UPDATE: 34-year-old man arrested in connection with Kovan double murder

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  Yahoo! Newsroom - Two men are suspected to have been murdered in Kovan, with one being dragged by a car from Hillside Drive to Kovan MRT station, about 1km away.

(UPDATED 13 July, 7.23am: Singapore police arrest 34-year-old suspect late on Friday evening with help from Malaysian police. )

A 34-year-old man has been arrested in connection with the Kovan double murder late on Friday evening.

"The arrest of the suspect was possible through the close collaboration between the Singapore Police and the Royal Malaysian Police," according to a statement.

The arrest comes after a frantic three-day manhunt after two dead bodies, a father and a son,  were found less than a kilometre apart around the Kovan area on Wednesday afternoon.

The body of the younger Tan Chee Heong, 42, was dragged by a car for almost a kilometre. The getaway car, a silver Toyota Camry with the licence plate SGM 14J was found at Block 1084, Eunos Avenue 7, on Thursday.

The elder man has been identified as 67-year-old car business owner Tan Boon Sin. He was found dead in a private home on Hillside Drive. The latter was suspected to have been murdered at the house.

Police followed a blood trail to a private home at Hillside Drive, where they discovered the body of the man's …

According to a neighbour of the older victim, the vehicle belonged to him. They also suspect a connection between the younger victim and driver of the Toyota Camry.

An eyewitness on Wednesdat afternoon said that he saw a body being dragged from a car's rear. He saw the car “dragging it for 10 to 20m” before it was “pushed” from the car near Kovan MRT station.

He added that the man was “barely conscious” and his head was “full of blood”.

The eyewitness also said that there were many motorists honking and one went to check on the victim. Later, he covered the victim's head with a white cloth.

The incident caused a huge traffic jam in Kovan as the three lanes on the left were subsequently blocked by the police, who were also directing traffic.
 

Neighbours were gathering at Hillside Drive to find out more about the case.

At Hillside Drive, one of the neighbours, a 73-year-old man who wanted to be known as Mr Liang, told Yahoo! Singapore that the deceased older man and his wife "were a nice couple". He added that they had lived in the house for 10 years.

If you have information on the driver or the case, call 1800-255-0000.

Additional reporting by Nurul Azliah

3rd person dies from Asiana crash; another victim was hit by fire truck

(CNN) -- A third person -- identified only as a girl -- has died from injuries sustained in last week's crash of Asiana Airlines Flight 214, officials at the San Francisco hospital where she was being treated said Friday.

San Francisco General spokeswoman Rachael Kagan said the "minor girl" had been in critical condition at the Bay Area hospital since last Saturday's incident. The hospital didn't release any information about the girl -- including her name, age or ethnicity -- who died Friday morning, according to Dr. Margaret Knudson, the hospital's chief of surgery.

"It's a very, very sad day today at San Francisco General Hospital," said Dr. Geoffrey Manley, chief of neurosurgery. "We have all done everything we could."

Two other people -- both 16-year-old girls from China -- were reported dead soon after the Boeing 777 crash-landed at San Francisco International Airport.

Plane crash-lands in San Francisco

One of those teenagers was hit on the runway by a fire truck, though it's not clear whether she was already dead when she was struck, San Francisco police spokesman Albie Esparza told CNN on Friday.

At the time, firefighters were using flame retardant that ended up surrounding areas immediately around the plane with foam, Esparza said.

"When the truck repositioned itself to get a better aim of the fuselage, they discovered the body of the victim in the fresh track from the path of the truck," he added.

The foam was thick enough to cover a body, Esparza noted. Moreover, it is difficult for those in the "industrial-size" fire trucks that responded to crash to see things on the ground, the police spokesman said.

"Right now, we are waiting results from the coroner to determine if she died from the crash or the fire engine going over her," the police spokesman said. "And that will be part of our investigations, like any other case, by our hit-and-run and major accidents investigations teams."

Of the passengers and crew on board, 304 people survived -- 123 of whom walked away relatively unscathed and the remainder sent to hospitals.

A handful of them remained hospitalized, including six patients at San Francisco General as of 3 p.m. (6 p.m. ET) Friday. That hospital's figure include two adults in critical condition with spinal cord injuries, abdominal injuries, internal bleeding, road rash and fractures.

Besides the passengers and crew members' physical recovery, San Francisco International Airport is working to get back to normal as well.

The airport was shut down to incoming and departing traffic for several hours after the Asiana crash, which occurred around 11:30 a.m. Saturday. Two of its four runways reopened later that day, though the charred remnants of the downed 777 remained -- a visible reminder of the horror that had unfolded.

Early Friday morning, that airline's fuselage was hauled away on flatbed trucks to a remote section of the airport, said San Francisco International Airport in a press release.

By 5:05 p.m., a Southwest Airlines jet landed on the runway where the crash occurred -- signifying that, for the first time in six days, all four of the airport's runways were operational.

"The tremendous efforts and around-the-clock work of airport staff, government agencies, airline tenants and contractors allowed us to complete all repairs and safety certifications for Runway 28L in a timely and efficient manner," said airport director John L. Martin.

While the wreckage has been hauled away, investigators still have not pinpointed exactly why Flight 214 crashed, or who was to blame.

NTSB: Pilot sees light before crash

Asiana attendants return home

New details emerge in plane crash

An in-depth review of the cockpit voice recorder shows two pilots called for the landing to be aborted before the plane hit a seawall and crashed onto the runway, the head of the National Transportation Safety Board said Thursday.

The first internal call by one of the three pilots in the cockpit to abort the landing came three seconds before the crash and a second was made by another pilot 1.5 seconds before impact, NTSB chief Deborah Hersman said.

The agency has begun wrapping up its investigation at the airport and crews are cleaning up the debris left by the crash. Investigators turned the runway back over to the airport. The runway has been closed since Saturday's crash.

The investigation is shifting back to NTSB headquarters in Washington, where authorities will work to find a more definitive answer about what led to the crash.

The passenger jet's main landing gear slammed into the seawall between the airport and San Francisco Bay, spinning the aircraft 360 degrees as it broke into pieces and eventually caught fire.

CNN's Chelsea J. Carter, Augie Martin and Ed Payne contributed to this report.

How Cash Secretly Rules Surveillance Policy

By David Sirota
Have you noticed anything missing in the political discourse about the National Security Administration’s unprecedented mass surveillance? There’s certainly been a robust discussion about the balance between security and liberty, and there’s at least been some conversation about the intelligence community’s potential criminality and constitutional violations. But there have only been veiled, indirect references to how cash undoubtedly tilts the debate against those who challenge the national security state.
Those indirect references have come in stories about Booz Allen Hamilton, the security contractor that employed Edward Snowden. CNN/Money notes that 99 percent of the firm’s multibillion-dollar annual revenues now come from the federal government. Those revenues are part of a larger and growing economic sector within the military-industrial complex – a sector that, according to author Tim Shorrock, is “a $56 billion-a-year industry.”

For the most part, this is where the political discourse about money stops. We are told that there are high-minded, principled debates about security. We are also told of this massively profitable private industry making billions a year from the policy decisions that emerge from such a debate. Yet, few in the Washington press corps are willing to mention that politicians’ attacks on surveillance critics may have nothing to do with principle and everything to do with shilling for campaign donors.
For a taste of what that kind of institutionalized corruption looks like, peruse InfluenceExplorer.com to see how much Booz Allen Hamilton and its parent company The Carlyle Group spend. As you’ll see, from Barack Obama to John McCain, many of the politicians now publicly defending the surveillance state have taken huge sums of money from the firms.
These are just examples from two companies among scores, but they exemplify a larger dynamic. Simply put, there are huge corporate forces with a vested financial interest in making sure the debate over security is tilted toward the surveillance state and against critics of that surveillance state. In practice, that means when those corporations spend big money on campaign contributions, they aren’t just buying votes for specific contracts. They are also implicitly pressuring politicians to rhetorically push the discourse in a pro-surveillance, anti-civil liberties direction.
All of this doesn’t mean there is direct conspiratorial micromanagement of politicians by the military-intelligence community. It doesn’t, for instance, mean that everything that comes out of surveillance defenders’ mouths comes from talking points provided by Booz Allen’s lobbyists. Instead, there’s something much more insidious and reflexive at work.
As anyone who has worked in Washington politics and media well knows, the capital is not a place of competing high-minded ideologies. In terms of the mechanics of legislation and policy, it is a place where monied interests duke it out, where those with the most money typically win, and where a power-worshiping media is usually biased toward the predetermined winners.
In the context of money and national security, there is a clear imbalance – there are more monied interests in the business of secrecy and surveillance than there are organized interests that support transparency and civil liberties. That imbalance has consequently resulted in a political environment so dominated by security-industry cash that the capital’s assumptions automatically and unconsciously skew toward that industry’s public policy preferences. Those preferences are obvious: more secrecy, more surveillance, and more lucrative private contracts for both.
If the simplest explanation is often the most accurate, then this financial imbalance is almost certainly why the pro-surveillance terms of the political debate in Washington are so at odds with public opinion polling. Big Money has helped create that disconnect, even though Big Money is somehow written out of the story.
David Sirota is the best-selling author of the books “Hostile Takeover,” “The Uprising” and “Back to Our Future.” Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.
© 2013 CREATORS.COM

Shutterstock photo of a satellite dish.

Republished with permission from: TruthDig

France loses AAA rating for 3rd time

The Fitch ratings agency cut France’s credit rating from AAA to AA+ on July 12, citing the country’s lack of growth.

The global ratings agency Fitch has cut France™s credit rating from AAA to AA+ over the country™s vague economic outlook and the need for structural reform in the world’s fifth largest economy.
On Friday, Fitch announced that France had lost its top credit rating, citing concern about the lack of growth and the buildup of government debt in the second largest economy of the European Union.
Budget risks œlie mainly to the downside, owing to the uncertain growth outlook and the ongoing eurozone crisis, even assuming no wavering in commitment to fiscal consolidation,” Fitch said in a statement.
The ratings agency added that France™s debt ratio was “significantly higher” than the AAA median of 49 percent.

œThe weaker economic outlook is the primary factor behind increases in the budget deficit and France needs more time to meet EU rules on government spending,” the statement said.
Fitch forecasts that the French economy will shrink by 0.3 percent in 2013, and then return to slight growth of 0.7 percent in 2014.
French Finance Minister Pierre Moscovici dismissed the loss of the top credit rating, saying, “French debt is among the safest and most liquid in the eurozone.”
“With the confidence of investors strong, French borrowing prices were low, and this confidence reinforces the government’s conviction that its strategy is the right one,” he added.
However, Friday™s figures are more gloomy than the French government’s outlook of 0.1 percent growth this year and 1.2 percent in 2014.
The International Monetary Fund expects French gross domestic product to contract 0.2 percent this year.
In January 2012, France was dropped one level to AA+ from AAA by Standard & Poor™s. Moody™s followed suit in November and knocked France off the top perch of AAA to AA+.
The downgrade represents another serious challenge to Socialist President Francois Hollande, who is struggling to revive an economy that has barely grown in more than two years and tackle unemployment, which soared to a 15-year high of 10.9 percent in May.
Even though Hollande™s government has increased taxes and implemented several reforms and spending cuts in an attempt to lower the country’s huge debt load, the measures have proven unproductive since the financial crisis in the eurozone has not been resolved and the 17-member bloc is still bogged down in recession.
MP/HGL

Republished with permission from: Press TV

10 Reasons Why The Global Economy Is About To Experience Its Own Version Of “Sharknado”

Have you ever seen a disaster movie that is so bad that it is actually good?  Well, that is exactly what Syfy’s new television movie entitled “Sharknado” is.  In the movie, wild weather patterns actually cause man-eating sharks to come flying out of the sky.  It sounds absolutely ridiculous, and it is.  You can view the trailer for the movie right here.  Unfortunately, we are witnessing something just as ridiculous in the real world right now.  In the United States, the mainstream media is breathlessly proclaiming that the U.S. economy is in great shape because job growth is “accelerating” (even though we actually lost 240,000 full-time jobs last month) and because the U.S. stock market set new all-time highs this week.  The mainstream media seems to be absolutely oblivious to all of the financial storm clouds that are gathering on the horizon.  The conditions for a “perfect storm” are rapidly developing, and by the time this is all over we may be wishing that flying sharks were all that we had to deal with.  The following are 10 reasons why the global economy is about to experience its own version of “Sharknado”…
#1 The financial situation in Portugal continues to deteriorate thanks to an emerging political crisis.  It all began last week when Portuguese finance minister Vitor Gaspar resigned…

“Mr. Gaspar’s resignation on July 1 has opened a Pandora’s box,” says Nicholas Spiro, managing director of Spiro Sovereign Strategy. “Portuguese politicians from the President down are treating the exit of Mr. Gaspar, the architect of the fiscal and structural reforms demanded by the troika, as a green light for a public debate about the bail-out programme. Yet the manner in which this debate is taking place, with the President undermining the prime minister and the opposition leader seeking to renegotiate the terms of the programme, is spooking markets.”

The general population is becoming increasingly restless as the nation plunges down the exact same path that Greece has gone.  Nobody seems to have any solutions as the economic problems continue to escalate.  According to Reuters, the president of Portugal has added fuel to the fire by calling for early elections next year…

Portugal’s president threw the bailed-out euro zone country into disarray on Thursday after rejecting a plan to heal a government rift, igniting what critics called a “time bomb” by calling for early elections next year.

Due to all of this instability in Portugal, the yield on Portuguese bonds shot up to 7.51% this week.  That is a very bad sign.
#2 The economic depression in Greece continues to deepen, and it is being reported that Greece will not even come close to hitting the austerity targets that it was supposed to hit this year…

A leaked report from the European Commission confirms that Greece will miss its austerity targets yet again by a wide margin. It alleges that Greece lacks the “willingness and capacity” to collect taxes. In fact, Athens is missing targets because the economy is still in freefall and that is because of austerity overkill. The Greek think-tank IOBE expects GDP to fall 5pc this year. It has told journalists privately that the final figure may be -7pc.

Another 7 percent contraction for the Greek economy?
It has already been contracting steadily for years.
At this point, it would be hard to overstate how bad economic conditions inside Greece are.  The following is from a recent article by Simon Black…

My friend Illias took a drag of his cigarette as he contemplated my question.
“Our government tells us that this will be a better year. No one really believes them. But all we can do is be optimistic. Too many people are committing suicide.”
His statement probably best sums up the situation in Greece right now. It’s as if the hopelessness has gone stale, and the only thing they have to replace it with is desperate, misguided, faux-optimism. And anger.
There are roughly 11 million people in this country. 3.4 million of them are employed, of which roughly one third work for the government.
1.34 million people are ‘officially’ unemployed. To put this in context, it would be as if there were 36 million officially unemployed in the US.
More startling, if you add the number of ‘inactive’ workers (i.e. those who gave up looking), the total number of unemployed is roughly 57% of the entire Greek work force.

#3 The economic crisis in the third largest country in the eurozone, Italy, has taken another turn for the worse.  The unemployment rate in Italy is up to 12.2 percent, which is the highest in 35 years.  An average of 134 retail outlets are shutting down in Italy every single day, and the debt of the country has been downgraded again to just above junk status…

Italy’s slow crisis is again flaring up. Its debt trajectory has punched through the danger line over the past two years. The country’s €2.1 trillion (£1.8 trillion) debt – 129pc of GDP – may already be beyond the point of no return for a country without its own currency.
Standard & Poor’s did not say this outright when it downgraded the country to near-junk BBB on Tuesday. But if you read between the lines, it is close to saying the game is up for Italy.

#4 There are rumors that some of the biggest banks in the world are in very serious trouble.  For example, Jim Willie (a financial writer who usually puts out really solid information) is insisting that Deutsche Bank is on the verge of collapse…

The best information coming to my desk indicates that three major Western banks are under constant threat of failure overnight, every night, forcing extraordinary measures to avoid failure. They are Deutsche Bank in Germany, Barclays in London, and Citibank in New York. Judging from the ongoing defense from prosecution and cooperation (flipped) with Interpol and distraction of resources, the most likely bank to die next is Deutsche Bank. They are caught with accounting fraud and outright financial fraud over collateral shell games, pertaining to USTreasury Bonds, other sovereign bonds in Southern Europe, and OTC derivatives linked to FOREX currency contracts. D-Bank is a dead man walking.

Time will tell if he is right.  But without a doubt the global financial system is extremely vulnerable right now.
Most Americans assume that the problems that caused the financial crash of 2008 were fixed, but that is most definitely NOT the case.  In fact, our financial system is far more shaky today than it was just before the last financial crisis.  When one major bank goes down, we could start to see others fall like dominoes.
#5 Just before the financial crisis of 2008, the price of oil spiked dramatically.  Well, it is starting to happen again.  The price of oil hit $106 a barrel on Friday.  If the price of oil continues to rise at this pace, it is going to mean big trouble for economies all over the planet.
And as I wrote about recently, every time the average price of a gallon of gasoline in the United States has risen above $3.80 during the past three years, a stock market decline has always followed.
The average price of a gallon of gasoline in the United States reached $3.55 on Friday.  This is a number to keep a close eye on.
#6 Mortgage rates are absolutely skyrocketing right now…

The average U.S. rate on the 30-year fixed mortgage rose this week to 4.51%, a two-year high. Rates have been rising on expectations that the Federal Reserve will slow its bond purchases this year.
Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan jumped from 4.29% the previous week. Just two months ago, it was 3.35% — barely above the record low of 3.31%.

This threatens to throw the U.S. real estate market into a slowdown worse than anything we have seen since the last recession.
#7 This upcoming corporate earnings season is shaping up to be an extremely disappointing one.  In fact, the percentage of companies issuing negative earnings guidance for this quarter is at a level that we have never seen before.
So is this a sign that economic activity is starting to slow down significantly?
#8 U.S. stocks are massively overextended right now.  In fact, according to Graham Summers, this is the most overextended stocks have been in the past 20 years…

Today, the S&P 500 is sitting a full 30% above its 200-weekly moving average. We have NEVER been this overextended above this line at any point in the last 20 years.

#9 Rapidly rising interest rates are causing the bond market to begin to come apart at the seams.  There is concern that the 30 year bull market for bonds is now over and investors are starting to pull their money out of the market at a staggering rate.  In fact, 80 billion dollars was pulled out of bond funds during June alone.
#10 Rapidly rising interest rates could cause an implosion of the derivatives market at any moment.  As I am so fond of reminding everyone, there are approximately 441 trillion dollars worth of interest rate derivatives out there.
If interest rates continue to soar, we could potentially see a financial disaster that is absolutely unprecedented, and the too big to fail banks would be the most vulnerable.
As USA Today recently reported, there are just five major banks that absolutely dominate derivatives trading in the United States…

Five of the biggest U.S. banks — JPMorgan, Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc. and Morgan Stanley — account for more than 90% of derivatives contracts. Regulators estimate that nearly half of derivatives are traded outside the United States.

Could you imagine the financial devastation that we would see if several of those banks started to collapse at the same time?
When you hear the mainstream media begin to talk about a “derivatives crisis” involving major banks, that will be a sign that disaster is upon us.
Most Americans don’t realize that Wall Street has been transformed into the largest casino in the history of the world.  Most Americans don’t realize that the major banks are literally walking a financial tightrope each and every day.
All it is going to take is one false step and we will be looking at a financial crisis even worse than what happened back in 2008.
So enjoy this little bubble of false prosperity while you can.
It is not going to last for too much longer.
Republished with permission from: The Economic Collapse

Five Facts About the New Glass-Steagall

Bloomberg – by Simon Johnson
Financial reform is stuck. There was sensible intent in the Dodd-Frank legislation of 2010, but the pressure from global megabanks has overwhelmed regulators.
The only way to remake the system is through renewed and focused impetus from Congress. Today may have marked that moment: Four senators — Republican John McCain, Democrats Elizabeth Warren and Maria Cantwell, and Independent Angus King — have unveiled their ”21st century Glass-Steagall Act,” which has potential to protect us from the worst problems in the banking industry while making it a better engine of prosperity.  
The biggest U.S. banks have become too big to manage, too big to regulate, and too big to jail. At a stroke, the proposed law would force global megabanks such as JPMorgan Chase and Bank of America to become smaller and much simpler — divorcing high risk activities from plain-vanilla traditional banking. Their failures would no longer threaten to bring down the economy.
Naturally, Wall Street will respond with a huge disinformation campaign, saying that the bill would cause the sky to fall. As the debate intensifies, keep in mind the following five points.
1) The bill would actually help small banks, because it would force the taxpayer-subsidized megabanks and related financial companies to break up. Anything that tilts the playing field back toward smaller financial institutions is good for the small business sector.
2) The simplifying intent of the 21st century Glass-Steagall Act is complementary to other serious reform efforts underway, including plans for the “resolution,” or managed liquidation, of any financial firm that fails. The main problem for resolution is that the largest firms are incredibly complex, and the impact of any failure could reach far and wide in unpredictable way. Making the biggest financial firms simpler would also dovetail nicely with the legislation proposed earlier this year, by Senator Sherrod Brown, Democrat of Ohio, and Senator David Vitter, Republican of Louisiana, that would significantly increase capital requirements for the very largest banks.
3) Proponents of big banks will claim that the breakdown of the original Glass-Steagall Act (which separated commercial and investment banking) did not contribute to the crisis of 2007-08. That view is so wrong that James Kwak and I wrote an entire book debunking it. More important, what did or did not happen in the run-up to 2007 is largely irrelevant. The doctrine of “too big to fail” has been with us for some time, but it was fully established by the policy response that followed the collapse of Lehman Brothers.
4) As the preamble to the 21st century Glass-Steagall Act points out, it represents a convergence with European reform thinking, as seen in the Vickers Report (for the U.K.) and the Liikanen Report (for Europe more broadly). We need structural change in banking in all major financial centers if large-scale cross-border banking is to become safer and better run.
5) The Treasury Department is not going to welcome the legislation — in fact, it may assist in mobilizing opposition. At this stage, this is an advantage, not a problem. Treasury has a severe case of reform fatigue. It’s time for someone else to carry the ball.
We can also expect Wall Street to claim that that the bill is all the work of people with “pitchforks” -– meaning populists who do not understand economics. On the contrary, the 21st century Glass-Steagall Act is very smart economics, based on a deep understanding of the politics that produce financial instability. It draws broadly on bipartisan and technocratic thinking, led by people such as Richard Fisher, president of the Dallas Fed, Sheila Bair, the former head of the Federal Deposit Insurance Corporation, and Tom Hoenig, the current vice-chairman of the F.D.I.C.
In claiming that federal action is going to bring down the markets, today’s anti-reformers are simply repeating what their counterparts said before and just after the first Glass-Steagall Act was passed in the 1930s. What we got instead was more than 50 years of financial stability and a rising middle class.
(Simon Johnson is a Bloomberg View columnist. Follow him on Twitter.)
http://www.bloomberg.com/news/2013-07-11/five-facts-about-the-new-glass-steagall.html

Get Ready For The Next Great Stock Market Exodus

Alt Market – by Brandon Smith
In the years 2006 and 2007, the underlying stability of the global economy and the U.S. credit base in particular was experiencing intense scrutiny by alternative economic analysts. The mortgage-driven Xanadu that was the late 1990s and early 2000s seemed just too good to be true. Many of us pointed out that such a system, based on dubious debt instruments animated by the central banking voodoo of arbitrary fractional reserve lending and fiat cash creation, could not possibly survive for very long. A crash was coming, it was coming soon, and most of our society was either too stupid to recognize the problem or too frightened to accept the reality they knew was just over the horizon.  
The Federal Reserve had cheated America out of an economic reset that was desperately needed. The 1980s had brought us utter destruction disguised as “globalization.” Our industrial center, the very heart of the American middle class that generated enormous wealth and decades of opportunity, had been dismantled and shipped overseas to the lowest bidder. It was then that the U.S. economy actually died; we just couldn’t see it. From that point forward, Americans were fully dependent on the charity of central bank money creation and international bank lending standards. The collapse that should have occurred in the 80s was delayed and thus made more volatile as the Fed artificially lowered interest rates and allowed trillions upon trillions of dollars in dubious loans to be generated. Free money abounded, and average citizens were suckered royally. Their greed was used against them, as they collateralized homes they could not afford to buy more crap they didn’t need. Of course, you know the rest of the story…
Today, credit markets remain frozen. Lending is nowhere near the levels reached in 2006. The housing market is showing signs of life; but that’s only because most home purchases are being made by banks, not regular people, for pennies on the dollar, as bankrupt properties are then reissued on the market for rent rather than for sale. If you are lucky, maybe one day you’ll get to borrow the keys to the house you used to own. And, millions of higher-paying full-time jobs have been lost and then replaced with lower-paying part-time-wage slavery positions. The image of American prosperity carries on, but it is nothing but  a cruel farce; and anyone with any sense should question how long this false image can be given life before the truth dawns.
The novice will question why it is necessary to re-examine all of this information. Is it not widely known? Am I not simply preaching to the choir a message heard over and over again since the crash of 2008? Maybe – or maybe it is time for us to finally apply some foresight given our knowledge of the recent past.
Why did 2008 creep up on so many people? Weren’t there plenty of economists out there “preaching to the choir” at that time? Weren’t there plenty of signals? Weren’t there plenty of practical conclusions being made about the future? And yet, the world was left stunned.
The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity. They want to believe that disaster is a mindset, that it is a boogeyman under their bed that can be defeated through blind optimism. They refuse to accept that disaster is a tangible inevitability of life that pays no heed to our naïve, happy-go-lucky attitudes. The American people allowed themselves to be caught off guard in 2008, just as they are setting themselves up to be caught off guard again today.
Again, the reality is clear; the Federal Reserve has propped up equities and bonds using money created out of thin air — so much so that both markets have become totally reliant and disturbingly addicted to fiat injections. The distribution of this fiat threatens the continued dominance of the dollar as the world reserve currency and will invariably lead to currency collapse and hyperstagflation. This process is much more likely to climax in the near term given the accelerated rate of quantitiative easing within our system to date and the accelerated rate at which our primary lenders (namely China) are dumping the dollar in bilateral trade with each other. The endgame is obvious, but I still fear millions of people within this country and around the world will be shell-shocked once again by a renewed crash.
The argument is always the same: “Yeah, things might get dicey, but it won’t be as bad as all the doom-mongers claim, and probably not for many years.”
Similar statements were made by naysayers before the Great Depression and before the 2008 crash. So why are the skeptics wrong again this time around?
The Stimulus Fantasy
Let’s put this in the simplest terms possible: Stimulus is now the lifeblood of our economy. There is nothing else sustaining our nation. Period. Stimulus in the form of bailouts and QE are keeping the stock market and bonds afloat.  This means that the continued existence of equities, and the continued existence of healthy treasuries, and thus the foundation of our currency, our general economy, and a functioning (or barely functioning) government, is completely dependent on the Fed continuing to print.
In recent weeks, the Fed hinted at possible intentions reduce or remove stimulus measures, which would effectively shut down the life-support machine and let the patient drown in his own fluids.
http://money.cnn.com/2013/06/19/news/economy/federal-reserve-stimulus/index.html
http://www.reuters.com/article/2013/06/14/usa-imf-lagarde-idUSL2N0EQ0QI20130614?feedType=RSS&feedName=marketsNews&rpc=43 
Day traders and common investors are not very bright, but they do understand well that no stimulus means no stock market and no bond market. In response, indexes have become erratic, shifting on the slightest rumor that the central bank might continue QE for a little longer. Pathetically, the Dow Jones now rallies upward whenever bad financial news hits the wire, as insane investment groups pour in money in the hopes that dismal economic developments might cause the Fed to extend the bailout bonanza.
In our modern nightmare era of hyper-centralized economy, one word or rumor from Ben Bernanke now determines whether stocks dramatically rise or fall.  This is NOT the behavior of a healthy and vibrant fiscal system.
The anatomy of American finance and trade has been horribly mutilated; and clearly, such a monstrous creation cannot last. Stocks are supposed to perform based on the true profitability of individual businesses as well as the political and social health of the overall culture. The wild printing of paper money by private banking magnates is not a catalyst for a successful economy. Whether the Fed actually ends QE is ultimately irrelevant. No fiscal structure can survive when it abandons fundamentals for fantasy. Either QE continues, becoming less and less effective in staving off negative results in equities, inspiring a flight from the dollar leading to a crash, or QE ends, exposing the inevitability of negative results in equities, leading to a crash.  If the Fed ends stimulus, the process of collapse will merely take place slightly faster than if stimulus remains.
But every historic economic crisis has a defining moment, a moment in which the tide turned overwhelmingly sour for a majority of the public. The question now becomes what, exactly, will trigger the avalanche?
Precious Metals Signal Secret Shift To Asia
As I have discussed in numerous articles over the years, China’s shift away from the U.S. consumer and the U.S. dollar is well under way.  Over half of the world’s major economies now have bilateral trade agreements in place which remove the dollar as the world reserve currency in trade with China and the ASEAN economic bloc.  China is issuing trillions in Yuan and Yuan denominated bonds around the globe, setting the stage for a higher Yuan valuation and allowing Chinese consumer markets to replace American consumer markets as the number one driver of manufacturing in export countries.  At the same time, China has increased its purchases of precious metals exponentially to the point that the nation is now set to become the largest holder of gold and silver in the world in the next two years.  This is clearly in preparation for a currency crisis event…
The buying spree in Asia seems to directly contradict the “paper market” value of metals in recent weeks.  Demand for gold and silver has only increased throughout most of the world, even in light of Federal Reserve suggestions that QE might end.  Manipulations within metals markets by the CME and JP Morgan explain half the story, but there may be another issue at work.
It is very possible that the COMEX is now essentially broken, and that gold and silver ETF’s (paper gold and silver) are decoupling from the street value of physical metals during the last gasp of a failing system.  In the near term, I believe that premiums on physical coins and bars will skyrocket, even as the official market prices of those metals is held down.  At the same time, China, Russia, and other countries heavily invested in gold may break from Western COMEX valuations completely using their own metals markets to establish their own prices.
As the dollar loses its world reserve status, the countries holding the most physical gold in their coffers stand to weather the storm most effectively, and because U.S. gold stores have never been officially audited, we have no idea if America has any reserve whatsoever.
Crushing Energy Prices Coming Soon?
While China continues a careful strategy of decoupling from the dollar and the U.S. consumer through bilateral agreements and trading blocks, another issue is arising: the issue of energy. I would like to note that despite globally diminishing oil demand caused by the 2008 credit collapse, gas prices have experienced little to no deflation.  I would also like to note that after the Federal Reserve hinted at shutting down QE, oil was one of the few commodities that continued to rise.
http://www.bloomberg.com/news/2013-01-18/u-s-oil-demand-falls-to-16-year-low-api-reports.html
This has not been caused by a lack of supply, as many American-based companies ramp up production. (I am aware of all the arguments behind peak oil. As soon as a peak oil proponent can show me an example of oil demand not being met because of a legitimate lack of supply, then I’ll be happy to consider that peak oil is the main cause of price increases.)
http://www.bizjournals.com/sanantonio/blog/morning-edition/2013/06/us-oil-production-up-as-global.html
The fact is current regressive global demand and ample supply should have led to lower gas prices, not higher. If speculation was the cause, then price shifts within the oil market should have been far more volatile, with increases lasting weeks or perhaps months, but certainly not years.  The only plausible explanation for this kind of commodity activity is a weakening of the currency it is directly tied to.  The petrodollar is slowly but surely coming to an end.
I believe the next market exodus may be triggered by the weakening effects of stimulus (or the removal of stimulus altogether) along with extreme energy prices cause by steady inflation and a global political crisis in the near future.
China, being strangely and consistently prophetic when it comes to economic calamity, has recently established an astonishing oil trade deal with Russia, which plans to supply China with an alternative petroleum source for the next 25 years. (This news went almost completely unnoticed by the mainstream media.)
http://www.forbes.com/sites/kenrapoza/2013/06/22/russia-inks-big-china-oil-deal/?partner=yahootix
Now, keep in mind that in 2010, China and Russia signed an agreement completely removing the U.S. dollar in bilateral trade. The dollar has been the world reserve and the only currency used to purchase petroleum for decades. The Russia/China oil deal changes everything. It sets a trend toward the removal of the petrodollar function of the Greenback which ultimately destroys any credibility the currency has left. This news flies in the face of dollar proponents who consistently claim that the dollar’s ties to oil make it invincible. Apparently, there are some weaknesses in the armor.
Ongoing social unrest in Egypt has also made oil markets jumpy, being that the Suez Canal oversees the transfer of a significant portion of the world’s oil shipping.  Clearly, there are two opposing factions within the country vying for power, and regardless of who is best suited to U.S. interests, the Egyptian people overall have no love for the West.  There is a distinct chance of a shooting war, similar to Syria, in the coming months in Egypt.
Meanwhile, the engineered conflict in Syria continues to go exactly as I predicted in my article ‘The Terrible Future Of The Syrian War’.
http://www.alt-market.com/articles/1535-the-terrible-future-of-the-syrian-war
Syria remains an explosive trigger point for regional war which will, in the end, draw in Iran and result in the closure of the Strait of Hormuz, which annually handles the shipping of about 20 percent of the world’s oil. All trends point toward higher gas prices over the horizon, and the U.S. economy is barely able to survive on the cost of energy we have today.
So Close They Can’t See It
Reduced stimulus combined with adversely high oils prices may very well be the tumbling boulders that bring down the mountain. We are close now. Beyond the undeniable economic factors, the very fabric of American government is crumbling. Corruption is openly rampant. Scandals are exposed daily. The establishment leadership is unapologetic and grows even more despotic with each truth that escapes into the open air. They are becoming MORE bold, not less bold, and those of us who seek transparency in all things, from politics, to economics, to surveillance, are being attacked as the source of the problem rather than the solution.
Collapse, from a historical perspective, seems to occur when the searchlights of the individual mind are dimmest, when the threat is the greatest, and when we are most comfortable in our ignorance. In 2008, the U.S. public was mostly oblivious to the danger, and they were painfully stung. Today, I hope that the liberty movement, the alternative media, and alternative economic analysts have created a window of opportunity by which millions of people can this time see the writing on the wall and prepare accordingly. At this point, there is no question that Americans have been warned. Whether or not they pay heed, is out of our hands.
——————

If You Put $250 in a Chase "Savings Account," You'll Get 12.5 Cents in Yearly Interest -- And Maybe Charged $4 a Month

MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
If you are a working stiff and can squirrel away $250 to put in a Chase "savings account," Chase will pay you 12.5 cents a year (.05% APY at a "standard rate"). Furthermore, if you don't make any transactions, they will charge you $4 a month, meaning that you will be left with $202 at the end of a year, plus your 2.5 cents.
It's all right here on a Chase website marketing page for what is called "Chase Savings." But a closer look at the fees and disclosures page indicates that if you are a consumer not used to reading the footnotes, you could end up losing your savings through add-on fees (including potentially the $4 a month "service" fee).
The oligarchy doesn't keep its money at Chase we bet, at least in savings accounts. We doubt that JP Morgan Chase CEO Jamie Dimon has a standard savings account at his own firm, the parent company of Chase. Why? Because according to the Chase rate chart, any sucker who puts $5 million into even the premium "Chase Savings Plus" still only gets .15% interest. To break that down, that would equal a $150.00 return on every $100,000 lent to Chase each year. Do you think Dimon is a master of the universe with those kind of investment returns?
We call savings at Chase lending because the bank takes your money and charges credit card holders up to around 30%, yielding enormous profits at your expense and the indebtedness of the credit card holders. Meanwhile, you end up as a "good" American saver with literally pennies in interest on your nest egg.  Consumer savers at banks like Chase are paying for providing the banks to big to fail with the capital to lend out funds at usurious interest rates for a variety of purposes -- or financing their risky investment ventures.
These practices of saver subsidies may explain why Forbes reported on July 12:

The U.S. economy is recovering, and the country’s biggest banks are certainly participating in the comeback.

JPMorgan Chase delivered second-quarter earnings that easily beat the Street’s consensus estimate Friday morning.

The banks, we think, will argue that the consumer savings interest rates are low because the Fed is keeping interest rates suppressed in order to boost the economy (although there are indications that such a policy will change in the near future).  However, the banks too big fail are not, by most accounts, reinvesting heavily in America -- either in loans for manufacuturing or small business loans -- and they are racking up profits by lending out money to debt-ridden consumers who can't afford to get ahead financially because pay (adjusted for inflation) for workers has plateaued for nearly two decades. In fact, blue collar worker pay is decreasing in buying power due to the shift to lower paying jobs in the US.

I personally received a flyer from Chase that offered $100 to deposit $10,000 for 90 days "into a new or existing Chase Savings account." In the small print, the advertisement notes: "The APY is 0.01% for all balances in all states. Interest rates are variable and subject to change. Additionally, fees may reduce earnings on the account."  This is a verbatim quotation from a section in small type entitled "Bonus/Account Information."  A section on "Service Fee" details the conditions under which the savings account holder would be charged $4 a month.

Considering that 400 families in the US own as much as the combined salary and assets of 50% of the US population, it's a given that those with minimal financial resources are literally being taken by the banks too big to fail.

That may be why, as BuzzFlash at Truthout recently reported, the large banks are pushing for a bill to take away the tax-exempt status from credit unions.  That is because perhaps as many as nearly a third of Americans are now using credit unions for their banking needs.

What is important to remember about credit unions is that they are essentially cooperatives; they have no shareholders. They are tax-exempt because no individual is an investor or profits from the financial institution except for the members.   In this case, the members are the people who bank at the credit union -- and the board and staff of the organization are beholden to the consumers.  

This dearly threatens the likes of Jamie Dimon and his cohorts for whom the amassing of gargantuan amounts of money is their "contribution" to society.

When you review what Chase, under Dimon, offers people who use their savings accounts for storing money, it appears more like a legal scam than any economic boost to society.  In fact, it leaves savers losing money just on the basis of inflation, as the banks yield enormous profits with the deposits of hardworking Americans.

There used to be a time when saving money at a bank earned you interest and your money was leant out to build up the community and the local economy.

Now, it's just more or less a rip-off for all but the most savvy and ruthless investors. 

(Photo: HowardLake)

60-Year Old Woman Attacked by Police For Trying to Close Her Account & Withdraw Her Cash From CitiBank

Radio Commentary by Michael Savage Aired on July 10, 2013 — Michael Savage Talks About A 60 Year Old Woman Brutally Attacked By Police Because She Wanted To Withdraw Cash From Her Bank Account. — http://www.michaelsavage.com

The American People Allowed Themselves To Be Caught Off Guard In 2008, Just As They Are Setting Themselves Up To Be Caught Off Guard Again Today

Why did 2008 creep up on so many people? Weren’t there plenty of economists out there “preaching to the choir” at that time? Weren’t there plenty of signals? Weren’t there plenty of practical conclusions being made about the future? And yet, the world was left stunned.
The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity. They want to believe that disaster is a mindset, that it is a boogeyman under their bed that can be defeated through blind optimism. They refuse to accept that disaster is a tangible inevitability of life that pays no heed to our naïve, happy-go-lucky attitudes. The American people allowed themselves to be caught off guard in 2008, just as they are setting themselves up to be caught off guard again today.
Again, the reality is clear; the Federal Reserve has propped up equities and bonds using money created out of thin air — so much so that both markets have become totally reliant and disturbingly addicted to fiat injections. The distribution of this fiat threatens the continued dominance of the dollar as the world reserve currency and will invariably lead to currency collapse and hyperstagflation. This process is much more likely to climax in the near term given the accelerated rate of quantitiative easing within our system to date and the accelerated rate at which our primary lenders (namely China) are dumping the dollar in bilateral trade with each other. The endgame is obvious, but I still fear millions of people within this country and around the world will be shell-shocked once again by a renewed crash.
The argument is always the same: “Yeah, things might get dicey, but it won’t be as bad as all the doom-mongers claim, and probably not for many years.”
Similar statements were made by naysayers before the Great Depression and before the 2008 crash. So why are the skeptics wrong again this time around?
http://www.shtfplan.com/headline-news/get-ready-for-the-next-great-stock-market-exodus_07122013
Strongest resistance in 13-years for the Nasdaq at hand!

CLICK ON CHART TO ENLARGE
Nasdaq Composite’s rally off the 2002 lows has finally reached its 61% Fibonacci retracement level 11 years later after the dot.com crash, where an 80% decline took place.
At the same time the Nasdaq Composite index is hitting its 61% Fib level several resistance lines come into play, tied to key “Emotipoints” dating all the back to the 1990′s Nasdaq lows.
http://blog.kimblechartingsolutions.com/2013/07/joe-friday-strongest-resistance-in-13-years-for-the-nasdaq-at-hand/
27 Facts That Prove That The Family In America Is In The Worst Shape Ever
The statistics that you are about to see should absolutely shock you.  American families have never been this weak, and this is an incredibly troubling sign for the future of our nation.  What will future generations of Americans be like if they do not have stable homes to grow up in?  Will they be even more messed up than we are right now?  That is a frightening thought.  The following are 27 facts that prove that the family in America is in the worst shape ever…
#1 The marriage rate in the United States has fallen to an all-time low.  Right now it is sitting at a yearly rate of 6.8 marriages per 1000 people.
#2 Today, an all-time low 44.2 percent of Americans in the 25 to 34 year old age bracket are married.
#3 According to the Pew Research Center, only 51 percent of all adults in the United States are currently married.  Back in 1960, 72 percent of all adults in the United States were married.
#4 Back in 1950, 78 percent of all households in the United States contained a married couple.  Today, that number has declined to 48 percent.
#5 100 years ago, 4.52 were living in the average U.S. household, but now the average U.S. household only consists of 2.59 people.
#6 The United States has the highest percentage of one person households on the entire planet.
#7 In the United States today, more than half of all couples “move in together” before they get married.
#8 The divorce rate for couples that live together first is significantly higher than for those that do not.
#9 For women under the age of 30 in the United States, more than half of all babies are being born out of wedlock.
#10 In 1970, the average woman had her first child when she was 21.4 years old.  Now the average woman has her first child when she is 25.6 years old.
#11 According to the Centers for Disease Control, there were 69.3 births per 1,000 women in the 15 to 44 year old age bracket in 2007. Now the rate has fallen to 63.2 births per 1,000 women.
#12 The birth rate for American women in the 20 to 24 year old age bracket has fallen to 85.3 births per 1,000 women.  That is a new all-time record low.
#13 The United States has the highest divorce rate in the entire world.
#14 At this point, approximately one out of every three children in the United States lives in a home without a father.
#15 Without a father around, many single mothers in this country are really struggling to survive.  Sadly, approximately 42 percent of all single mothers in the United States are on food stamps.
#16 It is being projected that approximately 50 percent of all U.S. children will be on food stamps at some point before they reach the age of 18.
#17 Today, more than a million public school students in the United States are homeless.  This is the first time that has ever happened in our history.
#18 The United States has the highest teen pregnancy rate in the entire world.  In fact, the United States has a teen pregnancy rate that is more than twice as high as Canada, more than three times as high as France and more than seven times as high as Japan.
#19 In the United States today, approximately 47 percent of all high school students have had sex.
#20 Approximately one out of every four teen girls in the United States has at least one sexually transmitted disease.
#21 According to one survey, 24 percent of all U.S. teens that have at least one sexually transmitted disease say that they still have unprotected sex.
#22 Instead of being raised by parents, an increasing number of children in America are being raised by movies, television and video games.  For example, the average young American will spend 10,000 hours playing video games before the age of 21.
#23 Americans are tied with the British for the highest average number of hours spent watching television each week.
#24 There are more than 3 million reports of child abuse in the United States every single year.
#25 The United States actually has the highest child abuse death ratein the developed world.
#26 Approximately 20 percent of all child sexual abuse victims in the United States are under the age of 8.
#27 It is estimated that one out of every four girls will be sexually abused before they become adults.
http://theeconomiccollapseblog.com/archives/27-facts-that-prove-that-the-family-in-america-is-in-the-worst-shape-ever

Bank To Spy On Customers Via Cellphone Location Tracking

It’s not just the government watching you
Paul Joseph Watson
Infowars.com
July 12, 2013

Image: Wikimedia Commons

It’s not just governments that are using cellphone location data to spy on citizens – banks are now getting in on the act too – with Barclays announcing changes to its customer agreement that will open the door to individuals being tracked in the name of preventing fraud.

Barclays’ new customer agreement terms (PDF) – set to come into force from October 9, 2013, will also permit the bank to collect social networking data as well as using private transaction information to bombard customers with unsolicited “services and products”.

“The information we use will include location data derived from any mobile device details you have given us. This helps us protect you from fraud,” states the document.

This suggests that phone companies in Britain must have given Barclays some kind of back door access to people’s private cellphones in order to track their precise location, whether in real time or after potential fraud has been reported.

All modern cellphones can be tracked down a location which is accurate within 50 meters. Police, governments and corporations already use such data to spy on individuals for both surveillance and data harvesting.

The changes also state that Barclays will track the behavior of its customers via social media. The bank will also retain “images of you or recordings of your voice” in addition to monitoring “transactions on your account, to increase our understanding of services and products that you may wish to use so we can send you information about them.”

Read the full list of changes below.

*********************

Paul Joseph Watson is the editor and writer for Infowars.com and Prison Planet.com. He is the author of Order Out Of Chaos. Watson is also a host for Infowars Nightly News.

Republished with permission from: Infowars

Farm Bill passes in House, without food stamp funding

By Ed O'Keefe, 

(AP Photo/Ed Andrieski, File)

House Republicans successfully passed a Farm Bill Thursday by splitting apart funding for food stamps from federal agricultural policy, a move that infuriated the White House and congressional Democrats who spent most of the day trying to delay a final vote.
Lawmakers voted 216 to 208 to make changes to federal agricultural policy and conservation programs and end direct subsidy payments to farmers. But the measure says nothing about funding for the Supplemental Nutrition Assistance Program, or food stamps, which historically constitutes about 80 percent of the funding in a Farm Bill.
No House Democrat voted for the measure. Twelve Republicans also opposed it. House Speaker John Boehner (R-Ohio) voted in favor of it, even though speakers traditionally don’t vote.
The vote made clear that Republicans intend to make significant reductions in food stamp money and handed Republican leaders a much-needed victory three weeks after conservative lawmakers and rural state Democrats revolted and blocked the original version of the bill that included food stamp money.
Several Democratic lawmakers rose in opposition to the plan early Thursday as debate began, with several of them repeatedly saying that the new bill “hurts the children of America” or “increases hunger in America.
Rep. G.K. Butterfield (D-N.C.) mockingly made a parliamentary inquiry, saying he had just obtained a copy of the 600-page bill.
“It appears to have no nutrition title at all, is this a printing error?” Butterfield asked.
The nutrition title is the portion of the bill that sets food stamp funding.
Republicans attempted to tamp down the opposition by assuring Democrats that they will hold votes on a separate measure dealing with food stamp funding later in the month.
Current federal farm and food aid policy expires on Sept. 30 and failure to pass a new bill in time means American farmers will fall back to a 1949 law governing the industry, which could lead to steep price increases on items such as milk.

Rep. Bob Gibbs (R-Ohio), a member of the House Agriculture Committee, said moving forward Thursday makes sense in order to ensure that negotiations between the House and Senate on a final Farm Bill can begin later this summer.

GRAPHIC: Americans on food stamps

House Republican leaders rushed late Wednesday to set up Thursday’s vote after securing sufficient support among rank-and-file members. The decision comes as many rural-state Republicans are facing pressure from constituents for so far failing to approve the legislation.
The White House said late Wednesday that President Obama would veto any Farm Bill that fails to comprehensively address federal farm and food aid policy. In a statement, White House officials said they had insufficient time to review the bill.
“It is apparent, though, that the bill does not contain sufficient commodity and crop insurance reforms and does not invest in renewable energy, an important source of jobs and economic growth in rural communities across the country,” the statement said.  “Legislation as important as a Farm Bill should be constructed in a comprehensive approach that helps strengthen all aspects of the Nation.”
House Minority Whip Steny Hoyer (D-Md.) blasted Republicans for violating their own rules on waiting three days before voting on major legislation.
Hoyer called the new Farm Bill “a bill to nowhere,” and said that Senate Democrats would reject the House version even if it passes. “This dead-on-arrival messaging bill only seeks to accomplish one objective: to make it appear that Republicans are moving forward with important legislation even while they continue to struggle at governing,” Hoyer said.
Conservative organizations closely aligned with dozens of House Republicans also cast doubt on the new bill.
The Club for Growth said that while it supports splitting up farm and food policy, the new farm-only bill “is still loaded down with market-distorting giveaways to special interests with no path established to remove the government’s involvement in the agriculture industry.” The group also faulted House GOP leaders for proceeding with what it calls a “rope-a-dope exercise” that likely will result in House and Senate negotiators restoring commodity and food stamp funding opposed by Republicans.
Heritage Action said the new bill would wrongly make permanent several programs, including aid to sugar producers that would drive up costs for customers and taxpayers.
Conservative GOP lawmakers joined with Democrats last month to defeat a broad, five-year farm bill, in the latest rebuke to House GOP leaders, who have struggled to control the chamber to pass major legislation.
Conservatives objected to the bill’s spending levels, while Democrats opposed a $20.5 billion cut to food stamps.
The surprise defeat signaled the difficulty congressional leaders face in the coming months in passing legislation on the budget and immigration that is expected to be debated this month and in the fall.

Mother Of All Bubbles Pops, Mess Ensues

Source: Wolf Richter, Testosterone Pit

The asset bubbles the Fed’s money-printing and bond-buying binge has created are spectacular, the risk-taking on Wall Street with other people’s money a sight to behold. Among the big winners were mortgage Real Estate Investment Trusts – and those who got fat on extracting fees. But now the pendulum is swinging back, and the bloodletting has started.
Mortgage REITs are highly leveraged. They borrow short-term in the repo market at near-zero interest rates, thanks to the Fed, then turn around and buy long-term government-guaranteed mortgage-backed securities issued by bailed-out Fannie Mae, Freddie Mac, and Ginnie Mae. Along the way, they issue more stock and borrow even more. By distributing 90% of their profits, they avoid having to pay income taxes. Hence double-digit dividends. A phenomenal business model. Instead of getting their hands dirty in the real economy, they manufacture dividends, fees, and all sorts of goodies for insiders – while the party lasts.
But now the Fed, leery of the risks these drunken partiers were taking on, knocked on the door of that party and threatened to crash it. Annaly Capital Management, the largest mortgage REIT with $126 billion in assets as of March 31, dropped 34% from its September high to $11.53 on Wednesday; most of it since mid-March. American Capital Agency, the second largest, is even better: its entire history is linked to the Fed’s zero-interest-rate policy and money-printing binge.
It went public in May 2008 at $20 a share. As of September 30 that year, it had $1.7 billion in assets. By December 31, 2012, it had $100.4 billion in assets. It had ballooned by a factor of 60 in 4 years. Its stock hit a high of $36.77 in September last year, all along paying out dividends sometimes exceeding 20%. On Wednesday, the stock closed at $20.74, down 43.6% from its September high. Just about the price at which it went public.
Issuing stock is what REITs do on a routine basis. So on February 28, in an example of impeccable Wall Street timing, American Capital Agency priced its most recent offering at $31.60 a share and raised $2 billion. Those who got bamboozled into buying it are sitting on a loss of 34.3%.
It wasn’t the only one. During the first quarter, in a last-minute flurry before the air started hissing out of the greatest bond bubble in history, mortgage REITS raised a total of $7.4 billion. The more equity they raise, the more securities they buy, and the more they borrow to maintain leverage. At every step, fees are extracted by Wall Street – a veritable bonanza. This is where the Fed’s money went. Instead of jobs, it created asset bubbles, risks, and fees.
Now the swoon has set in. Yet, the Fed hasn’t even begun tapering its bond purchases of $85 billion a month, including $40 billion in mortgage backed securities. It’s only talking about it. And when the Fed actually stops buying those securities and allows long-term rates to go back to normal? Last time a bubble burst, so from 2007 to 2008, REITs caved nearly 70%, and some, such as New Century Financial, American Home Mortgage Investment, or Luminent Mortgage, went bankrupt.
Bond-fund investors yanked $60 billion out of their funds in June alone, the largest monthly redemptions ever [my take.... Retail Investor Nightmare: The Bond Fund Rout]. But REITs don’t face that flood of redemptions; investors have to sell their shares, at plunging market prices. Where REITs get in trouble is when the prices of mortgage-backed securities decline, and when loan terms change. Then they get margin calls. And they have to dump their assets.
That happened massively, Bloomberg reported, citing JPMorgan Chase: in just one week in June, they “needed to sell about $30 billion” in agency debt “to maintain the amount of borrowing relative to their net worth.” Forced sales aggravated the hemorrhaging in the mortgage-bond market, “which had the worst quarter since 1994.”
Turns out, REITs have tripled their holdings of agency debt since 2009, and in gobbling up everything in sight, they were in part responsible for creating the mortgage bubble and in the process forcing mortgage rates down to ridiculously low levels. Leverage accelerated the run-up. Now, leverage is accelerating the plunge. The process has reversed: forced sales are pushing up mortgage rates.
And they have soared: average interest rates for 30-year fixed-rate mortgages with loan balances of $417,500 or less jumped to 4.68% in the week ending July 5, up over a full percentage point from 3.59% in early May, according to the Mortgage Bankers Association.
Now there’s the threat of a negative feedback loop: if lenders to mortgage REITs get antsy and change the terms or if rates go up, it could lead to more margin calls and forced sales that would further push down those mortgage-backed securities, causing further margin calls and forced sales.... And further upward pressure on mortgage rates (with consequences for the housing market).
This is the insidious backside of the asset bubbles the Fed has blown. The necessary consequence of any “wealth effect” – the Fed’s stated policy goal – is capital destruction. And wealth transfer from those who end up holding the bag to those who got rich off the fees, stock-based compensation, and bonuses, and to all those who, knowing what the Fed would do and what impact it would have, got out early.
That concept of “wealth effect” was invented as an excuse by the Greenspan Fed. With predictable results. But “the poster boy for Greenspan’s first stock market bubble and its sudden, violent demise was a wake-up call that was wholly ignored,” wrote David Stockman about that syndrome. Read his....  Bubble Finance Personified.