N. Korea did not sink S. Korean warship

States Going Belly Up Part 10 - California Creakin'

From Calculated Risk -

From the Sacramento Bee: Schwarzenegger orders more furloughs

[Gov. Arnold Schwarzenegger's] new executive order requires employees take three unpaid days off per month. But unlike that policy, it has no termination date: Furloughs will end when lawmakers pass a 2010-11 budget.
...
The governor made the decision this week after Controller John Chiang said that unless lawmakers enacted a budget soon, the state's cash would go into the red by October. Chiang said he'll start issuing IOUs in August or September to conserve funds as long as possible.

And the beat goes on ...

 Perhaps this is why 1 in 5 Californians say they need mental health care.


The Real Effect

I started specifically covering this back in 2009 and generally five years ago with the start of the blog.
In April -

In June, California has bonds due and they're in the same boat. There's a world of hurt coming fast. I think they can prop it up a bit longer perhaps 3-6 months? But every time they do, they make the end result that much more devastating, EXPONENTIALLY.

Back in May -

The first move which is already more-or-less occurring is for States to cut "essential" services in an attempt to cajole the populace into being generous. But the serfs have had enough and won't tolerate much more cutting. So the game of chess continues with States enforcing ever increasing "voluntary" fees. Of course, should the serf not pay said voluntary fee, there is always a nice cell waiting for him.

In fact, much of the news lately has been local municipal budget cutting as cops and firefighters get laid off. Further, debtor's prisons have been making a fashion comeback. Don't forget the next part of the prediction as -

Knowing their back is up against a wall, look for States to start to moan to the Feds about a State emergency fund similar to Europe's. Except, this ploy won't work either. After all someone has to pay the piper and the globalists seem to feel it's you.

But this is exactly what the IMF and globalists want to stoke the riotous fires at home.

Ron Paul: Why Do They Want To Kill Us? Because We Occupy Their Land!

The Year America Dissolved

Paul Craig Roberts (father of Reganomics) nails it -

It was 2017. Clans were governing America.

The first clans organized around local police forces. The conservatives’ war on crime during the late 20th century and the Bush/Obama war on terror during the first decade of the 21st century had resulted in the police becoming militarized and unaccountable.

As society broke down, the police became warlords. The state police broke apart, and the officers were subsumed into the local forces of their communities. The newly formed tribes expanded to encompass the relatives and friends of the police.

The dollar had collapsed as world reserve currency in 2012 when the worsening economic depression made it clear to Washington’s creditors that the federal budget deficit was too large to be financed except by the printing of money.

With the dollar’s demise, import prices skyrocketed. As Americans were unable to afford foreign-made goods, the transnational corporations that were producing offshore for US markets were bankrupted, further eroding the government’s revenue base.

The government was forced to print money in order to pay its bills, causing domestic prices to rise rapidly. Faced with hyperinflation, Washington took recourse in terminating Social Security and Medicare and followed up by confiscating the remnants of private pensions. This provided a one-year respite, but with no more resources to confiscate, money creation and hyperinflation resumed.

Organized food deliveries broke down when the government fought hyperinflation with fixed prices and the mandate that all purchases and sales had to be in US paper currency. Unwilling to trade appreciating goods for depreciating paper, goods disappeared from stores.

Washington responded as Lenin had done during the “war communism” period of Soviet history. The government sent troops to confiscate goods for distribution in kind to the population. This was a temporary stop-gap until existing stocks were depleted, as future production was discouraged. Much of the confiscated stocks became the property of the troops who seized the goods.

Goods reappeared in markets under the protection of local warlords. Transactions were conducted in barter and in gold, silver, and copper coins.

Other clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. Uneasy alliances formed to balance differences in clan strengths. Betrayals quickly made loyalty a necessary trait for survival.

Large scale food and other production broke down as local militias taxed distribution as goods moved across local territories. Washington seized domestic oil production and refineries, but much of the government’s gasoline was paid for safe passage across clan territories.

Most of the troops in Washington’s overseas bases were abandoned. As their resource stocks were drawn down, the abandoned soldiers were forced into alliances with those with whom they had been fighting.

Washington found it increasingly difficult to maintain itself. As it lost control over the country, Washington was less able to secure supplies from abroad as tribute from those Washington threatened with nuclear attack. Gradually other nuclear powers realized that the only target in America was Washington. The more astute saw the writing on the wall and slipped away from the former capital city.

When Rome began her empire, Rome’s currency consisted of gold and silver coinage. Rome was well organized with efficient institutions and the ability to supply troops in the field so that campaigns could continue indefinitely, a monopoly in the world of Rome’s time.

When hubris sent America in pursuit of overseas empire, the venture coincided with the offshoring of American manufacturing, industrial, and professional service jobs and the corresponding erosion of the government’s tax base, with the advent of massive budget and trade deficits, with the erosion of the fiat paper currency’s value, and with America’s dependence on foreign creditors and puppet rulers.

The Roman Empire lasted for centuries. The American one collapsed overnight.

Rome’s corruption became the strength of her enemies, and the Western Empire was overrun.

America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many.

Overwhelmed by liabilities, the government collapsed.

Globalism had run its course. Life reformed on a local basis.

Alex Jones on Max Keiser’s On the Edge

Israel and World War III - Part 4, The Pieces Start Moving

It appears that the World War is gaining traction as several important developments are occurring. In Africa -

France has declared war on al-Qaida, and matched its fighting words with a first attack on a base camp of the terror network's North African branch, after the terror network killed a French aid worker it took hostage in April.

The declaration and attack marked a shift in strategy for France, usually discrete about its behind-the-scenes battle against terrorism.

"We are at war with al-Qaida," Prime Minister Francois Fillon said Tuesday, a day after President Nicolas Sarkozy announced the death of 78-year-old hostage Michel Germaneau.

Wasn't there a coup attempt in the area not that long ago? Anyways, the giveaway section of the article tells you all you need to know about the situation -

U.S. Special Forces have helped the four nations train troops in recent years.

American troops created what could be the insurgents? No way! It's only happened a few times before in conspiracy land Georgia, Afghanistan, Pakistan...and has perhaps been funded by the Dept of Defense?

On another front, Russia is vocally drawing a line in the sand -

Russia joined Iran in condemning new sanctions the European Union imposed Monday to curtail Tehran's nuclear ambitions.

In a statement Tuesday, Russia said the EU's use of sanctions not approved by the UN Security Council is "unacceptable," Reuters reports.

The EU's new sanctions, adopted Monday, put sharp limits on new oil and gas investment and curb financial links with Iran. Canada also slapped Iran with similar sanctions Monday, according to RTT News, and on June 24 the US Congress passed curbs on dealing with Iran's banking and energy sectors.

Meanwhile Ahmadinejad is claiming that the attack is going to be within three months -

Iran expects the United States to launch a military strike on "at least two countries" in the Middle East in the next three months, Iranian President Mahmoud Ahmadinejad told state-run Press TV.

In an interview recorded on Monday, Ahmadinejad did not specify whether he thought Iran itself would be attacked nor did he say what intelligence led him to expect such a move.

Ahmadinejad said Iran had "very precise information that the Americans have hatched a plot, according to which they to wage a psychological war against Iran."

Hmmm, perhaps against Lebanon and Syria as well? And with action occurring in Columbia & Venezuela, Costa Rica, U.S. military drills in South Korea/North Korea and a possible terror attack on a Japanese tanker in the Gulf, can there be much doubt that everyone is positioning for the start of the race?

People Begin Living Without Electricity and Water in California

Transaction Tax to Drain the Lifeblood?

A transaction tax is floated -

President Obama's finance team is recommending a transaction tax. His plan is to sneak it in after the November election to keep it under the radar. 

This is a 1% tax on all transaction at any financial institution i. e. Banks, Credit Unions, extra. Any deposit you make, or move around within your account, i. e. transfer to, will have a 1% tax charged. If your pay check or your social Security or whatever is direct deposit, 1% tax charged. If you hand carry a check in to deposit, 1% tax charged, If you take cash in to deposit, 1% tax charged.This is from the man who promised that if you make under $250,000 per year, you will not see one penny of new tax.

BP Reveals $11 Billion Loss

Where Is the Global Economy? - The Upcoming Crash and General Mayhem

Since there is continued discussion of a "Summer of Recovery" (Green Shoots Two) and continued optimism in various market based indexes, let's do a quick look at just where the global economy stands right now. First we go to Europe the catalyst for the Great Depression of the 30's -

With the assumptions and conditions for the stress test pulled straight out of CEBS' collective bottom, it is no surprise that a mere 7 banks for a total $246 billion in affected assets end up being defined as undercapitalized. But what happens when instead of using a 6% Tier 1 capital threshold, a Basel III 8% Tier 1 is used? Something log scale worse.

As Austrian Der Standart journalist Lukas Sustala points out, and as demonstrated on his chart below, the failure rate goes up exponentially: instead of 7 banks failing, 39 of Europe's biggest banks would be undercapitalized, and the impaired assets would amount to a whopping E2.6 trillion, requiring at least E30 billion in incremental equity capital, on top of the hundreds of billions already infused by European governments.

Since governments routinely lie, cajole and misrepresent economic data in order to facilitate a given agenda, we shall do the prudent thing and assume the worst case scenario listed. This results in 2,6 trillion euro in assets failing, bankrupting 39 of Europe's largest banks. If we once again use history as a guide, we can rest assured that bailouts will once again be front and center as Europe attempts to rescue these institutions. Following the Real Effect triple government inefficiency rule, the minimum 30 billion bailout becomes a bailout of 100 billion euros. Certainly not chump change and certainly not a recovery.

From here we move to the United States manufacturing -

Case in point: the Dallas Fed Manufacturing index of General Business Activity was just released, and it is a stunner: after coming in at -4 in June, and expectations were for a gradual improvement in July to -2.5, the actual released number was -21!

New home sales -

The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 330 thousand. This is an increase from the record low of 267 thousand in May (revised from 300 thousand).

The Real Effect
Is there any doubt that we as a country are in the economic doghouse? And yet we continue the same idiotic policies that brought us to this end in the first place. Look for continued talk of corporate welfare handouts bailouts as more institutions crash and burn. But ask yourself, where does the money go?

Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.

Goldman Sachs (GS) received $5.55 billion from the government in fall of 2008 as payment for then-worthless securities it held in AIG. Goldman had already hedged its risk that the securities would go bad. It had entered into agreements to spread the risk with the 32 entities named in Friday's report.

Overall, Goldman Sachs received a $12.9 billion payout from the government's bailout of AIG, which was at one time the world's largest insurance company.

Goldman Sachs also revealed to the Senate Finance Committee that it would have received $2.3 billion if AIG had gone under. Other large financial institutions, such as Citibank, JPMorgan Chase and Morgan Stanley, sold Goldman Sachs protection in the case of AIG's collapse. Those institutions did not have to pay Goldman Sachs after the government stepped in with tax money.

Similarities In Crashes - 2008 Part 2

China's Housing Market Vaporizes

Mish covers the Chinese real estate implosion -

Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjin

China's property bubble is now on the verge of collapse. Transaction volumes are significantly down and declining volume is how property bubbles always burst. In simple terms, the pool of greater fools eventually runs out.

In China's case, the pool of fools is heavily involved in "loan shark" schemes where speculators hope property values rise fast enough to cover the interest.

How bad is the damage?

A typical Beijing flat costs about 22 times average incomes in the city, state media said Monday, highlighting the challenge China faces providing affordable housing amid a property boom.

A 90-square-metre (968-square-foot) apartment in Beijing cost 1.6 million yuan (236,000 dollars) last year, the China Daily said, citing an independent report.

That compared to an average household disposable income of around 71,000 yuan in 2009, according to city figures.

The Real Effect
Soooooo... Just who is going to buy all that Treasury debt now that China is entering it's own "Financial Crisis"? Waiting....

Police Violently Smash Mother's Head Onto the Road

War On Terror Leaves the U.S Bust

Here's some more money we could have saved -

The United States has spent more than $1 trillion on wars since the September 11, 2001, terror attacks, a recently released Congressional report says.

Adjusting for inflation, the outlays for conflicts in Afghanistan, Iraq and elsewhere around the world make the "war on terrorism" second only to World War II.

The report "Cost of Major U.S. Wars" by the Congressional Research Service attempts to compare war costs over a more than 230-year period -- from the American Revolution to the current day -- noting the difficulties associated with such a task.

Since the the 9/11 terror attacks, the United States has spent an estimated $1.15 trillion. World War II cost $4.1 trillion when converted to current dollars, although the tab in the 1940s was $296 billion.

The costs associated with the "war on terrorism" could still go much higher.

A Congressional Budget Office estimate from 2007 said the cost of the wars in Afghanistan and Iraq could total $2.4 trillion by 2017, more than double the current amount.

The Real Effect
Remember the video from last night? The one where the Secretary of State admitted that the progenitor to the WAR ON TERROR was created by...the U.S. Government? Perhaps if we had followed Ron Paul's advice and left well enough alone, we wouldn't be broke at the moment.

On a side note, if we were to calculate the cost of the War On Terror expressed per casualty on September 11th, the tab would work out to be about $43 million dollars per victim per year since 9/11. Just some food for thought as you dine in your cardboard box this evening.

Reasons to Abhor the Police State - Part 4 (Cops Beat Man After He Finds His Son Dead)

But no, no, seriously we need more -

“All of a sudden, the guy comes over to me and says, 'Can I talk to you?' I said, 'Of course, why not?'” said Flynn.

She said he asked her where she was travelling and why she was using a pay phone. He told her to take off her sunglasses so he could see her eyes. She slipped them off, looked at the officer, and then pushed them back down.

His tone became aggressive, she said.

“He said, 'No take your sunglasses off!'” said Flynn.

As he searched her carry-on bag and asked more questions, a bystander offered her a card for a lawyer, but the officer sent him away, Flynn alleges.

More officers arrived with a police dog who walked up to Flynn, sniffed her, walked away, came back over to her again, hesitated a moment, then left.

Then they brought her to a room with two female CBSA officers for a strip search.

Flynn — a frequent traveller who has been strip-searched twice before — said this time was different. She said the women made her bend over a table, open her legs, and squat and cough. They asked her personal questions, like when she last had sex, Flynn said.

She fought back tears throughout the ordeal.

“I thought, if I start crying, they're gonna think I'm guilty,” she said.

“As soon as they finished the strip search, I started bawling.”

One guard told her if she didn't stop crying, she'd be detained, Flynn said. When she explained why she was crying, Flynn said a guard piped up: “How do you think I feel? I just had lunch. You make me feel sick.”

U.S. Blows Trillions Trying to Push a String

As if anyone needed to say that bailouts were going to be a problem -

Increased housing commitments swelled U.S. taxpayers' total support for the financial system by $700 billion in the past year to around $3.7 trillion, a government watchdog said on Wednesday.

The Special Inspector General for the Troubled Asset Relief Program said the increase was due largely to the government's pledges to supply capital to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) and to guarantee more mortgages to the support the housing market.

"Indeed, the current outstanding balance of overall Federal support for the nation's financial system...has actually increased more than 23% over the past year, from approximately $3.0 trillion to $3.7 trillion -- the equivalent of a fully deployed TARP program -- largely without congressional action, even as the banking crisis has, by most measures, abated from its most acute phases," the TARP inspector general, Neil Barofsky, wrote in the report. 

 The Real Effect
Gee, I wonder who saw that coming?

The downside to this is way above one trillion - This figure is optimistic. If things get ugly, the taxpayers are holding tens, if not hundreds, of trillions of dollars in these "toxic" loans. Oops...

I'd like to draw attention to the fact that was written before the "crisis" hit it's nadir in October.

This would have been the massively inflationary tactics employed by the Fed and others throughout the 90's and 00's. This resulted in massive increases in commodity prices during this span. In 2008 we hit a big brick wall where the inflation naturally gave was to deflation to unwind extreme debt positions held by institutions. (The 2008 crisis) The government's response to this wall, was to substitute a larger and larger can with a boulder. (Increased government debt)

To explain further, the government is going to have to service this new debt (boulder) with new debt at either a higher amount of debt borrowed or higher rate . Yet, the market is saturated with debt both private and public viciously competing for whatever available liquidity is left. (The wall) In order to succeed in averting further crisis, the boulder needs to be kicked through the wall.

Is this possible? As long as there are gullible willing senior citizens clients to buy ever more debt, the boulder can be exchanged for a bigger one and successfully kicked through the wall.

At some point though, demand for U.S. debt will cease to an extent (2011?) and the bills will come due. At this point the government is going to have to figure out a new trick to take care of the debt fiasco. If that trick is money printing, (hyper-inflation) lookout as everything you think you own will suddenly belong to some man down the road named Chen.

Sec. State Clinton Admits U.S. Created Mujahideen that Became al-Qaeda

The Greatest Depression Takes Hold - Part 3 Asia

Trouble in China -

China just announced that its Q2 GDP came in at 10.3%, just below a consensus estimate of 10.5%. Surprisingly, for some odd reason the market seems to believe this "data." Although in retrospect, based on China's bottom up GDP goalseeking, the number, which we will show in a second is completely irrelevant, could very easily be true, based on two just announced stunners about the Chinese economy. The first comes from Fitch, which in a report released today titled Informal Securitisation Increasingly Distorting Credit Data, uncovers that China has in fact been massively underrepresenting the actual amount of new loans in the first half of 2010, courtesy of precisely the kinds of securitization deals that blew up half of our own banking system: "Adjusted for informal securitisation activity, Fitch estimates that the net amount of new CNY loans extended in H110 was closer to CNY5.9trn, or 28% above the official figure of CNY4.6trn...on a flow basis the volume of credit being shifted off balance sheets in recent times has been large and rising. Activity also is largely concentrated among just a few dozen banks, and institution?specific exposure is often much higher." And some are wondering why China's AgBank was scrambling to raise $20 billion via a hurried IPO...

Yet this data pales in comparison with disclosure from a recent article in South China Morning Post, in which an economist at the Chinese Academy of Social Sciences noted estimates from electricity meter readings that there are about 64.5 million empty apartments and houses in urban areas of the country! This number is five times larger than the roughly 12 million in total US public (3.89 million) and shadow (8 million as estimated by Morgan Stanley) home inventory available currently. Forget Stephen Roach - China is covertly funding and creating a housing bubble that is at least 5 times as big as that of the United States.

The Greatest Depression Takes Hold - Part 2 Europe

Looks like things went from bad to significantly worse in a heartbeat.

From Zero Hedge -

It was only yesterday that Britain's societies of accountants and economists disturbed 5 o'clock tea, saying that - according to their calculations - the Empire's public net debts of £2 Trillion were more than double the official figure.

This was a bad guess. It is £4 Trillion or again double that overnight, at least according to this story in the Independent:

Spain -

The just completed auction of Spanish 2025 Obligacions for just under €3 billion, came at a 5.116% yield, a substantially worse level than the last auction as of April 22, which was placed at 4.434%. 

Germany, Spain, Greece and Portugal -

Barclays analyst Jeffrey Meli has issued a report "European bank stress tests: A preview" in which he estimates that if properly executed, the Stress Test, whose results are to be announced on July 23, will require an infusion of €85 billion to replenish capital levels. Specifically, quantifying the amount of capital needed would include €36 billion for Spanish cajas, a number far greater than expected to date, €34 billion for the German landesbanks, €8.6 billion for Greek banks and €6 billion for Portuguese banks.

The Real Effect
Just a real quick recap on the preceding information - Britain is four times as broke as anyone thought, Spain is kicking the can down the road wishfully hoping the cost of debt gets cheaper, and European banks are just as insolvent as ever. Once again, how can this go wrong?

Year End Predictions Review - Part 1

On December 31, 2009 I posted the following -

Unemployment
Real Effect -

U3 will hit 11.5 % and could go as high as 15%, the U6 as high as 30%, but the rates will certainly not go down very far, if they go down at all. 

Evidence -
California's at 12.6%, national rate is down to 9.7%. However, the second half promises to be worse than the first because the Census employment workers that were hired will be released and additional layoffs will commence as the Depression deepens. The only possible issue I see with this is workers being excluded because they have become officially discouraged and no longer count towards the statistic.

Points (0 of 1 - Pending 1)

Commodities
Real Effect -

According to economists John Williams and Bob Chapman gold is going to explode, perhaps as high as $7,000 and ounce. This temporary dip down is nothing more than a small technical correction.

Evidence -
Gold has rallied to $1261 and ounce recently. Although an overall rally of 15% is not a bad return on investment thus far it has yet to step into its major potential as the flight to safe capitol has started but not taken full hold yet. Silver has lagged and struggled sideways but has come close to record levels as well.

Points (0 of 1 - Pending 1)


Real Effect -

Food will probably be up 6% and we could possibly hit a scenario where we could physically run out.

Evidence -
Rising demand and reduced supply drove supermarket prices for 16 basic foods up 6.2% in the first quarter of 2010. Nailed in one quarter.

Points (1 of 1)

Real Effect -

Oil is currently at $78.97 and it could go somewhat higher, although I do not believe it will be as volatile as it was in years past. (Unless the Straits of Hormuz gets blocked)

Evidence -
Oil is currently at $77.04 and has fluctuated between $72 - $79 for most of the year so far.
Definitely not the volatility that we are used to over the past decade.

Points (1 of 1)

Commercial Real Estate Collapse
Real Effect -

Is already in progress and gathering steam with the bankruptcy of CIT Group which is tied at the hip with CITI Group. In fact it has already fallen 37 percent in value in the last year and defaults are reaching 16 year highs.

Evidence -

Spending on U.S. nonresidential construction is likely to fall more than 20 percent this year before recovering slightly in 2011, according to a semiannual survey by an architects' trade group.
...
Construction spending on hotels will drop more than 43 percent this year, construction of office buildings will decline almost 30 percent, and retail and industrial categories will be down more than 20 percent, the [American Institute of Architects] said.

I'll go one step further and predict that this "recovering slightly" in 2011 isn't going to happen either.

Points (1 of 1)

Real Estate Collapse
Real Effect -

The second wave of the housing market collapse hits (The less risky ARM-A loans continue to default) and banks have yet to start unloading their “shadow inventory” in an attempt to stay solvent. I believe this is already underway as we see-

Evidence -

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 9, 2010.

On an unadjusted basis, the Index decreased 12.6 percent compared with the previous week.

The Refinance Index decreased 2.9 percent from the previous week and the seasonally adjusted Purchase Index decreased 3.1 percent from one week earlier. This was the lowest Purchase Index observed in the survey since December 1996.

We have had a nice little plateau for the last few months in housing prices, however now the plunge starts again in earnest as the tax incentives end.

Points (1 of 1)


Total Points for Part 1:  ( 4 of 6 with 2 outstanding)

Reasons to Abhor the Police State - Part 3

As things become clearer and clearer -

The Greatest Depression Takes Hold - Part 1 US

Remember those times when your grandparents would tell you about the difficulties of the Great Depression? Well, thanks to the wonders of Government Spending, you too get to tell your grand kids these stories. From Zero Hedge -

The record slaughter of shippers continues as the BDIY posts the largest overnight drop of 4.5% in the most recent 34-consecutive day trounce in dry bulk shipping rates. Short term Capsize and Panamax charters for Pacific delivery have hit $29k and $19k, respectively, both approximately 30% lower than comparable Atlantic delivery rates as the Chinese transit corridor is now massively oversupplied. 

The extend and pretend game fails as retail sales continue to fall -

The deflation threat continues as the drop in total retail sales persists, with the latest number coming in at -0.5%, once again worse than expectations of -0.3%, compared to a prior revised number of -1.1%. Ex autos come in at -0.1%, in line with expectations. The biggest plunge was in "Motor vehicle & parts dealers" which plunged 2.3% in June. 

Housing plummets -

The Mortgage Brokers' Association reported that demand for loans to purchase U.S. homes sunk to a 13-year low last week, and refinancing demand also slid despite near record-low mortgage rates. As Reuters noted, "requests for loans to buy homes dropped 3.1 percent in the week ended July 9, after adjusting for the Independence Day holiday, to the lowest level since December 1996, the industry group said....Rock-bottom borrowing costs are helping borrowers with pristine credit to buy and those who still have equity in their homes to refinance."

And the States are spinning the drain -

The latest funding fiasco comes from Texas, which Reuters reports is planning on selling $2 billion in debt just to refill its empty unemployment trust fund. 

The Real Effect
Think about that last bit of info for a second, we are going into debt, to pay people to do... NOTHING. How can we lose!?! Please keep in mind that I am not arguing for or against this policy, merely that when examined on it's own merits, it is a stupendously idiotic policy in the area of production. And for those of you that don't get it, think about it again. We are taking money (production) away from those that are productive and giving it to people that are doing nothing (unemployment).

Iran and Busy Politicians?

The news rolls in about "military force" as the US is on board for an attack against Iran -

The United States may be forced to launch an attack on Iran’s nuclear weapons facilities if diplomatic efforts and economic sanctions against the Islamic Republic fail, Sen. Joseph Lieberman said Wednesday after a meeting with Israeli officials in Jerusalem.

Appearing at a news conference with Sens. Lindsey Graham and John McCain, Lieberman was unusually harsh in his assessment of the Iranian threat. There is a broad consensus in Congress that military force can be used if necessary to stop Iran from obtaining nuclear weapons, he said.

It appears the northern attack route via Turkey is out -

The group also addressed President Barack Obama’s fence-mending meeting with Israeli Prime Minister Benjamin Netanyahu and the worsening situation with relations with Turkey, whose Islamic government is steadily moving away from the West to a closer relationship with Iran, according to experts. Turkey is one of the United States' oldest and best allies, McCain said.

"Of course, we have been disappointed by the actions and words the Turkish government was used," McCain said. "I hope that at some time the Turkish leadership would lower the rhetoric, reduce it, and try to solve differences in a quiet way."

Biden deals with Iraq -

In fact, Iraq has become a battleground for competing US and Iranian influence, and Iran has the upper hand.

The UAE falls in line -

A diplomatic firestorm has been set off in the wake of an article in the Washington Times. According to the article, United Arab Emirates Ambassador to the United States Yousef al-Otaiba openly advocated a US military attack on Iran, saying he was willing to “live with” damage such an attack would do to the security of the tiny country.

Israel positions against Lebanon -

Israel's military on Wednesday offered evidence of what it says is a growing threat from Hezbollah in southern Lebanon, using aerial images to highlight the militants group's activities in towns and villages close to the Israeli border.

In a briefing to journalists, Israel Defense Forces Colonel Ronen Marley revealed previously classified photographs to show what he said was a unit of 90 Hezbollah militants operating in the village of Al-Hiyam, where they were storing weapons close to hospitals and schools.

"Hezbollah is establishing itself with increasing strength in the villages," Marley said. "Every day they are collecting significant intelligence on our forces along the border and every day they are engaged in digging, building and laying communications infrastructure to prepare themselves for war."

And courts Washington to help with Syria -

Prime Minister Benjamin Netanyahu met with US Defense Secretary Robert Gates on Wednesday and the two discussed the Israel Defense Forces' ability to prepare to face a renewed eastern front.

Gates and Netanyahu discussed Israel's security measures in the frame of a permanent agreement with the Palestinians, and addressed ways to prevent the infiltration of rockets, missiles and other weapons into the territory of the future Palestinian state.

Is India heading off China?

India deployed its army in Kashmir's summer capital of Srinagar for the first time in nearly 20 years today in an attempt to break an escalating cycle of violence that has killed 15 people and wounded many hundreds.

A long column of armoured military vehicles drove through Srinagar in a show of strength after police failed to control weeks of street protests in the disputed region. The troops repeatedly fired live rounds into crowds of stone-throwing protesters.

And Washington?

Speaking today in Peshawar, America’s Consul General for Peshawar, Candace Putnam, called for the Pakistani government to launch a military offensive against North Waziristan, saying it was “vitally urgent” that it be done soon.

The Real Effect
Wheew!!! If I didn't know better, I would say that it's a World War in slo-mo.

Truth Needs to Be Shared

It's always nice to hear the truth told in a comedic way -

Well, perhaps Obama is running that line of crap, but I'm not - and never have been. But let's look at what's being "identified" by the CBO:

The bulk of the swing resulted from economic and technical revisions (33%) [We lied and the economy was being pumped with excessive debt], other new spending (32%) [Medicare Part D anyone?], net interest on the debt (12%) [What, you mean I have to pay that credit card?!], the 2009 stimulus (6%) and other tax cuts (3%). Specifically, the tax cuts for those earning more than $250,000 are responsible for just 4% of the swing. If there were no Bush tax cuts, runaway spending and economic factors would have guaranteed more than $4 trillion in deficits over the decade and kept the budget in deficit every year except 2007.

Right. But notice the above. And notice who was responsible for all of it. Who signed Medicare Part D again? Who pumped credit following 9/11? Who directed his DOJ to interfere with state regulation of predatory lending - that is, knowingly fraudulent credit creation?

The Democrats might get the "cause" wrong but they sure as hell didn't misidentify the responsible jackass. His name was George W. Bush and he was (up until Obama took office!) the undisputed KING of Ponzi Economics in the history of America.

Not that this should surprise. You might want to look into what sort of businessman he was before he came to the White House. Being one of his "investors" would have been great - if you liked turning large fortunes into small ones.

The Real Effect
Any long time reader can view my multiple positions on George W. Bush here and here and here and here and...well, you get the point.

Conservative is defined not by people lumped in a group but by a person's intellectual position on a given subject. Simply claiming you are "conservative" and then spending money like a drunken sailor does not do the job. It is the job of the faux conservative groups to convince us how indiscriminate spending namely on unfunded liabilities is a good idea or even remotely conservative.

Take the matter of the national debt -

While it is true that Obama has significantly increased spending. At the time, so had George "conservative" Bush. So it follows that if one is opposed to "reckless" spending under Obama, likewise one must also be just as opposed to spending by George Bush. (Let's keep in mind though that it is Congress that actually does the spending, albeit the President does have a veto pen.)

Let's keep this in mind when going to the voting booth in November shall we?

Keiser Report №59: Markets! Finance! Scandal!

Tax Your ATM Withdrawals?

Wow, this certainly reminds me of an episode of Simpsons, in which the town levies an insane and ever growing bevy of taxes on a film studio filming in their town. While seemingly absurd at the time, we are reaching further and further into the sheer demented insanity of unquenchable government when an individual can't move his money from one location to another without being taxed!

When Lanny Davis drops an op-ed, there tends to be more to it. So we should take note that he’s got Democrats signing onto a plan to tax your ATM withdrawals.

Why, you ask? Well, to pay down the deficit.

Rep. Chaka Fattah (D-Pa.) has introduced Davis’s dream legislation. It would charge a penny for every dollar of your money drawn from an ATM machine. That would then beg the question — why put your money in a bank if you are going to get taxed merely for the right to access your money.

The Real Effect
Presumably, any form of freedom is extinct in this country when you can't remove your money from your bank that you have already been taxed on, without being taxed again. Ostensibly, you need to pay an individual when a service is rendered, but the Federal government would have you believe that the act of you simply moving your money is an event which needs to be paid for.

This could be comical based off the sheer temerity of the idea if it didn't threaten so many people's well being.

The Road to Hell Is Paved...

The revenue generation machines come down -

Dozens of photo-enforcement cameras on freeways throughout the state are coming down this week.

A total of 76 cameras will cease operation on Thursday.

The photo-enforcement program, which was meant to catch speeders on Arizona's freeways, has been controversial from the beginning. The cameras first went up nearly two years ago.

Remember this when some politicrat tries to edumutate you that his new whatchamajig will be The Next Best Thing and will Solve All Our Woes! But first we must ask the question, why are the cameras coming down?

While the cameras have done a good job at snapping speeders, drivers have been ignoring the tickets.

According to the Department of Public Safety, the cameras led to more than 700,000 tickets in the first year of operation. Many of those people, however, never paid the fines.

Some say that's because the tickets were mailed, making them easy to ignore.

Any driver who ignored a photo-enforcement ticket was supposed to have been served. One problem was that process servers were inundated and simply couldn't get to everybody. If a person was not served, his or her ticket became invalid after three months.

 Not to mention the whole legality of a citation generating machine - How does the machine work? At what point does it capture the license plate? Who was driving the car? The list goes on and on. But here's the best reason to get rid of them.

The speeding tickets should have generated about $90 million in the first year of the program. About one-third of that was actually collected.

 Oh, the safety revenue initiative didn't generate enough revenue. Big surprise there.

The Real Tea Party Begins Here!

6'4" Cop Bullies 4'11" Videographer as She Videos a BP Worker Taken Away in Ambulance

1,500 Oil Cleanup Workers Sickened - BP's Lead Doctor In Gulf

Reasons to Abhor the Police State - Part 2

As if we need more evidence of the inefficiency, if not outright uselessness of most "law enforcement" -

The actions of a rookie Miami police officer are under review after he shot and killed a man during a traffic stop.

According to Miami police spokesman Detective Willie Moreno the officer pulled a man over near Northwest 3rd Avenue and 17th Street just before 1 p.m. Monday afternoon.

Family and friends identified the man as 36-year-old Decarlos Moore and describe him as a good man. Mayor Tomas Regalado explained what happened during the incident.

"There was a traffic stop. And two police officers. One rookie, one veteran police officers. They got out of the car. We understand that the driver went back to the car and this is when the shooting took place," said Miami Mayor Tomas Regalado.

At some point during their exchange the driver of the car reportedly reached for something. Feeling his safety was threatened, the officer pulled his gun and shot the man, his round striking the driver in the head.

Miami police Det. Willie Moreno issued this statement Monday afternoon: "It is unknown what caused the officer to discharge his firearm fatally striking the driver who had stepped outside of the vehicle."

Family members say Moore was likely reaching for registration or insurance papers.

"Shot him right in the back of his head. No gun no nothing. That's messed up," said Thomas Williams, a witness told CBS4's David Sutta.

The man was rushed to Jackson Memorial Hospital where he died.

Police said the man was not armed and did not have any firearms in the vehicle.

The Real Effect
Officers, "civilians" are not the enemy. For starters, you're not in the military so you are a civilian. Second, this is not Iraq. We are not setting traps for you and ambushing you on the side of the road with IEDs. Third, we resent being treated like cattle. We are not a commodity to trade, buy, sell and fleece all so you can retire with a 100k pension that you will involuntarily give to your "banking buddies".

There was a point in time when most Americans respected you. Now the opposite is becoming increasingly the case as the body count mounts on our "side". We don't want a fight, but we will protect ourselves, our property, and our families from all enemies foreign and domestic.

Ron Paul Talks About GOP Rifts

Reasons to Abhor the Police State - Part I

Another great outing for the G20 -

The 57-year-old Thorold, Ontario resident – an employee with Revenue Canada and a part-time farmer who lost a leg above his knee following a farming accident 17 years ago – was sitting on the grass at Queen’s Park with his daughter Sarah and two other young people this June 26, during the G20 summit, where he assumed it would be safe.

As it turned out, it was a bad assumption because in came a line of armoured police, into an area the city had promised would be safe for peaceful demonstrations during the summit. They closed right in on John and his daughter and the two others and ordered them to move. Pruyn tried getting up and he fell, and it was all too slow for the police.

As Sarah began pleading with them to give her father a little time and space to get up because he is an amputee, they began kicking and hitting him. One of the police officers used his knee to press Pruyn’s head down so hard on the ground, said Pruyn in an interview this July 4 with Niagara At Large, that his head was still hurting a week later.

Accusing him of resisting arrest, they pulled his walking sticks away from him, tied his hands behind his back and ripped off his prosthetic leg. Then they told him to get up and hop, and when he said he couldn’t, they dragged him across the pavement, tearing skin off his elbows , with his hands still tied behind his back. His glasses were knocked off as they continued to accuse him of resisting arrest and of being a “spitter,” something he said he did not do. They took him to a warehouse and locked him in a steel-mesh cage where his nightmare continued for another 27 hours.

There was a time and place where just one such incident would prompt a whole host of reviews in the entire process. Regardless of the "Black Bloc" protesters, no human being deserves to be treated with such vile contempt. As a matter of fact, that is exactly why our men in black are hired in the first place, TO PROTECT OUR RIGHTS!

If an officer is incapable of determining the difference, what is he doing on the force in the first place? Yet these beatings continue year after year solely because the officers are able to dress up, smash a few windows, retreat behind police lines and then declare EVERYONE THE ENEMY.

BP AD: Their Propaganda Versus the Reality

No Martial Law Prep Here, Seriously

Is there any doubt that government's initial reaction to general inquiry is to lie?

At a National Guard exercise being held in Toyota Park, a soccer stadium, Colonel Johnny Miller, the head of the drill, told Dew and Douglass, “Our partner country with Illinois is Poland, so we’ll have Polish military folks here,” adding that Polish law enforcement agencies, Polish FBI, as well as Latvian forces, would also be in attendance.

 

Miller said that the Polish personnel would be there merely as observers to incorporate what they had witnessed into their own counter-terror and law enforcement programs, a claim later disproved when the troops were seen participating in the programs.

 Moving on to Elk Grove Village for day 3 of the exercise, SFC Mark Ballard of the Illinois National Guard said that the Polish forces would be “integrating into some of the civil military units that are participating in this exercise” as part of Illinois’ partnership with the Republic of Poland, a relationship based around “integrative training” and blending military and civilian forces in the event of a national emergency, as well as making this process of integration with foreign troops more “visible”.

Or perhaps you would like the report from New York?

Alex Jones and Matt Ryan reported earlier today that the National Guard is currently working with police in Albany, New York, to confiscate weapons from citizens in violation of the Constitution and Posse Comitatus.

In New York state, the “other condition” allowing the military to violate the rights of citizens is the bogus “war on drugs.” As the video here reveals, the cops and National Guard are using the spurious drug war to search for and confiscate weapons in violation of the Second Amendment. Local cops are using x-ray technology provided by the Pentagon to search vehicles. In addition to images of pot plants, Fox 23 shows an image of an x-ray scan that reveals a rifle hidden inside a car.

Or perhaps in the Gulf?

And the Gulf again?
Taking photographs of failed oil booms — which trap oil in coastal waterways, or simply float ineffectively — could be a class D felony and result in a $40,000 fine, according to Georgianne Nienaber’s reading of this Deepwater Horizon Unified Command release.

Permission to enter the safety zone must be granted by Coast Guard Captain of the Port of New Orleans, a solution, says the investigative journalist and author, that is unworkable.

The Real Effect
Alright everybody, critical thinking time. Got your "thinkin' caps" on? Good.

Aside from your warm tinglies that you get upon hearing the word "blending" (Awe, aren't we all inclusive now?), does anyone think that adding foreign troops to our military ranks is a good idea? Especially in the event of an "emergency" during which accountability is generally lower?

Troops are for protecting your country not another. Generally to fix the issue of your troops being gone, you bring them back not hire foreign mercenaries!

If this is continued actions and casulties that would be unacceptable by a sovereign nation's own troops become dualistically accepted and rejected simultaneously. On the one hand, they are in our nation, as guests so it follows that we be somewhat civil towards them. On the other, once an invisible threshold of injustice is crossed, they are revealed for the loathsome occupiers that they really are.

Of course in the government's eyes no good plan should be left to a single locale, so these stunning ideas are being applied to the local police forces as well. Kiss the idea of representative government goodbye.

Who remembers last year's Operation Red Dragon?

The Height of Hypocrisy

The Feds claim power which they do not possess -

Costa Rica has allowed 46 US warships and 7,000 Marines to enter the country despite objection by the opposition parties, which describe the move as “illegal.”

Costa Rican opposition parties denounced the decision of the Legislative Assembly, describing it as “illegal” and “in violation of national sovereignty,” Presna Latina reported Saturday.

The decision grants US troops permission to stay in Costa Rica from July 1 to December 31 to fight drug trafficking.

While prosecuting others for doing their job that they are Constitutionally obligated to uphold that they refuse to do -

The Justice Department could file a lawsuit challenging Arizona’s immigration law as early as Tuesday, an official tells Fox News.

The potential court action comes just days after President Obama delivered a speech calling on Congress to tackle a comprehensive overhaul of the nation’s immigration system. In the speech, he criticized Arizona’s law and warned that national legislation is needed to prevent other states from following suit.

And why is Arizona so discriminatory? Maybe it has something to do with this.

Seriously people, why do we tolerate this?

Iran Escalating, Tick Tock

Building on the news from last week, we get a peek at the Iran War Law -

US President Barack Obama signed into law last Thursday Congressional legislation against Iran that has the potential to heighten tensions, not only with Tehran, but America’s European and Asia rivals.

The Comprehensive Iran Sanctions, Accountability, and Divestment Act requires the US Treasury Department to bar access to the American financial system to any foreign bank conducting transactions with Iranian entities blacklisted by the UN or the US government. The list includes some major Iranian banks, the Iranian energy sector, and businesses associated with the Islamic Revolutionary Guard Corps (IRGC).

The legislation provocatively targets foreign companies selling refined petroleum products, such as gasoline and diesel, to Iran, including producers, insurers and those involved in transportation. While Iran has huge reserves of oil, its energy infrastructure and refining capacity are badly rundown due to a lack of investment, forcing the importation of gasoline.

Calling our bluff, Russia sees our bet and raises the pot by 20k -

In one of the biggest show of military might since the collapse of USSR, Russia mobilised 20,000 troops and state-of-the-art weapons in a drill, with President Dmitry Medvedev on Sunday asserting that his country is a “great” naval power capable of defending its interests.

The Real Effect
This reminds me of the freakout regarding Iran giving Syria radar. Oh no! The Syrians have radar think of all the planes they could see!!! Won't someone think of the children!?! Let's review shall we?

April 25, 2006 -

With China backing up Russia and both countries in bed with Iran, please explain to me how taking on the Persian empire is a wise move?

For the record, I do believe that Russia and China are very real and deadly military threats and that the last 17 years of diplomacy are nothing more than an attempt to lure the American people an(d) military into a compromised position in order that they may easily secure dominance.

With Obama refusing to part ways with Israel, yet orchestrating a supposed "rift" between the two countries, Israel moving to seize Lebanon (Perhaps to seize the timing on this death?) and slapping Turkey, the US army perhaps moving to block the Chinese and Russia, Hillary talking tough with Russia and other various items, things just continue to ratchet up. Will Israel give Iran any sort of ultimatum like Saddam got, or will they just launch operations?

Bilderberg Breaker Estulin: US Builds 13 Secret Bases for War with Russia

Karl Explains Why "It" Is Screwed Up

Since people seem to be grabbing the obvious now, we'll take a look at what will FIX this problem. In response to runaway deficits and deflation we get the following from The Market Ticker -

If one actually "prints" then the immediate response in the marketplace is to shut down all lending of capital. Why? Because the person with capital has no means of assessing the damage to their purchasing power. Remember, interest is what's charged for the time value of money, the risk of default and the risk of dilution of your purchasing power by either naked shorting of the currency or outright unbacked emission.

The "deal" that all debt-backed currency systems make is that unbacked emission won't happen. Naked shorting (which is what issuing unsecured credit is against a currency) is bad enough; unbacked emission is ruinous to those who have lent capital on fixed terms.

The danger is that nobody knows in advance exactly where the edge of that cliff lies. Greece and Iceland found it the hard way and suffered ruinous damage to their economies. Neither thought the cliff was near; both engaged in hinky accounting to try to hide exactly how bad the damage was, just like the pension funds, states and federal government are doing right here, right now, in The United States.

"Austerity" connotes starving in the streets among the public but in point of fact thrift - saving back 10 or 20% of one's income and a government that spends less than what it takes in via taxes, paying down accumulated deficits, is not a dirty word at all.

Capital seeks return, and when you engage in austerity you free capital. The combined earnings power of the nation is incredible; government can, at best, extract perhaps a fifth of it and redirect it, but in the process loses so much to internal costs, fraud and waste that it makes a poor allocator.

Growth comes from the productive use of credit - that is, credit taken for the purpose of expanding factories, machine shops and innovative businesses that invent things like transistors and microprocessors.
Credit used for consumption - which includes virtually all credit taken by state and federal governments - is corrosive to to the financial health of the nation over time. The negative impacts don't appear right away, as it is the compound nature of interest that causes the problem. In the short term such expenditures look great, as the pulled-forward demand causes more production to take place.

But the debt left behind still needs to be serviced, and even under the argument that government essentially creates that demand by issuing, the fact remains that the exponential nature of both growth and debt means that one cannot escape from the crush that comes from the use of credit for either consumptive or speculative purpose.

The Real Effect
While borrowing can serve a legitimate purpose, it's application is quite limited. For instance, many believe that borrowing to finance a "College Education" is a laudable goal. Of course these individuals would prefer no borrowing, but debt is the norm, not the exception to this goal. What an individual should rightly do in these situations is to compute what their return on their investment would be. Perhaps this post by Vox Day will clear up any misconceptions there may be.

Now our present "crisis" at hand is caused precisely because we are pulling forward demand with excess credit and the solution is to allow the excess credit to be drained an put to productive use.

• End ZIRP. This is driving commodity inflation and causing undue hardship as the American consumer has to pay for a given commodity REPEATEDLY.
• Allow banks to fail. Including "too big to fail"
• Cut unproductive assets and spending. Feds, I'm looking squarely at you.
• Cut taxes. DEEP! (See previous point)
• End excessive regulations, hold criminals accountable. (In that order)
• Above all, NO MORE WARS! Wars inherently destroy capitol.

These actions will allow for new innovations, that the Feds CANNOT predict, to prosper and lift our productivity.

The Borders Are Secure Proclaims Rep. Pete Stark at Town Hall

Gerald Celente: Doom of Currencies!

ECB Armageddon Recap

Yesterday I posted saying today was going to be dangerous. Let's review -

Globally Spain just barely squeaks in another bond auction while getting it's debt downgraded, the ECB is kicking the debt can down the road and trading it for a boulder, housing prices have crashed in Ireland, and our pimp China's economy is just as much of a lie and is tanking.


Closer to home, US jobless rates are spiking again (Fine recovery we're having here) home sales dropped, cities are cutting fireworks, HooverObamavilles are springing up all over, debt is historic, spending is beyond farcical, the dollar is crashing again, Feds are losing their appetite for spending, and I believe I detect the shrill cries of the harpies on the wind - "Will someone please think of the children!"

But alas, I am speaking too soon as all is well because Obama has a plan for you to go back to work. Seems like this decade is sharing an awful lot of commonalities with the 30's. Now where is that dictator?

The Real Effect
Ask yourself, is this the legacy you want to leave your children?

Interesting Picture

Note the phoenixes...

U.S. GOV can kill ANYONE including YOU without trial COVERTLY !!

ECB Armageddon?

Denninger looks at a very bleak situation -

...the ECB has a rollover problem coming, in that they need to roll a significant amount of term liquidity deposits Thursday.

If those rolls fail, the markets will crash.  Both credit and equity.

If the ECB tries to machine it's way around a failure the results could be cataclysmic.

I have warned for over two years that these BS games played by the various governments and central banks WOULD NOT WORK and in fact CANNOT, mathematically, work.

The Real Effect
The law of supply and demand is dictating at this point that there isn't a whole lot of demand for debt at the moment. There's plenty of that to go around. So when given demand goes down, the price does as well, therefore the yield on a bond will go up. At this point the market is saturated with debt as evidenced by the direct actions that the Central banks are taking in the auctions over the last few months. Some have even failed outright.

And the Euro Central Bank only has to roll over, 420 BILLION Euros.

The S&P is in a death cross below 1040, Berkshire possibly has to put up $8 billion in collateral, France in the cross-hairs of the CDS kamikazes, and oh yeah, we've got our own rollover to worry about too. But it's all ok because Krugman realizes it's a depression now.

Anyway you shake it, today is likely to be a very dangerous financial day.