HOT: Fed Hides Major Accounting Change

Reuters has a very hot story out tonight on an accounting change the Fed snuck into a regularl weekly report. It will move off its balance sheet any bad debt the Fed may have purchased from Goldman Sachs, or anybody else for that matter. Here's Reuters via CNBC (My emphasis):

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

The significant shift was tucked quietly into the Fed's weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.

But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world's most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted.

But they are averting asking the Treasury for money in the future by an accounting gimmick that will simply dump the debt off its own balance sheet and onto that of the Treasury. More from Reuters:

[According to]Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey, "An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital."

The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability...

"Any future losses the Fed may incur will now show up as a negative liability as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible," said Brian Smedley, a rates strategist at Bank of America-Merrill Lynch and a former New York Fed staffer.


"The timing of the change is not coincidental, as politicians and market participants alike have expressed concerns since the announcement (of a second round of asset buys) about the possibility of Fed 'insolvency' in a scenario where interest rates rise significantly," Smedley and his colleague Priya Misra wrote in a research note.

Bottom line: We all knew the Fed was going to have to do some kind of monkey business to deal with all the junk securities it purchased, here it is: Negative liabilities. Yes, only at your local Fed.
Note: I hasten to add this does not appear to resolve the problem of the Fed going cash flow negative as a result of having to raise interest rates on excess reserve to a point where they are higher than most of the income earning debt they hold. Expect future monkey business on this front.

The Big Obscenity: A Trillion Dollars a Year to the Richest 1%

(That's seven times more than the budget deficits of all 50 states combined)

by Paul Buchheit

If you make less than $114,000 a year (90% of us), you've been financially damaged by the flow of income to the richest 1% of Americans over the past 30 years. Based on Internal Revenue Service figures, if middle- and upper-middle class families had maintained the same share of American productivity that they held in 1980, they would be making an average of $12,500 more per year.

If you make less than $160,000 a year (95% of us), your household value has decreased, percentage-wise, over the last 25 years. According to noted researcher Edward Wolff, only the top 5% of American families increased their percentage of the country's total household net worth from 1983 to 2007.

U.S. GDP has quintupled since 1980, and we all contributed to that success. It's not unreasonable to say that upper-middle class families should have maintained the same size of their slice of pie.

But if earnings since 1980 were based on this measure of productiveness, the richest 1% of Americans would be making $1 trillion less per year.

A trillion dollars a year. That's more than we spend on the entire military.

A trillion dollars a year. That's seven times more than the budget deficits of all 50 states combined. Many states have been forced to cut police forces and teachers to balance their budgets.

A trillion dollars a year. Yet Congress just voted to continue the Bush tax cuts.

The richest 1% ($400,000 or more) didn't work harder than the rest of us. They profited from stock market gains, shrewdly designed financial instruments, and tax cuts.

The very wealthy insist that all their income will stimulate the economy. But low-income earners spend a greater percentage of their overall income on consumption, while high-income earners save more. Middle-class America has been led to believe that the growth at the top will eventually produce more jobs. But many of us have college-educated sons and daughters who can't find suitable employment. Fortune Magazine reported that the 500 largest U.S. companies cut a record 821,000 jobs in 2009 while their collective profits increased to a record $391 billion.

Even the upper class should be concerned about this. As inequality increases, the majority of Americans will consume less, leading to conditions not unlike the years before the Great Depression, when the working class was unable to buy the goods they produced. The rich, with extra money, speculate in risky investments. The majority of middle-class Americans, with little money, go deeper into debt. The result is an unstable economy for all of us.

Who are the people making up the richest 1%? Bankers, CEOs, upper management, university presidents, Congressmen. They live in their own world, supporting each other's needs. They can no longer relate to the needs of average Americans.

Taxing them is not "soaking the rich." The greatest redistribution of income in history has taken place over the last 30 years, and the victims are beginning to make a fuss about it.

Paul Buchheit is a faculty member in the School for New Learning at DePaul University.

CASH FOR TOOLS

Update: MERS Spokesman 'Declines Comment' To CNBC On CEO Stepping Down - WSJ Has Now Pulled The Story

It started with a post on ZH two hours ago with a quote from a WSJ article that has apparently been pulled by WSJ editors. Here's that passage:

The chief executive of the privately-held Mortgage Electronic Registration Systems, or MERS, is planning to leave the company and an announcement could come within days, according to people familiar with the matter.

The company has been under fire by Congress and state officials for its role in the mortgage-document crisis. The firm's board of directors has met in recent days to address the fate of the company and its chief executive, R.K. Arnold, the people said.

Arnold and other MERS executives didn't respond to requests for comment. A MERS spokeswoman Friday declined comment. Arnold, a former U.S. Army Ranger, has served as the CEO and president of Merscorp Inc., the parent company of MERS, since 1998 and has been with the company since its inception 15 years ago, according to a corporate biography.

MERS was built by Fannie Mae (FNMA), Freddie Mac (FMCC), and several large U.S. banks in 1996 as an electronic registry of land records. That created a parallel database to facilitate the packaging of loans into securities that could be sold and re-sold without being recorded in local county courthouses, reducing costs for banks. The company's name is listed as the agent for mortgage lenders on more than 65 million home loans.

But the company's practices have begun to receive heavy scrutiny from state prosecutors and federal regulators, particularly in light of foreclosure-document problems that surfaced last fall. State and federal lawmakers have begun to consider bills that would make it harder for banks to use or foreclose on properties through MERS.

MERS's legal standing also has been challenged by legal experts because it doesn't own the underlying debt. Previously, the mortgage and the promissory note weren't split between different parties.

Critics of the company have raised concerns over whether notes were properly assigned or tracked within the electronic system. Judges have also begun to question the company's practices of "deputizing" hundreds of bank executives to handle foreclosures by naming them "vice presidents" of MERS.

Then Diana Olick tweeted that a MERS spokesperson has refused comment.

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Interview with MERS CEO R.K. Arnold...

Editor's Note: From October when the MERS controversy began...

For more detail see this story...

• Video: Foreclosure Fraud & MERS In The Spotlight: Interview With CEO R.K. Arnold

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From David Dayen at FDL

The ouster of Arnold wouldn’t put an end to the troubles for MERS. Several states have ongoing court cases questioning MERS’ standing to foreclose. The legislature in Virginia may act to restrict MERS from operating in that state, although the banks are rallying not only to avoid that, but to change the state’s Uniform Commercial Code to retroactively fix the illegalities in the MERS recording process. Federal regulators are investigating MERS as well. And House Democrats have introduced a bill to cut off MERS’ association with Fannie Mae and Freddie Mac. Since they’re basically the only ones doing securitization these days, I don’t know how MERS would be able to survive in that event.

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Check out the headlines in...

• Our huge MERS archive of stories...

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Obama Gives Hu The Red Carpet Treatment - Meetings With Goldman Sachs CEO Lloyd Blankfein (Video)

http://tinyurl.com/63v6ocu

Video - Next Media Animation - Day 2 of Hu's visit

On the second day of state visit, Chinese President Hu Jintao enjoyed all the perks of a visiting dignitary. President Barack Obama and Hu met with business executives such Microsoft’s Steve Ballmer and Lloyd Blankfein from Goldman Sachs. At a joint press conference, a question about human rights in China got lost in the translation.

The state dinner in the evening was a regal affair, with Jackie Chan and classical pianist Lang Lang providing amusement.

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Also, check out Hu Jintao’s first day in Washington...

• Hu Rocks Washington, Takes Over White House & Donates To Beggar Bernanke (Instant Classic)

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Also, if you haven't already seen NMA's first two videos about Hu and Obama, watch them here...

http://dailybail.com/home/video-hu-rocks-washington-takes-over-white-house-donates-to.html

http://dailybail.com/home/us-china-currency-rap-battle-chimerican-gangstas.html

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Who Got Loan Modifications and Who Didn't—Gov't Stalls on Data

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New America Media, News Report, Ngoc Nguyen, Posted: Jan 21, 2011

At the end of this month, for the first time ever, the U.S. Treasury plans to release to the public a treasure trove of demographic information on people who have received loan modifications. That is, if the government releases the information as promised— information that has a critical impact on policies that prevent home foreclosures.

So far, the Treasury has stalled on making this key information available, despite requests by housing and consumer advocacy groups and media organizations, including New America Media, under the federal Freedom of Information Act (FOIA). Loan modifications are changes made to the terms of a home loan and could include such things as being granted a different interest rate, a principal reduction, or a decrease in how often the loan must be paid off.

Housing advocates say they have been waiting for the Treasury to the release the information for more than a year.

National Consumer Law Center attorney Geoffry Walsh, whose organization filed a FOIA at the end of 2009, says the Treasury still hasn’t provided the information. Walsh says his group requested data detailing why borrowers were denied loan modifications.

“There were promises from the FOIA people that they would be sending [the data]…and that just went on and on for months,” he said. “They sent a few relevant things, but nothing substantial pertaining to what we asked for.”

New America Media first asked the Treasury for race and ethnicity data of those who received loan modifications under President Obama’s Home Affordable Modification Program (HAMP) last September. A Treasury spokesperson said the information would be released at the end of October. The release date was then pushed back to November. New America Media submitted a FOIA request last November, and is still waiting for the requested data. The Treasury now promises to release the data by the end of the month.

“Any delay in publishing the file is to ensure all proper precautions have been taken to protect homeowner privacy - our utmost concern,” Treasury spokesperson Andrea Risotto, said in an emailed reply to New America Media.

For housing advocates, the delay means not having access to critical data that could shed light on who’s getting loan modifications, which has been the key policy for preventing foreclosures, according to Kevin Stein, associate director of the San Francisco-based California Reinvestment Coalition.

The number of foreclosures nationally continues to rise and Stein believes they could reach 12 million by 2013.

“Many people will still need help,” Stein says, “and [loan modifications are] still the main way people will get help.” But, there’s little public information about who is getting the loan modifications and the terms of the deal, “except [what is] in the hands of the banks.”

According to Stein, in much the same way that demographic information on lending has revealed racial disparities, the HAMP data could be used to ensure fair housing laws are not being violated. The HAMP data has limitations though, as 80 percent of loan medications occur outside of the program, Stein said, citing figures by bank regulators.

Walsh of the National Consumer Law Center says his organization was denied a request for information about a calculator that loan servicers use to determine who qualifies for a loan modification. The calculator, referred to as a net present value (NPV) calculator, takes inputs such as the borrower’s income, property value, length of time behind on payments, credit score, and modification amount and “shows if the investor would do better under the loan modification or by foreclosing,” Walsh said.

The request was denied on the grounds that it was proprietary information. “Basically, they said it belongs to Fannie Mae and private businesses,” Walsh said. “We don’t agree with that.” The group appealed the decision, but the appeal was also denied. “Under HAMP rules, if the NPV test shows that the loan modification is the better option, the servicer has to do the loan modification, they can’t foreclose,” he added.

Homeowners have expressed frustration with the lack of transparency on the part of the bank, while trying to modify home loans with their lenders. Walsh says at least two changes set to begin next month will offer homeowners more transparency about their loan modification process.

As a part of the Wall Street Reform Act of 2010, banks will be required to list the figures that they used in the NPV calculator in denial letters to homeowners. In addition, Walsh says, the Treasury has said it will make the calculators available in the spring. That too, remains to be seen.

Washington, DeCeit's Expanding Public Surveillance Net Tapping Into Business Cameras

By: Freeman Klopott 01/19/11 8:05 PM
Examiner Staff Writer

Big Brother may already be watching you in the District, and he will soon have a lot more eyes trained in your direction.

The city's homeland security agency is planning to add thousands of security cameras from private businesses around the nation's capital and the Metro system to the thousands of electronic eyes that authorities are already monitoring 24/7.

Cameras from private businesses and Metro will soon be added to the network of more than 4,500 electronic eyes that the District's homeland security agency already monitors. - originally a fictional plot premise in the film "Enemy of the State" with Will Smith and Gene Hackman a few years back as life imitates art or predictive programming back then...

D.C.'s Homeland Security and Emergency Management Agency has already centralized the feeds from more than 4,500 cameras operated by the District's department of transportation and school system. Those feeds are watched around the clock by officials from those departments who sit together in homeland security's Joint All-Hazards Operation Center.

By bringing feeds from thousands more cameras to the central watching room through links to cameras at businesses such as banks, corner stores and gas stations, the District is joining other big cities like London, New York and Baltimore that in recent years have turned to cameras to fight crime and terrorism. But critics worry the District's government might be going too far.

"The D.C. effort to link public and private watching capabilities might be viewed as excessive," said Jeffrey Rosen, a law professor at George Washington University who studies the balance between security and civil liberties. "It would make it hard to find a place in the city where people aren't being watched by cameras."

"It sounds like Big Brother to me," Maryland resident James Dewitt said Wednesday on the streets of downtown Washington, referencing George Orwell's novel foreseeing a society oppressed by a government that tracks everyone. "We're heading to '1984.' It's 2011, but we're heading to 1984."

Robyn Johnson, a spokeswoman from HSEMA, told The Washington Examiner that "the program has not expanded to include private businesses." But, "We continue to explore this in a deliberative way."
A plan for 2011 submitted to the city administrator by HSEMA says the agency plans to centralize cameras at private businesses and those run by Metro and the D.C. Housing Authority. The plan doesn't have a timeline, and Johnson said there isn't one.

Homeland security says the centralized camera system is designed to be used to raise "situational awareness" during "developing significant events" like the shooting at the U.S. Holocaust Memorial Museum in 2009 or the terrorist attacks of Sept. 11, 2001.

When it was started in spring 2008, the program immediately met resistance from the D.C. Council. Some council members worried that the closed-circuit television system was put together too quickly and without consideration of how effective it would be in reducing crime or preventing terrorism.

At-large Councilman Phil Mendelson, who oversees the homeland security agency, still has those concerns.

"My concern about these cameras has always been that there's no evidence they reduce crime," Mendelson said. "If HSEMA intends to put more staff on to monitor these cameras, it would not be a good use of resources."

Mendelson added that "although one doesn't have much of a right of privacy on a Metro platform ... it could change when you're inside a bank, and if HSEMA were looking at a bank statement."

Johnson said the agency is developing regulations to protect civil liberties.

Homeland security currently operates under the same series of regulations the D.C. Council adopted for the cameras used by the police department, which are run separately from HSEMA's cameras.

Those regulations make it illegal for a camera to be focused on literature being carried by someone in a protest. They also prevent footage from being stored for more than 10 days, unless it captured a crime being committed or questionable police action.

fklopott@washingtonexaminer.com

Source: http://washingtonexaminer.com/local/dc/2011/01/dc-expanding-its-public-surveillance-camera-network#ixzz1Bh1ax4hb

10 Ways We Are Being Tracked, Traced, and Databased

Are technological advances infringing on our right to privacy?

Activist Post
The war on terror is a worldwide endeavor that has spurred massive investment into the global surveillance industry - which now seems to be becoming a war on "liberty and privacy." Given all of the new monitoring technology being implemented, the uproar over warrantless wiretaps now seems moot. High-tech, first-world countries are being tracked, traced, and databased,literally around every corner. Governments, aided by private companies, are gathering a mountain of information on average citizens who so far seem willing to trade liberty for supposed security. Here are just some of the ways the matrix of data is being collected:

• GPS -- Global positioning chips are now appearing in everything from U.S. passports, cell phones, to cars. More common uses include tracking employees, and for all forms ofprivate investigation. Apple recently announced they are collecting the precise location of iPhone users via GPS for public viewing in addition to spying on users in other ways.

• Internet -- Internet browsers are recording your every move forming detailed cookies on your activities. The NSA has been exposed as having cookies on their site that don't expire until 2035. Major search engines know where you surfed last summer, and online purchases are databased, supposedly for advertising and customer service uses. IP addresses are collected and even made public. Controversial websites can be flagged internally by government sites, as well as re-routing all traffic to block sites the government wants to censor. It has now been fully admitted that social networks provide NO privacy to users, while technologies for real-time social network monitoring are already being used. The Cybersecurity Act attempts to legalize the collection and exploitation of your personal information. Apple's iPhone also has browsing data recorded and stored. All of this despite the overwhelming oppositionto cybersurveillance by citizens.

• RFID -- Forget your credit cards which are meticulously tracked, or the membership cards for things so insignificant as movie rentals which require your SSN. Everyone has Costco, CVS, grocery-chain cards, and a wallet or purse full of many more. RFID "proximity cards" take tracking to a new level in uses ranging from loyalty cards, student ID, physical access, and computer network access. Latest developments include an RFID powder developed by Hitachi, for which the multitude of uses are endless -- perhaps including tracking hard currency so we can't even keep cash undetected. (Also see microchips below).

• Traffic cameras -- License plate recognition has been used to remotely automate duties of the traffic police in the United States, but have been proven to have dual use in England such as to mark activistsunder the Terrorism Act. Perhaps the most common use will be to raise money and shore up budget deficits via traffic violations, but uses may descend to such "Big Brother" tactics as monitors telling pedestrians not to litter as talking cameras already do in the UK.

• Computer cameras and microphones -- The fact that laptops -- contributed by taxpayers -- spied on public school children (at home) is outrageous. Years ago Google began officially to use computer "audio fingerprinting" for advertising uses. They have admitted to working with the NSA, the premier surveillance network in the world. Private communications companies already have been exposed routing communications to the NSA. Now, keyword tools -- typed and spoken -- link to the global security matrix.

• Public sound surveillance -- This technology has come a long way from only being able to detect gunshots in public areas, to now listening in to whispers for dangerous "keywords." This technology has been launched in Europe to "monitor conversations" to detect "verbal aggression" in public places. Sound Intelligence is the manufacturer of technology to analyze speech, and their website touts how it can easily be integrated into other systems.

• Biometrics -- The most popular biometric authentication scheme employed for the last few years has been Iris Recognition. The main applications are entry control, ATMs and Government programs. Recently, network companies and governments have utilized biometric authentication including fingerprint analysis, iris recognition, voice recognition, or combinations of these for use in National identification cards.

• DNA -- Blood from babies has been taken for all people under the age of 38. In England, DNA was sent to secret databases from routine heel prick tests. Several reports have revealed covert Pentagon databases of DNA for "terrorists" and now DNA from all American citizens is databased. Digital DNA is now being used as well to combat hackers.

• Microchips -- Microsoft's HealthVault and VeriMed partnership is to create RFID implantable microchips. Microchips for tracking our precious pets is becoming commonplace and serves to condition us to accept putting them in our children in the future. The FDA has already approved this technology for humans and is marketing it as a medical miracle, again for our safety.

• Facial recognition -- Anonymity in public is over. Admittedly used at Obama's campaign events, sporting events, and most recently at the G8/G20 protests in Canada. This technology is also harvesting data fromFacebook images and surely will be tied into the street "traffic" cameras.

All of this is leading to Predictive Behavior Technology -- It is not enough to have logged and charted where we have been; the surveillance state wants to know where we are going through psychological profiling. It's been marketed for such uses as blocking hackers. Things seem to have advanced to a point where a truly scientific Orwellian world is at hand. It is estimated that computers know to a 93% accuracy where you will be, before you make your first move. Nanotech is slated to play a big role in going even further as scientists are using nanoparticles to directly influence behavior and decision making.
Many of us are asking: What would someone do with all of this information to keep us tracked, traced, and databased? It seems the designers have no regard for the right to privacy and desire to become the Controllers of us all.

Join The Lawsuit - Sue The FED

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Please see the follow-up to this story for an important video...

• Video: Here's Another Reason To Sue The Fed

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The creator of this site - actually a physician, not a lawyer - sent this link our way last night. I haven't really explored it, but I thought I would pass it on.

You know damn well that I signed up.

• Information - Sue the Fed

• Sign up to be a co-plaintiff

And while we're at it, can we retroactively sue Congress for creating the Fed. That too is breach of contract, theft, fraud, misrepresentation, accepting bribes for personal gain, conflict of interest, passing important legislation in secret...

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Congress attacks China

Which Of The Currencies Of The World Is Going To Crash First?

Last year was an absolutely fascinating time for world currency markets. The yen, the dollar and the euro all took their turns in the spotlight. Each experienced wild swings at various times, but the overall theme that we saw was that faith in paper currencies is dying. The biggest reason for this is the horrific sovereign debt crisis that has swept the globe. The United States, Japan and a whole host of European nations are all drowning in debt. The U.S. and Japan are both steamrolling toward insolvency, and several European nations would have already defaulted on their debts if they had not been bailed out. So which of the major currencies of the world is going to crash first? Will one (or more) of the big currencies fall before the end of 2011? Once one major currency collapses will the rest start to fall like dominoes? The truth is that the world has never seen a sovereign debt crisis of this magnitude in all of human history. Almost the entire globe is drowning in a sea of red ink and it has brought us right to the brink of financial disaster.

So which of the currencies of the world is going to be the first to come crashing down? Well, let's take a quick look at the yen, the euro and the dollar....
The Yen
Japan has the 3rd biggest economy in the world, but they are also deeply swamped in debt. At well over 200%, the Japanese government has the biggest debt to GDP ratio of all of the major industrialized nations. In fact, it is estimated that this massive pile of Japanese government debt amounts to approximately 7.5 million yen for every person living in the entire nation of Japan.
So why hasn't Japan defaulted yet? Well, a big reason is because Japan has one of the highest personal savings rates on the entire globe, and Japanese citizens have been more than happy to gobble up huge amounts of Japanese government debt at very, very low interest rates.

However, Standard & Poor's has warned that they may have to slash Japan's credit rating if the debt gets much bigger, and once confidence starts to falter Japan is going to have to start paying higher interest rates.
At some point Japan is going to be facing a financial meltdown, but for the moment they are hanging in there.
The Euro
Several large European nations would have already defaulted on their debts if they had not been bailed out last year. Greece, Portugal, Ireland, Italy, Belgium and Spain are all on very shaky ground right now. Several of them have already had their credit ratings slashed.
Bond yields all over Europe have been absolutely soaring in recent months. It is getting really expensive for many of these nations to take on new debt. Interest rates on 10-year Greek bonds went from 6 percent up to 13 percent in just a single month at one point in 2010. In fact, even some of the nations that aren't in the most danger are even feeling the pain. For example, the cost of insuring French debt hit a new record high on December 20th.

Right now there are all kinds of rumblings that more European nations are going to need bailouts very soon. Professor Willem Buiter, the chief economist at Citibank, is warning that quite a few EU nations could financially collapse in the next few months if they are not rapidly bailed out....

"The market is not going to wait until March for the EU authorities to get their act together. We could have several sovereign states and banks going under. They are being far too casual."

So where is all of this bailout money coming from? Well, a lot of it is coming from Germany and a significant amount of it is actually coming from the United States.
But will wealthy nations such as Germany be willing to pour hundreds of billions of euros into these financial black holes indefinitely?
Are the Germans going to accept a situation where they are permanently bailing out the "weak sisters" all over the rest of the continent?

Already some prominent politicians in Europe are calling for the European "bailout fund" to be doubled in size to about 2 trillion dollars. Other analysts believe that it is going to take at least 4 or 5 trillion dollars to properly bail out all of the European nations that need it.
In any event, the truth is that the situation is really, really bad. If at some point the bailouts stop, the defaults are going to begin.
The Dollar
The United States has the biggest national debt of all. The 14 trillion dollar threshold has just been crossed, and the national debt is now less than 300 billion dollars away from the 14.294 trillion dollar debt ceiling. If the U.S. Congress does not raise the debt ceiling, the U.S. government will shortly begin to default on its debts. Of course everyone fully expects that the U.S. Congress will indeed raise the debt ceiling just like they have every time before.

However, U.S. politicians are not going to be able to keep kicking the can down the road forever. Today the U.S. national debt is more than 14 times larger than it was just 30 years ago. Everyone around the world is beginning to realize that this debt is not even close to sustainable. Investors are beginning to become more hesitant about loaning the United States money. The Federal Reserve has been forced to step in and "buy" more and more of the debt the U.S. government is issuing.
Yields on U.S. Treasuries have been moving up in recent months and this could eventually become a huge problem.
Why?

Well, the sad truth is that the U.S. government has been increasingly using short-term debt.
At this point, the average maturity of U.S. government bonds has fallen to 4.4 years. The is the lowest figure of all the major industrialized nations. That means that the U.S. government must constantly roll over massive amounts of debt.
As a point of comparison, UK government debt has an average maturity of approximately 13 years. That obviously gives them a lot more breathing room.
For the United States, the situation could become incredibly dire if interest rates start to go up.
If interest rates on U.S. government debt reach an average of 7 percent, interest payments on the debt would gobble up approximately 45 percent of the tax revenue that the U.S. government takes in each year.

Yes, at that point the game would be over.
But what the United States has going for it that the European nations do not is that the United States can just have the Federal Reserve keep printing currency. Unfortunately for the nations involved in the euro, they do not have that option.
That is why an increasing number of analysts believe that it will be the euro that will crash and burn first.
But only time will tell.
There are even many that believe that authorities at the highest level actually want the dollar, euro and yen to fail.
Why?
Well, many of the same individuals and groups that brought us NAFTA, the WTO, the IMF, the OECD and the World Bank believe that it would be absolutely wonderful for humanity if we could all have a single, united global currency. The "chaos" produced by the fall of our existing global currencies could provide the perfect "opportunity" to provide the grand "solution" that they have been hoping to introduce all along.

All over the world top politicians and financiers have been very open about the fact that a world currency is coming. In fact, men like George Soros are openly talking about these things. The United Nations has been publicly calling for the U.S. dollar to be replaced with a new global currency for some time now. Just this week Chinese President Hu Jintao stated that "the current international currency system is the product of the past."
So will the American people just sit back and accept it when their dollars are replaced with a new global currency?

Well, sadly, when things go badly most Americans seem to be willing to accept just about anything if it will mean that things will go back to "normal". When the global economy falls to pieces, and there already lots of signs that we are on the verge of such a collapse, will the American people be willing to say goodbye to the dollar if politicians from both major political parties tell them that the new global currency is the "answer" to our problems?
Hopefully the American people will wake up and will realize that "globalism" is rapidly wiping away almost everything that it means to be an "American". Now even many of our children and teens are primarily identifying themselves as "citizens of the world" rather than "citizens of the United States".
Even if the U.S. dollar does collapse, it is absolutely imperative that we continue to have our own national currency. The U.S. Constitution does not make any provision for any sort of "world currency". If we allow the globalists to push a truly global currency down our throats it will be another giant step towards the creation of a totalitarian one world system.

So what do you think about all of this? Please feel free to leave a comment with your thoughts below....

More Icelandic bankers arrested

Iceland’s special prosecutor into the banking crisis has confirmed that raids have taken place today and that arrests have been made. The Central Bank of Iceland is among the institutions under investigation.

Special Prosecutor, Olafur Thor Hauksson told Visir.is that house searches are taking place in at least three places today as part of investigations into the central bank, MP Bank and Straumur Bank.

Stefan Johann Stefansson at the central bank confirmed that agents were in the building conducting searches; and it has also been confirmed that searches are underway at MP Bank and ALMC (formerly Straumur).

An ALMC spokesman said that the premises are indeed being searched and that the bank’s staff members are doing their best to help.

In other news, four people have so far been arrested today in connection with the special prosecutor’s investigation into Landsbanki.

One of the arrested parties is Jon Thorsteinn Oddleifsson, former Landsbanki treasury boss; and it is not yet known who the other three are.

According to Visir.is sources, the arrests concern a brand new section of the wider case against the bank and are not directly connected to searches and arrests made last week.

US wars to continue until its economy busts

Click this link ..... http://revolutionarypolitics.tv/video/viewVideo.php?video_id=13623

NO Right to Keep Illegal Foreclosure by a MERS bank!

All those people who have bought foreclosures and are considering buying a foreclosure will need to watch this ruling carefully.

The Massachusetts Supreme Court had ruled two weeks ago, MERS had no rights to foreclose on property.

Now they are going to rule on another case of a buyers right to the property, that was illegally foreclosed on by a MERS bank.

A lower Massachusetts court had already ruled against the buyer of a foreclosure, saying they had no right to the property, due to being foreclosed on fraudulently by a MERS bank.

That court case is now going to the Supreme Court, as the buyer is trying to keep the property he purchased 3 years ago from the bank.

Imagine if the Supreme Court rules against the buyer, as the lower court has done....... I can see a whole new area of law suits, when buyers start losing their money and property of foreclosures they have purchased. Besides that, I can't imagine there will be much of a market for foreclosures, as they may become impossible to sell, as no title insurance company will touch them.

Bloomberg is the one even carrying the story, which is amazing they would let people know they may have a huge problem if they have purchased a foreclosure in the past.

This ruling from Massachusetts will be important all around the country. There are already class actions that have started in a few states for previous foreclosures. If the Massachusetts Supreme Court rules the buyer of the home has no right to the property fraudulently foreclosed on, we can expect a whole rush of class actions throughout the country against the banks.

Portions of article:

Massachusetts’ highest court will consider whether a home buyer can rightfully own a property if the bank that sold it to him didn’t have the right to foreclose on the original owner.

The state’s Supreme Judicial Court, which agreed last month to take the appeal, already ruled Jan. 7 that banks can’t foreclose on a house if they don’t own the mortgage. The lower- court decision now under review said the buyer of residential property in Haverhill, Massachusetts, never really owned it because U.S. Bancorp foreclosed before it got the mortgage.

In August, Long ruled that Bevilacqua wasn’t the property’s owner and didn’t have standing to inquire about claims. U.S. Bancorp, which sold Bevilacqua the property in 2006, conducted an invalid foreclosure because it didn’t properly own the mortgage at the time, Long said.

The mortgage transfer to U.S. Bancorp, which oversees the mortgage-backed trust containing the loan, happened after the foreclosure, Long said. All Bevilacqua had was a deed from an invalid foreclosure sale, the judge said.

So, I posted last week saying :BUYER BEWARE of foreclosures, as I believed class actions would be started.

NOW ALL WHO HAVE PURCHASED FORECLOSURES - YOU WILL WANT TO WATCH THIS CAREFULLY! If Mass. Supreme Court rules against the buyer of an illegal foreclosure, you can expect ALL Title insurance companies will stop insuring ALL Foreclosed homes and there will be NO buyers of foreclosed homes!

I believe a ruling against the buyer by the Supreme court would also slow down foreclosures immensely. As banks would not be able to get rid of foreclosures, why would they want to foreclose, to only have the liability of upkeep and costs, when title companies and buyers would not want to touch them.

In my opinion this will be a very important ruling. So Watch it!

Home Buyers Are at Risk in Bad-Foreclosure Case at Massachusetts Top Court

Massachusetts’ highest court will consider whether a home buyer can rightfully own a property if the bank that sold it to him didn’t have the right to foreclose on the original owner.

The state’s Supreme Judicial Court, which agreed last month to take the appeal, already ruled Jan. 7 that banks can’t foreclose on a house if they don’t own the mortgage. The lower- court decision now under review said the buyer of residential property in Haverhill, Massachusetts, never really owned it because U.S. Bancorp foreclosed before it got the mortgage.

“It appears to be the next step in the conversation,” Paul R. Collier III, who represented the borrower in the earlier case, U.S. Bank v. Ibanez, said in a phone interview.

Like the Ibanez case, the court’s decision may resonate with other states as they grapple with the rights of new homebuyers who may be hesitant to complete a purchase for fear of uncertain title, and with how such a trend may hobble the broader housing market.

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse. Last year, completed foreclosures in Massachusetts rose 32 percent to 12,233 from 9,269 in 2009, according to Boston-based Warren Group, which tracks local real estate.

Bundled Mortgages

The latest case, Bevilacqua v. Rodriguez, could affect trusts that bundled mortgages and sold securities to investors. Questions about lending practices, including alleged overstatements of borrowers’ income and inflated appraisals, have pitted mortgage-bond investors against banks. Also, loan originators or trust sponsors may be forced to buy back mortgages wrongly transferred into loan pools.

The Ibanez and Bevilacqua cases both originated before Massachusetts Land Court Judge Keith C. Long in Boston.

Francis J. Bevilacqua III went to Long’s court to force the original owner to say whether he had a claim on the property in Haverhill, about 36 miles (58 kilometers) north of Boston. A city assessment website lists four condominiums at the location with a total value of $600,300.

Bevilacqua asked Long whether he could try to find the original owner through newspaper notices, said his lawyer Jeffrey B. Loeb, of Rich May PC in Boston, in a phone interview.

In August, Long ruled that Bevilacqua wasn’t the property’s owner and didn’t have standing to inquire about claims. U.S. Bancorp, which sold Bevilacqua the property in 2006, conducted an invalid foreclosure because it didn’t properly own the mortgage at the time, Long said.

The mortgage transfer to U.S. Bancorp, which oversees the mortgage-backed trust containing the loan, happened after the foreclosure, Long said. All Bevilacqua had was a deed from an invalid foreclosure sale, the judge said.

‘Great Sympathy’

“I have great sympathy for Mr. Bevilacqua’s situation -- he was not the one who conducted the invalid foreclosure, and presumably purchased from the foreclosing entity in reliance on receiving good title -- but if that was the case his proper grievance and proper remedy is against that wrongfully foreclosing entity on which he relied,” Long wrote.

The servicer of the mortgage-backed trust the loan was in would have handled the foreclosure and sale, not U.S. Bancorp, Teri Charest, a spokeswoman for the Minneapolis-based bank, said in an e-mail. U.S. Bancorp isn’t a party to the Bevilacqua case.

Bevilacqua’s lawyers never found the original owner, Pablo Rodriguez. The city property-assessment site lists the four condos under different owners. Bevilacqua didn’t return a message seeking comment left with Loeb.

‘Broad Implications’

The Supreme Judicial Court agreed to take the appeal directly, bypassing an intermediate panel. The court may do that when a case has “broad implications,” Kevin Costello, a lawyer at Roddy Klein & Ryan in Boston, said in a phone interview. Costello represents borrowers in a statewide class action accusing banks of conducting faulty foreclosures.

Both Costello and Collier, the lawyer for Ibanez, said Bevilacqua is the first so-called third-party buyer case to come before the high court since the Ibanez decision.

“The third-party buyers obviously have claims against the selling entity, the servicing entity and any title insurer and any attorney that was engaged,” Collier said.

The court has tentatively set oral argument for April, according to Susan Mellen, the court clerk.

“This ruling, in conjunction with Ibanez, may allow a wrongfully foreclosed-upon borrower to retrieve their property,” Glenn F. Russell Jr., a Fall River, Massachusetts- based lawyer for the other borrowers in the Ibanez case, said in an e-mail.

Try-Title Statute

In their appeal brief, Bevilacqua’s lawyers argue that Long confused requirements for the law used to prove one’s title to a property with those for the law their client sued under, the so- called try-title statute, through which one party seeks to force another to assert or waive a potential claim on the property.

“The Land Court made this finding despite the existence of a recorded deed conveying the property to Bevilacqua,” they wrote. The lawyers said that even if the Ibanez ruling means Bevilacqua doesn’t have “legal title,” he has “record title” because of the deed.

“Anyone conducting a title search would be led to believe that Bevilacqua is the record owner of the property,” they wrote. “Bevilacqua recognizes, without conceding, that Rodriguez may have a claim to the property.”

Edward M. Bloom, president of the Real Estate Bar Association for Massachusetts, said the group may file a friend- of-the-court brief in the case. It may be possible under Massachusetts law that Bevilacqua could keep the property by having possession of it for three years, Bloom said.

Legislative Solutions

“Maybe the court will throw up its hands and say the legislature must come up with a solution,” said Bloom, a partner at Sherin & Lodgen LLP in Boston.

The third-party issue has become a major one for title insurers in the state, said Richard D. Vetstein, a real-estate lawyer in Framingham, Massachusetts.

“What’s going to happen to all these people?” Vetstein said. “The people who don’t have title insurance are really in big trouble.”

The court may have left the issue of third-party buyers unaddressed in Ibanez anticipating a ruling in the Bevilacqua case, said Thomas Adams, a partner at New York law firm Paykin Krieg & Adams LLP.

“That’s a big issue to leave outstanding,” said Adams, a former analyst at bond insurer Ambac Financial Group Inc. “If Judge Long’s decision holds, then that’s a big deal.”

The case is Bevilacqua v. Rodriguez, 10880, Supreme Judicial Court of Massachusetts (Boston).

Unbowed China leader warns US

Chinese President Hu Jintao, unbowed by pressure on a state visit, warned the United States on Thursday not to press on Taiwan and Tibet as he insisted that the rising Asian power sought cooperation.

A day after a gala dinner at the White House, Hu had a frostier reception as he visited Capitol Hill where top US lawmakers pressed him on economic and human rights concerns including the jailing of Nobel laureate Liu Xiaobo.

Hu afterward delivered a speech to US business and political leaders in which he urged "mutual respect" and said: "The China-US relationship is not one in which one side's gain means the other one's loss."

The Chinese leader said that Taiwan and Tibet "concern China's sovereignty and territorial integrity and they represent China's core interests."

"A review of the history of our relations tells us that US-China relations will enjoy smooth and steady growth when the two countries handle well issues involving each other's major interests," Hu said.

"Otherwise our relations will suffer constant trouble or even tension," he warned.

Beijing considers Taiwan, a self-governing island founded by China's defeated nationalists, and Tibet, a largely Buddhist territory where China sent troops in 1950, to be integral parts of the country.

President Barack Obama, at a joint news conference with Hu on Wednesday, reaffirmed the US position that Taiwan and Tibet are part of China.

But he also urged China to engage with Tibet's exiled spiritual leader the Dalai Lama, who is widely popular in the United States, and recommitted the United States to helping Taiwan defend itself against China's growing military.

The United States and its allies, particularly Japan, have repeatedly voiced concern about China's double-digit growth in defense spending. China tested a stealth fighter this month just as US Defense Secretary Robert Gates visited.

Hu dismissed worries, saying: "We do not engage in arms races or pose a military threat to any country. China will never seek hegemony or pursue an expansionist policy."

However, much of Hu's speech was conciliatory. He urged cooperation between the world's largest developed and developing nations on issues from reviving the moribund Doha trade liberalization talks to fighting climate change.

"China and the United States should pursue global cooperation as partners to fulfill common responsibilities and meet common challenges," Hu said.

He also said China sought to work with the United States around Asia, despite unease in Japan and Southeast Asian nations about Chinese assertiveness in recent months over myriad territorial disputes.

"We should stay committed to promoting peace, stability and prosperity in the Asia-Pacific region, engage in open and inclusive regional cooperation and turn the Asia-Pacific into an important region where China and the United States work closely together on the basis of mutual respect," Hu said.

Hu earlier met with Obama's nemesis John Boehner, the newly installed House speaker, who said that he had "a good meeting" with Hu that focused heavily on "our economic relationship."

"I did express my concerns about religious liberty. I expressed my concerns about intellectual property and the issue of North Korea. The president responded. And I would hope that the dialogue on all of these subjects will continue," Boehner, who did not detail Hu's answers, told reporters.

Democratic House Minority Leader Nancy Pelosi, a longtime advocate for human rights in China, said she raised concerns about the imprisonment of Liu Xiaobo and restrictions on the dissident's wife, who was not allowed to go to Oslo last month to accept his Nobel Peace Prize.

Senate Majority Leader Harry Reid, also a Democrat, said he spoke with Hu about China's currency which many US lawmakers allege is deliberately undervalued to fuel a flood of exports, killing off US manufacturing jobs.

Hu hit back at criticism during his speech, citing an unspecified study that stated that "quality yet inexpensive products" from China have saved US consumers 600 billion dollars over the past 10 years.

Hu will on Friday visit Chicago, Obama's hometown, where he is expected to showcase a Chinese factory to demonstrate that his country is creating jobs. China and the United States signed $45 billion in trade deals during Hu's trip.

Mindful of China's image, China has also broadcast commercials on major US television networks aiming to show China as a nation of rich culture and advanced technology.

Busloads of Chinese students waved flags to cheer on Hu as he delivered the speech at a heavily guarded hotel. But protesters were also out in force, with hundreds waving Tibetan flags and chanting for Hu to "free Tibet."

China leader warns US on Tibet, Taiwan
Washington (AFP) Jan 20, 2011 - Chinese President Hu Jintao on Thursday warned the United States to respect Beijing's sovereignty over Taiwan and Tibet but assured that his country had no interest in engaging in an arms race. Hu repeatedly urged "mutual respect" and cooperation between the Pacific powers as he delivered a policy speech on a state visit in which his hosts have repeatedly pressed him about human rights. At a luncheon with senior US officials and business leaders, Hu said that Taiwan and Tibet "concern China's sovereignty and territorial integrity and they represent China's core interests." "A review of the history of our relations tells us that US-China relations will enjoy smooth and steady growth when the two countries handle well issues involving each other's major interests," Hu said.

"Otherwise our relations will suffer constant trouble or even tension," he warned. President Barack Obama, at a joint news conference with Hu on Wednesday, had urged China to engage in talks with the Dalai Lama, Tibet's exiled spiritual leader, although he reaffirmed the US view that the Himalayan territory is part of China. The United States and its allies, particularly Japan, have repeatedly voiced concern about China's double-digit growth of military spending. China tested a stealth fighter this month just as US Defense Secretary Robert Gates visited.

Hu dismissed concerns, saying: "We do not engage in arms races or pose a military threat to any country. China will never seek hegemony or pursue an expansionist policy." However, much of Hu's speech was conciliatory. He urged cooperation between the world's largest developed and developing nations on issues from reviving the moribund Doha trade liberalization talks to fighting climate change. "China and the United States should pursue global cooperation as partners to fulfill common responsibilities and meet common challenges," Hu said.

He also said China sought to work with the United States around Asia, despite growing concerns in Japan and Southeast Asian nations about Chinese assertiveness in recent months over myriad territorial disputes. "We should stay committed to promoting peace, stability and prosperity in the Asia-Pacific region, engage in open and inclusive regional cooperation and turn the Asia-Pacific into an important region where China and the United States work closely together on the basis of mutual respect," Hu said. The leader of the world's most populous nation also hit back at the sour US mood over China's economic clout.

Hu met earlier Thursday with US lawmakers, many of whom accuse China of killing American manufacturing jobs by keeping its currency artificially low. Hu, citing an unspecified study, said that "quality yet inexpensive products" from China have saved US consumers 600 billion dollars over the past 10 years. In China, more than 70 percent of US companies stayed profitable even during the worst of the global economic crisis, Hu said. "The China-US relationship is not one in which one side's gain means the other one's loss," Hu said.

Ron Paul: "Perpetaul War Is Expensive!"

Click this link ..... http://revolutionarypolitics.tv/video/viewVideo.php?video_id=13619

Housing Shows There Is No Recovery

Greg Hunter
USA Watchdog

Housing starts are a tried and true barometer of business activity. If there was a real economic recovery going on in the economy, housing starts would be, at the very least, edging up. Please keep in mind the government is providing some of the lowest mortgage rates in a generation. A 30-year mortgage is around 4.75%. This week, the Commerce Department reported housing starts were down 4.3% last month. Here’s how this was couched in the opening line of a Bloomberg story: “Builders began work on fewer homes than projected in December, a sign the industry that triggered the recession continued to struggle more than a year into the U.S. economic recovery.” (Click here to read the complete Bloomberg story.)

“More than a year into the U.S. economic recovery.” What recovery? I feel Bloomberg does a better job than most reporting the financial news, but I cannot figure out why nearly all reporters universally keep beating the “recovery”drum when there is no actual proof of a sustained recovery.

The same Bloomberg story quoted above backs up my contention. It said, “Boston Fed President Eric Rosengren is among central bankers concerned growth won’t exceed 4 percent this year because the housing recovery is likely to be weaker than usual, given the tightening of lending standards and high vacancy rates. “If housing-related growth is not going to boost the recovery this time around, we may need policy — particularly monetary policy — to continue playing a stimulative role,” Rosengren said in a Jan. 14 speech.”

Why in the world would the Fed need “to continue playing a stimulative role” if there was, in fact, a sustained recovery? The answer is simple—there is no recovery. For example, just this week, American Express announced it is closing a call center in Greensboro, North Carolina. It is one of four in the U.S. 1,900 high paying white-collar jobs will be gone by the end of the year. Does this sound like a growing economy where credit is being extended? This is not just the loss of those jobs, but it will cause a ripple effect. For instance, Am Ex and its employees contributed $250,000 last year to the local United Way. (Click here ro read more on the Am Ex call center closing.)

Read Full Article

Path Is Sought for States to Escape Debt Burdens

Pensioners and state bond holders could lose out

Mary Williams Walsh -- The New York Times

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.

Read Full Article

YOUR Poverty is Virtuous

You should labor mightily and for little money, so that I can admire your picturesque and quaint industry from my well-appointed sitting room:

Seven months into its bid to reinvent the metro newspaper, The Bay Citizen, the San Francisco-based nonprofit news site, has so far raised a total of $14.5 million in philanthropic gifts, rolled out daily online news and culture coverage with a 26-person-staff, and, during November, attracted a monthly audience of approximately 200,000 unique visitors. It’s on track to spend $4 million during its first year.

[snip]

In a world where many local nonprofit startups are shoestring operations run by refugees from downsized or shuttered metro papers, The Bay Citizen’s relatively large budget continues to attract scrutiny — and some hostility. (As a quick comparison, the national investigative nonprofit ProPublica spent approximately $9.3 million last year, and the local civic news outlet Voice of San Diego spent approximately $1 million.)

“I’m honestly mystified as to why so many journalist-commentators seem to think that spending real money on journalism is a bad thing,” Weber told me. “I’ve been there, and there is nothing especially virtuous about being broke.” Moreover, he said, “I would challenge anyone to take a hard look at what we do — and I mean really dive in in a serious way over a period of time — and tell me that we are wasting money.”

Right. Just for comparison's sake, here's what a for-profit newspaper company thinks is appropriate spending:

Mr. FitzSimons, 57, who has been with the company since 1982, became president in 2001, chief executive in 2003 and chairman in 2004.

He leaves with a total of about $15 million, which includes severance, a “gross-up” to cover taxes, and a bonus, in addition to retirement, deferred compensation and other benefits worth more than $4 million, according to an analysis by James F. Reda & Associates, a compensation consulting firm. In addition, he will cash in $19 million in stock, restricted stock grants and stock options that he would receive even if he were not leaving.

But oh, these little non-profit startups are supposed to be scrappy and poor and not at all a reasonable competitor to an actual for-profit company! They can't have a budget that looks REAL! We can't have that!

And before anybody goes on a wank about NONprofit, that nonprofit status doesn't mean they don't make any money or pay anybody. The heads of some 501c3s make and spend obscene amounts of money.

Mostly, though, I agree with Weber and it's the attitude that everybody ELSE should be poor that makes me annoyed, and it's a thing you see in major news commentary all the time: Rich assholes bemoaning the dearth of examples of noble poverty for them to point to in their columns. People doing a job are not your goddamn scenery, and authenticity is not conveyed by holes in one's shoes. Romanticizing the poverty of others is just as bad as ignoring it; in neither case are you actually seeing the poor, just what they represent to YOU.

Your poverty is only a morale-building, toughening, valuable life lesson after you're rich, and telling the story about how you used to scrounge the day-old bagel bin at the coffee shop to get through the week is either a coping mechanism or a distancing one. Either way, it doesn't actually do shit to improve anybody else's lot, not when you're surviving on comparative pennies and dickheads like FitzSimons are walking away with the bank.

A.

How the financial elite have dismantled the American middle class

The U.S. economy is now operating like a finely tuned engine bent on dismantling the middle class and protecting the tiny elites in our nation that have learned to manipulate both political parties to their financial benefit. This did not occur over night but started in the 1970s when the U.S. government and investment banks juiced up the nation with deficit and debt spending. A single family cannot go into debt for a very long time without consequences but a rising housing market hid much of the inequality developing in our system for a very long time. It was an illusion of stability. The top 1 percent in our nation now control 43 percent of all financial wealth. These are levels not seen since the years before the Great Depression consumed the global economy. The fact of the matter is the top 1 percent has massively gained in real financial terms because of political maneuvering and selling out the middle class. Since these people protect their wealth through investment banks and tax breaks politicians have not dared touch these sacred cows or even asking banks to pay for their decades of personal irresponsible lending. In the end the elite have created a system where the working and middle class are paying for their own demise.

“(UK Guardian) A homeless encampment known as Tent City, in Sacramento, California, in 2009. Since the 1970s, real wages stopped growing and the gap between rich and poor expanded as the US economy slowed down after decades of growth. Photograph: Rich Pedroncelli/AP”

I find it disturbing that foreign news organizations are covering our financial reality better than local media outlets. This probably has to do with many large media outlets being controlled by the same Wall Street power brokers. This is no conspiracy story but a logical extension of money infiltrating and controlling politics, laws, and the trajectory of our economy moving forward. The above comes from the UK and shows a grim reality that many Americans do not want to face. Those that do face it are usually left voiceless (ironically the viral star Ted Williams was a homeless man with a golden voice). We have a very large problem with many people falling off of the economic radar. Tent cities are now a staple in many areas of the country and food banks are facing unprecedented demand for their services. Why is this occurring in the midst of a recovery? Well take a look at how many people now receive food assistance from the government:


Source: SNAP
The latest uninviting data shows 43,200,000 Americans receiving some form assistance, an all-time record that seems to be broken each month. This number has been moving up steadily for the entire decade. Many of these people are families that have been thrown off of the middle class track. With 1 out of 3 families with no retirement savings many people are one paycheck away from being homeless or being evicted, a fact confirmed by the record number of foreclosures in 2010. What is disturbing however is how many people are anesthetized by the mainstream media and somehow blame each other for these problems. Have they not noticed the record profits at investment banks? Did they miss the memo that Goldman Sachs, a bank that would not even be around without taxpayer support, is now going to give out bonuses that average $430,000? Did people forget that it took Wall Street years to create these financially destructive products to gamble away the wealth of average Americans and distribute it amongst themselves? While most working and middle class Americans operate in the rugged individualistic capitalism world of Social Darwinism many of the elite operate in a plutocracy model where they win no matter what outcome hits in the market. If they make a failed bet they can extort politicians and force their hands for bailouts.

“US employers took advantage of the changed situation: they stopped raising wages. When basic labour scarcity became labour excess, not only real wages, but eventually benefits, too, would stop rising. Over the last 30 years, the vast majority of US workers have, in fact, gotten poorer, when you sum up flat real wages, reduced benefits (pensions, medical insurance, etc), reduced public services and raised tax burdens. In economic terms, American “exceptionalism” began to die in the 1970s.”

The disparity is obvious by examining the above chart. Income is now flowing to the top 10 percent in a way that it has not since the 1920s all the while middle class American have been increasing productivity and have actually added more family members to the workforce merely to stay afloat. Half of all American workers make $25,000 a year or less. Wages have been stuck for over a decade and have gone virtually nowhere for a few decades in real terms. Yet these gains in productivity and favorable political climate have flowed one way:

“The rich, however, have got much richer since the 1970s, as every measure of US income and wealth inequality attests. The explanation is simple: while workers’ average real wages stayed flat, their productivity rose (the goods and services that an average hour’s labour provided to employers). More and better machines (including computers), better education, and harder and faster labour effort raised productivity since the 1970s. While workers delivered more and more value to employers, those employers paid workers no more. The employers reaped all the benefits of rising productivity: rising profits, rising salaries and bonuses to managers, rising dividends to shareholders, and rising payments to the professionals who serve employers (lawyers, architects, consultants, etc).”

So even with the top 10 percent we see the inequality spike as we move up the chain. The narrative coming out of Wall Street is all of this was inevitable. That somehow the middle class disappearing is just the market working itself out. That is a blatant lie. If that were to be the case all big investment banks on Wall Street would be in the ash heap of history. That would be the market working things out. Instead, we have subsidized cronyism for the top 1 percent all at the expense of the working and middle class:

“Since the 1970s, most US workers postponed facing up to what capitalism had come to mean for them. They sent more family members to do more hours of paid labour, and they borrowed huge amounts. By exhausting themselves, stressing family life to the breaking point in many households, and by taking on unsustainable levels of debt, the US working class delayed the end of American exceptionalism – until the global crisis hit in 2007. By then, their buying power could no longer grow: rising unemployment kept wages flat, no more hours of work, nor more borrowing, were possible. Reckoning time had arrived. A US capitalism built on expanding mass consumption lost its foundation.”

Average Americans need to wake up and get a handle on the situation. College tuition now is even outpacing inflation compared to other sectors so it is likely that fewer Americans will gain the knowledge base needed to combat these entrenched interests without going into massive debt at these institutions. Many would rather be fixated on a homeless man with a golden voice instead of looking at where all the real gold is in our economy.