The Must Have Chart That Every Eurocrat Carries... 

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                                         .......................................  williambanzai7 

Fiat Money Kills Productivity

I have long suspected that a money supply based on nothing other than faith in government is a productivity killer.

Last November I wrote:

During 1947-73 (for all but two of those years America had a gold standard where the unit of exchange was tied to gold at a fixed rate) average family income increased at a greater rate than that of the top 1%. From 1979-2007 (years without a gold standard) the top 1% did much, much better than the average family.

As we have seen with the quantitative easing program, the newly-printed money is directed to the rich. The Keynesian response to that might be that income growth inequality can be solved (or at least remedied) by making sure that helicopter drops of new money are done over the entire economy rather than directed solely to Wall Street megabanks.

But I think there is a deeper problem here. My hypothesis is that leaving the gold exchange standard was a free lunch: GDP growth could be achieved without any real gains in productivity, or efficiency, or in infrastructure, but instead by just pumping money into the system.

Only a wilful and ideological Keynesian could ignore the salient detail: as soon as the USA left the gold exchange standard, total factor productivity began to dramatically stagnate.....

                          .................................. Aziz

 

The Ignorance is Willful 

“The ignorance is willful.”  I think you can say the same thing about the ongoing banking crisis.  Last Thursday, credit rating giant Moody’s downgraded the long-term credit ratings of 15 of the biggest North American and European banks.  All but four were cut at least two notches, and these are some of the biggest banks in the world.... The MSM greeted this enormously negative bank news with a yawn.  USA Today, which touts itself as “The Nations Newspaper,” covered the story, last Friday, in the newspaper with less than 75 words! What kind of reporting is this?
This is the same treatment the financial press gives to what I call “government sanctioned accounting fraud” that the banks use to value underwater assets on their books such as real estate and mortgage-backed securities.  The Financial Accounting Standards Board (FASB) changed the rules in 2009, and the banks can value these assets at whatever they think they will be worth at some fictional date in the future.  Instead of“mark to market” accounting where assets are valued at what they will sell for today (this is how the IRS does it), you have “mark to fantasy” accounting where you value the assets at what you hope to get for them in the future.  This is an insolvency problem so big that FASB had to change the accounting rules to make people think some banks are still solvent.  

................. By Greg Hunter’s USAWatchdog.com 

High Anxieties: The Mathematics of Chaos

"The hyper-rich are facing something worse than death: becoming poor. Do you think they will go quietly? I think they will do whatever it takes and sell it to us in the name of 'saving the system.'"

David Malone, Debt Generation
David Malone writes a financial blog Golem XIV.

A number of people had been warning of a collapse including myself. The bubble in housing and dodgy credit was apparent to anyone who had eyes to see, the time and training to look, and a mind unclouded by conflicts of interest.

And that is perhaps the heart of what went wrong. Few were acting from conscience and principle, and most, as is so human, were guided by self-interest, ideology, rosy thinking, careerism, and the flawed models that supported inaction in the face of monstrous injustice and transfers of wealth from the relatively innocent and unsuspecting to the financial predators..

Author’s Note from Debt Generation By David Malone

"From the very start of this crisis what concerned me, above all else, was the almost total lack of any real and meaningful debate. Decisions have been made that will affect us for generations to come, but did we ever truly hear competing ideas, explanations and alternative solutions? I certainly didn’t. All I heard was a worrying unanimity. 

The more I read, the stronger my conviction grew that the mainstream media’s reporting of the crisis was alarmingly wrong. After three months of reading, I began to write. That was in early 2008. I had no intention of writing a book. I simply felt compelled to voice opposition to the deafening certainties being thrust at me from all sides. What I wrote, under the name GolemXIV, were comments on the Guardian newspaper’s website responding to financial news stories.

We had been denied, I argued, a meaningful discussion of the nature of this crisis and the futility of what was being done in the name of fixing it. As the crisis unfolded, I became more and more convinced that what was being done in the name of helping us would instead, whether by design or stupidity, turn us and our children into the Debt Generation: the generation whose principle use and fate would be to pay off other people’s debts. It made me angry. Angry at those engineering it, angry at those who justified it, and angry at those who told me there was no alternative.



......................................jessescrossroadscafe

It starts: the government’s plan to steal your money

There are consequences to being flat broke. There are consequences to investing any level of confidence in a financial system underpinned by debt and the creation of paper currency.There are consequences for ignoring reality and pretending that everything is normal. Some of these measures have already been implemented sporadically; customers of Italian bank BNI, for example, were all frozen out of their accounts starting May 31st upon the recommendation and approval of Italy’s bank regulator. No ATM withdrawls, no bill payments, nothing. Just locked out overnight. In Greece, the government has taken to simply pulling funds directly out of its citizens’ bank accounts; anyone suspected of being a tax cheat (with a very loose interpretation in the sole discretion of the government) is being releived of their funds without so much as administrative notification.
Simply, capital controls are policies which restrict the free flow of capital into, out of, through, and within a nation’s borders. They can take a variety of forms, including:

- Setting a fixed amount for bank withdrawals, or suspending them altogether
- Forcing citizens or banks to hold government debt
- Curtailing or suspending international bank transfers
- Curtailing or suspending foreign exchange transactions
- Criminalizing the purchase and ownership of precious metals
- Fixing an official exchange rate and criminalizing market-based transactions

Establishing capital controls is one of the worst forms of theft that a government can impose. It traps people’s hard earned savings and their future income within a nation’s borders.

The dominos have already started falling. Iceland. Ireland. Greece. Spain. Portugal. Italy. Cyprus. Soon even France and the rest of Europe.
So what are the most critical steps to take now?

1) Buy precious metals and store in a secure jurisdiction.

2) Open a foreign bank account.

3) Have a place to go overseas


.........................Simon Black

Necessary But Not Sufficient

We woke up this weekend to a €100 billion "rescue" of Spanish banks, and the initial reaction of the market was relief. But did we not just see this movie, but with Greek subtitles rather than Spanish? Was this another of those "necessary but not sufficient" plot lines that Europe is so good at? Kick the can down the road and hope for a happy ending?.... Spain is running an almost 10% of GDP deficit... It will cost Europe 500 billion if Spain goes bust, and then another 700 billion if Italy goes bust.To actually fix the problem, Europe must remove bank liability from the various nations and make them joint and several. But that is going to be something that Germany and other nations will fiercely resist....

                                                     .....................  John Mauldin

The Euro - What Should Have Been 

In my opinion the Europeans have snatched defeat from the jaws of victory……

First, Europeans didn't trust markets. The acceptability of a member state default should have been the primary Maastricht weapon to ensure fiscal probity. (I have written over and over how US states defaulted in the 1840s without permanent damage to the American union. But instead one bailout after another was set up for Greece and the European Central Bank began printing money.)

Second, the euro is getting blamed for the sins of socialism. (The fatal attraction of populism has been quite evident in the European political process which has promised more and more ultimately unaffordable benefits. The governments in Europe for quite some time have been gradually devouring their economies. The bulk of the countries in Europe are headed for bankruptcy anyway and the euro is taking the blame.)

Third, somehow the Europeans managed to saddle themselves with a bank clearing mechanism that effectively has allowed the weaker states to pile up with impunity more debt obligations to the strong states. (This has provided the peripheral weaker countries with another ATM machine not subject to market discipline.)

Fourth, the banking systems of Europe were not allowed to become integrated. (Each country has its own set of national banks which have their own sets of regulators and which tend to be undiversified in terms of deposits and lending. The banks are captives of the national governments for whom financial repression, to use an old economic term repopularized by Reinhart and Rogoff, is a routine practice.)

                                          …………………. Peter T Treadway.

Debt is not Wealth

These figures are staggering; the advanced nations typically have between three and ten times as much total debt as they have economic activity. In the United Kingdom — the worst example — if one year’s economic activity was devoted entirely to paying down debt (impossible — people need to eat and drink and pay rent, and of course the United Kingdom continues to add debt) it would take ten years for the debt
to be wiped clean.



….. (The) twin delusions central bankers have sought to cater to — for creditors, that debt is wealth and should never be liquidated, and for debtors that debt is an easy or free lunch — have been smashed by the juggernaut of history many times before. While we cannot know exactly when, or exactly how — and in spite of the best efforts of central bankers — I think they will soon be smashed again.


                                                       .................… John Aziz

10 Things That We Can Learn About Shortages And Preparation From The Economic Collapse In Greece
When the economy of a nation collapses, almost everything changes. Unfortunately, most people have never been through anything like that, so it can be difficult to know how to prepare... Things in Greece could be a whole lot worse, and they will probably get a whole lot worse before it is all said and done. But already things have gotten bad enough in Greece that it gives us an idea of what a full-blown economic collapse in the 21st century may look like. There are reports of food and medicine shortages in Greece, crime and suicides are on the rise and people have been rapidly pulling their money out of the banks.

                                            .......................theeconomiccollapseblog.com

Hot Drone-On-Drone Action

It’s now commonly estimated that more than 50 nations have drones, are making plans to develop them, or are at least planning to buy them from those who do produce them. In other words, the future global skies are going to be a busy -- and increasingly dangerous -- place. Iranians, Israelis, Russians, Chinese, Indians, British -- you name it and if they don’t already have something robotic aloft, they undoubtedly will soon enough....
 
In some ways, of course, the future is now.  When the first Terminator movie was released in 1984, its HKs seemed as futuristic as its time-traveling cyborg title-character.  Nearly three decades later, we’re living in an age in which armed robots do regularly surveil, track, and kill people.

                             ................. Nick Turse

 The Global Crunch is Just Getting Started 

...companies worldwide will need to downsize and "reform". That is debt deflation, guys, that is a credit crunch. These things hurt something bad, and there's no escaping it. Bailing out banks while at the same time bleeding industries dry and shedding jobs like so many flies won't help anything recover...

…… The only way Greek banks can be kept barely alive (or, if you will, the only way the dead can be kept on their feet for a while longer) is through emergency injections of capital (bonds) underwritten by all Eurozone citizens (and the rest of the world through the IMF)……. as all banks use (and/or already have used) their best assets as collateral for ECB loans, like LTRO, thereby shoving their other creditors and shareholders into the bleachers, the financing situation can only get worse. So people taking money out of their accounts seems the only possible consequence, in a vicious circle of self-fulfilling false prophecies……. And no, it's not just Greece, if that's what you might have thought.

Now, let's make one thing clear once more: deposit insurance is useless in all but a theoretical manner. It can make people feel good, but it won't do them any actual good when push comes to shove.

Deposit insurance in those European countries that are presently experiencing mass withdrawals (Spain announced €100 billion was withdrawn from its banks so far this year) is grossly inadequate: Italy’s deposit-insurance program is still unfunded, with banks pledging to contribute if and when necessary [!!!].

…… There is no solution. Nature, reality, will solve this mess. Not people. And reality can be a harsh mistress.

                                …….. Raul Ilargi Mendoz, The Automatic Earth.

Hope Is Never A Good Strategy  (PDF)

Greece’s end should have occurred three years ago. If it was allowed to follow every other bankruptcy process, today Greece would have been well on its way to recovery. What should have cost a few billion is now certainly going to cost hundreds of billions and maybe even hitting trillions once all is said and done.

On June 17, 2012 Greeks will once again head to the polls. We have no idea of the outcome. All we know is that Greece has already lost everything it had – it can’t lose much more. Rather, the biggest losers will certainly be the rest of Europe and this is why you will see subtle, then not so subtle and then lunatic fringe campaigning by Brussels to ensure that Greeks vote to remain in the Euro-zone.

The talking heads will tell you that we’ll have to wait until June 17 for this drama to unfold. IceCap is telling you the drama will happen before this pivotal day.
We fully expect The Troika (European Central Bank, European Union and International Monetary Fund) with the blessing of the US Federal Reserve to announce yet another save the day money printing scheme. We also fully expect markets to rally strongly on the news.
We speak often with investors and other managers on a regular basis and the high degree of complacency towards these very real problems continues to amaze us.

                                    ……… Icecap Asset Management

The Worst Economy In History

How do you solve the unsustainable debt problem of the U.S.? We now know from the White House: You raise taxes on the “wealthy” to bring in about $5 billion per year. The deficit is $1.3 TRILLION per year and rising. You can see that these revenues are less than a rounding error. It’s the size of a flea on an elephant. Washington spends $10 billion per day. So, this widely debated subject would bring in only enough to run the government for half a day. Yet, we hear speech after speech that taxing the wealthy into oblivion will resolve the unsustainable debt problem of the country.

The US is on the same path as Greece, Portugal, Spain, etc. And the Congress is not interested in changing that. The Senate hasn’t produced a budget for three years. Americans should insist that their paychecks be confiscated until there is a budget that  will reduce the debt..

                                                .............Bert Dohmen

Obama Administration Admits Cyberattacks Against Iran Are Part Of Joint US-Israeli Offensive

Administration officials revealed … that the Stuxnet virus was developed by the National Security Agency (NSA) and Israel's Unit 8200 (i.e. Israel's secretive cyber arm) to "become the attacker from within" Iran's nuclear facilities.

Officials also said that the recent Flame virus was not part of Olympic Games and declined to say whether Flame was a U.S.-Israeli attack, but the nature of the virus and sequence of events imply that it is part of the cyber offensive against Iran.
…… Michael Kelley.