchange for receiving interest (or no interest in the era of The Great Chairman), which also have a limitation on the number of withdrawals: six per month at last check. Savings accounts also encompass the broader Money Market account category, which has a higher floor requirement than an ordinary savings account.
At first blush one would balk at the concept of a Savings Account in the New Normal: after all who in their right mind would face the counterparty risk associated with having money in a bank, especially money that has withdrawal limitations, if there is nothing to be gained in exchange, because under ZIRP nobody collects any interest, and won’t until the system finally collapses.
Well prepare to be surprised.
The chart below shows the time progression of the largest Savings Component: total Savings Deposits at Commercial Banks, which at $5.6 trillion in the week ended November 5, 2012, is also the largest single component of M2, and thus broader money stock of the US (accessible source data via the St Louis Fed).
The chart above hardly shows any slowing down in cash entering Savings Accounts. In fact, quite the opposite. As we have conveniently highlighted, the historic rate of growth in this category of about $200 billion per year, aka the “pre-New Normal” regime, nearly quadrupled to just shy of $700 billion, with a distinct break when Lehman failed aka the “post-New Normal”. That’s $700 billion per year entering what the Fed defines as a “Savings Account.” And all it took to get everyone to scramble to the uncompensated safety of savings accounts? A near collapse of the entire financial system!
This topic alone is worthy of a far greater discussion, because there is a distinct possibility that what the Fed discloses as a “savings account” book entry may simply be a book entry “plug” at the bank level to account for the surge in Excess Reserves into the banking system, after applying an appropriate reserve discounting factor: one way of thinking of M2 is the full lay out of the monetary system using base currency and Fed Excess Reserves and applying a Fractional Reserve banking multiplier. At last check the, multiplier from currency outstanding (1.08 trillion) to total M2 ($10.3 trillion) was 9.5x, in line with the historic ratio of ~10x.
A better representation of the very tight correlation between M1, which captures both currency and physical excess reserves, and M2 can be seen on the chart below.
As can be seen M1 is M2 just with a multiplier factor of ~4.5x.
What has been unsaid so far, is that to Ben Bernanke and the champions of the status quo, money in Savings Accounts would be far better used if it were to be dumped into stocks. After all, the primary reason for the urge by the Group of 30, Tim Geithner, Bernanke and the SEC to crush money markets and to make them even more uneconomical is to pull all the cash contained there and to have it invested into bonds, stocks, and other risky products.
In summary, the more money allocated to Savings Accounts, the more Bernanke’s attempts to rekindle the “animal spirits” fail. And while this cash is at least on the surface what is known as “money on the sidelines”, the flipside also is that should this money ever leave the “sidelines”, modestly at first, then all at once, then the Fed’s moment of reckoning will come, as that will be the moment when the Fed’s ability to keep inflation grounded in “15 minutes” or less, will be thoroughly tested.
Paradoxically, Bernanke wants this money to re-enter the risk markets, and/or the economy, but not in a way that leads to hyperinflation. After all there is $10 trillion in electronic “money” in the US system, and only $1 trillion in cold, hard cash available for cash claims satisfaction.
All that brings us to the topic of today’s post: weekly changes in the amount of cash held in Savings Deposits at Commercial Banks. As the chart below shows, rapid, dramatic shifts, characterized by massive inflows of cash into such savings accounts usually coincide with times of great monetary stress: the three biggest episodes in history to date have been the 2008 Lehman failure, the August 2011 Debt Ceiling Crisis and associated US downgrade, and the May 2009 First Greek failure and bailout.
Those three episodes represent the biggest weekly Savings Deposits inflows number 2 through 4.
When was the largest ever inflow into Savings Deposits at Commercial banks, at $131.9 billion in one week? This past week.
Why?
We don’t know, but the people who control $5.6 trillion in US commercial bank savings deposits – certainly not the vast majority of the US population who have virtually no money saved up, but the true 1% – just decided to park the most cash on a week over week basis into their savings accounts in history.
Perhaps ask them why they did it…
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FROM ZERO INTEREST RATE TO ZERO RETIREMENT: HOW THE FED DOOMED ELDERLY AMERICANS TO ENDLESS WORK
zerohedge.com
October 8, 2012
Excerpted from PIMCO Viewpoints: What’s Your Number at the Zero Bound?
The math of what happens when assumed rates of return go down, driven by a pro-active ZIRP from the Fed, is pretty straightforward. To make up for this, PIMCO notes that those approaching retirement have three choices: a) save more, b) work longer, or c) tighten their belts in retirement. Each of these are clear, individual family choices, but what happens when the whole of society is faced with the same dilemma? What works for one household can be grossly sub-optimal for society.
For now, let us assume that Americans would reject the idea of pre-commitment to significant future belt tightening. They may find that when they get to retirement they have little choice, but this is not something it seems they would rationally choose before having to do so.
If everyone saves more, we consume less, and therefore GDP growth slows down.Anemic growth leads to a Fed on hold for a prolonged period. If expectations for how long the Fed will be on hold are extended, low interest rates – particularly real ones – are the end result.
Given that the personal savings rate is a low 4.2%, significantly below the 6.9% average over the past 50 years, it is hard to argue that we are experiencing the paradox of thrift – at least not yet. We believe that there is a distinct wedge between households’ desired savings and actual savings driven by budget constraints. Less explored is the linkage between “working longer” and interest rates. The right side of Figure 1 shows a possible feedback loop for that cycle – which has the same end result as the Paradox of Thrift, but gets there through a different mechanism.
Here we see low rates leading to longer periods in the work force which would lead to a higher fraction of older Americans continuing employment. By construction, if labor force participation goes up, unless jobs go up proportionately, unemployment will rise. Given the Fed’s dual mandate – 1) fight inflation, 2) stimulate growth/lower unemployment – the central bank’s natural response will be to keep rates low, thus completing the circle.
The crux of the argument hinges on two things. First, if elderly labor force participation goes up and there is not an offsetting drop among other age groups, and second, whether there is empirical proof that low rates can be linked to higher labor force participation among older Americans. With respect to the first item, if there were a compensating drop in labor supply among other age cohorts, causing the unemployment rate to be unchanged, that would be unambiguously bad as these individuals are of prime working age. This would indicate serious structural issues and would likely be paired with slow economic growth. Figures 2 and 3 present support for the argument that low interest rates go hand-in-hand with high labor force participation among the elderly.
Figure 2 shows a 50-year history of 10-year Treasury yields versus labor force participation for those Americans over age 65. The axis for labor force participation is inverted to highlight the relationship. Over a long period, as yields rise, participation falls, and vice versa.
Figure 3 regresses participation on the level of the 10-year rate and its squared value, as the relationship is distinctly non-linear. Elderly labor force participation displays a “convexity” of sorts – the lower rates go, the greater the inertia of the elderly to stay in the workforce. Note the relationship is not perfect, and critics of this argument can point to structural issues in social programs that can give explanation to the time series relationship. It makes sense that elderly participation fell in the 1960s given the passage of Medicare under the Johnson Administration and fell further still given more generous benefits granted in Social Security during the Nixon years. Increases in the Social Security normal retirement age phased in after reform legislation in 1983 induced gradual lengthening of working careers.
Intuitively, low rates leading to longer work lives just makes sense – especially in an era where fewer retirees will draw defined benefit pensions. For those relying more and more on IRAs and 401(k) plans for retirement, the income produced is simply a product of portfolio yield and account balances. They alone bear the risk of market volatility and their own mortality. If anything, we would expect this to tie labor force participation more strongly to yield levels.
This is why some of us are wondering if the Fed is spinning its wheels by sticking to the old model of trying to stimulate growth. Maybe instead of pushing harder on the credit demand side of the ledger by doggedly keeping rates low, central bank policymakers might benefit by looking at other parts of the equation. Specifically, those parts of the puzzle that become more important as America ages.
Work a little longer. Save a little more. Get by with a little less. It’s like each of our numbers is tied to a hot air balloon that seems to rise higher as we get a little closer. Given our outlook for growth and the Fed’s renewed commitment to keeping rates at ”exceptionally low levels” at least through mid-2015, it could be quite a while before those numbers are within reach.
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WHEN WORKING UNTIL 70 ISN’T ENOUGH
By David Wessel
We’ve all heard the admonitions that with life spans growing longer, retiring at age 65 may not be economically possible, either for individuals or for the society as a whole.
- Getty Images
But here’s some discouraging news from the Employee Benefit Research Institute: For about one-third of working-age households (those between ages 30 and 59 in 2007), working until age 70 won’t enough to provide adequate income in retirement.
“It would be comforting from a public policy standpoint to assume that merely working to age 70 would be a panacea to the significant challenges of assuring retirement income adequacy, but this may be a particularly risky strategy, especially for the vulnerable group of low-income workers,” said Jack VanDerhei, research director of EBRI, a nonprofit, nonpartisan research outfit.
Working longer can help, for sure. EBRI’s Retirement Security Projection Model indicates that nearly 64% households aged 50‒59 in 2007 would be “ready” for retirement at age 70, compared with 52% those households if they were to retire at age 65.
The EBRI conclusion differs that that of some other researchers. Earlier this year, economists at the Boston College Center for Retirement Research said in a report that by age 66 “about 55% of households are projected to be prepared for retirement” and that by 70, 86% are. They also found that at age 70, “low-income households … are nearly as prepared for retirement as their high-income counterparts (82% vs. 88%).”
EBRI said the major disagreement between the two findings turns on projections of the value of 401(k) defined contribution retirement accounts. The EBRI model relies on data from millions of actual 401(k) participants and its model incorporates longevity risk, investment risk, and the risk of potentially catastrophic health-care costs (such as prolonged stays in a nursing home).
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THE UNITED STATES GOVERNMENT IS GOING TO MAKE IT NEARLY IMPOSSIBLE TO PASS ON A FARM OR A BUSINESS TO YOUR CHILDREN
Michael Snyder
Economic Collapse
Nov 21, 2012
If you have a farm or a small business, would you like to pass it on to your children when you die? Well, unless Congress does something, it is going to become much, much harder to do that starting next year. Right now, there is a 5 million dollar estate tax exemption and anything above that is taxed at 35 percent. But on January 1st, the exemption will go down to 1 million dollars and the tax rate will go up to 55 percent. A lot of liberals are very excited about this, because they believe that the government will be soaking wealthy people like Warren Buffett and Bill Gates. But the truth is that a lot of farms, ranches and small businesses will be absolutely devastated by this change in the tax law. There are many farmers and ranchers out there today that do not make much money but are sitting on tracts of land that are worth millions of dollars. According to the American Farm Bureau, approximately 97 percent of all farms and ranches in the United States would be subject to the estate tax if the exemption was reduced to just a million dollars. That means that the children of these farmers and ranchers would be faced with a very cruel choice when it is time to inherit these farms and ranches. Either they come up with enough money to pay the government about half of what the farm or ranch is worth, or they sell the farm or ranch that may have been in their family for generations. Needless to say, most farm and ranch families do not have that kind of cash lying around. Most of them are just barely making it from year to year. So this change in the tax law is going to greatly accelerate the death of the family farm in America. This is also going to devastate many family-owned small businesses. Many small businesses don’t make much money, but they have buildings or land or assets worth millions of dollars. Children that may have wanted to continue the family legacy will be forced to sell because of the massive tax bill that they get from Uncle Sam. This is an insidious cruelty, and it shows just how broken our system has become.
The desire to leave the wealth that you have worked so hard to accumulate all your life to your children is something that is common to virtually all human societies. We want to know that future generations will be taken care of.
It is simply immoral for the federal government to swoop in and tax farms, ranches and small businesses that were intended to be passed down from parents to their children at a 55 percent tax rate.
A lot of the people that are going to be affected by this change are not “wealthy” at all. A recent Fox News reportexamined what this change in the law is going to mean for rancher Kevin Kester and his family…
Rancher Kevin Kester works dawn to dusk, drives a 12-year-old pick-up truck and earns less than a typical bureaucrat in Washington D.C., yet the federal government considers him rich enough to pay the estate tax — also known as the “death tax.”
Kester told Fox News that he has no doubt that his ranch will have to be sold when he dies just to pay the tax bill…
“There is no way financially my kids can pay what the IRS is going to demand from them nine months after death and keep this ranch intact for their generation and future generations,” said Kester, of the Bear Valley Ranch in Central California.
Two decades ago, Kester paid the IRS $2 million when he inherited a 22,000-acre cattle ranch from his grandfather. Come January, the tax burden on his children will be more than $13 million.
Reading that should make you angry. Every single year, thousands upon thousands of farms, ranches and small businesses are going to be lost to the federal tax monster.
It is almost as if the federal government does not want income-producing assets to remain in the hands of the “little guy”.
What in the world are we supposed to do?
It isn’t as if all of those farmers and ranchers can go off to the big cities and find good jobs. As I wrote about yesterday, our politicians are standing aside as millions of our good jobs are shipped out of the country.
The cold, hard truth is that our system does not work for average Americans any longer. Those that roll out of bed every morning, work hard and never complain always seem to get the short end of the stick.
The people that are the backbone of America are the ones that the government is always the hardest on.
Unfortunately, we have gotten to a point where the government is searching for more “revenue” from anywhere it can because it desperately needs more money. U.S. government finances are a complete and total mess and we are drowning in the biggest ocean of debt the world has ever seen.
We are more than 16 trillion dollars in debt and there are more than 100 million Americans that are enrolled in at least one welfare program.
Someday has to pay for all this.
Middle class Americans are already hit with dozens of different taxes each year, and you can be certain that our politicians will continue to invent ways to extract even more “revenue” out of us.
And of course our politicians will never stop their wild spending. Despite all of the negotiations that have taken place over the past couple of years, our spending problems just continue to grow. For example, the federal budget deficit for the month of October was $120 billion, which was more than 20 percent larger than the federal budget deficit for October 2011 was.
So what is the solution?
Well, Treasury Secretary Timothy Geithner now says that he wants to eliminate the debt ceiling entirely. He says that we should just have no limit and that the federal government should just be able to go into debt as much as it wants.
In the end, all of this debt is going to absolutely crush us. We have literally destroyed the future of America, and yet most of the country still seems clueless about all of this. The blind are leading the blind, and we are headed straight for complete and utter disaster.
One day, when people look back on this period in American history, what do you think people are going to say about us?
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FABIAN CALVO: WE WILL SEE MASSIVE FORECLOSURES AFTER THE ELECTION
By Greg Hunter’s USAWatchdog.com
Fabian Calvo buys and sells a $100 million worth of distressed mortgage debt and property a year. He says, “We haven’t even scratched the surface of being at the bottom of the housing market.” Calvo runs a company calledTheNoteHouse.us and predicts, “. . . massive default and massive foreclosures after the election.” Calvo is an outspoken critic of crony capitalism on his “Fabian4Liberty” YouTube channel that has nearly 2 million views! Calvo says, “You have to flush out mal investment to get the economy working again and to rework the Constitutional Republic, you have to flush out the criminals who have hi-jacked it.” Calvo contends, “There is systemic fraud and corruption” and sees firsthand how “. . . banks are profiting from short sales and foreclosures.” Calvo thinks there is an even bigger financial meltdown on the not-so-distant horizon, and it “. . . will center around the repudiation of the dollar as the world’s reserve currency” and that food and fuel prices could “triple.”
In 2013, Calvo predicts, “The next President will inherit the economic calamity that is coming.”
Join Greg Hunter as he goes One-on-One with Fabian Calvo.
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FABIAN CALVO: OVER 20 MILLION HOUSES STILL SITTING VACANT
By Greg Hunter’s USAWatchdog.com
Real estate expert Fabian Calvo says there’s more to the story about rising prices in the housing market than what’s reported by the mainstream media. Calvo charges, “There’s a tremendous amount of manipulation . . . Yes, prices have gone up 3%. I see it, but it’s because the inventory has been suppressed on purpose by big players . . . not foreclosing on properties.” Calvo should know because he runs a company called TheNoteHouse.us. It buys and sells $100 million annually in distressed debt and real estate. Calvo says, “Over 20 million houses, on any given night in America, are completely sitting vacant.”
According to Calvo, the economy is being helped by “shadow stimulus.” It’s coming from millions of underwater homeowners who have stopped making mortgage payments. Calvo says, “Money that would have been otherwise allocated towards a housing payment is going into consumer spending.” The Fed is also propping up housing by suppressing interest rates. Calvo says the fragile real estate market would crash if rates rose just a little, and he adds, “That’s why you’re going to see low interest rates . . . through 2015 or until there’s some kind of dollar or bond crisis.” Join Greg Hunter as he goes One-on-One with Fabian Calvo.
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KEITH JUROW: PREPARE FOR THE COMING HOUSING COLLAPSE
After being one of the few analysts who was correct in stating for the past two years that there is no housing bottom in sight, it’s time for me to tell you what I see ahead.
Housing pundits are nearly unanimous in declaring that housing markets are showing signs of bottoming. This is nonsense!
What is Really Happening Now
We hear that California markets are showing signs of revival and that prices are rising in certain markets. Let’s see. Here are the latest figures from trulia.com.
In Los Angeles, trulia reports that the average price-per square foot for homes sold in February through April was down 9.3 percent year-over-year for 3-bedroom homes and down 8.7 percent for 2-bedroom homes.
In San Francisco, allegedly one of the hottest areas in the nation, the 3-bedroom average price-per-square-foot was down 4.7 percent year-over-year and 1-bedroom price-per-square foot was down 8.1 percent.
Price-per-square-foot statistics are the best way to compare prices because it does not matter how large the house is. Median prices are skewed by square footage as well as by the percentage of distressed properties sold.
Here in Connecticut where I live, double-digit price declines are commonplace:
Fairfield County – down 10.7 percent year-over-year
Darien – down 13.5 percent New Canaan – down 15.7 percent Norwalk – down 13.8 percent New Britain – down 15.3 percent Branford – down 15.9 percent City of New Britain – down 15.3 percent City of Hartford – down 14.4 percent
These statistics come from Wm. Raveis & Co.’s website – raveis.com. They are the largest family-owned brokerage firm in the northeast with offices in 7 states.
Their reputation for integrity is excellent. Try it. You can search any town/city in six states in the northeast plus Westchester County in New York. No indices here, just the raw data.
The figures above are for all single-family homes sold in the period February through April of 2012 compared to the year earlier time frame. You can also find price comparisons for different time periods to give you a broader perspective. My latest BUSINESS INSIDER article showed prices for several northeast states.
Serious Mortgage Delinquencies – The Real Story
We have been told that the rate of mortgage delinquencies has been declining over the last year. Let’s see.
In the NYC metro area, the banks drastically cut back foreclosing on properties in the spring of 2009 and have never changed their policy. This has nothing to do with the robo-signing scandal which occurred 18 months later.
Through sheer persistence, I obtained accurate statistics on serious delinquencies from the New York State Division of Banking. Let me explain.
In late 2009, the NYS legislature passed a law requiring all servicing banks in the state to send a “pre-foreclosure” notice to all delinquent owner occupants. It warned them of possible foreclosure and explained steps they could take to prevent this. These servicing banks were also required to report to the Banking Division all notices that were sent.
The Division published preliminary figures in October 2010 but has never updated these numbers. Here is what I learned.
Through the end of March 2012, a total of 192,000+ pre-foreclosure notices had been sent to delinquent owners in NYC. This does not include delinquent investor-owned properties because the law did not require servicers to send notices to them. There are lots of 2-3 family homes in the four outer boroughs of
NYC. I estimate that there are roughly 75,000+ delinquent investor-owners.
This means there are roughly 265,000 seriously delinquent homeowners in NYC who have not yet been foreclosed. Why so many? The banks do not foreclose in NYC. As of May 24, foreclosure.com reported a total of 301 foreclosed properties on the active MLS and 103 in Brooklyn. Together, these two boroughs
have a total of 4.7 million residents. That is more people than live in Maricopa County where Phoenix is situated.
Hard as it may be to believe, the situation is even worse on Long Island. With fewer than 3 million occupants, Nassau and Suffolk Counties showed a total of 175,000 pre-foreclosure notices sent out as of the end of March.
Banks Gamble Again By Closing the Foreclosure Spigot
If you think the reduction in foreclosing is limited to the NYC metro markets, you’re mistaken. Take a good look at this revealing chart for Phoenix from foreclosureradar.com.
Bank repossessions in Maricopa County plunged from 3,159 in April 2011 to a mere 767 a year later. Clearly, the banks are gambling that this will help to stem the decline of home prices.
Or let’s take a look at Miami — a market that suffered one of the largest price collapses since the bubble popped. In 2010, the banks repossessed 23,000 properties just in Miami-Dade County. They foreclosed on 54,000 properties in the 3 south Florida counties of Dade, Broward, and Palm Beach. Although they sharply curtailed repossessions in 2011, that number still totaled roughly 35,000.
I spoke with the head of data for the Miami Association of Realtors on May 18 and was amazed to learn that there were only 282 repossessed properties on the active MLS.
A similar tactic has been occurring in Phoenix. During the height of the credit crisis in early 2009, 2/3 of all homes sold in Maricopa County were repossessed properties. That percentage was down to 40 percent a year ago. Take a look at the following chart:
My source is Phoenix realtor, Leif Swanson, whose charts I have used in several previous articles. It is not an index and shows the raw sales data for homes sold in Maricopa County where Phoenix is situated. In April, only 17 percent of all homes sold in the Phoenix metro were REOs on the active MLS. Banks are hoping that this cutback of foreclosed properties for sale will steady home prices.
In the spring of 2009, 2/3 of all sales were REOs. A year ago, it was still nearly 40%. By July 2012, that percentage had plunged to a mere 11%. For the last year, the banks have tightened the spigot and dramatically reduced the number of foreclosed properties which they put on the active MLS.
What is the significance of this? There is hard evidence that REO properties sell at the greatest discount to the non-distressed market price. That discount normally varies from 20-40% depending on the metro and particular location. So when far fewer REOs are sold in a given metro, this will necessarily push upward any measure which uses median prices. That’s why the median sale price for Maricopa County has soared from $114,000 in July 2011 to $145,000 a year later. Now take a look at Leif Swanson’s chart on the median price:
 Keith Jurow |
This may have been why Professor Robert Shiller, co-creator of the Case-Shiller Index, said in a recent interview that we may be witnessing a new bubble in Phoenix.
The supply of repossessed properties for sale has been intentionally constricted by the servicing banks, the GSEs and by HUD. So buyers have been forced to turn more to short sale listings as well as to non-distressed properties. Remember, many are all-cash investors who have been lured from Canada, California and just about every other state for several years by the collapsed prices in Phoenix.
That is why short sale listings plunged from 11,000 in January 2011 to under roughly 1,000 in July 2012 . This has pushed the average price-per-square-foot for distressed and non-distressed homes up from their lows of 2011.
Leif Swanson also informed me that the average price-per-square-foot for short sales in July was $76. That hardly seems like the stuff of a roaring housing market. This was actually lower than the average price-per-square-foot for repossessed home sales. Leif explained to me that the short sellers don’t care, don’t maintain their homes and sell them “as is.”
Does this mean that the Phoenix market has actually bottomed? No way. At some point, the banks will have to unload their REOs onto the market. Much more important is the shadow inventory of seriously delinquent underwater properties about which I have written extensively. We’ll take another look at this important overhang briefly.
Why the Collapse is Coming
Despite all the mortgage modifications, refinancings, and cutbacks in REOs for sale that have taken place in the past 2 ½ years, prices continue to decline. Will this change anytime soon?
Let’s take a look at potential buyers. It’s an undeniable fact that the trade-up buyer is gone in every major metro market. Most of those who would like to sell and buy another house are unable to do so. Their house is underwater and their equity is gone.
Swanson has explained to me that the few normal sales he closes are for sellers over 70 years old. Because they have owned the property for decades, they have equity. The trade-up buyer of the past – ages 30-60 — has disappeared.
That leaves first-time buyers and investors. According to Inside Mortgage Finance, their survey of roughly 2,500 brokers nationwide finds that roughly 30 percent of all purchases nationwide are by investors, many paying all-cash. Some analysts have argued that this is a good thing for housing markets. This is rubbish. There aren’t enough potential all-cash investors to make-up for the collapse of the trade-up market.
Furthermore, investors are concentrating in the sand states where prices have collapsed more than anywhere else – Arizona, Nevada, and Florida. Prices have plunged so much in the past year here in Connecticut because there are not many investors.
That leaves first-time buyers. Do you really think there are enough potential first-time buyers out there to keep prices from declining further? I’ve written extensively about renters and the changing attitude toward buying a home.
Had it not been for the FHA’s program of mortgage insurance, buying by first- timers would have collapsed. The latest FHA Single-Family Outlook revealed that 78 percent of all purchase mortgages went to first-time buyers.
When you look at securitized mortgages bought or guaranteed by Fannie Mae and Freddie Mac, the picture is very grim. In the fourth quarter of 2011, 80 percent of all Fannie/Freddie mortgage originations were refinancings. The average down payment was 30 percent. How many first-time buyers can put that much down?
More recently, an April 2012 Federal Reserve Board survey of bank loan officers found that fewer than 4 percent of those surveyed said that their bank had eased mortgage lending standards for prime mortgages.
Worst of all is what I’ve been saying for more than a year. A growing number of prospective first-time buyers are reluctant to buy even though they can afford to. Their attitude is this: What’s the rush? I think prices are headed lower. And I like the flexibility that renting gives me.
As prices continue to decline, this new attitude feeds on itself – it becomes a vicious circle.
What About the Potential Sellers?
Over the past two years, I have written about the so-called “shadow inventory.” It’s real, growing and very scary in what it says about where things are heading.
You need to keep in mind that the total number of underwater homeowners is far larger than just those who purchased during the bubble years 2004-2007. Millions of homeowners took out what became known as “cashout” refis. Banks were only too willing to shovel out cash to owners whose homes were rising at double-digit rates.
What has been almost completely overlooked by the media is the enormous number of properties with second liens. There are still nearly 12 million home equity lines of credit (HELOC) outstanding. It’s safe to say that 98 percent or more of these properties are underwater. Roughly 30 percent of all HELOCs were originated in California. There are millions of owners there with HELOC balances in excess of $100,000.
The HELOC boom began in 2003. Most of these revolving lines of credit were interest-only loans for the first ten years. After that, they convert into 15-year fully amortizing loans. This means that beginning next year, these loans start to transform into a fully-amortizing loan. The number of HELOCs which do this increases in 2014 and even more in 2015 and 2016.
What will these homeowners do when their HELOC payment soars from a few hundred dollars per month to more than $1,000. The monthly payments that will go into effect in California are mind-boggling.
Finally, let’s not forget all those homeowners who have pulled their home off the market in the past year. A recent survey published by ProTeck Valuation Services showed that MLS listings had dropped more than 35 percent over the last year in metros such as Phoenix, Miami, Atlanta, Orlando, Tampa and Riverside, CA. Dozens of others saw reductions of more than 15 percent.
Many are frustrated homeowners who were unwilling to take the hit and do a short sale. Nearly all are simply hoping that the pundits are right that housing markets are bottoming this year. Sooner or later, some of these homes will be put back on the market.
For months, a slew of pundits have pointed to figures which allegedly show that home prices are now on the rise around the country. Nearly all refer to the Case-Shiller price index which has become the gold standard of what’s going on in housing markets. The June index revealed that the year-over-year price declines for 20 major cities had finally ended. Prices in June were higher than May in most of these metros. Analysts were most excited by how Phoenix had turned around. The Phoenix index was up by nearly 14% year-over-year.
Home Prices Continue to Fall Throughout New England
In many areas of the country, it is not easy to obtain accurate, comprehensive and reliable statistics on home price changes over time. However, there is a source in Connecticut that provides the best picture of home prices from any source of which I am aware. William Raveis & Co. is the largest family-owned brokerage firm in the northeast with offices in six states. It has an impeccable reputation.
On their website – raveis.com – you can view accurate statistics on single-family home prices and price changes over time for any town or city in six New England states. I’ve spent literally weeks pouring over these statistics to get a good feel for what was occurring in these states. Here is a summary of what I found for five of these states.
 Keith Jurow |
Let me explain these numbers. The first column of figures is the average price-per-square-foot (ppsf) for all single family homes sold in that town or city for the period January – July 2012. The next column shows the per cent change from the same seven months in 2011. You can also go to any town or city and find year-over-year comparisons for the month of July, the previous three months or the previous twelve months. Try it yourself. It’s very easy to use.
I was quite surprised when I examined roughly 200 towns and cities. I found only one town that showed a year-over-year price increase – Cambridge, MA. That’s where Harvard and MIT are located. Like many towns where much of the labor force works for a college or university, not many people get fired there. So its economy and labor market are much stronger than most places. Cambridge is certainly not indicative of what’s going on in the rest of New England.
I believe that comparisons using average ppsf are the best way to view home price changes. It eliminates distortions caused by the size of a house. For example, median price statistics could be seriously distorted by changes in the mix of homes sold. If a large increase in the sale of expensive homes occurs, this will inflate the median price for that area.
Price-per-square-foot eliminates that bias. I realize that different kinds of homes will fetch a higher ppsf than others in the same locale. If you spend time on trulia.com, you’ll see that 3-bedroom homes often sell for a somewhat higher average ppsf than 4-bedroom homes. However, with the raveis.com figures, the mix of three and four bedroom homes sold will not ordinarily change dramatically for any town. So their figures give us a very good indication of what buyers are willing to pay per-square-foot for houses in that town.
Take a look at the price declines in the raveis.com table, especially those for Connecticut where I live. You’ll see some very nice towns with double-digit year-over-year price declines. Some are wealthier towns in Fairfield County. But not all. New Britain is a blue-collar town. Shelton is a nice town with a mix of household incomes.
Now you may say that what’s occurring in Connecticut and other New England states may not be representative of the rest of the nation. That is certainly possible. Many of you will probably refer to the Case-Shiller Index. Okay, let’s take a look at it.
The World According to the Case-Shiller Index
Without a doubt, the Case-Shiller Index has more credibility than any other home price index. Its publisher – Standard & Poors — has actually put out a 41-page explanation of the methodology behind the Index which I have read.
The Index uses a “repeat sales” model because it takes recent home sales and matches them with a previous sale of that property. It is essential for you to understand that at the foundation of the Index are certain key assumptions. The most important is that different weighting is assigned to matched pairs of home sales depending on certain criteria.
Paired sales are assigned a weight anywhere from zero to one depending on how far the pair differs from the “average price change for the entire market.” The purpose of this is to smooth out distortions which the creators believe are caused by extreme price changes that differ markedly from most of the other price changes in a given metro.
Another key weighting factor is that a home which has a longer time interval between its two paired sales is given less weight than one where the interval is much shorter. For example, a home in which the interval between sales is 10 years may be assigned a weight of only 80% of that of a paired sale with a six-month interval. The weight could be as low as a mere 55%.
The assumption behind the time interval weighting is that “over longer time intervals, the price changes for individual homes are more likely caused by non-market factors” (i.e., physical changes in the property).
Why am I digging into this? It’s very simple. The weighting of paired sales and the assumptions underlying it will necessarily cause the index figure to be far removed from the raw sales data. To put it differently, the Case-Shiller Index is not a measurement of what is going on in any major housing market. If its Index methodology were used on the raveis.com numbers for New England, they would look completely different.
Just understand that if you use the Case-Shiller Index as a measure of what is occurring in a major metro, it is like someone with good vision viewing things through very strong glasses. The world will look very different for you.
Why the Shadow Inventory Will Bury Nearly All Major Housing Markets
By the spring of 2009, the foreclosure situation had become so awful that servicing banks decided to sharply reduce the flow of REOs onto the market to keep home prices from completely collapsing.
Nowhere was this done more vigorously than in the New York City metro area. Unlike other major metros, however, the banks have never turned the spigot back on in the New York metro area. Once the word got around that the banks were not foreclosing or evicting, borrowers stopped paying their mortgage in droves.
Late in 2009, the NYS legislature passed a law requiring all mortgage servicers to send a “pre-foreclosure notice” to all owner-occupant borrowers who were delinquent more than 30 days on their mortgage. The purpose was to warn the delinquent borrower of the danger of foreclosure and to explain steps they could take to prevent it. The act did not require notices to be sent to investor-owned properties nor for properties known to be vacant.
The servicing banks were also compelled to send information about the delinquent property to the NYS Division of Banking after they had sent out the notice. The state published a preliminary pre-foreclosure notice report in October 2010, but has never updated its statistics.
I immediately saw the importance of these numbers because it could provide the most comprehensive statistics on the true extent of serious delinquency of any state. For months, I sought to obtain updated numbers, but none were forthcoming. Finally I was able to get updated stats for New York City and Long Island. My contact has updated these quarterly numbers three times since then.
What follows is a table showing the cumulative totals through June 2012 of pre-foreclosure notices sent to delinquent owner-occupants in NYC and Long Island. The accuracy of these statistics has been confirmed by the Division of Banking although they have not published any official updates.
I have spoken to my contact in the Division of Banking numerous times on the phone. He is quite sure that there are very few delinquent properties which have received more than one pre-foreclosure notice. More important, I also received an explanation from the foremost foreclosure attorney in NYS that the statute did not require a follow up second pre-foreclosure to be sent to a delinquent borrower. Therefore, I am confident that the totals in the table are almost entirely separate properties and have exceptionally few duplicates.
A total of roughly 212,000 owner-occupants of delinquent properties in New York City and 193,000 in Long Island had been sent pre-foreclosure notices by their mortgage servicer at some point between February 2010 and June 2012.
My source at the Division of Banking sent me a further breakdown showing that roughly 86% of these mortgages were first mortgages and the remainder were second liens. I have fairly reliable statistics from the Federal Reserve Bank of New York showing the total number of first liens outstanding in these counties through the first quarter of 2011.
Keep in mind that I have posted several articles showing that for several years hardly any seriously delinquent first liens have been foreclosed in either NYC or Long Island. If we use both of these reliable sources, then nearly 24% of all outstanding first liens in NYC are still seriously delinquent and nearly 30% of all the first liens on Long Island. Many of them have not yet started the foreclosure process and are still lived in by owners who have not paid a cent on their delinquent first liens for 2-3 years or more. Nice deal, huh?
Though some may try, it is very difficult to spin these numbers or explain them away. The total continues to grow as new pre-foreclosure notices are sent out each day. It would not be a stretch to conclude that these seven counties have the worst serious delinquency percentage in the nation.
What will the servicing banks do with all these seriously delinquent properties? I am asked this question all the time. Who can know for sure? But I am quite certain that this game cannot continue indefinitely. At some point in the not-to-distant future, they will have to begin to take action. When they finally start to foreclose on these properties or even accept short sales, home prices in these seven counties will begin to collapse.
How low? I don’t have a crystal ball. Three years from now, I am fairly sure that most properties in these counties will be worth less than half of their current value. If you want to project where the NYC metro is headed, take a good look at what happened in Phoenix since the end of 2006.
The Serious Delinquency Fiasco in Other Major Metros
To get a good sense of the enormity of the serious mortgage delinquency problem, you need to understand that it has two components:
- mortgages which have been delinquent for 90+ days but which have not been put into default (NOD) – the first formal stage in a foreclosure proceeding
- those mortgages which have been placed into default but have not yet been foreclosed and sold at a trustee sale
For any specific metro, you need to add both of these numbers to get a complete picture of the “shadow inventory.” A website called foreclosure-response.org tracks this total delinquency picture. Here is a table showing 15 of the worst metros and the percentage of all first liens that are seriously delinquent as of the first quarter of 2012:
 Keith Jurow |
It’s essential to understand that these statistics do not include first liens delinquent between 30 and 90 days. Based on LPS’ latest Mortgage Monitor, you need to add another 5% to the delinquent percentage in the table to get a complete delinquency picture.
Note also that the percentages in the table exclude the nearly three million first liens which were modified by mortgage servicers in 2010-2011and have not yet redefaulted. All non-HAMP modifications are considered “current” and no longer delinquent once the modifications are put in place. We have reliable evidence that nearly half of these modified mortgages will eventually redefault.
Refinanced First Liens Originated During the Bubble Years
You must also keep in mind that there was a refinancing frenzy during the height of the housing bubble – 2004, 2005, and 2006. Take a look at this amazing chart from mortgagedataweb.com.
Keith Jurow
In the three years 2004 – 2006, an incredible total of roughly 27.5 million first and second liens were refinanced. Many of them became known as “cash-out refis” where the borrower tapped the “piggy bank” house and took cash out from the growing equity in the home. They would later regret this.
We know from the Federal Financial Institutions Examination Council (FFIEC) that roughly 20.8 million of these refinanced loans were first liens. This means that around 6.7 million were refinanced second liens and most of these were home equity lines of credit (HELOC).
You need to understand that millions of these properties were refinanced more than once during the insane bubble years, especially in California. It is also essential for you to realize that nearly all properties with either first or second liens which were refinanced during 2004-2006 are now underwater. The total amount of mortgage debt on the property exceeds the value of the property. This does not include the millions of mortgages that were refinanced in 2007 – 2009.
Disregard reports you may have read purporting to show what percentage of homes are now underwater. These reports almost never include the second liens on the property. Even the Wall Street Journal’s June 7, 2011 report claiming that 38% of all homeowners with second liens were underwater is much too low a figure.
According to Equifax, there are roughly 16 million homes with outstanding second liens. More than 70% of these loans are HELOCs with an average outstanding balance of $50,000. However, there are millions of homeowners in California and numerous major metro areas with HELOC balances exceeding $100,000. It’s not going out on a limb to say that any homeowner with a HELOC in excess of $100,000 is badly underwater.
Believe it or not, most banks are still offering HELOCs to those with very good credit up to an 80% loan-to-value ratio even though home prices have been declining since 2006. I’ve spoken to several of them and they seem totally oblivious to the risks.
The serious delinquency statistics in the previous section show only those borrowers who were delinquent as of March 30, 2012. I have explained in previous articles that walking away from a mortgage increases as the borrower goes further underwater. Thus there are countless millions of underwater owners with refinanced mortgages who are likely to default in the next few years. They are a ticking time bomb just waiting to explode and expand the number of seriously delinquent properties.
What Should a Homeowner Do?
I suggest that you pay no attention to all the talk about possible solutions to this housing mess. They aren’t any solutions. The question is this: What should a homeowner do now to protect against the looming disaster?
The problem is that the insistence by the pundits that the worst is over has led many homeowners to believe this nonsense. On August 20, the website redfin.com released the results of a survey of would-be home sellers conducted during the second week of August. It found that 38% of them plan to wait more than a year before selling their home. Another 36% intended to wait anywhere from 3 to 12 months before putting the house on the market.
Why are they doing this? They are optimistic that prices will be higher down the road. Eighty percent of those surveyed believe they will get a higher price after a year or two. Only 7% thought that prices would be lower.
This thinking has caused large numbers of sellers to pull their house off the market in the last six months. If you are among those inclined to believe the drivel about a housing bottom, I urge you to reread this article carefully. Also, check out the home price statistics on raveis.com. Go to your local tax assessor’s office and review the sales of the past six months. Talk to people who have actually sold their house and find out how much of a loss they had to take. See if you can find any successful sellers under 60 years old who actually profited from the sale of their house.
I believe that doing this research will cause you to reassess your optimism. Time is running out. What is the risk of keeping your home off the market until next spring? Plenty. Many major metro markets will almost certainly show signs of further weakness. Some may begin to unravel with willing buyers increasingly hard to find. I cannot think of one major market that I expect to be stronger.
Once you discover that your home is underwater, many of you will probably feel trapped. There are many homeowners who are simply unwilling to contemplate taking a loss and doing a short sale. If you simply hope for better times ahead, I believe you will regret that inaction. Now is the time for you to act.
Conclusion
Let’s put this housing credit bubble and collapse in historical perspective. Prior to this disaster, the largest bubble and collapse in American history was the U.S. stock market from 1927 to 1932. Most of you probably don’t know that during that stock market boom, you could buy stocks with only 10 percent down. Brokers would lend you up to 90 percent of the price. Sounds like the housing bubble, doesn’t it?
The Dow Jones Industrials peaked at nearly 400 in October 1929. When it finally hit bottom, the DJI had collapsed to 34. Now that’s a true collapse. Every few months, pundits would claim that the worst was over. Sound familiar? Then the stock market would plunge lower.
Do I see anything on the horizon that could turn things around and correct the growing imbalance between potential homebuyers and sellers. No. Nothing whatsoever. Wishful thinking won’t do it.
My advice to homeowners in nearly all major metros is quite simple. Get an appraisal from a professional appraiser to find out what the market value of your home is. Seriously consider putting your home on the market within the next six months. You will have a chance of selling it.
Within a year, I expect many of the weakest markets to show signs of unraveling. Perhaps the most vulnerable market is the entire NYC metro area. Sooner or later, the banks will have to start foreclosing or even doing short sales. When these properties hit the market in significant numbers, I have no doubt that prices in the entire region – where 19 million people reside – will collapse.
For other major metros, the plunge will depend on how crazy the bubble was during 2004-2007 and how large the total number of underwater owners becomes.
Predictions are always iffy. But I am convinced that things will get ugly from here and that there is no solution that can prevent this collapse. The wisest thing is for you to do is prepare for the worst. Is there anything wrong with renting a nice house or condo to ride out this perfect storm?
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OBAMA’S SECRET PLAN TO PROP UP HOUSING PRICES
Private Equity firms are piling in to the housing market to take advantage of bargain basement prices on distressed inventory. The Obama administration is stealthily selling homes to big investors who are required to sign non-disclosure agreements to ensure that the public remains in the dark as to the magnitude of the giveaway. Aside from the steep discounts on the homes themselves, the government is also providing “synthetic financing to reduce the up-front capital required if they agree to form a joint venture with Fannie Mae and share proceeds from the rental or sale of properties.” (Businessweek)
In other words, US-taxpayers are providing extravagant financing for deep-pocket speculators who want to reduce their risk while maximizing their profits via additional leverage. The plan resembles Treasury Secretary Timothy Geithner’s Public-Private Partnership Investment Program, (PPIP) which Columbia University professor Joseph Stiglitz denounced in an op-ed in the New York Times. Here’s what he said:
“The Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose.”
The same rule applies here. Speculators are getting lavish incentives (gov financing, low rates, and severe discounts) in secret deals to buy distressed inventory which should be available to the public at market prices. If that’s not a ripoff, then what is?
Now take a look at this clip from an article in Nuwire Investor:
“Single-family homes are on the radar with private equity investors for good reason. There is a robust pipeline of distressed properties that is allowing owners to buy property at a steep discount—typically 30 percent to 50 percent of replacement cost.
The volume of foreclosure filings in the U.S. totaled more than 2.8 million per year in both 2009 and 2010. Although the volume of home foreclosures dropped to 1.9 million in 2011, there were approximately 1.5 million active home foreclosure filings recorded during the first six months of 2012, according to data from RealtyTrac, an Irvine, Calif.-based listing service. The current volume is about five times higher than the rate of foreclosures that were occurring prior to the housing bust. In 2005, for example, home foreclosure filings reached just 532,833, according to RealtyTrac.
That inventory includes an ample supply of quality middle-class homes in good neighborhoods. Investors are finding that they can buy three-bedroom, two-bath homes, many of which were built in 2005 or later. At the peak of the market, these homes were selling for about $250,000, and now investors are able to buy them at prices averaging between $100,000 and $130,000.” (“Private Equity Funds Prey On Distressed Housing”, NuWire Investor)
Read that again. Obama’s preferred customers are getting discounts of up-to 60 percent of the home’s peak value and generous gov-backed financing to boot! Where can Mom and Pop get a deal like that?
Nowhere.
As we have noted in previous articles, housing prices are going up for two reasons. First, because the banks are withholding their distressed inventory (delaying foreclosures) to keep prices artificially high. And, second, because of Private Equity firms are buying up the available stock of distressed homes in special “bulk sales” deals that are pushing up prices on lower-end homes. Housing analyst Michael Olenick sheds a bit of light on these secret transactions in a recent post on Naked Capitalism. Here’s a clip:
“Besides lower foreclosure activity, the government is going all out to give away houses to private equity firms. Recently Fannie Mae sold 275 properties across metro Phoenix in one sale to a mystery buyer, according to a report by Catherine Reagor of the Arizon Republic. All Fannie disclosed is the buyer is an LLC, which Fannie apparently helped create, based at 135 N. Los Robles Ave., in Pasadena, CA. Google shows that is the US address of EastWest Bank, a bank whose tagline is “Your Financial Bridge,” presumably between Asian money and Phoenix real estate. Fannie’s decision to sell Phoenix to Asian investors keeps 275 houses off the local market, which drives up prices for Phoenix homes people intend to actually live in, rather than flip. (Update: Nick Timiraos points out by e-mail that Fannie’s address in Pasadena is the same as EastWest’s, and Bloomberg has reported that Colony is the buyer. But this still raises the question of why Fannie cooperate with what appears to be an effort to hide the identity of the buyer.) (“Still Looking for a Housing Bottom”, Michael Olenick, naked capitalism)
So, why all the cloak and dagger? Why is the public being kept in the dark? And, most importantly, why are taxpayers providing financing for moneybags PE firms on discounted homes that would sell on Day 1 if they offered to the general public? This whole operation stinks to high-heaven.
As the article above indicates, there’s no shortage of delinquent homes that will eventually be foreclosed. That means the process is being dragged out so the banks don’t have to fess-up to the losses on their fetid pile of nonperforming loans Here’s a little more background from an article in Businessweek:
“About 6 million U.S. borrowers will lose their homes in the next five years because of inability to pay their mortgages, creating demand for as many as 4 million new rental households, according to Scott Simon, head of mortgage bonds at Pacific Investment Management Co. in Newport Beach, California….
Single-family rentals are priced to deliver unlevered total returns in the range of 7.5 percent to 8 percent, or about 0.5 percentage point to 1 percentage point higher than institutional-quality apartments, according to a June 8 report by Ray Huang, senior associate at Green Street Advisors in Newport Beach, California. (“Colony Said to Win Foreclosed Homes Sold by Fannie Mae”, Businessweek)
If “6 million homeowners” will lose their homes in the next five years, then why are clownshoes media dupes touting a “bottom” in prices and a “market rebound”?
It’s all hype. And look at how calculatingly fiendish Obama’s foreclosure-to-rental program really is. The big boys have figured out the nearest penny how much they can make by throwing people out of their homes. (7.5 percent to 8 percent) Talk about heartless. And, of course, this whole process is being orchestrated by President Fairydust and his Wall Street Pranksters to keep prices artificially high and preserve the illusion that the banks are solvent.
It’s infuriating!
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.
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THE FED’S U.S. LAND-GRAB HIDDEN WITHIN PURCHASE OF MORTGAGE-BACKED SECURITIES
Susanne Posel
Infowars.com
SEPTEMBER 29, 2012
As of August 9th of this year, the banks are legally allowed to co-mingle customer segregated funds with their own if the financial institution is insolvent, under duress or in bankruptcy. In other words, the technocrats have made the theft that Jon Corzine committed a non-criminal offense.
The latest scheme of the banking cartels has been introduced as QE3, which is nothing more than amassive land-grab in the domestic US by the technocrats under the guise of purchasing the mortgage-backed securities through the Federal Reserve to alleviate the pressure the banks are feeling from the bait-and-switch they caused.
Essentially, as the Fed buys the mortgage-backed securities, the central bankers now own all those properties which were bundled and securitized. The experts are still coming to terms with how many homes, small business, small farms and other lands were mixed-up into this Ponzi scheme. The actual total numbers of victimized Americans are continuing to rise and are currently unknown. However, it is clear that as this monster grows, it will be the Federal Reserve at the helm, making sure that more Americans are displaced and foreclosed on.
It is not the value they are after. Bernanke sets the tone for that with interest rates. It is the physical property that interests the central bankers. And this is a massive land-grab – the likes of which has never been attempted in the US and are likely to be a major contributor to our downfall as a sovereign nation. Through the mortgage-backed securities, the central bankers will literally own most of the domestic US.
Charles Plosser, president of the Federal Reserve Bank of Philadelphia, stated that purchasing toxic assets is investing in “diminishing returns” and that “the evidence is not strong that somehow more (bond purchases) are going to help the unemployment rate move faster to where we’d like it to be. I don’t see that there is much benefit.”
Under QE3, the US dollar will be devalued even further, driving prices up on food, gas, utility bills and every else we purchase with Federal Reserve notes. This global Ponzi scheme moves newly printed money into the expanded infinity that is hyperinflation.
Quantitative Easing and its effects, according to the Bank of England, benefits “mainly the wealthy.” This plan boosts “the value of stocks and bonds by 26 percent, or about $970 billion.” It is understood that quantitative easing incites “social anger and unrest.”
In July, the first audit of the Federal Reserve Bank of New York (FRBNY) was published by the Government Accountability Office (GAO). According toSenator Bernie Sanders : “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world. This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”
The GAO audit states that this transfer of funds from the FRBNY to the central Bank of China was an “unusual and exigent circumstance” that warranted the “emergency authority” of the Federal Reserve Bank of New York (FBNY).
Sanders points out that the FRBNY gave massive amounts of money to foreign banks and multi-national corporations. Sanders said: “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president.”
To know what the central bankers are truly doing with America’s money, more than just an audit of the FBNY has to happen.
At the same time the American public is being introduced to QE3, there is little attention being placed on how devastating this scheme will be to US citizens who live on fixed incomes, elderly Americans who depend on their social security checks and all others who have been socialized by needing entitlement programs like Food Stamps, unemployment benefits and welfare checks.
The social security program has been played on the stock market and is dependent on this Ponzi scheme as are an estimated 56 million Americans who collect those checks. As the Federal Reserve’s low interest rate policy destroys the securities that are entitlement programs, there will be nothing left in the funds by 2030. Without earning interest on the funds in social security, the program will fail.
The US government benefits from social security because the monies are invested in the federal government. “All securities held by the trust funds are “special issues” of the United States Treasury. Such securities are available only to the trust funds.”
As social security is slated for 25% in cuts, “anyone who is 55 or older should be worried about this. Based on current law, all SS benefit payments must be cut by (approximately) 25% when the TF is exhausted. This will affect 72 million people. The economic consequences will be severe.”
Within the Patriot Act of 2001 was the creation of a private police for all of the Federal Reserve Banks.
According to Section 364, entitled Uniform Protection Authority for Federal Reserve: “Law enforcement officers designated or authorized by the Board or a reserve bank under paragraph (1) or (2) are authorized while on duty to carry firearms and make arrests without warrants for any offense against the United States committed in their presence…Such officers shall have access to law enforcement information that may be necessary for the protection of the property or personnel of the Board or a reserve bank.”
These Federal Reserve police officers trains at their own academies, wear select badges, uniforms, issued separate armory and police cruisers and can arrest US citizens without a warrant. The issuance of employment is granted by the Federal Reserve Board of Governors which are the decision makers for the privately-owned central bank. In order to become a Federal Reserve police officer, “top secret clearance” must be obtained.
Falsely claiming to be a “government organization”, these police officers may work with local law enforcement in their region; however they are beyond those police departments in so far as structure and power.
The Federal Reserve Banks have been preparing for financial collapse in America by acquiring firearms, ammunition and control over private mercenary corporations like DynCorp and ‘Blackwater” as authorized by the Department of Defense (DoD) directive 3025.18.
Named as investors for the amassing of gun and ammunition manufacturers are Citi Bank, Bank of America, Barclays and Deutsche Bank who are pouring money into Cerberus and Veritas Equity who have taken over private corporations involved in the controlling riot situations.
While preparations for financial collapse and technocratic acquisition of mercenary military forces are being laid out behind closed doors, Bernanke announces to the sleeping American public that the Fed now own every property that has been foreclosed on, is currently in foreclosure and will be foreclosed on in the future.
When will we stop complying with this system?
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AGENDA 21 PLAN TO DOWNSIZE AMERICANS INTO JAIL CELL LIKE HOMES
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UNITED NATIONS WARNS OF LOOMING WORLDWIDE FOOD CRISIS IN 2013
• Global grain reserves hit critically low levels
• Extreme weather means climate ‘is no longer reliable’
• Rising food prices threaten disaster and unrest
John Vidal | The Observer | guardian.co.uk
Saturday 13 October 2012
World grain reserves are so dangerously low that severe weather in the United States or other food-exporting countries could trigger a major hunger crisis next year, the United Nations has warned.
Failing harvests in the US, Ukraine and other countries this year have eroded reserves to their lowest level since 1974. The US, which has experienced record heatwaves and droughts in 2012, now holds in reserve a historically low 6.5% of the maize that it expects to consume in the next year, says the UN.
“We’ve not been producing as much as we are consuming. That is why stocks are being run down. Supplies are now very tight across the world and reserves are at a very low level, leaving no room for unexpected events next year,” said Abdolreza Abbassian, a senior economist with the UN Food and Agriculture Organisation (FAO). With food consumption exceeding the amount grown for six of the past 11 years, countries have run down reserves from an average of 107 days of consumption 10 years ago to under 74 days recently.
Prices of main food crops such as wheat and maize are now close to those that sparked riots in 25 countries in 2008. FAO figures released this week suggest that 870 million people are malnourished and the food crisis is growing in the Middle East and Africa. Wheat production this year is expected to be 5.2% below 2011, with yields of most other crops, except rice, also falling, says the UN.
The figures come as one of the world’s leading environmentalists issued a warning that the global food supply system could collapse at any point, leaving hundreds of millions more people hungry, sparking widespread riots and bringing down governments. In a shocking new assessment of the prospects of meeting food needs, Lester Brown, president of the Earth policy research centre in Washington, says that the climate is no longer reliable and the demands for food are growing so fast that a breakdown is inevitable, unless urgent action is taken.
“Food shortages undermined earlier civilisations. We are on the same path. Each country is now fending for itself. The world is living one year to the next,” he writes in a new book.
According to Brown, we are seeing the start of a food supply breakdown with a dash by speculators to “grab” millions of square miles of cheap farmland, the doubling of international food prices in a decade, and the dramatic rundown of countries’ food reserves.
This year, for the sixth time in 11 years, the world will consume more food than it produces, largely because of extreme weather in the US and other major food-exporting countries. Oxfam last week said that the price of key staples, including wheat and rice, may double in the next 20 years, threatening disastrous consequences for poor people who spend a large proportion of their income on food.
In 2012, according to the FAO, food prices are already at close to record levels, having risen 1.4% in September following an increase of 6% in July.
“We are entering a new era of rising food prices and spreading hunger. Food supplies are tightening everywhere and land is becoming the most sought-after commodity as the world shifts from an age of food abundance to one of scarcity,” says Brown. “The geopolitics of food is fast overshadowing the geopolitics of oil.”
His warnings come as the UN and world governments reported that extreme heat and drought in the US and other major food-exporting countries had hit harvests badly and sent prices spiralling.
“The situation we are in is not temporary. These things will happen all the time. Climate is in a state of flux and there is no normal any more.
“We are beginning a new chapter. We will see food unrest in many more places.
“Armed aggression is no longer the principal threat to our future. The overriding threats to this century are climate change, population growth, spreading water shortages and rising food prices,” Brown says.
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WORLD ON TRACK FOR RECORD FOOD PRICES ‘WITHIN A YEAR’ DUE TO U.S. DROUGHT
Brace yourself for some painful “agflation”. That is the shorthand for agricultural commodity inflation, otherwise known as rising food prices.
By Emma Rowley, and Garry White
September 23, 2012
They are being driven upwards by the climb in grain and oilseed prices as US crops weather the country’s worst drought since 1936, while the farming belts of Russia and South America suffer through similar water shortages.
What we are seeing represents the third major rally in global grain and oilseed prices in just half a decade.
Worse is to come, new research warns. World food prices look set to hit an all-time high in the first quarter of next year – and then keep rising, according to the analysis from Rabobank, a specialist in agricultural commodities.
By June 2013, the basket of food prices tracked by the United Nations could climb 15pc from current levels, according to the bank’s analysts.
“The coming year will see the world economy re-enter a period of agflation as grain and oilseed stocks decline to critically low levels, pushing the FAO [Food and Agricultural Organisation] Food Price Index above record nominal highs set in February 2011,” they say.
The index offers a useful proxy for the prices paid by world consumers for food, they note – indicating how agricultural commodity price movements are likely to translate into prices of shop shelves.
For policy-makers, the pick up in food inflation signals problems, as high food prices tend to magnify social unrest.
“Politics and economics are inextricably linked as exemplified by the Arab Spring, which was preceded by a rise in food prices,” note Hermes fund managers in a recent report.
But no crisis looks quite the same as the last. Rabobank thinks the consumer impact could be less painful this time around compared to 2008, when there were severe shortages of wheat and rice.
That is because today’s shortages are being seen more in crops used as animal feed, such as corn and soybeans.
In contrast, back in 2008 falling wheat stocks and various bans on rice exports capped the amount of grains available for direct consumption by people.
Today, prices for staple grains such as rice and wheat are currently 30pc below their 2008 peaks.
So while the pressure on feedstock supplies pushes up meat prices, consumers feeling the squeeze should be able to switch from animal protein towards staple grains.
Food prices are also rising in a very different global economic environment, with Chinese demand slowing and the debt problems of the West weighing on world growth. That lessens wider price pressures in the system.
However the risks remain, as states try to appease citizens feeling the squeeze.
As in 2008, government stockpiling, trade restrictions and other forms of intervention remain a significant threat, says Rabobank. But it warns a pick-up in government intervention will prove counterproductive at an international level, as states engage in a “vicious cycle” of protectionist policies, aggravating the food price environment.
More specifically, the scarcity of feed crops is expected to have major repercussions for the meat and dairy industries, as the increase in the costs of feed stocks raises the prices faced by consumers and hits profit margins.
In the shorter term, higher slaughter rates as producers respond to rising feed costs should temporarily increase the meat supply. But the ultimate result is expected be smaller animal herd sizes, which will reduce meat and dairy production and ramp up prices.
The British public, which consumes high levels of meat and dairy products, will definitely feel the impact of this latest bout of agflation, says Rabobank. Nick Higgins, one of the report’s authors, says UK food prices “are going to rise in the coming year significantly.”
Still, while consumers in developing countries show “elasticity” of demand as prices move, people in the UK tend not to change their consumption patterns in response to prices, he notes.
In other words, even if meat gets more expensive, they will keep buying.
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COMING FOOD CRISIS PLAYS INTO GLOBAL ELITE’S DEMAND FOR POPULATION STABILIZATION
Susanne Posel
Infowars.com
September 8, 2012
Since 2010, the UN Food and Agricultural Organization havestated that the rise in food prices is directly correlated to the 80 million people being added to the world’s population annually. This fact, according to the globalists at the UN, is beginning to “tax both the skills of farmers and the limits of the earth’s land and water resources.”
Added to this problem are the 3 million people who are “moving up the food chain” eating more than their share in gluttonous nations like the United States and China.
While New York Mayor Michael Bloomberg is announcing that the city plan to ban sugary beverages larger than 16 ounces to curb the waistlines of the average New Yorker, the rest of the world is wondering where their next meal may be coming from.
In the UK, the average person’s weight continues to dramatically increase with the use of high fructose corn syrup, increased consumption of processed foods and a lethargic lifestyle. Their societal issues with food and weight are mirrored in America. And if compared to other nations, the problem remains the same. While some die of starvation, others are dying from over consumption. Both the degenerative quality of the food being sold in the developed world and the lack of food in the under-developed nations are causational to the same end – population reduction.
To keep up appearances, the mainstream media will dole out ludicrous studies such as one published last month that reported men who are stressed find heavier women more attractive. Instead of facing the health problems brought on by an industry that is designed to deplete the human body of nutrition thereby causing disease and early death, the MSM would have the American public considering their burgeoning waistlines as trendy. Meanwhile, the quest to become anorexic-esque thin is still en vogue and sought after – ever leaving the average American confused about their self-image.
Perhaps a portion of the problem facing Americans and their eating habits stems from the use ofchemically enhanced food such as chocolate that is prescribed as a mood-stabilizing drug. The brain manipulation by way of chemical inhibitors comes from the use of valproic acid that acts as an anti-depressant; calming moods and other related psychiatric conditions.
Pointing out the US investment in ethanol is a drain on the world’s food stores; which allocates massive amounts of food to the production of this plant-based fuel for cars.
The World Bank issued a statement of concern last month for the coming food shortage due to the drought devastating the US and Europe. According to Jim Yong Kim, World Bank group president: “Food prices rose again sharply threatening the health and well-being of millions of people. Africa and the Middle East are particularly vulnerable, but so are people in other countries where the prices of grains have gone up abruptly.”
Because of the drought, Obama offered , through the USDA, to purchase $170 million in pork, chicken, lamb and catfish to stave off some of the financial burden of American farmers. The White House announced the use of this food in food-aid programs.
Water resources are directly tied to global food supplies. As more of the planet’s water is securitized by private corporations and governments, some globalists suggest that the world’s population may have to become vegetarian in order to survive.
Malik Falkenmark and colleagues at the Stockholm International Water Institute (SIWI) are responsible for a report that explains “there will not be enough water available on current croplands to produce food for the expected 9 billion population in 2050 if we follow current trends and changes towards diets common in western nations.”
The UN and Oxfam are warning nations that the scarcity of water will limit food production dramatically and cause another food crisis. Oxfam is predicting food prices to rise incredibly in developed nations.
The globalist answer to the problem: by adopting a global vegetarian diet, the world’s water supplies will be saved and the erratic weather evidenced by the man-made climate change myth will simply disappear. Miraculously, third world nations would have the arable land to feed their populations which would increase trade and food surplus.
In April, S. Matthew Laio, bioethics professor at New York University proposed that the masses take a pill that would cause nausea when a person ate meat. This would eventually create a lasting aversion to meat-eating.
Laio had other ideas, like using genetic engineering or hormone therapy to birth smaller babies that would be less resource-intensive throughout their lifetime. Larger people consume more food and energy over their life. Smaller people consume less. Liao believes that human engineering would liberate a family to choose from two medium sized children or three small sized children. Or they could choose one large child. The choice is theirs.
This bioethics professor also thinks very highly of China’s one child policy (that was first instituted by Mao, modeled after Henry Kissinger’s work) and Britain’s advocators of a two-child maximum.
Competition for water will be the next Great War. The International Water Management Institute (IWMI) claims that food security in Southeast Asia and the sub-Saharan Africa will be protected by investing in small pumps because the world depends on their success.
The World Bank and the UN Population Fund have issued ultimatums (referred to as guidelines) to under-developed nations to either implement their plans for population reduction, or be withdrawn from the international community.
According to the UN’s Reproductive Health Action Plan 2010-2015 , adherence to the UN’s Millennium Development Goal number 5 is an imperative. This goal calls for a 75% reduction in maternal mortality and universal access to reproductive health by 2015.
Melinda Gates, at the recent London Family Planning Summit held in July, spoke of preventing 40% of unwanted births in under-developed nations like Africa and India to reduce the world’s human population growth significantly.
Population stabilization , the true meaning behind family planning is evident in the World Bank and UN Population Fund’s push against sovereign nations to reduce their populations by rule of the “global consensus” which dictates human rights policy by deeming some fit to live and others not.
Based on the Rockefeller Commission report, population stabilization is an endeavor worth pursuing, although its success would take decades because of the high incidents of reproduction by marriage. However, with the destruction of the family, this problem could be solved. Furthermore, the stabilization of the global population would reallocate resources to be better spent in terms of quality versus quantity.
Concluding that the best way to achieve population stabilization is to coerce the nation’s citizens that they freely choose abortion and not having a child at all as part of an acceptable societal norm. By way of implementation of social barrier and cultural pressures, the average citizen would rather go with the flow and chose not to procreate for the sake of being part of the herd.
Simultaneously, by reforming the acceptable amount of children born into a married house-hold, the impact on population growth would seem to be natural. And trends would take care of social conformity. Those who had more children would be shunned.
Increasing access to abortion clinics with the inception and popularity of Planned Parenthood would give unacceptable pregnancies a viable solution. This would distract and control another Baby Boom from occurring.
Using images on television, film and print media to control the ideals of the modern family to fit the model of a population stabilized by no longer being plagued with “run-a-way” births; but focusing on the example of small-families as the best way to go.
Last month, eugenicists, Alberto Giubilini and Francesca Minerva proposed after-birth abortion for infants up to age 2 as they are a “threat” to their parents and society because of the drain on resources, time and energy expended to care for them. Giubilini and Minerva continued on to say that “merely being human is not in itself a reason for ascribing someone a right to life. Indeed, many humans are not considered subjects of a right to life.”
Droughts, lack of access to nutritional food and an agenda of the global Elite to reduce the population are not conspiracy theories. Simply look at the data, the evidence being played out in real time and their own publications where these concepts are outlined for implementation. They all connect together to form the basis of the 90% human population reduction that is necessary for the global Elite to control the world’s population as feudal serfs and slaves to Global Governance.
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OBAMACARE: MEDICAL TYRANNY IS HERE, AND WE CAN’T SAY WE WEREN’T WARNED
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Daniel Taylor
Infowars.com
November 29, 2012
Health care reform is a hot topic today, as it has been for much of America’s history. Benjamin Rush, one of the signers of the Declaration of Independence, warned in 1787 that medical freedom needed to be included in the American Constitution. Without this protection, Rush warned that the medical establishment would naturally progress – as many of mankind’s institutions do – into an oppressive dictatorship. His words, echoing from over 200 years ago, ring strikingly true today:
“The Constitution of this Republic should make special provision for medical freedom. To restrict the art of healing to one class will constitute the Bastille of medical science. All such laws are un-American and despotic. … Unless we put medical freedom into the constitution the time will come when medicine will organize into an undercover dictatorship and force people who wish doctors and treatment of their own choice to submit to only what the dictating outfit offers.”
The spirit of managerial scientific control that drives this beast is summarized in the words of Frederick Taylor, a pioneer in “scientific management.” As Taylor stated in 1907, ”Too great liberty results in a large number of people going wrong who would be right if they had been forced into good habits.” This spirit of quasi-altruistic scientific control begins to fade away towards the higher ranks of the system, however.
The potential for medical tyranny that Benjamin Rush perceived over 200 years ago crystallized when the Rockefeller and Carnegie foundations transformed the American medical establishment in the early 20th Century. They strove to create a system of schooling to manufacture a predictable, rule following group of professionals to enforce the establishment regulations. Additionally, tax exempt foundations – through their grant making power – are able to mold the idea-sphere from which medical research emerges, or is suppressed.
The dictatorial health care model as expressed by “obamacare” is being implemented as part of a larger global program. The World Health Organization announced recently that it hopes to implement – via a U.N. resolution – “universal health coverage” across the globe in fulfillment of its Millennium Development Goals. The Rockefeller Foundation is working with WHO in the project. “There is a global movement towards UHC (Universal Health Care) and it is gathering momentum,” said Judith Rodin, President of the Rockefeller Foundation.
If you don’t want the kind of care that the allopathic establishment prescribes, be prepared to face the consequences.
A Minnesota mother was recently brought to court over refusing chemotherapy for her 8 year olddaughter. A doctor apparently reported her to CPS. She was “…ordered into court and told if they did not work with them on a treatment plan, they would lose custody of Sarah.”
Another case involved a Pennsylvania mother who declined to vaccinate her child, resulting in a visit from CPS.
A 2009 case in which a 13 year old boy’s parents refused chemo resulted in a judgement of “medical neglect,” denying the right of his parents to refuse treatment on religious grounds.
The bottom line is this: Even if the medical establishment had our best interests at heart, what happens when their science is wrong? What happens when it is skewed in favor of the corporations that are closely aligned with them? What kind of damage is done when it is universally enforced? Benjamin Rush foresaw this danger, and it is time to face it for the reality it has become.
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CHUCK NORRIS: THREE PERILOUS PREVIEWS OF OBAMACARE
Though I have concern that every American citizen has affordable health care, too, I have grave concerns about the opinion that the federal government holds the true solution.
History shows that whenever government oversees personal welfare (such as with Medicare, Medicaid, welfare and Social Security), the program is inept, broken, intrusive, impersonalized, oppressive or often bankrupt.
It is no coincidence that the Congressional Budget Office recently released updated figures revealing how the Patient Protection and Affordable Care Act, or Obamacare, will cost twice as much as the original price tag, from $900 billion to $1.76 trillion between now and 2022.
Many of America’s Founding Fathers shared a sentiment that can be summarized in this statement: “That government is best which governs least.”
Three perilous previews of state-mandated health care have come to my attention recently.
Veteran journalist Bob Unruh of WorldNetDaily reported just a few weeks ago: “In what is being seen as a preview of a fully implemented Obamacare, government officials in Michigan are demanding that a 9-year-old child follow standard procedure and take a dangerous course of cancer medications that can cause additional cancer — even though the boy has had three scans indicating an absence of the disease.”
Health Impact News Daily added: “Ken and Erin Stieler are the mom and dad of Jacob — who has been cancer-free since his PET scan in early July. He has had two clean PET scans since then — the most recent in January. Despite all of this, the Michigan Department of Human Services continues to attempt to prosecute this family for medical neglect. If they succeed they will force Jacob to resume chemotherapy despite the fact that the drugs in question are not FDA approved (either for children in general or for this particular cancer). Moreover, these drugs do not promise anything close to a guaranteed cure. And, the FDA requires the drug manufacturers to disclose that these drugs cause new cancers to form, heart disease in children, failure to sexually mature, and many other serious side effects in some cases.”
And if you think the federal government never will tell you what to do with your child’s health care, then consider passages in the Affordable Care Act under the heading “home visitation programs for families with young children and families expecting children,” which would provide (via grants to states) for home visitation programs by government agents to educate parents on child behavior and parenting skills.
Imagine how that health care provision might play out as state officials walk into your home invoking their values and beliefs upon your parenting and children.
There is nothing more intrusive than the thought of government coming into our houses, teaching us how to parent and getting under our skin. And the latter is even a literal intent of federally mandated health care.
Most people don’t realize — even though it was verified recently by even the left-leaning snopes.com — that an earlier House version of health care legislation (HR 3200), which was reformed and approved into law as the Affordable Care Act (HR 3590), included references to the creation of a national health registry with murky correlations to the tracking of personal information via the implanting of microchips in humans.
The Food and Drug Administration’s website explains that “class II” microchips are “subject to special controls,” which can be “exempt from the premarket notification” and include “postmarket surveillance.” And class III devices are those that “support or sustain human life.”
Snopes.com and other pro-Obama agencies were quick to explain the section in the preapproved health care legislation (HR 3200) as nothing more than wording that “simply calls for the creation of a registry that would allow for the Department of Health and Human Services to collect data about medical devices ‘used in or on a patient’ (including devices which patients consent to have implanted with them during surgery, such as pacemakers) for purposes that include tracking the effectiveness and facilitating the distribution of manufacturer recall notices.” (Notice snopes.com’s overly verbose explanation and evasive multiuse of “including” but never “excluding” overreaching microchip uses and expansions. Remember that opening legislative doors and leaving them wide-open is the government’s specialty.)
But if that section in HR 3200 referred only to a benign registry without universal and intrusive implications (including an ultimate obliteration of HIPAA laws), then why was that section excluded from or changed to “similar language” (per snopes.com) in the final version of Obamacare? And shall we assume that though every other form of government entitlement has expanded, these microchip-registry provisions never will be re-included or expanded in future amendments to federally mandated health care?
And I suppose it is also merely coincidental that Fox News recently reported — in an article titled “Microchips ‘the future of medicine’” — that Veriteq, the company responsible for the current usage of informational microchips in pets, “was cleared by the FDA for patient identification in 2004 (via its VeriChip microchip). In 2009, the company entered into an agreement to implant its 8-milimeter microchip in Medcomp’s vascular access catheters. … After VeriChip is implanted, it can be scanned to reveal the identification number and checked in a database.”
And if all of this is sounding a bit too close in this sacred Easter week to the epic and biblical “mark of the beast” (Revelation 16), without which people in the end times “cannot buy or sell,” just know you’ll be lumped among conspiratorial camps (like birthers) for suggesting that, too.
I don’t care how the Obama administration or the Supreme Court bends the commerce clause of the Constitution; Obamacare is bad medicine for Americans’ health care, households, rights and liberties and the American economy.
We need more government officials and a federal government that shift health care back to the free market, personal responsibility and local and community care for one another.
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TOP THREE HEALTH CARE POLICY PROPOSALS
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WHAT DO WE MEAN BY THE UNINSURED?
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HEALTH PREMIUMS UP $3,000; OBAMA VOWED $2,500 CUT
By JOHN MERLINE, INVESTOR’S BUSINESS DAILY
09/24/2012
During his first run for president, Barack Obama made one very specific promise to voters: He would cut health insurance premiums for families by $2,500, and do so in his first term.
But it turns out that family premiums have increased by more than $3,000 since Obama’s vow, according to the latest annual Kaiser Family Foundation employee health benefits survey.
Premiums for employer-provided family coverage rose $3,065 — 24% — from 2008 to 2012, the Kaiser survey found. Even if you start counting in 2009, premiums have climbed $2,370.
What’s more, premiums climbed faster in Obama’s four years than they did in the previous four under President Bush, the survey data show.
There’s no question about what Obama was promising the country, since he repeated it constantly during his 2008 campaign.
In a debate with Sen. John McCain, for example, Obama said “the only thing we’re going to try to do is lower costs so that those cost savings are passed onto you. And we estimate we can cut the average family’s premium by about $2,500 per year.”
At a campaign stop in Columbus, Ohio, in February 2008, Obama promised that “We are going to work with you to lower your premiums by $2,500. We will not wait 20 years from now to do it, or 10 years from now to do it. We will do it by the end of my first term as president.”
2008 Promises, 2012 Reality
To back that up, Obama pointed to a memo drafted by Harvard professors (and unpaid campaign advisers), which claimed that investing in health care IT, cutting administrative bloat, and improving management of chronic diseases would cut health costs by $140 billion a year. That would translate into $2,500 in premium savings for families.
But those projections were wildly optimistic, overestimating potential savings from IT, making big assumptions about disease management, and ignoring the fact that past government interventions have always increased health care administrative costs.
Meanwhile, the health reform law Obama signed in March 2010 has pushed up insurance costs.
In 2011, premiums spiked 9.5%, and many in the industry blame ObamaCare for at least part of it. Premiums climbed another 4.5% in 2012, Kaiser found.
And ObamaCare will continue to fuel health premium inflation.
First, the law piles on new coverage mandates. It requires insurance companies to provide 100% coverage for various types of preventive care, bans lifetime coverage limits, extends parents’ coverage to offspring up to 26 years old, and requires plans to meet certain “medical loss ratios.” Coming up are rules on “essential standard benefits,” limits on deductibles, bans on annual spending caps, and much more.
The experience with state mandates show that they only tend to grow over time, and get more expensive. The Council for Affordable Health Insurance found more than 2,200 state benefit mandates, which add from 10% to 50% to the cost of coverage.
“One of the biggest cost drivers in our health care system is the steady proliferation of federal and state-based coverage mandates,” noted CAHI’s Victoria Craig Bunce.
Meanwhile, ObamaCare’s insurance reforms — guaranteed issue and community rating — will likely raise premiums, too.
State Experiments
States that have tried these reforms — which forbid insurers from denying coverage based on preexisting conditions or charging the sick more — have seen insurance premiums spiral upward as healthy people leave the market, knowing they are guaranteed coverage when they get sick.
“Premium rates tended to increase, sometimes dramatically” in the eight states that tried these reforms, according to a study by Milliman, a health care consulting group.
The law’s backers claim the individual mandate will prevent these rate hikes, because it requires everyone to buy insur ance. But experts say millions will still refuse to buy coverage and pay the fine instead.
Meanwhile, Jonathan Gruber — who helped design ObamaCare — found that the law will hike individual market premiums in three states by as much as 30%. The Congressional Budget Office said ObamaCare would push them “about 10% to 13% higher in 2016.”
Supporters say people will be getting more generous coverage for those higher prices, and that tax subsidies will offset higher cost for many of these families. But that will be small comfort to those forced to pay more.
Perhaps the best evidence that ObamaCare won’t bring costs down is a report published this month in the New England Journal of Medicine and signed by nearly two dozen leading health economists and policy experts — some of whom worked for the Obama administration. The report warns that “health costs remain a major challenge” and calls for a “systematic approach” to get spending under control.
One thing that isn’t on their list of proposals: Scrapping ObamaCare and starting over.
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SURPRISE A NEW $63 PER-HEAD FEE IN OBAMACARE
By RICARDO ALONSO-ZALDIVAR | Associated Press
WASHINGTON - Your medical plan is facing an unexpected expense, so you probably are, too. It’s a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama’s health care overhaul.
The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.
Employee benefits lawyer Chantel Sheaks calls it a “sleeper issue” with significant financial consequences, particularly for large employers.
“Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it,” said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.
Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.
The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.
Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.
The program “is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all,” the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to “contributions” without detailing the total cost and scope of the program.
Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.
The $25 billion fee is part of a bigger package of taxes and fees to finance Obama’s expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.
But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don’t provide coverage.
“This kind of came out of the blue and was a surprisingly large amount,” said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.
Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.
America’s Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama’s law take effect.
But employers already offering coverage to their workers don’t see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.
“It just adds on to everything else that is expected to increase health care costs,” said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.
The fee will be assessed on all “major medical” insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That’s because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.
The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.
It will phase out completely in 2017 _ unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits _ decides to extend it.
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COMPANIES PLAN MASSIVE LAYOFFS AS OBAMACARE BECOMES REALITY
By Kerry Picket - The Washington Times
NOVEMBER 11, 2012
Freedom Works has put together a list of companies that will be laying off employees as a result of President Barack Obama’s health care law:
Welch Allyn
Welch Allyn, a company that manufactures medical diagnostic equipment in central New York, announced in September that they would be laying off 275 employees, or roughly 10% of their workforce over the next three years. One of the major reasons discussed for the layoffs was a proactive response to the Medical Device Tax mandated by the new healthcare law.
Dana Holding Corp.
As recently as a week ago, a global auto parts manufacturing company in Ohio known as Dana Holding Corp., warned their employees of potential layoffs, citing “$24 million over the next six years in additional U.S. health care expenses”. After laying off several white collar staffers, company insiders have hinted at more to come. The company will have to cover the additional $24 million cost somehow, which will likely equate to numerous cuts in their current workforce of 25,500 worldwide.
Stryker
One of the biggest medical device manufacturers in the world, Stryker will close their facility in Orchard Park, New York, eliminating 96 jobs in December. Worse, they plan on countering the medical device tax in Obamacare by slashing 5% of their global workforce - an estimated 1,170 positions.
Boston Scientific
In October of 2009, Boston Scientific CEO Ray Elliott, warned that proposed taxes in the health care reform bill could “lead to significant job losses” for his company. Nearly two years later, Elliott announced that the company would be cutting anywhere between 1,200 and 1,400 jobs, while simultaneously shifting investments and workers overseas – to China.
Medtronic
In March of 2010, medical device maker Medtronic warned that Obamacare taxes could result in a reduction of precisely 1,000 jobs. That plan became reality when the company cut 500 positions over the summer, with another 500 set for the end of 2013.
Others
A short list of other companies facing future layoffs at the hands of Obamacare:
Smith & Nephew – 770 layoffs
Abbott Labs – 700 layoffs
Covidien – 595 layoffs
Kinetic Concepts – 427 layoffs
St. Jude Medical – 300 layoffs
Hill Rom – 200 layoffs
Beyond the complete elimination of a significant number of American jobs is another looming problem created by the health care law – a shift from full-time to part-time workers.
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SMALL EMPLOYERS WEIGH IMPACT OF PROVIDING HEALTH INSURANCE
By REED ABELSON and STEVEN GREENHOUSE | The New York Times
Like many franchisees, Robert U. Mayfield, who owns five Dairy Queens in and around Austin, Tex., is always eager to expand and — no surprise — has had his eyes on opening a sixth DQ. But he said concerns about the new federal health care law had persuaded him to hold off.
“I’m scared to death of it,” he said. “I’m one of the ones sitting on the sidelines to see what’s really going to happen.”
Mr. Mayfield, who has 99 employees, said he was worried he would face penalties of $40,000 or more because he did not offer health insurance to many of his full-time workers — generally defined as those working an average of 30 hours a week or more. Ever since the law was enacted in 2010, opponents have argued that employers who were forced to offer health insurance would lay off workers or shift more people to part-time status to compensate for the additional cost. Those claims have drawn considerable attention — and considerable anger in response — in recent weeks.
John H. Schnatter, the chief executive of Papa John’s, the pizza chain, said some franchisees were likely to reduce their employees’ hours to avoid having to provide coverage. And an unhappy Denny’s franchise owner in Florida warned that he would raise prices 5 percent as a “surcharge,” adding that disgruntled customers could offset that by reducing their tips.
Some health care experts said comments like those came from outliers and sometimes resulted from confusion about a highly complicated new law, the Patient Protection and Affordable Care Act. Many of the provisions do not go into effect until 2014. Federal officials are still tweaking the fine print, like defining exactly what constitutes a 30-hour workweek. Even so, restaurants and hotels are among the industries likely to be squeezed the hardest by the law because they are low-wage industries that do not offer coverage to most of their workers.
Most employers, even small businesses, already offer health insurance, and the federal law is not expected to have a significant impact on what they do over the next year or so. But businesses that rely heavily on low-income workers, many of whom do not make enough to afford their share of the cost of the insurance premiums, are being forced to rethink their business models.
Almost half of retail and hospitality employers do not offer coverage to all their full-time employees, according to a recent survey by Mercer, a benefits consultant.
“They’re all developing their strategies,” said Debra Gold, a senior partner with Mercer who advises several major retailers.
Many who oppose the requirement say the cost of providing health insurance could mean hiring fewer workers. “Any dollar that gets diverted, whether it’s through Obamacare or increased tax rates, puts franchisees one dollar further away from being able to expand their businesses,” said Don Fox, chief executive of Firehouse Subs, a fast-growing chain of 559 restaurants based in Jacksonville, Fla. At the 30 stores the corporation owns, only full-time managers are offered coverage. Mr. Fox is wrestling with whether to absorb the considerable cost of covering 100 more employees or pay the penalties — which would probably cost him less — but risk losing valued employees to competitors who choose to offer coverage.
Employee health coverage now averages nearly $6,000 for an individual plan. That is considerable for businesses like restaurants in which the majority of workers make $24,000 a year or less, according to research by the Kaiser Family Foundation. The foundation found that only 28 percent of companies that employ large numbers of low-income workers offer health benefits. “This is where the biggest set of hurdles is,” said Gary Claxton, an executive with Kaiser.
By 2014, businesses with 50 or more full-time employees will be expected to offer as yet undefined affordable coverage, based on an employee’s income. For employers that fail to offer such coverage, the law typically calls for a penalty of $2,000 a worker, excluding the first 30 employees. As evidence of how sensitive the issue is, Mr. Schnatter of Papa John’s took some heat for his initial statements about the possibility that franchisees would cut employees’ hours to avoid penalties or having to provide coverage. His comments, made during a public appearance, were reported by a local newspaper in Florida, The Naples News. After facing a storm of criticism, he wrote an opinion piece for The Huffington Post, in which he said he had only been speculating about the law’s potential impact on franchisees.
“Papa John’s, like most businesses, is still researching what the Affordable Care Act means to our operations,” he wrote. “Regardless of the conclusion of our analysis, we will honor this law, as we do all laws, and continue to offer 100 percent of Papa John’s corporate employees and workers in company-owned stores health insurance as we have since the company was founded in 1984.” Through a spokesman, Mr. Schnatter declined to comment further.
Some business owners and consultants warn that opting to have more part-time workers, perhaps by converting some full-timers to part-time status, may not be the answer because many workers might decide to find jobs elsewhere.
“When you explain this to your employee who really needs the income, maybe they’ll try to get a second job,” said Mr. Fox, Firehouse’s chief executive. “Maybe they’ll try to get another full-time job and maybe a job that provides health care. There will be an incentive for the best people to search for those jobs.”
Ms. Gold, of Mercer, said that when one employer analyzed what might happen if the company moved to more part-time workers, it realized that its losses in productivity would outweigh any savings on insurance costs.
Employers — often with a mixture of impatience and confusion — are waiting for the Obama administration to issue final rules on some of the law’s crucial aspects, like how the government determines whether an employee meets the 30-hour threshold, given the large numbers of seasonal and part-time workers with varying hours. Similarly, the precise level of coverage an employer must provide has not yet been clearly defined.
“If you can tell me what Obamacare is, then I can tell you how much it’s going to affect me,” said Bob Bellagamba, who runs Concorde Limousine, a service with 75 employees, in Freehold, N.J. “All the reading I’ve done on this, and there are so many things that are not determined. There is no clarity to the guidelines.”
In contrast to the resistance in the hospitality industry, some small business owners say the health care law has made coverage more affordable.
Lisa Goodbee, who runs a civil engineering firm in a Denver suburb, decided to offer health coverage to her 15 employees this year for the first time in the firm’s 20-year history. She said the Affordable Care Act was a major reason. In past years, she said, the quotes she got from health insurers were “ridiculous”; this year, she said, they were far more reasonable.
“We’re an engineering company and we need to hire the best of the best,” she said, acknowledging that not offering health insurance made that difficult.
Ron Nelsen, who operates Pioneer Overhead Door, a Las Vegas business with five employees that installs garage doors, says he has already received the tax credits the law makes available to businesses with fewer than 25 employees that offer coverage.
“They’re in the bank,” he said.
Mr. Nelsen dismissed the notion that employers like him weigh the cost of providing health insurance in deciding whether to hire someone new. “You know what makes jobs? Consumer demand,” he said. “I hire people when demand necessitates it.”
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THE OBAMACARE SURCHARGE
Kurt Nimmo
Infowars.com
November 16, 2012
Business owners are talking about the Obamacare surcharge – an additional charge added to a restaurant or retail store bill to cover the cost of mandatory participation in Obama’s health care scheme that will be fully implemented in January 2014.
Mertz said adding the surcharge and cutting hours is “the only alternative. I’ve got to pass on the cost to the customer.” The business owner said he will hold a meeting in December and tell employees “that because of Obamacare, we are going to be cutting front-of-the-house employees to under 30 hours, effective immediately.”
Liberals went ballistic on Papa John’s Pizza CEO John Schnatter earlier this week when he said the pizza business would reduce the hours employees work to offset the cost of Obamacare.
On the Monday night edition of The Ed Show on MSNBC, host Ed Schultz lambasted the Papa John’s CEO. “Schnatter lives in a 40,000-square-foot mansion with a 22-car garage, and this guy doesn’t want to give pizza delivery workers health insurance?” Schultz said.
Tommy Christopher, writing for the Mediaite.com website, said Schnatter’s wealth is “ostentatious” and accused him of “cheaptitude” and “begrudging his employees a dime’s worth of health insurance” while he lives in a “ridiculous estate,” writes Randy Hall.
“The sad part of all this is that while businesses will struggle to stay afloat in the face of higher taxes and health care insurance, the din of liberals’ shouts criticizing them for that will get louder as we continue to sink to the bottom of the Obama economy,” Hall points out.
The National Federation of Independent Businesses (NFIB) told CNSNews that other retailers may soon adopt the idea of making customers and employees pay for Obamacare.
“Clearly, you are seeing what real people are doing with costly situations. This is no different than the airline carriers adding a bag fee or noting the TSA extra expense,” NFIB spokesman Kevan Chapman told CNSNews.
“I suspect this Denny’s owner wants his customers to understand why their costs are going up and what they must do to handle the cost increase.”
“Frankly, they are just being honest with the customer. It’s possible you may see more of this as employers begin major preparation for the law.”
Employers state Obamacare imposed at gunpoint will increase business costs and impoverish workers. A Towers Watson survey of employers found that 90 percent said they believe Obamacare “will increase their organization’s health care benefits costs.” A 88 percent said they will pass the increased cost on to employees by requiring them to contribute more to company health plans, according to the Heartland Institute.
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OBAMACARE TO BANKRUPT BUSINESSES AND FAMILIES
Melissa Melton
Infowars.com
November 14, 2012
A post-election poll of more than a thousand Americans showed that support for repealing the Affordable Care Act, aka Obamacare, dropped to an all-time low. Although President Obama’s health care initiative will include 20 new or raised taxes, forty-nine percent of respondents still favored it, even as businesses are already planning massive layoffs and price hikes ahead of its implementation.
Freedom Works has compiled a list of companies planning to lay off workers and outsource jobs because of Obamacare. Boston Scientific will be doing both, as CEO Ray Elliott has announced the company will cut up to 1,400 employees and shift workers and investments to China. In order to cover the $24 million in estimated additional Obamacare expenses, auto parts manufacturer Dana Holding Corp. has let go of several higher ups and hinted at more layoffs coming to its 25,000+ workforce. Medical device manufacturers Medtronic and Stryker have both cut at least a thousand jobs already.
Last Year, Congressional Budget Office Director Douglas Elmendorf testified before the House Budget Committee that the Affordable Care Act would cost this country 800,000 jobs.
Unfortunately, layoffs won’t be the only consequence of Obamacare. Consumers are about to foot the bill for the president’s health care reform in a lot more ways than one.
Business analysts are forecasting that many companies will turn to price hikes to offset the financial burden of complying with Obamacare. Papa John’s CEO John Schnatter claims the health care law will cost his company $5 to $8 billion annually; in an attempt to neutralize this, Schnatter has announced he will raise product prices. He isn’t the only one. An NY Applebee’s owner said Obamacare will cost the company millions, forcing them to freeze hiring and stop building new restaurants. Waivers aren’t even stopping some companies from instituting price increases. Even though McDonalds has been granted an Obamacare waiver, the company’s Chief Financial OfficerPeter Bensen announced in July the company would see up to $420 million in new health care costs, ultimately leading to higher menu prices.
Regardless of what restaurants a person chooses to patron, the bigger picture here is an expensive trend that will likely spread across our nation, from business to business and wallet to wallet.
While we are all paying higher prices for products, employees will also shoulder the financial burden of health care premium increases or a smaller paycheck due to their hours being cut — or both.
A National Business Group survey found that employers will raise health care rates an average of at least seven percent due to Obamacare, but many are being forced to hike rates much higher.Universities across North Carolina have cited Obamacare as the reason for “substantial” student health care premium hikes; some students in that state will now pay double for insurance. Walmart recently raised health care premiums, in some cases 36 percent, leaving many of its employees unable to afford any health insurance coverage at all.
The Affordable Care Act also changes the definition of what a full-time employee is (the massive piece of legislation requires 18 pages just to define it) to anyone who works 30 hours a week. As the majority of Walmart employees are not full-time, the company may cut worker hours even further to avoid full-time designation. Darden Restaurants, owners of national chain restarurants Olive Garden, Red Lobster and LongHorn Steakhouse among others, is “experimenting with limiting the hours of some of its workers to avoid health care requirements”. National grocery store chainKroger has announced it will be doing the same.
As if all of this financial burden sliding downhill isn’t enough, a recent poll of more than 13,000 doctors found that a whopping 84 percent feel America’s medical profession is in decline, and six out of every 10 doctors have a negative view of America’s health care future following Obamacare. More than 60 percent said they’d retire now if given the option, up 15 percent from before the law passed. The U.S. already faced a chronic doctor shortage prior to Obamacare. The New York Timesannounced this shortage is “likely to worsen” under the president’s health care law. The Association of Medical Colleges is projecting a 10-15 percent reduction in physicians by 2015 alone.
With fewer jobs, higher prices, and a smaller pool of doctors to go around, it remains unclear exactly how Obamacare will make health care more accessible or “affordable.”
As Infowars has previously reported, Obamacare was largely written by insurance companies, not health care providers. The House Energy and Commerce Committee’s investigation into the mandate’s crafting found that numerous backroom deals took place between special interest groups and the White House. It makes no logical sense that profit-hungry health insurance companies worth billions and related special interest groups would help craft a legislation behind closed doors that would actually save the average American money.
Nomi Prins points out the real danger of Obamacare is a health insurance company takeover of our health care system:
“And if you’re keeping score – billions of dollars are flowing from insurance companies – NOT to reduce premiums to patients and NOT to reimburse doctors and NOT to enhance the quality of care, but to simply expand nationally and globally… And if insurance companies can manage doctors directly, they can control not just costs, but treatment – our treatment. It’s not an imaginary government takeover anyone should fear; but a very real, here-and-now insurance company takeover, to which no one in Washington is paying attention.”
By 2014, every American will be forced to get health insurance or pay the Obamacare tax our Supreme Court deemed was constitutional for the government to charge us.
This is only the beginning.
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KARL DENNINGER: FIX HEALTH CARE OR GOVERNMENT COLLAPSES
Greg Hunter’s USAWatchdog.com
Karl Denninger of Market-Ticker.Org says both Romney and Obama are lying about health care reform. Denninger says drastic changes are coming no matter what, “. . . because the amount of money the federal government spends doubles every seven years . . . this is mathematically impossible.” Denninger says, “We either fix this or the government collapses along with society.” Denninger contends, “You have to kill the monopoly protections that the medical system has that prevent the free market from working.”
Think we can fix the economy of health care with Federal Reserve money printing or QE? Forget it! Denninger warns, “It is a huge tax increase. . . . It acts by devaluing your purchasing power, and it falls disproportionately on the poor and lower middle class.” Join Greg Hunter as he goes One-on-One withKarl Denninger of Market-Ticker.org.
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STUDY FORESEES SHORTAGE OF PRIMARY-CARE DOCTORS
Reasons include medical students pursuing specialties, older physicians retiring
By Denise Mann
HealthDay Reporter
December 4, 2012
Fewer medical students are choosing careers in primary care, and instead are opting to become specialists, a new study found.
The study, which appears in the medical-education-themed Dec. 5 issue of the Journal of the American Medical Association, fuels concerns that there will be a shortage of primary-care doctors available when patients need them most.
Researchers surveyed internal medicine residents about their career plans. Of nearly 17,000 third-year residents, only 21.5 percent were planning on a career as an internal medicine doctor. This included about 40 percent of students in a primary-care residency program and about 20 percent of those in a categorical residency program. These are two different tracks available within an internal medicine residency program.
Women were more likely to choose internal medicine than men, and U.S. medical school graduates were slightly more likely to opt for a career in internal medicine than international graduates, the study showed.
“This is worrisome,” said study author Dr. Colin West, an internist at the Mayo Clinic in Rochester, Minn. “In the next decade, we will be 50,000 primary-care physicians short for the needs of the country.”
Compounding the likely shortage is health care reform under the Affordable Care Act, which is expected to flood the system with new patients in the coming years.
“We will need even more primary-care physicians as the foundation of care and we are not generating enough,” West said. And, in addition to fewer residents choosing internal medicine and more patients having access to health care, many providers are getting older and heading to retirement.
“The difficulty that many people have already experienced with access to their regular physician will get significantly worse,” West said. “Access to primary care is threatened by these numbers if we don’t do something about it.”
Many ways exist to help sweeten the pot for primary-care residents, he said. For starters, medical students need to be enticed to choose primary-care careers. This may involve getting rid of some of the non-care-related demands of the job, such as paperwork and the routine time spent haggling with insurers about reimbursement, he added.
Dr. Cynthia Smith, senior medical associate for content development at the American College of Physicians, agreed that the career choice of primary care must be made more appealing.
“We haven’t done enough yet to encourage more folks to go into primary care,” Smith said. “The elephant in the room is reimbursement. Today’s primary-care physicians spend 60 percent of their time doing activities that are not currently reimbursed.” This includes following up with patients and other specialists and performing clerical duties.
As far as doctors’ training goes, “we have to enhance their educational experience outside of the hospital to give them that type of experience,” Smith said.
Study author West noted that some primary-care residents may choose specialty careers because they think they’re more lucrative. Hot career choices are cardiology, gastroenterology and radiology.
Dr. Martha Grayson, senior associate dean of medical education and a professor of clinical medicine at Albert Einstein College of Medicine in New York City, said debt forgiveness may help boost interest in primary care as many medical students have significant debt.
Another issue is lifestyle. Many medical students are choosing careers with set boundaries on their time, such as the hospitalist track. These are doctors who care for you while you are hospitalized.
“We can think about reduction of expected work hours,” Grayson said. “We need to send a clearer message on the value of primary care to medical students. In my day, almost everybody stayed in primary care after completing a primary-care internal medicine residency.”
But times have changed.
“We need to be concerned because the Affordable Care Act will allow more and more people access to health insurance and health care and that is wonderful thing, but it will exacerbate our overall shortages,” she said.
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DOCTOR SHORTAGE LIKELY TO WORSEN WITH HEALTH CARE LAW
By ANNIE LOWREY and ROBERT PEAR | The New York Times
July 28, 2012
RIVERSIDE, Calif. — In the Inland Empire, an economically depressed region in Southern California, President Obama’s health care law is expected to extend insurance coverage to more than 300,000 people by 2014. But coverage will not necessarily translate into care: Local health experts doubt there will be enough doctors to meet the area’s needs. There are not enough now.
Other places around the country, including the Mississippi Delta, Detroit and suburban Phoenix, face similar problems. The Association of American Medical Colleges estimates that in 2015 the country will have 62,900 fewer doctors than needed. And that number will more than double by 2025, as the expansion of insurance coverage and the aging of baby boomers drive up demand for care. Even without the health care law, the shortfall of doctors in 2025 would still exceed 100,000.
Health experts, including many who support the law, say there is little that the government or the medical profession will be able to do to close the gap by 2014, when the law begins extending coverage to about 30 million Americans. It typically takes a decade to train a doctor.
“We have a shortage of every kind of doctor, except for plastic surgeons and dermatologists,” said Dr. G. Richard Olds, the dean of the new medical school at the University of California, Riverside, founded in part to address the region’s doctor shortage. “We’ll have a 5,000-physician shortage in 10 years, no matter what anybody does.”
Experts describe a doctor shortage as an “invisible problem.” Patients still get care, but the process is often slow and difficult. In Riverside, it has left residents driving long distances to doctors, languishing on waiting lists, overusing emergency rooms and even forgoing care.
“It results in delayed care and higher levels of acuity,” said Dustin Corcoran, the chief executive of the California Medical Association, which represents 35,000 physicians. People “access the health care system through the emergency department, rather than establishing a relationship with a primary care physician who might keep them from getting sicker.”
In the Inland Empire, encompassing the counties of Riverside and San Bernardino, the shortage of doctors is already severe. The population of Riverside County swelled 42 percent in the 2000s, gaining more than 644,000 people. It has continued to grow despite the collapse of one of the country’s biggest property bubbles and a jobless rate of 11.8 percent in the Riverside-San Bernardino-Ontario metro area.
But the growth in the number of physicians has lagged, in no small part because the area has trouble attracting doctors, who might make more money and prefer living in nearby Orange County or Los Angeles.
A government council has recommended that a given region have 60 to 80 primary care doctors per 100,000 residents, and 85 to 105 specialists. The Inland Empire has about 40 primary care doctors and 70 specialists per 100,000 residents — the worst shortage in California, in both cases.
Moreover, across the country, fewer than half of primary care clinicians were accepting new Medicaid patients as of 2008, making it hard for the poor to find care even when they are eligible for Medicaid. The expansion of Medicaid accounts for more than one-third of the overall growth in coverage in President Obama’s health care law.
Providers say they are bracing for the surge of the newly insured into an already strained system.
Temetry Lindsey, the chief executive of Inland Behavioral & Health Services, which provides medical care to about 12,000 area residents, many of them low income, said she was speeding patient-processing systems, packing doctors’ schedules tighter and seeking to hire more physicians.
“We know we are going to be overrun at some point,” Ms. Lindsey said, estimating that the clinics would see new demand from 10,000 to 25,000 residents by 2014. She added that hiring new doctors had proved a struggle, in part because of the “stigma” of working in this part of California.
Across the country, a factor increasing demand, along with expansion of coverage in the law and simple population growth, is the aging of the baby boom generation. Medicare officials predict that enrollment will surge to 73.2 million in 2025, up 44 percent from 50.7 million this year.
“Older Americans require significantly more health care,” said Dr. Darrell G. Kirch, the president of the Association of American Medical Colleges. “Older individuals are more likely to have multiple chronic conditions, requiring more intensive, coordinated care.”
The pool of doctors has not kept pace, and will not, health experts said. Medical school enrollment is increasing, but not as fast as the population. The number of training positions for medical school graduates is lagging. Younger doctors are on average working fewer hours than their predecessors. And about a third of the country’s doctors are 55 or older, and nearing retirement.
Physician compensation is also an issue. The proportion of medical students choosing to enter primary care has declined in the past 15 years, as average earnings for primary care doctors and specialists, like orthopedic surgeons and radiologists, have diverged. A study by the Medical Group Management Association found that in 2010, primary care doctors made about $200,000 a year. Specialists often made twice as much.
The Obama administration has sought to ease the shortage. The health care law increases Medicaid’s primary care payment rates in 2013 and 2014. It also includes money to train new primary care doctors, reward them for working in underserved communities and strengthen community health centers.
But the provisions within the law are expected to increase the number of primary care doctors by perhaps 3,000 in the coming decade. Communities around the country need about 45,000.
Many health experts in California said that while they welcomed the expansion of coverage, they expected that the state simply would not be ready for the new demand. “It’s going to be necessary to use the resources that we have smarter” in light of the doctor shortages, said Dr. Mark D. Smith, who heads the California HealthCare Foundation, a nonprofit group.
Dr. Smith said building more walk-in clinics, allowing nurses to provide more care and encouraging doctors to work in teams would all be part of the answer. Mr. Corcoran of the California Medical Association also said the state would need to stop cutting Medicaid payment rates; instead, it needed to increase them to make seeing those patients economically feasible for doctors.
More doctors might be part of the answer as well. The U.C. Riverside medical school is hoping to enroll its first students in August 2013, and is planning a number of policies to encourage its graduates to stay in the area and practice primary care.
But Dr. Olds said changing how doctors provided care would be more important than minting new doctors. “I’m only adding 22 new students to this equation,” he said. “That’s not enough to put a dent in a 5,000-doctor shortage.”
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HOSPITAL IN BROOKLYN PLANS TO DECLARE BANKRUPTCY
By ANEMONA HARTOCOLLIS | The New York Times
A financially troubled hospital serving a largely African-American and Caribbean niche of central Brooklyn is planning to declare bankruptcy this week, hospital officials said on Sunday, raising concerns that New York State may force it to close or merge with another institution.
The hospital, Interfaith Medical Center, serving Bedford-Stuyvesant and Crown Heights, has been in and out of financial trouble for decades, with its survival dependent on infusions of state aid. In difficult economic times, however, the Cuomo administration has not indicated a willingness to continue bailing out failing hospitals.
James Introne, Gov. Andrew M. Cuomo’s deputy secretary for health, when asked on Friday about the possibility of an Interfaith bankruptcy filing, said he was not aware of it, but he said, “That’s their decision, not ours.”
A year ago, a Brooklyn work group of the governor’s Medicaid Redesign Team, which was created to find savings in the hospital and health industry, recommended that Interfaith merge with two other Brooklyn hospitals, Wyckoff Heights Medical Center and Brooklyn Hospital. It suggested that Brooklyn Hospital, judged to be the most financially stable of the three, should take the lead.
Interfaith officials said on Sunday that they had no choice but to file for Chapter 11 bankruptcy reorganization, given the hospital’s precarious financial situation.
But they said the hospital had a better chance of surviving in the long term if the state would guarantee it about $20 million in what is known as debtor-in-possession financing to underwrite its operating costs during the reorganization.
The officials said the state Dormitory Authority, which holds $130 million of the hospital’s debt, had refused to provide the financing unless Interfaith would first sign an agreement to merge with Brooklyn Hospital.
But the Interfaith officials said that granting Brooklyn Hospital control without the state’s first promising the financing needed to keep the hospital going would be tantamount to a covert plan to close the hospital in a year and a half or so.
“That is turning over the keys to Brooklyn and we have no further say in the future of this hospital and, more importantly, whether it will stay open or not and whether it will continue to serve the community,” said Nathan M. Barotz, the chairman of Interfaith’s board of trustees.
Mr. Introne denied that that was the case. “My understanding is that Chapter 11 has to be part of this process given the liabilities associated with the organization,” he said. “But I’ve also been advised that it can be constructed in a way that would allow a successor organization that has been previously planned.”
The hospital, at 1545 Atlantic Avenue, is so poor that it cannot afford malpractice insurance. In August, hospital administrators said that it was running out of cash and that they feared they would soon be unable to meet its payroll.
Wyckoff hospital dropped out of the merger plan this year, with trustees saying they feared that the merger would lead to a severe shrinking or a closing of the hospital. Wyckoff’s new chief executive, Ramon Rodriguez, had served on the Brooklyn work group that recommended the three-way merger, but he later turned against it.
In letters to state officials, Mr. Barotz has said a 2010 cut in Medicaid rates cost Interfaith 40 percent of its inpatient revenue and precipitated its current crisis.
The hospital has about 11,000 inpatient visits a year, and 250,000 outpatient visits, according to the letter. It has 1,516 full-time employees, many of whom live in central Brooklyn.
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DRUG SHORTAGES PERSIST IN U.S., HARMING CARE
By KATIE THOMAS | The New York Times
Paul Davis, the chief of a rural ambulance squad in southern Ohio, was down to his last vial of morphine earlier this fall when a woman with a broken leg needed a ride to the hospital.
The trip was 30 minutes, and the patient was in pain. But because of a nationwide shortage, his morphine supply had dwindled from four doses to just one, presenting Mr. Davis with a stark quandary. Should he treat the woman, who was clearly suffering? Or should he save it for a patient who might need it more?
In the end, he opted not to give her the morphine, a decision that haunts him still. “I just feel like I’m not doing my job,” said Mr. Davis, who is chief of the rescue squad in Vernon, Ohio. He has since refilled his supply. “I shouldn’t have to make those kinds of decisions.”
From rural ambulance squads to prestigious hospitals, health care workers are struggling to keep vital medicines in stock because of a drug shortage crisis that is proving to be stubbornly difficult to fix. Rationing is just one example of the extraordinary lengths being taken to address the shortage, which health care workers say has ceased to be a temporary emergency and is now a fact of life. In desperation, they are resorting to treating patients with less effective alternative medicines and using expired drugs. The Cleveland Clinic has hired a pharmacist whose only job is to track down hard-to-find drugs.
Caused largely by an array of manufacturing problems, the shortage has prompted Congressional hearings, a presidential order and pledges by generic drug makers to communicate better with federal regulators.
The problem peaked in 2011, when a record 251 drugs were declared in short supply. This year, slightly more than 100 were placed on the list, and workers say the battle to keep pharmacy shelves stocked continues unabated. The list of hard-to-find medicines ranges from basic drugs like the heart medicine nitroglycerin to a lidocaine injection, which is used to numb tissue before surgery.
A deadly meningitis outbreak caused by contamination at a large drug producer could worsen the situation, federal officials have warned. The Food and Drug Administration said that shortages of six drugs — medicines used during surgery and to treat conditions like congestive heart failure — could get worse after a big compounding pharmacy closed over concerns about drug safety. The pharmacy, Ameridose, shares some management with the New England Compounding Center, which is at the center of a meningitis outbreak that has claimed 33 lives.
“When you can’t treat basic things — cardiac arrest, pain management, seizures — you’re in trouble,” said Dr. Carol Cunningham, the state medical director for the Ohio Department of Public Safety’s emergency services division. “When you only have five tools in your toolbox and three of them are gone, what do you do?”
Dr. Margaret A. Hamburg, the F.D.A. commissioner, said in an interview this week that she was “guardedly optimistic” that the shortage crisis was abating. “I think there’s been an enormous amount of progress,” she said. “We’re seeing real change in the number of shortages that we’re able to recognize early.” More than 150 new shortages have been prevented this year, according to the agency.
But Erin Fox, who tracks supply levels for a broader range of drugs at the University of Utah, said once a drug became scarce, it tended to stay scarce. The university’s Drug Information Service wasactively tracking 282 hard-to-find products by the end of the third quarter of this year, a record.
“The shortages we have aren’t going away — they’re not resolving,” she said. “But the good news is we’re not piling more shortages on top.”
In 2011, prompted by emotional pleas by cancer patients and others who said the drug shortage was threatening lives, President Obama issued an executive order requiring drug makers to notify the F.D.A. when a shortage appeared imminent. The agency also loosened some restrictions on importing drugs, and sped up approvals by other manufacturers to make certain medicines.
A law passed this summer contains several provisions aimed at improving the situation, including expediting approval of new generic medicines and requiring the agency’s enforcement unit to better coordinate with its drug-shortage officials before it takes action against a manufacturer.
Ralph G. Neas, the chief executive of the Generic Pharmaceutical Association, said fixing the drug shortage was complex and would take time, but was a top priority. “One shortage is one shortage too many,” he said. “One patient not getting a critical drug is one patient too many.”
Federal drug officials trace much of the drug shortage crisis to delays at plants that make sterile injectable drugs, which account for about 80 percent of the scarce medicines. Nearly a third of the industry’s manufacturing capacity is not running because of plant closings or shutdowns to fix serious quality issues. Other shortages have been caused by supply disruptions of the raw ingredients used to make the drugs, or by manufacturers exiting the market.
Some people have accused the F.D.A. of causing the shortages, saying overzealous enforcement and poor communication have led plants to close needlessly or to slow production. Others have cited economic factors, like market pressures and reimbursement policies that have set prices so low that some companies have stopped making certain drugs. Earlier this week, several Democratic members of Congress asked the Government Accountability Office to investigate whether the practices of so-called group purchasing organizations, which buy drugs on behalf of hospitals, was contributing to the shortage.
Regardless of the cause, the drug shortage has forced the F.D.A. to make some tough choices, including allowing manufacturers to sell drugs that, if it were not for the crisis, most likely would have been recalled. Last year, for example, the agency allowed the manufacturer American Regent to sell a drug used during chemotherapy that was found to contain glass particles. Doctors and nurses were instructed to filter the drug, sodium thiosulfate, before administering it to patients.
“If there wasn’t a shortage, we would never allow a company to continue marketing” in such cases, Dr. Sandra Kweder, deputy director of the F.D.A.’s office of new drugs, said. But “patients need it.”
Dr. Hamburg said drug manufacturers had invested significantly in improving their facilities, upgrades that will ultimately help ease the crisis but that in the near term are making some shortages difficult to resolve. “It’s not going to happen overnight, but we’re in the midst of a period of really, very significant change that offers great promise for the future,” she said.
Patients like Jennifer Lacognata, a mother of two in suburban Florida, say they cannot afford to wait. She has debilitating night blindness, skin lesions and other health problems because she cannot absorb vitamin A through her diet, a rare side effect of weight-loss surgery she had years ago. In 2011, her doctor prescribed Aquasol A, a liquid form of the vitamin, to be injected into her shoulder.
But Hospira has temporarily stopped selling Aquasol A after it decided to move manufacturing of the product from an outside company to one of its plants. The company recently decided to abort the plan, citing complex technical challenges, and now has a deal with another company to begin making the vitamin.
Ms. Lacognata sued Hospira unsuccessfully to try to compel the company to make it again.
A company spokeswoman said Hospira recognized the critical need for Aquasol A and was “working diligently” to return it to the market, but declined to provide an estimate of when.
Given that the delays have stretched for more than a year, Ms. Lacognata said she was not holding her breath. “If they don’t get their act together and do this, they’re not going to suffer,” she said. “They’re still going to be making millions of dollars. It’s the little guy in the end who ends up with nothing.”
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THE RATIONING BEGINS: STATES LIMITING DRUG PRESCRIPTIONS FOR MEDICAID PATIENTS
By Melanie Hunter
(CNSNews.com) – Sixteen states have set a limit on the number of prescription drugs they will cover for Medicaid patients, according to Kaiser Health News.
Seven of those states, according to Kaiser Health News, have enacted or tightened those limits in just the last two years.
Medicaid is a federal program that is carried out in partnership with state governments. It forms an important element of President Barack Obama’s health-care plan because under the Patient Protection and Affordable Care Act–AKA Obamcare–a larger number of people will be covered by Medicaid, as the income cap is raised for the program.
With both the expanded Medicaid program and the federal subsidy for health-care premiums that will be available to people earning up to 400 percent of the poverty level, a larger percentage of the population will be wholly or partially dependent on the government for their health care under Obamacare than are now.
In Alabama, Medicaid patients are now limited to one brand-name drug, and HIV and psychiatric drugs are excluded.
Illinois has limited Medicaid patients to just four prescription drugs as a cost-cutting move, and patients who need more than four must get permission from the state.
Speaking on C-SPAN’s Washington Journal on Monday, Phil Galewitz, staff writer for Kaiser Health News, said the move “only hurts a limited number of patients.”
“Drugs make up a fair amount of costs for Medicaid. A lot of states have said a lot of drugs are available in generics where they cost less, so they see this sort of another move to push patients to take generics instead of brand,” Galewitz said.
“It only hurts a limited number of patients, ‘cause obviously it hurts patients who are taking multiple brand name drugs in the case of Alabama, Illinois. Some of the states are putting the limits on all drugs. It’s another place to cut. It doesn’t hurt everybody, but it could hurt some,” he added.
Galewitz said the move also puts doctors and patients in a “difficult position.”
“Some doctors I talked to would work with patients with asthma and diabetes, and sometimes it’s tricky to get the right drugs and the right dosage to figure out how to control some of this disease, and just when they get it right, now the state is telling them that, ‘Hey, you’re not going to get all this coverage. You may have to switch to a generic or find another way,’” he said.
Arkansas, California, Kansas, Kentucky, Louisiana, Maine, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Utah and West Virginia have all placed caps on the number of prescription drugs Medicaid patients can get.
“Some people say it’s a matter of you know states are throwing things up against the wall to see what might work, so states have tried, they’ve also tried formularies where they’ll pick certain brand name drugs over other drugs. So states try a whole lot of different things. They’re trying different ways of paying providers to try to maybe slow the costs down,” Galewitz said.
“So it seems like Medicaid’s sort of been one big experiment over the last number of years for states to try to control costs, and it’s an ongoing battle, and I think drugs is just now one of the … latest issues. And it’s a relatively recent thing, only in the last 10 years have we really seen states put these limits on monthly drugs,” he added.
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IRS AIMS TO CLARIFY INVESTMENT INCOME TAX UNDER HEALTHCARE LAW
WASHINGTON (Reuters) – The Internal Revenue Service has released new rules for investment income taxes on capital gains and dividends earned by high-income individuals that passed Congress as part of the 2010 healthcare reform law.
The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income.
The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.
The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.
The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.
Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.
Both sets of rules will be published on Wednesday in the Federal Register.
The proposed rules are effective starting January 1. Before making the rules final, the IRS will take public comments and hold hearings in April.
Together, the two taxes are estimated to raise $317.7 billion over 10 years, according to a Joint Committee on Taxation analysis released in June.
To illustrate when the tax applies, the IRS offered an example of a taxpayer filing as a single individual who makes $180,000 in wage income plus $90,000 from investment income. The individual’s modified adjusted gross income is $270,000.
The 3.8 percent tax applies to the $70,000, and the individual would pay $2,660 in surtaxes, the IRS said.
The IRS plans to release a new form for taxpayers to fill out for this tax when filing 2013 returns.
The new rules leave some questions unanswered, tax experts said. It was unclear how rental income will be treated under the new rules, said Michael Grace, managing director at Milbank, Tweed, Hadley & McCloy LLP law firm in Washington.
“The proposed regulations surely will increase tax compliance burdens for individuals,” said Grace, a former IRS official. “There’s clearly some drafting left to be done.”
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TAX PENALTY TO HIT NEARLY 6 MILLION UNINSURED PEOPLE
By RICARDO ALONSO-ZALDIVAR, Associated Press
WASHINGTON (AP) — Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama’s health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.
The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.
The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.
That’s still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.
And the budget office analysis found that nearly 80 percent of those who’ll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.
Average penalty: about $1,200 in 2016.
“The bad news and broken promises from Obamacare just keep piling up,” said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.
Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.
A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.
“This (analysis) doesn’t change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it,” said Erin Shields Britt of the Health and Human Services Department. “We’re no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it.”
The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.
The Supreme Court upheld Obama’s law as constitutional in a 5-4 decision this summer, finding that the insurance mandate and the tax penalty enforcing it fall within the power of Congress to impose taxes. The penalty will be collected by the IRS, just like taxes.
The budget office said the penalty will raise $6.9 billion in 2016.
The new law will also provide government aid to help middle-class and low-income households afford coverage, the financial carrot that balances out the penalty.
Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.
The Supreme Court also allowed individual states to opt out of a major Medicaid expansion under the law. The Obama administration says it will exempt low-income people in states that opt out from having to comply with the insurance requirement.
Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.
However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.
It’s also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.
Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama’s law is a “costly disaster.”
“Even more of the middle-class families who President Obama promised would see no tax increase will in fact see a massive tax increase thanks to Obamacare,” she said.
Romney says insurance mandates should be up to each state. The approach seems to have worked well in Massachusetts, with virtually all residents covered and dwindling numbers opting to pay the penalty instead.
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NEW OBAMACARE TAX FORM MANDATES AMERICANS REPORT PERSONAL HEALTH ID INFO TO IRS
Here’s why the IRS will require Americans to disclose their personal health ID information starting in 2014.
When Obamacare’s individual mandate takes effect in 2014, all Americans who file income tax returns must complete an additional IRS tax form. The new form will require disclosure of a taxpayer’s personal identifying health information in order to determine compliance with the Affordable Care Act’s individual mandate.
As confirmed by IRS testimony to the tax-writing House Committee on Ways and Means, “taxpayers will file their tax returns reporting their health insurance coverage, and/or making a payment”.
So why will the Obama IRS require your personal identifying health information?
Simply put, there is no way for the IRS to enforce Obamacare’s individual mandate without such an invasive reporting scheme. Every January, health insurance companies across America will send out tax documents to each insured individual. This tax document—a copy of which will be furnished to the IRS—must contain sufficient information for taxpayers to prove that they purchased qualifying health insurance under Obamacare.
This new tax information document must, at a minimum, contain: the name and health insurance identification number of the taxpayer; the name and tax identification number of the health insurance company; the number of months the taxpayer was covered by this insurance plan; and whether or not the plan was purchased in one of Obamacare’s “exchanges.”
This will involve millions of new tax documents landing in mailboxes across America every January, along with the usual raft of W-2s, 1099s, and 1098s. At tax time, the 140 million families who file a tax return will have to get acquainted with a brand new tax filing form. Six million of these families will end up paying Obamacare’s individual mandate non-compliance tax penalty.
As a service to the public, Americans for Tax Reform has released a projected version of this tax form to help families and tax specialists prepare for this additional filing requirement. Taxpayers may view the projected IRS form at www.ObamacareTaxForm.com. On the form, lines 3-4 show where taxpayers will disclose their personal identifying health information.
Depending on family size, the tax penalty will range from $695 to $2,085 (plus inflation). For many families, a higher penalty of 2.5 percent of adjusted gross income (AGI) will apply.
Make no mistake about it — this is a tax. The Obamacare statute places this payment right in the Internal Revenue Code. It’s money paid from your family to the government — and not just the government, but the IRS. It’s reported and paid on your 1040. If you don’t pay it, the IRS will assess further penalties and interest until you do, and confiscate future tax refunds for repayment. Correspondence audits and field visits will be used by the IRS to ensure payment of this tax penalty.
According to the non-partisan Congressional Budget Office (CBO), six million families will have to pay this Obamacare individual mandate surtax. Most of these will make less than $100,000 per year, putting them solidly in the middle class. When combined with the 19 other new or higher taxes in Obamacare, the individual mandate non-compliance surtax makes a mockery of President Obama’s “firm pledge” in 2008 not to raise “any form of tax” on any family making less than $250,000 per year.
While six million families will have to pay this tax, everyone who files a tax return will have to file the form disclosing whether or not they obtained “qualifying coverage.” According to IRS data, roughly 140 million tax returns are filed every year. Nearly all of these will have to include the Obamacare individual mandate compliance form, adding yet another layer of complexity to American families’ favorite April pastime: tax preparation.
How will this qualifying insurance coverage be documented? Families can look forward to another tax reporting form in the mail every January, this time from their health insurance company. All health insurance companies will issue a new tax form reporting health insurance coverage for you. Just like your W-2 or your mortgage interest statement, one copy will go to you, and one to the IRS. This form will report your personal health information, including your health ID number, the ID number of your health insurance company, and the number of months that you were covered by this plan. If you try to report anything different than what is on the form, the IRS will have a copy and know it, and an audit (or at least strongly worded correspondence) will follow.
Will anyone be exempt from this mandate-and-tax regime? Yes, though you might not like the answer.
Exemptions in the law include but are not limited to: those on welfare or otherwise not making enough money to file a tax return; criminals living behind bars; those not in the country legally; and those whose religion was deemed by HHS to have a sufficient theological objection to health insurance (no word yet on whether HHS will start hiring unionized theologian-bureaucrats). If you’re not in one of these categories, chances are you will be forced to document to the IRS whether you bought government-approved health insurance, and pay an extra tax if you didn’t.
All citizens should share this information on Facebook and Twitter, and ask themselves and their neighbors whether this is the world they and their families want to live in.
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OBAMACARE – THE TAX MAN COMETH
Robert S. Dotson, M.D.
“I think you should send us the biggest transport plane you have, and take this thing to the Arctic or somewhere and drop it where it will never thaw.” – Lieutenant Dave in the Sci-Fi Classic, “The Blob”
With the confusion accompanying the passage of the Patient Protection and Affordable Care Act (PPACA, aka Obamacare) and its on-going implementation, it has not been easy to discern its real meaning for those covered by it. Presidential and Vice-Presidential candidates alike have kicked the disinformation machines into high gear. In what follows I will try to identify some of its ramifications.
The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) have continued to periodically release estimates of the costs of PPACA. Their most recent cost estimates for current provisions in the legislation (July 2012) indicate that the insurance coverage provisions of Obamacare will have a net cost of $1.168 trillion from 2012-2022. Government projections usually underestimate costs. We were told that the war in Iraq would be essentially self-financing and that the banks only needed a few hundred billion to protect them from collapse. Many thousands of billions of dollars have been shoveled at both to date and the end is not in sight.
The CBO says that the new health care law raises taxes by more than $1 trillion. The individual mandate (which the CBO refers to as a “penalty tax”) will produce $55 billion in “penalty payments for uninsured individuals”. The “additional hospital insurance tax” is the largest tax increase in Obamacare and is projected to bring in $318 billion in new revenues. Supposedly, this tax mainly hits “high-income taxpayers” (individuals making over $125,000/year and households over $250,000/year). Other money comes from: “associated effects of coverage provisions on tax revenues” ($216 billion); “reinsurance and risk adjustment collections” ($184 billion); fees on certain manufacturers and insurers ($165 billion); “penalty payments by employers” ($106 billion); “other revenue provisions” ($87 billion); and, an excise tax (40%!) on high-premium insurance plans ($111 billion).
Americans are holding on to the fairy tale that someone else will be paying these taxes – those rich pharmaceutical and insurance companies, for instance. In fact, all costs will be passed along to consumers/patients in the form of higher premiums and higher costs for drugs and medical devices. According to the Cato Institute, the top 1% of income earners can expect tax hikes of up to $52,000/year, but the bottom 99% will also feel the pain – and lack the discretionary income to absorb the taxes.
There are at least twenty new taxes included in PPACA. Seven of them will directly impact the people whose taxes Obama promised not to raise: those making less than $250,000 per household. Below is a summary of the new taxes on the middle class:
The Individual Mandate Tax – In 2014 this penalty will hit all Americans who are not covered by a private health insurance policy, Medicaid, Medicare, of other public insurance program. The penalty requires a couple to pay the higher of a base tax of $1,360/year, or 2.5% of adjusted growth income (AGI). In 2016 the cost of not being part of Obamacare is $695 for individuals and $2,085 for families.
The Medicine Cabinet Tax – This tax (begun in 2011) prohibits reimbursement of expenses for over-the-counter (OTC) medicines, with the exception of insulin, from an employee’s Health Saving Account (HSA), Flexible Spending Account (FSA), or Health Reimbursement Account (HRA). This impacts the shrinking middle class hard, since they earn enough to actually pay federal taxes, but not enough to make this a negligible restriction. This is also another backdoor attempt to block access to alternative medicines (vitamins and nutritional supplements).
The FSA Cap – This tax scheduled to begin in 2013 is potentially one of the most harmful to middle class people, as it imposes a cap of $2,500/year (it’s now unlimited) on the amount of pre-tax dollars that can be deposited in these accounts. Why so harmful? It is because funds in these accounts can be used for special needs education for special needs children. Tuition rates for such special education can readily exceed $14,000/year and the use of pre-tax dollars has helped many families over the years.
The Medical Itemized Deduction Hurdle – Presently, one must have medical itemized deductions of greater than 7.5% to deduct them on federal income taxes. Obamacare raises the bar to 10% of AGI beginning in 2013.
The HSA Withdrawal Tax – This tax increases the additional tax on early non-medical withdrawals from these types of accounts from 10% to 20% in 2013.
The Indoor Tanning Services Tax – Begun in 2010, this provision added a 10% excise tax on people using tanning salons. Some may consider this minor, but it is another attempt by the Ruling Elite to control the behavior of the peasants and, I believe, to put a road block to accessing beneficial light therapy for many people. Space does not permit exploring this much further here, but suffice it to say that there are many potential health benefits from the use of tanning beds when properly used. A variety of conditions, from depression (Seasonal Affective Disorder or SAD) and related mood disorders to psoriasis, are improved by the judicious use of tanning type beds. I can hear my Dermatology colleagues groaning now, but the over-reaction to increases in skin cancers by banning tanning beds and slathering often-toxic sunscreen on everyone has led to an even worse epidemic of Vitamin D deficiency, in my opinion. The latter problem, of course, can be directly linked to explosions in the numbers of Type II diabetics, cancers of many types, and respiratory infections (such as, influenza).
The Excise Tax on Comprehensive Health Insurance Plans or the “Cadillac” Health Insurance Plan Tax – So-called Cadillac plans are generally fully paid for by employers. This tax, delayed until 2018 to protect Obama’s union supporters, will impose a 40% excise tax on the recipients when fully enacted.
There are at least 13 other significant taxes imposed on all businesses, employers, and “high income” individuals (>$125,000/year) and families (>$250,000/year) within PPACA. A summary of these other taxes and the history behind Obamneycare can be found at Wikipedia: http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act.
It is worth taking time to review this entry, so that one can understand how invasive and costly this legislation really is.
For “low income” individuals and families, subsidies for insurance obtained from “insurance exchanges” will be provided for those between 100% and 400% of the Federal Poverty Level (FPL). For example, the 2016 FPL is projected to be $11,800/year for an individual and $24,000/year for a family of four. DHHS and CBO estimate that the average annual premium cost for a family of four without PPACA would be $11,328/year. With PPACA in place as presently enacted, the same family at 200% of FPL would be paying $2,778/year out of pocket and at 400% of FPL, $8,379/year. In participating states, Medicaid eligibility will be expanded to all individuals and families earning up to 133% of the FPL. The Wikipedia entry referenced above contains several tables that explain this in more detail.
The Internal Revenue Service will be the implementer and enforcer of PPACA (up to 16,000 new agents). The Act will be partially paid for by taking $716 billion from Medicare and Medicaid; AARP claims that the money is taken from doctors and hospitals, but the lower payments to health care providers will reduce the services that Medicare patients receive.
The Congressional Budget Office reports that costs will rise for all Americans; and, more than 30 million will remain uninsured when Obamneycare is fully implemented. The CBO further predicts that the average family’s insurance premiums will rise at least $2500/year, in spite of candidate Obama’s repeated promises that they would go down that same amount. Be of good cheer, however, as all illegal immigrants will be exempt from the health insurance mandate and, yet, will remain eligible for emergency services under the 1986 Emergency Medical Treatment and Active Labor Act (EMTALA).
As a kid (and, I confess, as an adult) I always loved the 1950’s science fiction thrillers. One of the classics from that era is “The Blob” (1958). Though silly in many ways, it remains metaphorically appropriate today. Starring a young Steve McQueen, the story revolves around an extraterrestrial bit of alien protoplasm that arrives on Earth via a meteorite. This goo proceeds to engulf every living thing that comes in contact with it until it fills the town’s cinema and engulfs the local diner. In this thriller, the Blob is finally defeated by freezing it with CO2 bottles and the U.S Air force airlifts the blob to the arctic. Problem solved – at least, until global warming kicks in.
In reflecting on Obamneycare over the past few months, I have been unable to discover any such easy solution for eliminating PPACA.
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CBO TO EMPLOYERS: OBAMACARE HAS $4 BILLION MORE IN TAXES THAN EXPECTED
By Joel Gehrke | The Washington Examiner
Business owners will pay $4 billion more in taxes under President Obama’s Affordable Care Act (ACA) than the Congressional Budget Office had previously expected.
“According to the updated estimates, the amount of deficit reduction from penalty payments and other effects on tax revenues under the ACA will be $5 billion more than previously estimated,” the CBO reported today. “That change primarily effects a $4 billion increase in collections from such payments by employers, a $1 billion increase in such payments by individuals, and an increase of less than $500 million in tax revenues stemming from a small reduction in employment-based coverage, which will lead to a larger share of total compensation taking the form of taxable wages and salaries and a smaller share taking the form of nontaxable health benefits.”
In short, CBO revised the Obamacare tax burden upward by $4 billion for businesses and $1 billion to $1.5 billion for individual workers.
CBO couldn’t help but bump into Chief Justice John Roberts controversial decision uphold the individual mandate as a constitutional exercise of Congress’s taxing power. The report dubs the individual mandate a “penalty tax” — that is, “a penalty paid to the Treasury by taxpayers when they file their tax returns and enforced by the Internal Revenue Service.”
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IRS WANTS 4,000 NEW AGENTS AND $300 MILLION BUDGET TO ENFORCE OBAMACARE
More than quadrupling an estimate it put forth last year for new agents (http://dailycaller.com), theInternal Revenue Service(IRS) now says that it will need more than 4,000 new agents to enforce the provisions of theAffordable Care Act(ACA), also known as Obamacare. And in addition to these new agents, the IRS is also asking for more than $ 300 million in new funding to help fortify the infrastructure it will supposedly need to unconstitutionally force Americans to purchase government healthcare.
The constitutionality of Obamacare is currently being reviewed by the U.S. Supreme Court, and yet the IRS is already acting as though the overhaul is definitive law. According to IRS budget requests, the agency says it needs a massive cash infusion to “continue the development of new systems and modifications of existing systems required to support new tax credits.” But in reality, this money will more than likely be used to spy on Americans and fine them for failing to purchase adequate health coverage.
“Health reform’s insurance mandate says if you do not have ‘adequate’ insurance, you’ll have to pay a fine as part of your tax return,” writes Elizabeth MacDonald forFOX Business (http://www.foxbusiness.com). “If your business doesn’t provide ‘affordable’ coverage, you’ll have to pay a fine to the IRS, too, as part of your tax return filing.”
According toFOX Newsanalyst James Farrell, new IRS reporting requirements under Obamacare, should it end up being declared constitutional, will require individuals to disclose personal insurance plan information such as coverage provisions and costs to the IRS. The provisions will also require individuals to reveal whether or not they have been offered health insurance by their employers, and what this employer-sponsored insurance costs, information that the IRS has never before dealt with.
Another stated reason for the increase in agents and budget funds is to enforce the new tanning excise tax. Tanning salons, health clubs, beauty parlors and other businesses that offer tanning services will be required to pay a tax similar to the kind levied on alcohol and tobacco (http://blog.heritage.org). According toThe Daily Caller, the IRS is planning to devote 81 of its agents just to collecting this ten-percent tax (http://dailycaller.com).
“Obamacare bashes into the Constitution at every turn because it is fundamentally in conflict to the essential founding principles of this country — freedom and the sovereignty of states and citizens,” writes Grace-Marie Turner forCanada Free Press (http://www.canadafreepress.com/index.php/article/45534). “It turns control over one-sixth of our economy to the federal government, ceding life and death decisions to the state.”
SOURCE: http://www.naturalnews.com/035409_IRS_Obamacare_agents.html
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OBAMA ADMINISTRATION DIVERTS $500 MILLION TO IRS TO IMPLEMENT HEALTHCARE REFORM LAW
By Sam Baker | The Hill
April 9, 2012
The Obama administration is quietly diverting roughly $500 million to the IRS to help implement the president’s healthcare law.
The money is only part of the IRS’s total implementation spending, and it is being provided outside the normal appropriations process. The tax agency is responsible for several key provisions of the new law, including the unpopular individual mandate.
Republican lawmakers have tried to cut off funding to implement the healthcare law, at least until after the Supreme Court decides whether to strike it down. That ruling is expected by June, and oral arguments last week indicated the justices might well overturn at least the individual mandate, if not the whole law.
“While President Obama and his Senate allies continue to spend more tax dollars implementing an unpopular and unworkable law that may very well be struck down as unconstitutional in a matter of months, I’ll continue to stand with the American people who want to repeal this law and replace it with something that will actually address the cost of healthcare,” said Rep. Denny Rehberg (R-Mont.), who chairs the House Appropriations subcommittee for healthcare and is in a closely contested Senate race this year.
The Obama administration has plowed ahead despite the legal and political challenges.
It has moved aggressively to get important policies in place. And, according to a review of budget documents and figures provided by congressional staff, the administration is also burning through implementation funding provided in the healthcare law.
The law contains dozens of targeted appropriations to implement specific provisions. It also gave the Department of Health and Human Services (HHS) a $1 billion implementation fund, to use as it sees fit. Republicans have called it a “slush fund.”
HHS plans to drain the entire fund by September — before the presidential election, and more than a year before most of the healthcare law takes effect. Roughly half of that money will ultimately go to the IRS.
HHS has transferred almost $200 million to the IRS over the past two years and plans to transfer more than $300 million this year, according to figures provided by a congressional aide.
The Government Accountability Office has said the transfers are perfectly legal and consistent with how agencies have used general implementation funds in the past. The $1 billion fund was set aside for “federal” implementation activities, the GAO said, and can therefore be used by any agency — not just HHS, where the money is housed.
Still, significant transfers to the IRS and other agencies leave less money for HHS, and the department needs to draw on the $1 billion fund for some of its biggest tasks.
The healthcare law directs HHS to set up a federal insurance exchange — a new marketplace for individuals and small businesses to buy coverage — in any state that doesn’t establish its own. But it didn’t provide any money for the federal exchange, forcing HHS to cobble together funding by using some of the $1 billion fund and steering money away from other accounts.
The transfers also allow the IRS to make the healthcare law a smaller part of its public budget figures. For example, the tax agency requested $8 million next year to implement the individual mandate, and said the money would not pay for any new employees.
An IRS spokeswoman would not say how much money has been spent so far implementing the individual mandate.
Republicans charged during the legislative debate over healthcare that the IRS would be hiring hundreds of new agents to enforce the mandate and throwing people in jail because they don’t have insurance.
However, the mandate is just one part of the IRS’s responsibilities.
The healthcare law includes a slew of new taxes and fees, some of which are already in effect. The tax agency wants to hire more than 300 new employees next year to cover those tax changes, such as the new fees on drug companies and insurance policies.
The IRS will also administer the most expensive piece of the new law — subsidies to help low-income people pay for insurance, which are structured as tax credits. The agency asked Congress to fund another 537 new employees dedicated to administering the new subsidies.
The Republican-led House last year passed an amendment, 246-182, sponsored by Rep. Jo Ann Emerson (R-Mo.) that would have prevented the IRS from hiring new personnel or initiating any other measures to mandate that people purchase health insurance. The measure, strongly opposed by the Obama administration, was subsequently dropped from a larger bill that averted a government shutdown.
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HIGHER TAXES FOR HIP REPLACEMENTS?
Makers of replacement knees and hips argue there’s more pain than gain in an Obamacare surcharge on medical devices.
By JEN WIECZNER | Smart Money
The many baby boomers considering hip or knee replacements in the coming years are likely to have to pay more to get them. The question is, How much more? And could the problems stretch beyond a higher price tag?
Under the Affordable Care Act, the Obama administration’s signature health care reform law, medical-device manufacturers will pay a 2.3 percent tax on sales of such products starting in 2013. That tax will affect everything from surgical tools to oxygen tanks to wheelchairs. It is one of several features of the law designed to raise money to cover the uninsured — it’s expected to raise an additional $20 billion by 2019.
But experts say that the tax could have a particularly big impact in the world of knee and hip replacements. Such operations increased more than 26 percent to more than 1 million procedures in the U.S. between 2005 and 2010, according to the American Academy of Orthopaedic Surgeons; the total bill of the hospital stays for such surgeries was about $60.5 billion in 2010. And with the American population hitting retirement age in record numbers, demand is likely to surge: The number of knee replacement procedures alone is expected to increase 673 percent, to nearly 3.5 million, in 2030, according to a study presented at the annual meeting of the orthopedic academy.
At the simplest level, some critics of the tax estimate that the expense could add hundreds of dollars to the cost of each joint-replacement procedure, as the manufacturers of the joints pass the cost along to patients. “By having taxes that go into effect for health care companies, you’re actually increasing the cost of health care in the country,” says Dave Blaszczak, senior health policy analyst at the nonpartisan Potomac Research Group, which provides government and economic analysis to institutional investors.
Medical-device manufacturers contend, however, that the potential problems go much further. While the tax may seem relatively small — it would amount to $230 on the sale of a $10,000 medical device — opponents note that it hits sales, not just profits, which increases its impact. Indeed, several medical companies say that the surcharge would eat into their profitability, at the expense of their research and development budgets. Large orthopedic device maker Stryker says that in anticipation of the tax, it plans to cut more than $100 million from its annual pretax operating costs next year. Smaller device maker Zoll Medical says the new surcharge will raise its overall rate above 50 percent and use up its entire R&D budget.
If companies focus just on products that generate higher sales volumes, they may discontinue specialized models, leaving doctors and consumers with fewer options, says Julie Stralow, an orthopedics analyst at Morningstar. That could force doctors to be more hesitant before recommending joint-replacement surgeries and could also lead to higher prices, according to James Capretta, a fellow at the Ethics and Public Policy Center, a conservative-leaning organization that has opposed many elements of the Affordable Care Act.
No industry likes to face a tax increase, of course, and some advocates of the health-care act say that manufacturers are overstating its potential impact. Asked about the possible impact of the tax, the Treasury Department referred a SmartMoney reporter to a statement the White House released earlier this summer that said, “The medical device industry, like others, will benefit from an additional 30 million potential consumers who will gain health coverage under the Affordable Care Act starting in 2014. This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion.”
Other insiders are optimistic that scenarios like the ones the companies describe might not come to pass. “The manufacturers up until now have made a big profit on this, so there’s some room to bargain,” says Dr. Peter Mandell, chair of the American Academy of Orthopaedic Surgeons council on advocacy. “This market is never going to go away.” Still, Mandell says, he and other surgeons are concerned about the possibility of a cutback in research; he cites, in particular, the danger that companies will fail to develop joint replacements for children and tumor patients, a generally unprofitable niche.
Ultimately, until the tax takes effect, its impact on consumers will remain unclear. But at least some remain unworried. Richard Warner, a 69-year-old marathon runner, created the Foundation for the Advancement in Research in Medicine, and its website BoneSmart.org, to educate consumers about the benefits of joint-replacement surgeries. Warner, a former insurance executive who has had both hips replaced, says he’s confident that advances in efficiency — such as improving robotic technology to assist surgeons and the advent of cheaper, disposable surgical instruments — will soak up the extra costs. But even if they don’t, he’s willing to pay extra for the technology that took him from a wheelchair to finish lines across the country. “The physical pain prior to the surgery is so high, I’m not going to [worry about] a couple hundred dollars extra,” says Warner. “I think it’s worth it absolutely.”
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DEMOCRATS ASK FOR DELAY TO MEDICAL DEVICE TAX THEY VOTED FOR!
By Byron York,Chief Political Correspondent,The Washington Examiner
Sixteen Democratic senators who voted for the Affordable Care Act are asking that one of its fundraising mechanisms, a 2.3 percent tax on medical devices scheduled to take effect January 1, be delayed. Echoing arguments made by Republicans against Obamacare, the Democratic senators say the levy will cost jobs — in a statement Monday, Sen. Al Franken called it a “job-killing tax” — and also impair American competitiveness in the medical device field.
The senators, who made the request in a letter to Senate Majority Leader Harry Reid, are Franken, Richard Durbin, Charles Schumer, Patty Murray, John Kerry, Kirsten Gillibrand, Amy Klobuchar, Joseph Lieberman, Ben Nelson, Robert Casey, Debbie Stabenow, Barbara Mikulski, Kay Hagan, Herb Kohl, Jeanne Shaheen, and Richard Blumenthal. All voted for Obamacare.
Two other Democrats, senators-elect Joe Donnelly and Elizabeth Warren, also signed the letter. Donnelly voted for Obamacare as a member of the House. Warren was not in Congress at the time.
“The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million skilled manufacturing jobs,” the senators wrote in a December 4 letter to Reid. “We must do all we can to ensure that our country maintains its global leadership position in the medical technology industry and keeps good jobs here at home.”
Beyond that, the senators say, the medical device industry “has received little guidance about how to comply with the tax” — a reference to the apparently confused and halting nature of the Obama administration’s implementation of Obamacare.
Several of the senators, many of whom have medical device manufacturers in their states, have opposed the tax for a long time. During the Obamacare debate, for example, Franken and Klobuchar were among a group of senators who successfully pushed to reduce the tax. (The device giant Medtronic is headquartered in Minnesota.)
On Monday, Franken again expressed his opposition to the tax he voted for. “I want to repeal the medical device tax altogether,” the senator and former comedian said in a statement. “But I am concerned that we are running out of time before this job-killing tax goes into effect. So, for now, the best thing to do to ensure that this important industry continues to create jobs and producing life-saving devices is to delay this unwise tax.” Franken and other want Reid to include a provision to delay the tax in the ongoing fiscal cliff negotiations.
None of the senators found his or her earlier objections to the tax a sufficient reason to vote against Obamacare. In December 2009, with 60 votes in the Senate and a determined Republican opposition, Democrats needed every vote they could get to pass the president’s national health care plan. But now, with Obamacare — and the taxes to fund it — about to become a reality, some of those Democrats are singing a different tune.
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DEATH PANELS: SENIOR CLAIMS GOVERNMENT DENIED HIM MEDICAL CARE
Infowars.com
June 5, 2012
Editor’s note: The following is from an email sent to Infowars.com. The sender claims the federal government decided not to pay for a procedure normally covered under Medicare. The email states that Obamacare has motivated seniors to vote for Mitt Romney in November. Seniors should realize this is merely a political season good cop-bad cop trick and Romney will not save them. The elite has decided that seniors are expendable. Romney or any other hand-picked establishment candidate will follow the script – death panels are a reality and if you are over 65 the state is going to let you die even though it promised pie-in-the-sky medical care and expropriated billions to pay for it.
No wonder the Seniors are coming out in huge numbers in support of Mitt Romney for president in 2012….it is a life and death issue for all of us!! PS, keep walking and stay healthy!! Bob
Seniors BEWARE – BE SURE TO READ THIS ONE!
Forget about getting to age 75, this exact thing happened to me this morning at Danbury hospital here in Ct. I was scheduled for a cardio-lite stress test. This is a tread mill stress test where during the process they inject nuclear dye into your blood stream and then put you in a CAT scan or something similar and take a picture of your heart. If all is good the heart shows up red, if there are blocked arteries anywhere that portion of the heart shows up pink. I have had three of these tests in the past twelve years due to blocked arteries discovered in 2000. They use the test to determine if I need a roto router or a bypass operation.
So I arrive at the hospital at 8 am this morning and I am in the process of checking in at Cardiology and the lady says that my appointment has been canceled. She makes a call and speaks with someone and hands me the phone. It is a nurse in cardiology who says that my medical coverage denied the procedure. I said it was routine, part of my heart maintenance process and ordered by my PCP and with approval from my Cardiologist who is the head of Danbury Cardiology which is right where I was standing. She goes, “yes but we were denied our request”. So I say, I have Medicare so what is my backup insurance doing denying anything. Then the bombshell, she says it was the Medicare board that denied the procedure.
At that point, I turn to everyone behind me, and it was a long line, and I say to them “well you won’t have to wait too long today because my stress test procedure was just canceled by a Medicare Death Panel. I am only 67 so can you imagine what is going to happen when we really get old”. The entire waiting room and everyone there from patients to staff just went dead silent. So I turn to the front desk and tell them, ” I guess I will have to write a letter to the editor of the Danbury News Times and call my Senators and Congressman and let them know the Death Panels have already convened”. Then I walked out.
By the time I got home the message machine was blinking. My PCP had already called and so did the hospital and guess what, Medicare decided to approve my stress test procedure and if I could get back down to the hospital they would fit me in right now for this 3 hour procedure. I told them I couldn’t make it, that I was going fishing because I didn’t know how many more fishing trips I could get in before I went into cardiac arrest but not to worry about me costing the government any money because I am a 30% disabled Army veteran, due to Agent Orange poisoning which is what caused this heart problem to begin with, and I qualify to be buried for free in a plain pine wrapper in the cheap graves section at any National Cemetary. I certainly don’t want to cost our government any money so maybe we just won’t do this procedure anymore and we can use the money to redistribute it to all of the illegals to keep them alive so they can mow the lawns at the National Cemeteries.
So this Death Panel crap has started. If we don’t vote this guy and his criminal cronies out of office November 2012 then we will all die younger than we should as broke paupers as the country goes bankrupt. Feel free to distribute my note to anyone and make it a mission to not only make your vote count but on behalf of all of us please make an effort to change the thinking of anyone remotely willingly to get intellectually engaged in this critical time in our country’s history.
I had one of the most troubling, most disturbing conversations ever with Dr. Suzanne Allen, head of emergency services at the Johnson City Medical Center in Tennessee . We were discussing the “future” and I asked her had she seen any affects of Obama Care in her work?
“Oh, yes. We are seeing cutbacks throughout the services we provide. For example, we are now having to deal with patients who would normally receive dialysis can no longer be accepted. In the past, there was always automatic approval under Medicare for anyone who needed dialysis — not anymore.” So, what will be their outcome? “They will die soon without dialysis,” she stated.
What about other services? She indicated as of 2013 (after the election), no one over 75 will be given major medical procedures unless approved by locally administered Ethics Panels. These Panels will determine whether a patient receives medical treatment or not. While details on specific operating procedures and schedules, Dr. Allen points out that most life-threatening emergencies do not occur during normal hospital business hours, and if there are emergencies that depend to be resolve within minutes or just few hours, the likely hood of getting these Panels approval in time to save a life are going to be very challenging and difficult, if not impossible she said.
This applies to major operations such as receiving stents, bypass surgery, kidney operations, or treating for an aneurysm that would be normally covered under Medicare today. In other words, if you needed a life-saving operation, Medicare will not provide coverage anymore after 2013 if you are 75 or over. When in 2013? “We haven’t been given a specific date — could be in January or July….but it’s after the election.”
This is shocking to any of us who will be 75 this year. Her advice — get healthy and stay healthy. We do not know the specifics of the actual implementation of the full Obama Care policies and procedures — “they haven’t filtered down to the local level yet. But we are already seeing severe cuts in what we provide to the elderly — we refused dialysis to an individual who was 78 just the other day….we refused to give stents to a gentleman who was in his late 80s.” Every day, she said, we are seeing these cutbacks aimed at reducing care across the board for anyone who is over 75.
We can only hope that Obama Care will be overturned by the Supreme Court — otherwise, this is a death sentence to those who are over 75….perhaps you should pass this on to your friends who are thinking of voting for Obama this year.
Regardless if you have private health care coverage now (I have Aetna Medicare Part B) — it will no longer apply after 2013 if the Ethics Panels disapprove of a procedure that may save your life…..
Scary, scary, scary. Think about this? You? Your parents? Your loved ones?
Didn’t know about it? Of course, not. As Nancy Pelosi said….” if you want to know what’s in the bill, you’ll have to read it…..” After it was passed.
This is a graphic reminder of the need to stay healthy. Get your plot now at Forest Lawn….while they last. Is this a death sentence to those of us who will reach 75?…..Yes!
Please do pass this along to those in your address book.
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TIME MAGAZINE PUSHES DEATH AGENDA: REMOVE FEEDING TUBES FROM THE DYING ELDERLY
Mike Adams,
Natural News
Thursday, June 7, 2012
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TIME Magazine is peddling a death agenda propaganda piece with a new issue that features these words on the cover: “HOW TO DIE.”
Inside, the magazine promotes a cost-saving death agenda that encourages readers to literally “pull the feeding tubes” from their dying elderly parents, causing them to dehydrate and die. This is explained as a new cost-saving measure that drastically reduces return hospital visits by the elderly… yeah, because dead people don’t return to the hospital, of course. Kill Granny, get a cash bonus!
The article is part of the new soft-sell, hard-kill agenda of the mainstream media which also featured an article on Newsweek Magazine entitled, “The Case for Killing Granny.” (http://lookintoit.org/Euthanasia-%28The-Case-For-Killing-Granny%29.ht…)
The cover of that magazine stated, “Curbing excessive end-of-life care is good for America.”
Just as with TIME Magazine, Newsweek is pushing a death agenda that devalues the lives of elderly citizens and actually encourages citizens to have their own parents killed in order to reduce medical costs. In fact, as TIME Magazine says, organizations that embrace these “outcome-based” death panel systems actually receive cash bonuses when they save more money by pulling the plug on granny!
That’s the answer to health care in America, you see. It’s not about nutritional therapy, using trace minerals to prevent disease, avoiding GMOs and toxic chemicals. Nope, it’s about pulling the plug and killing your elders and then convincing yourself that you arecompassionatefor making sure they die sooner rather than later.
It’s trendy to kill your parents off, didn’t you know? It’s good for the economy! And it’s good for society! Death to grandma! For God’s sake don’t give any water to your dying father, either, because it’s better to just let him die from kidney failure. Yep, here’s an actual quote from the TIME Magazine story: “Renal failure is a good way to go,” the story says. Just dehydrate ‘em to death and call it trendy.
When you get old, they’ll kill you too!
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Be careful what you wish for, all you trendies, because sooner or later, you’ll be old, too! And if you created a society in which pulling the plug is the socially-acceptable way to kill off all the “useless old people,” then don’t be surprised when they cut off your feeding tube, too, and you suffer a slow, painful death while your own children cheer about how socially responsible they are.
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WEBSTER TARPLEY: THE ELITE’S PLAN FOR GLOBAL EXTERMINATION
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UK HOSPITALS PAID TO PUT PATIENTS ON DEATH “PATHWAY”
By Wesley J. Smith | National Review
Death panels on the march! The Telegraph is reporting that UK hospitals are paid to put patients on the Liverpool Death Care Pathway. (The Pathway is supposed to sedate patients whose pain cannot otherwise be controlled. But serious charges have been made that it is actually sometimes used when not needed medically, in other words, as backdoor euthanasia, including of the non terminally ill.) From the story:
Almost two thirds of NHS trusts using the Liverpool Care Pathway have received payouts totalling millions of pounds for hitting targets related to its use, research for The Daily Telegraph shows.
The majority of NHS hospitals in England are being given financial rewards for placing terminally-ill patients on a controversial “pathway” to death, it can be disclosed. The figures, obtained under the Freedom of Information Act, reveal the full scale of financial inducements for the first time. They suggest that about 85 per cent of trusts have now adopted the regime, which can involve the removal of hydration and nutrition from dying patients. More than six out of 10 of those trusts – just over half of the total – have received or are due to receive financial rewards for doing so amounting to at least £12million.
And the statistics show that the Pathway has indeed become backdoor euthanasia:
At many hospitals more than 50 per cent of all patients who died had been placed on the pathway and in one case the proportion of forseeable deaths on the pathway was almost nine out of 10.
This is very bad. Only a small minority–maybe 2%-5%–need to be sedated because it is the only way to control pain, and moreover, that the amount of sedation can be raised and lowered as needed–as I detailed here. Instead, centralized bureaucratic control has turned it into a checklist on the ”to do list”–with money apparently offered as an incentive because it supposedly represents “excellence” in care–which results in sedation clearly being applied whether patients need it or not, and when less aggressive measures would suffice.
That cheats patients and families of their last time together. It is the destruction of individualized end-of-life care–indeed, one that ignores hospice altogether where the emphasis is on living, not dying quietly in a corner. And it seems to be a method–intended or not–of backdoor euthanasia that can save costs.
There is a warning here for us under Obamacare, in which bureaucrats also plan to create similar bureaucratic incentives to induce particular approaches of providing “excellence.” Indeed, many Obamacarians look to emulate the UK method of centralized control cost containment/care provision regimes. We will come to rue the day if we allow Obamacare to remain on the books.
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RELATED POST:
AMERICA 2013 – WHAT IS AT STAKE IN THE U.S. HEALTHCARE DEBATE?
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THE CRISIS OF STUDENT LOAN DEBT IN AMERICA
MAY 8, 2012
by Devon DB
It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way. ~ Charles Dickens
We are in a time of crisis, a time of austerity, a time the where poor are getting poorer and the rich are getting richer at a faster pace than at any other time in recent US history. We have gone from having a well-functioning economy to a real unemployment rate of 14.5% [1]. During all of this, the situation has greatly affected college students, who are taking on massive debt just to further their education. With student debt at over $1 trillion, an examination is underway of how we have gotten into this scenario and how we can get our way out of it.
The situation began in 1964 when Lyndon B. Johnson established a task force to examine the role of federal government in student aid, headed by John W. Gardener. The taskforce firmly believed that cost shouldn’t be a barrier in attaining a college education and to this end they concerned themselves with how lack of funds contributed to students being unable to attend college. Gardener focused on a study which revealed that one out of six students who took the National Merit Scholarship test in high school did not attend college. Of the students who did not attend college and who had families who could contribute only $300 or less to their education, about 75 percent of the men and 55 percent of the women indicated that they would have attended college if they had had more money available. [2] (emphasis added)
Upon seeing this information, Johnson was shocked as he viewed the situation as a loss in human capital. This drove him to sign the the Higher Education Opportunity Act of 1965 into law. The bill included the recommendations put forth by the Gardener taskforce that the federal government should aid student in their journey to attain a higher education by providing loans, remedial classes, and grants to college-aspiring students as well as special programs and projects for low-income students who have an interest in attending college. This allowed for low-income and middle-class students who have an opportunity to go to college.
There was an uphill battle, though, as the American Bank Association was against the loan guarantee provision. The ABA was mainly concerned about possible government encroachment in their business, arguing that “the federal government could not replicate the working relationships that locally-owned financial institutions had with state and private non-profit guarantee programs” and “the federal government would end up taking over the industry because there would be little incentive for the state and private non-profit agencies to establish their own programs.” [3] To solve this problem, the Johnson administration met with the ABA and worked to “[assure] the bankers the loans would pay them back handsomely over time because they were investing in young people who would become their best customers in the future,” [4] as well as telling the banks that the government would be the ultimate loan guarantor if there was no one else available. Thus, with the banks placated, the bill could be passed.
There were several reauthorizations of the Higher Education Opportunity Act, but one of the most important reauthorizations was in 1972. In the 1972 bill, there were several new programs created, yet one of the most important ones was the Basic Educational Opportunity Grant which sends “a payment directly from the federal government to undergraduate students based on their financial need,” yet this act also “tied institutional aid to the number of students receiving federal student aid at the given institution.” [5] Tying institutional aid in this manner only served to increase costs. According to the Bennett hypothesis, first proposed in the 1980s by Secretary of Education William J. Bennett, colleges absorb federal student aid by increasing tuition costs. (This was proven in a paper done by two economics professors at the University of Oregon. [6]) While these increases in tuition were not seen in the 1970s, they began to be felt substantially during the 1980s, thus causing students to increase their debt levels. However there was another factor involved that led to student debt increase: President Ronald Reagan.
During the presidency of Ronald Reagan, he launched a massive attack on federal student aid. Reagan’s budget included a proposal that would cut deeply into the two major student assistance programs, the Pell grants and the Guaranteed Student Loans, to reduce sharply or eliminate a series of categorical programs in higher education, and to eliminate a group of social or economic programs which either directly or indirectly affect higher education. With rare exception, every college campus would be affected by the proposed cuts beginning in academic year 1981-82. [7] (emphasis added)
In cutting these student assistance programs, Reagan went against the spirit of the 1965 Higher Educational Opportunity Act, in which the main goal was to ensure that a college education was both accessible and affordable. In addition to this, he was effectively targeting low-income and middle class people who needed that assistance in order to afford a college education. Congress attempted to enact amendments to the Higher Education bill that would allow for both programs to continue until 1985 and expanded programs such as Guaranteed Student Loans to middle-class families.
Yet, there were complaints from the Reagan administration, specifically Secretary of Education Terrence Bell, that the expanding such programs “had the potential for eroding the traditional roles of the student and the family in the financing of educational costs” [8] and that the Guaranteed Student Loans program was actually an entitlement program as its costs couldn’t be constricted without Congressional approval. Rather than actually allow students greater access to education, the Reagan administration was able to pass a plan that would gut federal student aid assistance by cutting the amount of aid per Pell Grant from $1,900 to $1,750, limiting Guaranteed Student Loans to remaining need, and eliminating the in-school interest subsidy and the subsidy to lenders on Parent Loans.
This decrease in federal aid only served to disenfranchise millions of potential college students from attaining an education. Student debt also increased. A survey done by the College Scholarship Service and National Association of Student Financial Aid Administrators showed that “those students at public institutions who borrow will graduate with an average debt of $6,685, while their counterparts at private colleges and universities will assume $8,950 in debt on average.”
This decrease in aid hit minority students quite hard as in 1987 there was a seven percent decline in college enrollment for Native Americans and eleven percent for blacks. Many minority groups depended on grants and scholarships to go to college, but now their only option was to borrow money or just not go at all. This would have a major ripple effect as “Many studies have shown that one of the most important factors influencing the decision to go to college is parental educational level” and that “If today’s minority high school graduates choose not to participate in further education, out of concern for loan burdens or for other reasons, their children may not be as likely to go to college as the next generation of white and Asian students.” [9] This would only serve to further increase educational- and with it economic- disparities between races.
The situation did not get any better in the next decade as the median student loan debt more than doubled in a 10 year period, increasing from $4,000 in 1990 to about $11,000 in 1999. [10] It was to become even worse with the passing of the Higher Education Amendments of 1998, which stated that student loans could no longer be forgiven under bankruptcy. Thus, if one found themselves in bankruptcy, but had student loans, they would be in debt bondage until the loans were paid. In such a situation, the only possible out is to default on one’s student loans, however, that would not only worsen your credit but:
- Your entire financial life can potentially be destroyed if you default
- Your entire loan balance will be due in full, immediately.
- Collection fees can be added to your outstanding balance.
- Up to 15% of your paychecks can be taken.
- Your Social Security, disability income, and state and federal tax refunds can be seized.
- You will lose eligibility for federal aid, including Pell grants.
- You will lose deferment or forbearance options.
- Outstanding fees and unpaid interest can be capitalized (added) onto your principal balance. [11]
Thus, by the very circumstances, a situation of ‘damned if you do, damned if you don’t’ is created and students are put into de facto debt slavery.
This brings us to our current situation where student debt nationwide is over $1 trillion. Student debt can potentially turn into a major problem by threatening economic growth due to the fact that people are defaulting on their student loans as they cannot find jobs. A recent article came out from the Associated Press which stated that 53% of college graduates are either unemployed or underemployed and that when “underemployment [is taken] into consideration, the job prospects for bachelor’s degree holders fell last year to the lowest level in more than a decade.” [12] This is an even further economic threat when one realizes that the current level of student is unsustainable and that there will be major ripple effects on the economy when this house of cards comes crashing down.
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CHARTS SHOWING THE BOOM IN STUDENTS LOANS
By Sam Ro | Business Insider
Jul. 11, 2012
Many young Americans are struggling to pay off their student loans thanks to elevated levels of unemployment.
Ironically, with unemployment levels so high, more and more high school graduates have enrolled in college.
Neal Soss, Credit Suisse’s top U.S. economist recently published a report titled A Lesson On Student Loans, which examines all of the major issues regarding student loans.
“In the past few years, the volume of student loans has increased dramatically, reaching almost $1 trillion by the end of Q1 2012,” wrote Soss. “Student loans outstanding have surpassed credit cards and auto loans as the second largest form of consumer debt, following mortgages.”
Student loans outstanding have more than doubled since Q3 2006 to nearly a trillion dollars
Federal loans (e.g. Direct Loans and Perkins Loans) dominate private loans, state loans, and institutional loans
Student loans continue to be the fastest growing category of household debt. Mortgage, credit card, and home equity debt outstanding have been falling since the crisis of 2008
A key reason driving student loan growth is skyrocketing tuition inflation
In July 2010, the Federal government took over the student loan business, forcing private lenders out of the game, making the federal government the only lender of student loans.
As long as the delincquency and default rates remain low, the government makes tons of money on this because of low Treasury rates
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Currently the largest asset on Uncle Sam’s balance sheet is federal student loans
The loan balance has risen an astonishing 332%, most of which dates from after the recession of 2008.
Student loans may be a liability on the consumer balance sheet, but they constitute an asset for the federal government
Just how big? Nearly 35% of the total federal assets, over four times the 8.6% percent for the total mortgages outstanding.
Of course, assets are, sadly, the trivial side of Uncle Sam’s Flow of Funds balance sheet — about 1.36 Trillion. The liability side totaled 12.65 Trillion at the end of Q1 2012.
Although, high student loan delinquency rates do not pose a problem yet, they have increased by 1.15 percentage points since Q3 2008
Delinquency rates are closely correlated to unemployment rates
And default rates occuring during the first year of repayment has been on the rise
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As the dollar dies, and the U.S. economy collapses students will have a much tougher time paying back their loans.
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For the first time ever, the U.S. Department of Education has come out with an official three-year federal student loan default rate.
Until now, the agency has only looked at two-year default rates at universities, and with a wider net cast, it’s clear that students only struggle to pay back loans more with time.
Two years after leaving school, students default on their federal loans at a rate of 9.1 percent, up from 8.8 percent at last count. That figure jumps to 13.4 percent at the three-year mark, the report shows.
The graph below shows the default rate over the last 23 years. The sharp decline in rates in the early 90s shows the change that occurred after the Department of Education started sanctioning institutions with default rates higher than 25 percent.
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STUDENT-LOAN DELINQUENCIES NOW SURPASS CREDIT CARDS
By: Kelly Evans | CNBC Reporter
Even as the economy shows signs of improvement, a record share of Americans are falling behind on their student-loan payments.
The proportion of U.S. student loan balances that are in delinquency — that is, unpaid for 90 days or more — surpassed that of credit-card balances in the third quarter for the first time, according to the Federal Reserve Bank of New York.
Of the $956 billion in student-loan debt outstanding as of September, 11 percent was delinquent — up from less than 9 percent in the second quarter, and higher than the 10.5 percent of credit-card debt, which was delinquent in the third quarter. By comparison, delinquency rates on mortgages, home-equity lines of credit and auto loans stood at 5.9 percent, 4.9 percent, and 4.3 percent respectively as of September.
With the release of these figures, student-loan debt officially takes the crown from credit-card debt as that most prone to delinquency in the U.S. Since the NY Fed’s data began in 2003, the share of student debt which is delinquent has nearly doubled, from a starting level of 6.13 percent, while credit-card delinquency has steadily drifted lower since peaking at 13.74 percent in mid-2010 in the wake of the financial crisis.
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The trouble is, while losses and write-downs of credit-card debt typically fall on banks and private-sector lenders, in the case of student debt, it is largely taxpayer dollars at risk. And the student-debt pile only keeps growing. After first surpassing credit-card debt in mid-2010, the amount of student-loan debt outstanding has quickly surged to become 42 percent larger than the $674 billion of credit-card debt outstanding as of September.
Moreover, the actual rate of student loan delinquency is far higher than the official tally suggests. According to the New York Fed, “these delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle.”
In other words, the real delinquency rate for loans in the current repayment cycle is “roughly twice as high,” per the Fed — which would put it north of 20 percent. An extraordinarily sobering figure, and one that begs for an overhaul of this increasingly important market which has put significant taxpayer dollars at risk.
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STUDENT LOANS GO UNPAID, BURDEN U.S. ECONOMY
Borrowing for education will have “potentially lasting effects” on U.S. demand for houses, cars and other big-ticket items, according to Steven C. Wieting, Citigroup Inc.’s director of economic and market analysis.
As the CHART OF THE DAY depicts, student loans surpassed credit cards last quarter to show the highest delinquency rate among U.S. consumer debt. The shift was chronicled in a report published two days ago by the Federal Reserve Bank of New York.
“Student-loan debt crowds out other consumption,” Wieting wrote yesterday in a report. The New York-based economist cited a Rutgers University study, done in May, that showed 40 percent of college graduates from 2006 through 2011 postponed a major purchase because of their debt burdens.
Payments on 11 percent of educational loans were at least 90 days behind last quarter, the New York Fed’s report showed. The rate was the highest of five categories tracked by the bank, using data compiled by Equifax Inc., a credit-rating company. Credit-card delinquencies ranked second at 10.5 percent.
The rate for student debt may be understated because about half the loans aren’t currently due for repayment, according to the New York Fed. The figure reflects grace periods, deferments and forbearance, or temporary suspensions.
Student loans are a growing burden on younger Americans, whose pay is dropping as the cost of education rises, Wieting wrote. Average earnings fell at a 1.6 percent annual rate for 25- to 34-year-olds with a bachelor’s degree and a full-time job from 2000 to 2010, according to government data cited in the report. Tuition and fees at four-year public colleges and universities climbed 5.6 percent annually in the same period.
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OBAMA LOAN REPAYMENT SCHEME MAINTAINS CRUSHING DEBT BURDEN ON STUDENTS
By Nancy Hanover
Earlier this month, the Obama administration’s Department of Education put into place its new regulations regarding the “Pay As You Earn” modification to Income-Based Repayment (IBR) of student loans.
This Obama “reform,” supposedly a centerpiece of his program for young people, promises little and provides even less. For a small subset of students it can mean “only” 20 years of monthly payments, instead of 25, with decreased minimum payments of 10 percent of discretionary income instead of 15 percent.
As the federal “fiscal cliff” and additional cuts approach, the record shows that student aid has already been declining. According to a report released last month by the College Board, federal grants totaled $49 billion during the last academic year, down 5 percent from a year prior, after adjusting for inflation—the first drop after rising for five consecutive years. Federal work study, which allows colleges to create campus-based jobs for students, fell 4 percent to $972 million, after adjusting for inflation, the first time its has dropped below the $1 billion mark in at least a decade.
What small benefits accrue from IBR are, according to the New America Foundation, directed to providing “huge financial windfalls to people who, far from being in need, are among the most financially well-off graduates in today’s job market.”
The primary beneficiaries will be students who have taken on very large loans for graduate school. Because of federal loan maximums, those merely getting a four-year degree will not benefit. In fact, the report states that middle-income earners who start with salaries under $33,000 and later earn $63,000 or more for the majority of their repayment period, “will actually pay more and for longer due to the pending changes.”
In addition, this updated IBR scheme has a myriad of qualifications. No student with loans prior to 2008 qualifies. Only certain types of loans are accepted—for example, no PLUS loans, private loans or consolidated loans. Payments have to be made without a problem for the entire 20-year period. And, should a student actually meet all of these hurdles, the amount forgiven will be entirely taxable. The process of application is described as “overly complicated.”
The IBR fig leaf cannot rehabilitate the Obama record on student loans. Nor can it obscure the fact that, under his administration, students have amassed debt at a record rate. Since the third quarter of 2008, student loans have ballooned by $303 billion!
As of October 2012, average indebtedness is now up to $26,600 among those who borrowed for college and earned bachelor’s degrees in 2011, rising from $25,250 in 2010, according to a new report from the Project on Student Debt. Sisty-six percent of students now borrow to finance their education.
Moreover official three-year rates of default show that 13.1 percent of students who began repaying in 2009 had defaulted by the end of 2011, a 53.4 percent increase in default, while the two-year default rate is the highest in a decade. The number for three-year defaults among for-profit school ex-students is nearly double, at 22.7 percent.
Obama’s policies over the first term
Far from rescuing increasingly desperate defaulting students, Obama’s policies can best be summarized as: protection of the financial industry, protection of the for-profit sector and intensification of the burdens on the poorest students.
As it is uniformly throughout the administration’s policies, Obama’s main constituency is the financial industry. Student loans are, in general, very profitable. Banks are receiving capital from the Federal Reserve at rates just above 0 percent. Student loans run from interest rates starting at 3.4 percent up through the double digits. In addition to this interest spread, the federal government makes Special Allowance Payments to banks making student loans. These are additional subsides pegged to commercial loan rates with an extra margin rolled in.
Hedge funds are the secondary beneficiary of student loans. Bundles of loans are transferred to trusts that sell shares to investors as asset-backed securities, just like mortgages. The principal of these loans is backed by the federal government, and securitization of these portfolios has been extremely profitable and are publicly traded. As just an example of this week’s news in the “education market,” it was reported that newly minted publicly traded debt buyer Performant Financial received $1.3 billion of student loan placements this quarter, showing a 27.1 percent revenue jump.
Then there are the education loan servicers and collectors. The Pennsylvania Higher Education Assistance Agency, for example, has seen its revenues for servicing loans triple, while money from defaulted loan collections quadrupled. It has earned multi-million-dollar profits for years, netting a cool $174 million last year alone.
Lastly, under Obama, the federal government itself cashes in on Direct Student Loans, an influx of money estimated to be $30 billion for 2012, according to the Department of Education. As a concession to the Republicans, Obama agreed that at least one-third of the savings from banking subsidies would go to the deficit.
Protection of the for-profit sector
At the start of his administration, Obama pledged to rein in the gouging of students by for-profit colleges and career schools. These institutions are notorious for their high costs, a nearly 50 percent student loan default rate, and failure to provide training adequate for students to secure employment of their chosen field.
The popularity of these career-driven programs is a sign of the times. More than 12 percent of the entire US student population now attends for-profits such as the University of Phoenix, the second largest higher education system in the country, right behind the state university system of New York. For-profit colleges are now a $25 billion industry, dominated by 13 large, extremely profitable, publicly traded corporations.
A two-year Senate investigation, concluded last year, stated that the federal government has failed to protect students from misleading sales pitches, an army of recruiters and poor quality programs. They pointed out that “publicly traded companies operating for-profit colleges had an average profit margin of 19.7 percent, generated a total of $3.2 billion in pre-tax profit and paid an average of $7.3 million to their chief executive officers in 2009.” Additionally, they cited National Center for Education Statistics data showing that 23 percent of students who attended for-profit schools in 2008-2009 were unemployed and seeking work!
Despite the president’s earlier rhetoric, when it came to drafting the rules the Obama administration met with the representatives of the largest for-profits—well-known Democratic Party contributors—in a series of 17 meetings before the final regulations were released. Student groups, in contrast, merited only one meeting.
The result was a relatively toothless “gainful employment” rule, providing only for the elimination of student loan eligibility to institutions where more thantwo-thirds [!] of the students were unable to repay their loans and failed debt-to-income measures three out of four years (loans more than 12 percent of income). Even among the egregious for-profits, only 5 percent of programs were considered at risk of losing their eligibility. Lastly, the programs were to be allowed to continue operating “with no requirements to improve,” until at least 2015.
The Association of Private Sector Colleges and Universities launched a lawsuit challenging even this paltry restriction to the student loan spigot. Last June, the “gainful” rule was vacated by a US District Court judge. To date, the Obama administration has neither appealed the decision nor adopted further penalties on the exploitation of students by the for-profit industry.
Cuts to student aid under Obama
On the other hand, the Obama administration had adopted a whole series of cuts to existing programs, affecting Pell Grants, interest rate subsidies and grace periods—overall increasing student indebtedness. This is just a foretaste of what will happen after the new year’s budget negotiations. Already discussions have begun on ending all fixed loan interest rates and allowing them to float, ending the 3.4 percent subsidy of Stafford loans, ending all in-school loan subsidies and making the Obama cuts to Pell permanent.
* Pell Grants: Obama has pointed to the “expansion” of Pell Grants, the only substantial non-loan program provided by the government for students, under his administration. Actually the growth of the program has been primarily the result of more students qualifying, due to the general impoverishment of the population.
Moreover, Obama has cut between $1,100 and $1,700 for 14 percent of recipients by tightening eligibility. In another new attack on the most needy, Pell Grants are now denied to students without a high school diploma who could show that they have an ability to benefit from college. The administration has also retroactively limited the number of semesters a student could receive Pell from 18 to 12, which disproportionately affects lower-income students who typically take a longer time to graduate in order to accommodate jobs or families. Obama also abolished the year-round Pell that many community college students used to take summer courses.
While the maximum Pell aid did rise from $4,731 to $5,550, fewer people will receive that maximum. Even more importantly, with the cost of college steadily rising, the typical grant covers only about one-third of the cost of a public four-year college. To receive a full-cost grant, a student’s household must live on less than $23,000.
Ominously, Obama has continued the systematic underfunding of Pell. It now faces an $8 billion shortfall in 2014, and will be the inevitable target of further cuts during the “fiscal cliff” negotiations.
* Interest rates and grace periods: Obama also elected to maintain the 3.4 percent interest rate for certain qualifying undergraduate loans, allowing others to rise to 6.8 percent. That limited measure was also only enacted for a one-year period, to the consternation of student loan advocates. Additionally, he ended the government-subsidized interest payments for graduate students while in school, as well as the six-month grace period for undergrads. These measures add thousands of dollars to the typical cost of a degree.
Predatory student loan collectors unleashed
With $67 billion of student loans in default, the Obama Education Department has enlisted an army of private debt-collection companies to put the squeeze on borrowers. Education Department contracts—featuring commissions of as much as 20 percent of recoveries—collected $11 billion in defaults last year, and has netted $1 billion in commissions.
As a whole, Obama has continued the overall trend of pricing the working class out of higher education, while creating a section of educated but desperate students working (if they are lucky) for the rest of their lives to pay off their student loan debt.
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OBAMA HAS HIRED AN ARMY OF DEBT COLLECTORS TO GO AFTER STUDENT LOAN DEADBEATS
MARCH 28, 2012
By Mandi Woodruff | Business Insider
When students default on their federal loans, debt collectors are hired out just like any other to track them down and wrangle some kind of payment.
Problem is they may be asking borrowers for more than they should have to pay under federal law, Bloomberg’s John Hechinger reports:
“With $67 billion of student loans in default, the Education Department is turning to an army of private debt-collection companies to put the squeeze on borrowers. Working on commissions that totaled about $1 billion last year, these government contractors face growing complaints that they are violating federal laws by insisting on stiff payments, even when borrowers’ incomes make them eligible for leniency.”
The fact that students are letting their loans fall into collection at all is what’s truly troubling here.
Collectors will do whatever it takes to weasel as much out of your pocket as they can (they’ve got their commission in mind), but don’t give in.
The best thing federal-backed student loans have going for them is the host of repayment options available to borrowers after they’ve graduated. The key is being proactive enough to take advantage of them.
Here’s how:
Loan rehabilitation
“Only borrowers who are already in default will be contacted by a collection agency,” FinAid.org’s Mark Kantrowitztold Your Money. “(Students) should ask about the process for rehabilitating their loans. Once the loans are rehabilitated, they should be able to obtain income-based repayment (IBR).”
Ten percent of borrowers are eligible for IBR but a fraction of that actually take advantage of it. The beauty of IBR is that it caps your monthly loan payment at 15% of your income and forgives any remaining balance after 25 years in repayment.
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PETER SCHIFF: HOW GOVERNMENT PROGRAMS DRIVE UP COLLEGE TUITIONS
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THE COST OF A COLLEGE DEGREE IN THE U.S. SOARS 12 FOLD
AUGUST 18, 2012
This chart shows college tuition and fees have surged 1,120 percent since records began in 1978, four times faster than the increase in the consumer price index. Medical expenses have climbed 601 percent, while the price of food has increased 244 percent over the same period.
“Soaring tuition and shrinking incomes are making college less and less affordable,” Senator Tom Harkin, an Iowa Democrat and chairman of the Senate Health, Education, Labor and Pensions Committee, said in an e-mailed statement. “For millions of young people, rising college costs are putting the American dream on hold, or out of reach.”
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PETER SCHIFF: IS A COLLEGE DEGREE WORTH THE COST? YOU DECIDE.
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34 DEPRESSING FACTS ABOUT THE JOB MARKET FOR COLLEGE GRADS
By Scott Gerber, Young Entrepreneur Council
The class of 2012 is graduating from community colleges, four-year colleges and universities all across America this month. When they toss their caps in the air, I suggest you duck — because this graduating class has a lot to protest.
While overall U.S. unemployment has dropped to about 8 percent — in part because many Americans have simply given up looking for work — recent college grads face a much more dismal reality: one out of every two was either jobless or underemployed in 2011.
To combat this epidemic, the Young Entrepreneur Council recently launched the national #FixYoungAmerica campaign. In April, we held a #FixYoungAmerica rally on 300+ college campuses in all 50 states, in which tens of thousands of students participated, and next week, we’ll release #FixYoungAmerica: How to Rebuild Our Economy and Put Young Americans Back to Work (for Good), a book of essays written by nonprofit founders, educators, politicians and entrepreneurs who shared their own entrepreneurial solutions for ending the youth unemployment crisis in America.
Unfortunately, throughout the campaign, what we’ve really uncovered is just how bad chronic unemployment is for our young people, including college grads. The fact is, young Americans need all the help they can get, and they need it now.
What’s the class of 2012 up against? Take a look for yourself:
1. 1 out of 2 college grads — about 1.5 million, or about 53.6 percent, of all bachelor’s degree holders age 25 or younger — were unemployed or underemployed in 2011.
2. 3 in 5 young college grads are unemployed or underemployed in the Mountain West region of the United States. The next-worst regions for being a young college grad looking for work? The Southeast and Pacific regions.
3. The share of employed young adults (aged 18-24) is at a 60-year low. It has dropped to 54.3 percent — the lowest level since government began tracking it in 1948.
4. Only 56 percent of American teenagers believe they’ll be as well off as their parents financially– a 37 percent drop since 2011.
5. Only 18 percent of American teens say they’ll be financially independent when they turn 20 – compared to 44 percent in 2011.
6. The 15-percentage-point gap between young and working-age adults right now is the widest in recorded history.
7. While overall unemployment is around 8 percent, 29.1 percent of young male veterans and 36.1 percent of young female veterans age 18-24 were unemployed 2011—compared to 17.6 and 14.5 percent, respectively, of non-veteran young men and women.
8. Young American women still earn less than young American men, regardless of their educational background.
9. According to some researchers, up to 95 percent of job positions lost occurred in low-tech, middle-income jobs like bank tellers. Gains in jobs are going to workers at the top or the bottom, not in the middle.
10. More college graduates are getting low-level jobs, period. U.S. bachelor’s degree holders are more likely to wait tables, tend bar or become food-service helpers than to be employed as engineers, physicists, chemists or mathematicians combined — 100,000 versus 90,000.
11. More recent grads are working in administrative jobs than in all professional computer jobs out there — 163,000 versus 100,000.
12. More college grads are cashiers, retail clerks or customer representatives than engineers – 125,000 versus 80,000, to be exact.
13. Of young Americans aged 18-34, half have taken a job they didn’t want in order to pay bills.
14. 24 percent of young Americans aged 18 to 34 said they took an unpaid job for work experience.
15. According to new U.S. government projections, only three of the 30 occupations with the largest projected number of job openings in the next eight years will require a bachelor’s degree or higher. Most job openings by 2012 will be in low-wage professions like retail sales, fast food and truck driving.
16. More than 35 percent of young Americans went back to school because of the economy.
17. 31 percent of young Americans postponed getting married or having a baby due to their financial situation.
18. One in four young Americans moved back in with their parents AFTER living on their own.
19. Median earnings for young African Americans are only 75 percent of the earnings of whites. For young Latinos, the number is even lower — 68 percent.
20. Almost half – 41.3 percent – of 25 to 34-year-old young Americans spend more than 30 percent of their income on rent every month.
21. Credit card debt has risen 81 percent among young Americans aged 25-34 since 1989.
22. The student loan default rate rose 31 percent over just two years.
23. Student loan debt is reaching debt-bubble proportions — it recently topped $1 trillion (and exceeds total credit card debt in the United States).
24. Two out of three college students now graduate with student loan debt. Average tuition is three times higher today than in 1980.
25. Average student loan debt is now more than $25,000.
26. African American students are more likely to take out student loans and graduate, on average, with higher levels of debt.
27. Federal student loan default rate is 8.8 percent and projected to rise.
28. Although 92 percent of young Americans aged 21-24 said they felt entrepreneurship education was vital given the realities of the new economy and job market, more than half (56 percent) were never offered entrepreneurship classes at all.*
29. Most – 62 percent – students who were offered entrepreneurship classes said they didn’t feel the classes prepared them enough to start a business.*
30. Of employed young Americans aged 18-34, less than half think they have the education and training they need to get ahead in their jobs today.
31. More than 53 percent of U.S. companies say they’re having trouble finding skilled non-managerial employees, in spite of the high number of unemployed Americans.
32. 72 percent of youth said they do not feel they have enough support from banks, up from 65 percent in 2010.*
33. 86 percent of recent grads feel they do not have enough support from the government (YEC/Buzz 2011).*
34. Finally, 52 percent of young Americans 18-29 feel the U.S. is headed in the wrong direction.
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THESE CHARTS SHOW HOW DESPERATE YOUNG PEOPLE ARE FOR JOBS
By Aimee Groth | Business Insider
Today’s college grads have it tough, but those with less education are up against even greater odds.
Researchers at Rutgers — The State University of New Jersey just published a report, “Left Out. Forgotten? Recent High School Graduates and the Great Recession,” looking at how those with high school diplomas are faring in today’s job market.
The report, led by researchers Dr. Carl Van Horn and Dr. Cliff Zukin, surveyed 544 recent high school graduates from the classes of 2006 to 2011, with a weighted demographic representative of the U.S. population. They found that a shocking 88 percent took low-paying, temporary jobs with an average wage of $7.50/hour after graduating.
“There is tremendous pessimism among high school graduates about what the future holds for them,” the researchers wrote.
In other words, the future for this demographic is bleak.
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DOWNWARD MOBILITY HAUNTS UNITED STATES EDUCATION
By Sean Coughlan | BBC News education correspondent
An integral part of the American Dream is under threat – as “downward mobility” seems to be threatening the education system in the United States.
The idea of going to college – and the expectation that the next generation will be better educated and more prosperous than its predecessor – has been hardwired into the ambitions of the middle classes in the United States.
But there are deep-seated worries about whether this upward mobility is going into reverse.
Andreas Schleicher, special adviser on education at the Organisation for Economic Co-operation and Development (OECD), says the US is now the only major economy in the world where the younger generation is not going to be better educated than the older.
“It’s something of great significance because much of today’s economic power of the United States rests on a very high degree of adult skills – and that is now at risk,” says Mr Schleicher.
“These skills are the engine of the US economy and the engine is stuttering,” says Mr Schleicher, one of the world’s most influential experts on international education comparisons.
Lack of opportunity
The annual OECD education statistics show that only about one in five young adults in the US reaches a higher level of education than their parents – among the lowest rates of upward mobility in the developed world.
A steelworker in Ohio in 1950 drives away his new Dodge, paid for with a $320 monthly wage. The steelworks have shut and the town is now in the “rust belt”
For a country whose self-image is based on optimism and opportunity, the US is now a country where someone with poorly-educated parents is less likely to reach university than in almost any other industrial country.
It’s the opposite of a Hollywood ending.
And about one in five young adults in the US are now defined in educational terms as “downwardly mobile” – such as children who have graduate parents but who don’t reach university level themselves.
When the global story of higher education is so much about rapid expansion and the race to increase graduates, it’s almost counter-intuitive to find a powerhouse such as the United States on the brink of going backwards.
It’s easy to overlook the dominance of US higher education in the post-war era – or how closely this was linked to its role as an economic, scientific and military superpower.
The US had the first great mass participation university system. The GI Bill, which provided subsidies for a generation of World War II veterans, supported three times as many people as are currently in the entire UK university sector.
An American born in the 1950s was about twice as likely to become a graduate than in the rest of the industrialised world.
As the cars ran off the production lines in Detroit, the graduates were leaving the universities to become part of an expanding middle class.
Overtaken
But the US university system is no longer the only skyscraper on the block. It’s been overtaken by rivals in Asia and Europe.
Today’s young Americans have a below-average chance of becoming a graduate, compared with other industrialised economies.
The US Education Secretary Arne Duncan, in a speech a few weeks ago, asked how the US had in “the space of a generation” tumbled from first place to 14th in graduation rates.
So what’s gone wrong?
The spiralling cost of higher education in the United States is often cited as a barrier – and the collective student debt has exceeded a trillion dollars.
But Andreas Schleicher argues that a deeper problem is rooted in the inequalities of the school system.
He says that the level of social segregation and the excessive link between home background and success in school is “cutting off the supply” between secondary school and university.
The meritocratic, migrant energy in US culture is no longer operating in the school system.
“If you lose the confidence in the idea that effort and investment in education can change life chances, it’s a really serious issue,” says Mr Schleicher.
Middle-class squeeze
A US Senate committee examined this sense of imperilled optimism, in a hearing called Helping More Young People Achieve the American Dream.
The economist Miles Corak was among the expert witnesses – and he says the US education system reflects a wider picture of the “hollowing out” of the middle class.
“What you’re seeing is the inequality of the labour market being echoed in education.”
Prof Corak describes a polarising jobs market, with the very rich and very poor diverging – and a collapse in jobs in the middle ground, such as clerical or manufacturing jobs.
For such families, sending their children to college had once been a “defining metaphor for the country”.
But it seems that the education system is no longer holding the door open to the brightest and the best, regardless of background.
The Philadelphia-based Pew research group compared the outcomes of young people in 10 western countries, in a project called Does America Promote Mobility as Well as Other Countries?
It found the US had the strongest link between family wealth and educational success – and the lowest mobility. Advantage and disadvantage were being further amplified in education.
Research manager Diana Elliott says in the US “income has a pervasive hold on mobility”.
Insecurity
Another study by Pew, against the backdrop of recession, examined the phenomenon of downward mobility and found that a third of adults classified as middle class would slip out of that status during their adult life.
It reflected a modern sense of insecurity, where families could no longer assume their children would be as prosperous. In fact, about a quarter of children born into the middle class were expected to slip downwards.
None of this matches the image of the US as a place for fresh starts and self-made millionaires. Modern American history almost assumes an upward incline.
But evidence of this downward drift has been gathering in recent years. A study by the University of California, Berkeley, showed that school leavers in California in 1970 were more likely to stay on to higher education than their counterparts in 2000.
In terms of international education, that’s like finding out that athletes were running faster 40 years ago.
Such current difficulties should not be mistaken for any kind of end-of-empire zeitgeist, says Philip Altbach, director of the Center for International Higher Education at Boston College.
Instead he says it’s a more practical question of money. The rising cost of higher education is a deterrent. And there is a wider question of finance for higher education at state level.
He also says there is another “dirty little secret” of US higher education – that too many people who enrol at university fail to graduate – which pushes down the graduation rate in international comparisons.
Bouncing back
Andreas Schleicher also says there are reasons for optimism. Almost more than any other country, he says the US has the financial resources, the capacity and the flexibility to change course quickly and to catch up.
There are already plans to recover lost ground. President Barack Obama has been re-elected with a promise that the US will regain its global first place in graduation rates by 2020.
And as part of this drive, the American Association of Community Colleges, in a project called Reclaiming the American Dream, has an ambitious plan to create five million more college places.
But it’s an aspiration against a gloomy background.
“The American dream has stalled,” the association’s report says, describing a society where typical family incomes having been falling for more than a decade.
“A child born poor in the United States today is more likely to remain poor than at any time in our history. Many other nations now outperform us in educational attainment and economic mobility, and the American middle class shrinks before our eyes.”
It’s as if It’s A Wonderful Life had been remade – without the happy ending.
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CHARLOTTE ISERBYT – THE SECRET HISTORY OF WESTERN EDUCATION
Charlotte Thompson Iserbyt served as the head of policy at the Department of Education during the first administration of President Ronald Reagan. While working there she discovered a long term strategic plan by the tax exempt foundations to transform America from a nation of rugged individualists and problem solvers to a country of servile, brainwashed minions who simply regurgitate whatever they’re told.
Part one of our exclusive interview with Iserbyt breaks down how conditioning/training under a corporate agenda has replaced traditional education, leading to a deliberate dumbing down of Americans. Iserbyt further explains how Reagan signed agreements merging the U.S. and Soviet systems under the United Nations banner, turning over education and many other areas of public policy to global control.
This 74 minute exposé is a must see for anyone who wants to truly know why the education system is deliberately crafted to produce human drones with no critical thinking whose only skills are to be subservient, trust authority and follow orders.
READ FULL E-BOOK FREE: THE DELIBERATE DUMBING DOWN OF AMERICA
Visit Iserbyt’s website at http://www.deliberatedumbingdown.com/
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AMERICAN SCHOOLS ARE NOW JUST BREEDING GROUNDS FOR COMPLIANT CITIZENS
By John W. Whitehead | The Rutherford Institute
OCTOBER 20, 2012
“[P]ublic school reform is now justified in the dehumanizing language of national security, which increasingly legitimates the transformation of schools into adjuncts of the surveillance and police state… students are increasingly subjected to disciplinary apparatuses which limit their capacity for critical thinking, mold them into consumers, test them into submission, strip them of any sense of social responsibility and convince large numbers of poor minority students that they are better off under the jurisdiction of the criminal justice system than by being valued members of the public schools.”—Professor Henry Giroux
For those hoping to better understand how and why we arrived at this dismal point in our nation’s history, where individual freedoms, privacy and human dignity have been sacrificed to the gods of security, expediency and corpocracy, look no farther than America’s public schools.
Once looked to as the starting place for imparting principles of freedom and democracy to future generations, America’s classrooms are becoming little more than breeding grounds for compliant citizens. The moment young people walk into school, they increasingly find themselves under constant surveillance: they are photographed, fingerprinted, scanned, x-rayed, sniffed and snooped on. Between metal detectors at the entrances, drug-sniffing dogs in the hallways and surveillance cameras in the classrooms and elsewhere, many of America’s schools look more like prisons than learning facilities.
Add to this the epidemic of arresting schoolchildren and treating them as if they are dangerous criminals, and you have the makings of a perfect citizenry for our emerging police state—one that can be easily cowed, controlled, and directed.
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MOVES WILL CONTINUE BEING MADE TO MERGE THE UNITED STATES, CANADA, AND MEXICO INTO A NORTH AMERICAN UNION WHICH WILL THEN BECOME PART OF THE ONE WORLD GOVERNMENT.
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GEORGE W. BUSH: ‘CANADA, MEXICO AND THE UNITED STATES SHOULD MERGE’
Daily Bell
December 6, 2012
Former President George W. Bush stressed the importance of immigration on Tuesday at a speech in Dallas, throwing himself back in the ring as the debate over reform heats up in Washington. “Immigrants come with new skills and new ideas. They fill a critical part in our labor market. They work hard for a better life,” Bush said at the event, hosted by the George W. Bush Institute and the Federal Reserve Bank of Dallas. – Huffington Post
Dominant Social Theme: Immigrants reinvigorate our collective soul.
Free-Market Analysis: Okay, we made up the headline. George W. Bush has never publicly said that Canada, Mexico and the US should merge into one great big North American Union.
But in our view, he might as well have said it.
He spent a good bit of his second term sneaking around and holding confidential meetings with top leaders of Canada and Mexico. The security deals he made more closely combined civil and military policing, from what we can tell.
And today, of course, there is a “constitution free” zone between Canada and the US where authorities can act unimpeded by such pesky restraints as laws designed to protect people from unnecessary search and seizure.
Coincidence? Toward the end of his term, Bush made a desperate effort to further immigration reform in the US but was soundly rebuffed. What was not widely reported was that Bush’s public effort was merely the capstone of years of private efforts to apparently move the US, Canada and Mexico toward a closer “cooperation.”
And for those who still don’t believe that this is a deliberate and ongoing attempt to create a European-style union in the Americas, there is this report from 2007, courtesy of Webwire.com, excerpted as follows:
Los Angeles, CA (Oct. 10, 2007) – Speaking on the Larry King show, former Mexican President Vicente Fox confirmed every assertion made by Jerome Corsi in his new book, NY Times bestseller “The Late Great U.S.A.: The Coming Merger with Mexico and Canada” (WND Books, ISBNs 0-9790451-4-2, $25.95, July 2007). Not only did Fox admit that he and George W. Bush have “agreed” to create a common currency, the Amero, he contended that a North American Union is “inevitable.” That’s something that Jerry Corsi takes issue with while applauding Fox’s openness on national television.
“At last we have public confirmation of the pernicious secret activity that’s been going on towards merging Mexico, Canada and the United States,” declares Corsi, whose book became a bestseller shortly after publication. “Personally, I’d like to thank Vincente Fox. His candor about this merger is what’s going to stop it dead in its tracks.”
Corsi continues, “Fox’s appearance with Larry King and, of all places, on The Daily Show constitutes the first time a leader of Mexico, Canada or the U.S. has openly confirmed a plan to create a regional currency called the Amero – a plan I document in detail in ‘The Late Great U.S.A.’” Fox went on to explain how current regional trade agreements between the United States and its hopelessly corrupt neighbor to the south are intended to evolve into other previously hidden aspects of North American integration.
As reported in WorldNetDaily, Larry King, near the end of the broadcast, asked Fox a question e-mailed from a listener: “I would like to know how you feel about the possibility of having a Latin America united with one currency.”
Fox answered in the affirmative, admitting he and George W. Bush had “agreed” to pursue the Free Trade Agreement of the Americas – a free-trade zone extending throughout the Western Hemisphere – and that part of the plan was to institute a regional currency from Canada to the tip of South America!
“Long term, very long term” he said. “What we proposed together, President Bush and myself, it’s ALCA, which is a trade union for all the Americas.”
According to Corsi, Fox has indeed performed a public service. “George W. Bush is president of the United States, not king. He has utterly no right to enter into any such agreement with a foreign country, particularly a hostile one.” During Fox’s tenure as Mexican president, millions of Mexicans entered the United States illegally. In Corsi’s view, this constitutes an invasion that has cost American taxpayers billions of dollars while destroying schools and bankrupting hospitals and municipal governments across the country…and is only a taste of what a merger would bring.
“Finally” says the author of “The Late Great U.S.A.,” “here is unequivocal proof, straight from the mouth of Mexico’s former president, that Bush’s goal is to erode United States sovereignty in order to create free movement for Mexico’s peasant class across our border, in the process flooding us with even more anchor babies and illiterates ready and willing to take advantage of our country’s all-too-generous welfare programs.”
To be clear, the above was from a press release about Jerome Corsi’s (then) new book, initiated by conservative website World Net Daily. But courageous reporting by Corsi and others stopped the move toward a NAU at the time.
Every day people pitched in, too. Citizens in Texas protested against the monster highway that was supposed to run to Canada, bisecting the US into two Balkanized nations.
And Bush himself slunk off into the arid, non-political evening after Obama‘s election with nary a peep. Like “gun control,” the meme of a “closer union” had become too public too quickly and the US electorate was overwhelmingly against it.
But now Obama has “won” a second term. (Of course, we don’t believe it for a minute. There was a reason electronic election machinery was installed over the past decade lacking paper trails. Who authorized them? No one seems to know.)
Here Obama goes … and here comes Bush suddenly making a reappearance.
Just coincidence, of course not!
All part of directed history, folks. Yes, Bush is back after modestly withdrawing as a public figure to give President Barack Obama time to be his own man and political figure.
Bush is back and so, seemingly, is the push for a North American Union with its own currency. Here’s some more from the Huffington Post article:
Bush pushed during his second term for comprehensive immigration reform, with the help of Sen. John McCain (R-Ariz.) and the late Sen. Ted Kennedy (D-Mass.). That bipartisan effort failed in 2007, and hasn’t been taken up again since. But now, after former GOP presidential nominee Mitt Romney suffered a crushing loss among Latino voters in the November election, a comprehensive immigration reform push will be taken up again, possibly along the lines of Bush’s framework.
Bush has mostly stayed out of the limelight and politics since his presidency ended in early 2009, but his new non-partisan institute may help him re-enter the fray on policy. In July the institute published The 4 Percent Solution, a book that focused on economic growth and partially touched on immigration reform.
Bush Institute executive director James K. Glassman said then that the book emphasizes the need for immigration policy that would “attract the smartest people from around the world.”
Bush is back … with a book!
This is a man who would not commute the death sentence of a young, born-again Christian woman who’d evidently and obviously changed her life in prison. As governor, he callously let her go to her death but now Bush has grown more merciful. This Bush wants immigrants to have the same chance for prosperity that US citizens do.
Of course, between Bush and Obama, there’s not much left of that prosperity. You see, the US’s standard-of-living has to be lowered if a merger is to be effectuated with Mexico.
And Mexico itself has to be destabilized. Drug war, anyone?
The power elite that wants nothing more dearly than global government works on a scale that is generally beyond human comprehension. They use dominant and subdominant social themes – fear-based promotions – to do this and influence billions to agree with one globalist policy or another.
But we analyze these themes and memes every day. You can, too! You see, the Internet has given us the ability to see the patterns and make a diagnosis. More and more people are doing this. We call it the “Internet Reformation.”
Protect yourself. Figure out what “they” are up to.
They may control the hundreds of trillions of central banking dollars, but they don’t control YOU.
Conclusion: We expect a renewed push for the never-admitted NAU. It won’t be presented in those terms, either, but as an immigration debate. For our Canadian friends … Hey, you´re on the menu, too!
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DR. JEROME CORSI: THE DANGERS OF A NORTH AMERICAN UNION
This Conservative Roundtable interview of Jerome Corsi by Howard Phillips reveals how behind closed doors, the US government has collaborated with the governments of Mexico and Canada to merge the three nations into one Socialist mega-state: the “North American Union” (NAU), also known as the “Security and Prosperity Partnership” (SPP). Dr. Corsi is an investigative journalist for http://www.WND.com where you can find many of his articles exposing the NAU; and he is a best selling author of many books including “Obama Nation.” This interview was taped in 2006: the facts and the plan has not changed, however we have helped slow and stop some elements of this, and Obama has succeeded with enacting some elements of the plan.
Freedom and our Constitution will have no place in this grim Orwellian future. The Dollar could be scrapped for the “Amero” formed by including Mexican and Canadian currencies (or a global UN currency led by Red China, Russia and Venezuela), and Socialist economic policies.
There would be no First and Second Amendments and no limit on the power of government. This is following the exact same path as merging Europe into the European Union; abandoning sovereignty for Socialist conformity, and assigning convenience a far higher priority than freedom. The leaders of the US, Mexico and Canada meet often to enact the NAU: They met in 2011 in separate meetings with Mexican and Canadian leaders, and at joint secret summits in 2009 in Guadalajara Mexico, 2008 in New Orleans, and 2007 in Montebello Canada; each time advancing the cause of surrendering the nation our founding fathers built to secure our freedom.
President Obama abandoned his campaign promise to renegotiate NAFTA and is continuing to push the NAU. In early 2011 he signed an agreement which when implemented will effectively abolish the US/Canadian border, and approved Mexican trucks to take to our roads–and to take American trucking jobs. Obama’s apparent contempt for American patriotism and admiration for America’s enemies gives further cause for exposing the plan for a North American Union.
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UNITED WE FALL
A film by Bryan Law and Dan Dicks “United We Fall” is a documentary about the North American Union that is being developed right now between Canada, the United States, and Mexico. For years this topic has been debated in the news and in political circles as being a possible future for North America. In recent years, the mood has shifted and a rift is developing between those who want a Deeply Integrated North American Community, and those who wish to retain their national sovereignty. This film takes a look at both sides by interviewing both insiders and activists who have been at the heart of this heated debate. The film also looks to the broader agenda of building a world government and its implications.
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THE UNITED STATES IS ON THE VERGE OF A GREAT, GREAT DEPRESSION
The U.S. economy is coming apart at the seams, and there are a whole lot of indications that things are about to get even worse. Overall, American households are about 7.7 trillion dollars poorer than they were back in early 2007.
The pace of job cuts is starting to pick up again, inflation is rising but paychecks are not, the U.S. housing crisis shows no signs of ending, millions of American families are drowning in debt and all of the recent polls show that the faith of the American people in the economy is eroding.
There are scores of families from coast to coast that are barely surviving from month to month. It can be a soul-crushing experience to work as hard as you can and yet just barely be able to pay the mortgage and put food into the mouths of your kids. The reason why so many Americans believe that we are in a “recession” or a “depression” is because that is what they feel like they are living through every single day.
The number of Americans that are really depressed about the direction of the economy continues to grow. At first most Americans had expected the U.S. economy to bounce back after the recession “like it always does”, but now hope is turning into desperation as people start realizing that this time things are different.
The Federal Reserve has been printing gigantic piles of money and the U.S. government has been borrowing and spending cash at a dizzying pace in an all-out effort to stabilize things. But the result is that our long-term economic problems are worse than ever. We are still in the middle of a full-blown economic crisis and things are about to get even worse.
We’re on the verge of a great, great depression.
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RIOTS, VIOLENT CRIME AND LOOTING OF ALL TYPES WILL INCREASE WITH INTENSITY AS THE U.S. ECONOMY COLLAPSES
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“The Bond market is finished, We all knew that there is a bubble in the bond market, This is the coup de grace that will not pop the bubble, but make it explode with the force of a thousand suns. America will be broke and barren in a blink of an eye! These are two events that I have been warning about, are ones that will end your life on this planet as you know it. Your cash will be worthless, your country at a standstill, No money, No food, no essential services, AND WHEN IT ALL STOPS….. YOU STOP.” – Steve Quayle’s anonymous international banking source
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“When people lose everything they have, and they have nothing left to lose, they lose it.” – Gerald Celente
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THE COMING U.S. ECONOMIC COLLAPSE
All over America, restlessness and frustration are growing. It has now been almost four 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 hard 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.
Every single month, the number of good jobs continues to go down. Wall Street actually rewards companies that have a good “outsourcing strategy”. The growing percentage of the jobs that are being created now 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 at 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”.
In the near future, there will be massive unemployment at 20% or higher, increased riots in the streets, food shortages, bank runs, tax revolts, massive arrests, and periods of uncontrollable crime and violence in the streets. There will not be enough police officers or national guard soldiers to control the chaos. To maintain control, the US government will initiate martial law on the American people and place them into FEMA camps located in different parts of the United States.
Massive federal government spending and the Federal Reserve are the two biggest threats facing America right now. The U.S. Federal Government has added $5 trillion to the national debt since 2006, and the spending hasn’t stopped. Because other countries have either reduced lending or stopped lending money to the United States, the Federal Reserve began printing money to pay off the national debt and called it quantitative easing. We are on an unsustainable course and the politicians in Washington are not taking the necessary steps to correct it.
Right now, every American owes about $51,000 to other people who lent the United States money. There must be legislation put together to cut federal spending and curb the cost of Obamacare, Social Security, Medicare and Medicaid or America will collapse. When America collapses there will be no one to bail us out. Even if all the citizens were taxed at 100% of their income, it still would not be enough to balance the federal budget and pay off the national debt. America will be bankrupt.
The savings of millions of people will disappear. The U.S. dollar will no longer be the world reserve currency. The Commercial Real Estate market will collapse. There will be vacant homes, ghost malls, and closed businesses. The price of food and gasoline with soar. Banks will close. Retail will decline. Credit cards will stop working. Food stamps will fail. It will be a complete breakdown of the U.S. economy and U.S. civil society. Worse than the financial crisis of 2008. Worse than the Great Depression of 1929. America will become a third world country, and the U.S. government will not be there to help you. The U.S. government will only be looking out for itself.
As the U.S. economy collapses, the thin veneer of civilization that we all take for granted is going to begin to disappear. In fact, there are already an increasing number of signs that the collapse of society is accelerating. Every single American is facing a future that looks incredibly bleak. It is hard to have faith in the “system” when the “system” simply does not work any longer. What are you supposed to do when you know very well that there are no jobs and that there is very little hope for the future? What are you supposed to do when you do not have a home to live in, no clean drinking water, no electricity, when you will no longer be able to buy food, have access to healthcare, or purchase the things necessary to take of yourself and your family?
For the last few years the American people have waited patiently for our politicians to “fix things”, but they have not gotten the job done. Instead, our economic situation is still declining. So now the frustration is starting to boil over, and the violence is only going to intensify and get worse and worse.
The only thing that has kept the American society civil has been the unprecedented affluence that we have enjoyed over the past few decades. Once that affluence is gone, the mask will come off, and the true character of the American people will be revealed. Once America’s wealth and individual freedom disappears, we will not like what we see. There is going to be absolute chaos and horrifying violence in the streets of America. Former middle class Americans who find themselves with no home, no food, no running water, and no electricity, won’t like their new accommodations, and many of them will turn to violent crime in a desperate attempt to improve their circumstances. Instead of working together as a community, most Americans will only be concerned with making sure that their own needs are taken care of.
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FIVE REASONS WHY AMERICAN RIOTS WILL BE THE WORST IN THE WORLD
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STEVE QUAYLE: ETHNIC WARFARE, UNITED STATES CIVIL WAR AND UNITED NATIONS GUN CONFISCATION IS COMING; THE ELITE SAY THE UNITED STATES MUST BE DISARMED
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