An Unsustainable System, A Warning of Collapse

Dees Illustration

Bob Chapman
International Forecaster

We do not believe that Americans, particularly elderly Americans, understand what the elitists are up to in regard to Social Security and Medicare. The Council on Foreign Relations and the Peterson Foundation has for years been working on plans to terminate Social Security and Medicare. Cuts in these paid for programs were impossible to get through Congress. Thus, the ruse was born of getting around Congress.

A flash issue was raised regarding a short-term debt extension that could have been passed in 15 minutes that demanded budget cuts for passage. In that process the Obama Enabling Act was formulated, patterned on the German Enabling Act passed in 1933 by Adolph Hitler. It allows a 12-person panel to bypass Congress regarding legislation. The changes are made in this committee and cannot be debated or amended and must be voted on via a straight up and down majority vote. While this was transpiring, as part of the plot, Standard and Poor’s downgraded the US debt rating based upon there not being large enough cuts in what Congress likes to call entitlements, which are not entitlements, but paid for benefits. The reason for the cuts is that both benefits trusts are broke, all the funds having been spent on other things over the years. S&P said that if major cuts are not made that they would cut the US debt rating again in November. Thus, you can understand the framework and what the elitists have paid the committee and Congress to do. The committee takes all the heat upon passage and Congress generally gets off the hook.

Needless to say, the controlled mainstream media reports on none of this. That a chained CPI is to be employed - is little discussed. The cost of living adjustment, or COLA, changes as CPI changes. The problem is the CPI, currently up 3.6%, is a bogus statistic. Real inflation based on the 1980 model is up 11.2%. As you probably remember there has been no COLA upward adjustments for two years and another is being considered this month for next year. It will be interesting to see what they come up with – probably no change. The COLA based on CPI isn’t bad enough now they want to chain-weight it. These changes won’t take place for a few months so there is time for Americans to complain to all of the members of the House and Senate regarding this rape of both benefits that they have paid for. If Congress wants to cut they can cut the military budget. What the powers behind government want to do is make the nations elderly; they call them useless eaters, carry the burden, and force them to live like animals.

This chained CPI will increase even less than the bogus CPI, or some 0.3% less on average than the CPI-W, or the Consumer Price Index for urban wageworkers, and clerical workers, which is what COLA really is. As you can see retired Americans have been cheated by government for years and now they want to cheat them even more leaving many of the elderly destitute in order to finance more wars. Looting Social Security provides revenue to be wasted elsewhere.

Politicians believe their constituents won’t know what they are up too, but they are mistaken. Many of them will be kicked out of Congress for betraying the elderly of benefits that they paid for over a lifetime of work. The cuts would cost retirees $100 billion and S&P wants even further cuts. This is going to put seniors into poverty, especially the disabled. The proposal would cut more at 9.5%, almost 10%, versus 4% at 75. These politicians are calculated to bring early death to the aging. As this travesty takes place, Medicare benefits would be reduced by another $100 billion. In 2014, we will have the Obama death panels, where a panel will decide who will be treated and who will be allowed to die. Soylent Green comes to mind, this travesty, planned by elitists to transfer funds and get rid of useless eaters, was fully aided by America’s controlled media, which misled all readers and listeners. The program was formulated the by ex-president of the Council on Foreign Relation’s billionaire Pete Peterson who lied about the entire program. The chained CPI is a scam just as the CPI is. All of you men and women in your 40s and 50s will have to make up the loss unless you want to see granny and grandpa starve to death. AARP, which is in part funded by the federal government, naturally came out in favor of cuts for its paying members. That proves once and for all what a useless organization AARP really is. They tried to play both sides of the issue. What this really amounts to is a tax increase on those who can least afford it. What really concerns the aged is that the new tax increase is already in place. The question is will the unconstitutional illegal, “Obama Enabling Group,” increase the burden on the aged even more?

It should be noted that the elite members of the “Obama Enabling Group” are all part of the Council on Foreign Relations, Trilateral Commission and Bilderberg Groups. They will do as the illuminists tell them to do. Their control companies won’t share in the tax increases because they are immune and exempt. We have yet to see anyone file a lawsuit challenging the unconstitutional law that created this group of enablers. As we pointed out before this group has been bought and paid for via $64.5 million in campaign payoffs. The biggest contributors were legal firms for more than $31 million and Wall Street threw in more than $11 million. These are the people who in part, control our government - JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America. Your commentaries and votes mean very little to these people.

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This is August and Europe is on vacation as the European Union and the euro zone fall apart. Mrs. Merkel and Mr. Sarkozy had a meeting that accomplished nothing. It was supposed to be a cover for all of Europe’s bureaucrats who were enjoying themselves while their union burned.

The European Central Bank, the ECB, continues to finance the insolvent euro zone participants by purchasing their bonds. The most recent recipients have been Italy and Spain. The total is now approaching some $900 billion. The bonds are virtually worthless and other members have to pay for these interventions. In addition another $500 billion has been lent to these problem countries. The EFSF, the European Financial Stability Fund, the method for loans is supposed to terminate in 15 months, so the permanent solution is supposed to be the ESM, the European Stability Mechanism, which can lend $700 billion. All these loan packages are guaranteed by euro zone members and the citizens of the remaining 11 countries. This commitment guarantees a AAA rating, which we see as dubious at best. All these commitments have forced the lenders in the case of Greece to now demand collateral on just about everything the Greek government owns. We have said from the beginning Greece should just default but that is not what the bankers and other solvent nations want. They want to own the country and enslave its inhabitants. At the same time many of the lenders are only in slightly better shape then the sovereigns they are lending too. That means the stronger members are under increased pressure, as their credit ratings and finances are pushed to the limit. In addition a number of nations not within the euro zone, such as England and Norway have no intention of getting involved in the ESM. There is absolutely no question that the euro zone cannot survive under these circumstances.

We still believe the euro zone doesn’t fully understand their problem. It was 1-1/2 years ago we predicted that the bill would total $4 trillion. A few months ago we raised that to $4 to $6 trillion, as Germany raided their estimate from $1 to $3.5 trillion and the EU support mechanism raided their estimate to $2.8 trillion. The bottom line is none of the estimates are payable, but the desire for world government is so great that the Illuminists are wiling to destroy the system to accomplish that. Finance ministers call for greater commitments, but where will the funds come from? Sooner or later these one-worlders are going to discover that if they keep pushing, the system it will crash and burn.

In addition to the sovereign problems European banks are exposed for $700 billion in just the debt of Greece, Ireland and Portugal. If Spain, Italy and Belgium are included the exposure grows to $2.8 trillion and that is just the bank exposure. Thus sovereign and bank exposure is $7 to $8 trillion. These kinds of numbers make you realize that all of Europe is broke and all the banks are going to go bankrupt as well as the countries, including Germany. We often wonder whether the European condition wasn’t a Anglo-American trap. We will see in time. Perhaps the one interest rate fits all was the trap, as we believed it was from the beginning. This one interest rate supposedly eliminated risk, when in fact as you can see it heightened risk. The euro could not eliminate that risk, because the six nations over lent and over expanded. No one cared about debt repayment because supposedly the euro protected everyone from that, and as we have found out the euro and sovereign commitment was not adequate protection. Quite frankly Germany was with its AAA rating, and financial success was supposed to carry everyone. It has now been proven they cannot and the German people are shouting we have had enough of this. It has to be stopped now. We will take our losses, dump the euro and return to our beloved Deutsche Mark.

If debt is restructured at today’s recognized level for the problem countries, even a 50% default would wipe all 17 countries except Germany. 1-1/2 years ago Greece made a 50% default offer to Germany, which rejected it. If they had accepted it these nations could have been dealt with over a long period of time avoiding a euro collapse, but they were not smart enough to envision such a solution, because they really didn’t grasp the enormity of the problem and where it would take them. They understand now but it is too late. If you think the foregoing is overwhelming all those structured securities called CDS and MBS, bonds containing mortgages. They were holding $2 trillion worth and they are probably still holding them. They are carried at par and are worth at best $0.30 on the dollar. Banks do not have sufficient capital to cover these losses and we do not believe the public in Europe will cover these bank losses. Even the IMF says the banks have not recognized these losses. Bank stress tests are a joke, pabulum for the masses. Italy has 30 problem banks, but they lent conservatively, have high levels of deposits and very small leverage. If they are in trouble you can imagine what the banks in the other countries look like. How can governments recapitalize banks when the governments are broke? In the case of Greece a 50% write off would cost the ECB, the 17-euro zone country citizens, $70 billion, plus what banks and others are holding. The sovereigns are buried just as the banks are. The ECB has paid in capital of $7.4 billion. Euro zone central banks have $1.4 trillion in capital. How can anyone believe they can fund losses of $7 trillion? Talk about contagion. The word should be catastrophe.

As we have often said, the problem and debt has only been extended. All the debt is unpayable. Interest rates and bond yields of troubled nations are such that debt cannot be repaid. How can anyone have confidence in a broken system? Unsustainable is the operative word. There is no political courage to end all this because all of the key figures and many others are controlled by the Illuminists, who want world government. They will hold out until the system has collapsed, and hope they can save themselves. That is why people worldwide have to prepare for what is coming. Europe’s financial collapse will be the catalyst that will cause all other nations to fall. That is why it is so very important that all of your investable assets be invested in gold and silver, coins, bullion and shares.