Thursday, December 5, 2013

Dow, S&P 500 Fall For Fourth Straight Session

U.S. stocks finished mostly lower Wednesday, giving back earlier gains, with the Dow and the S&P 500 both extending their losing streak to a fourth day.
The Dow Jones Industrial Average fell 25 points, or 0.15% to close at 15,890. The S&P 500 index lost two points, or 0.12%, to end at 1,793.
The Nasdaq Composite, however, managed to buck the trend, though not by much. The index rose one point, or 0.02% to close at 4,038.
It was a choppy market. The big indices all moved into positive territory on news about progress towards a U.S. budget deal. Those gains disappeared as the day progressed.
What happened? Upbeat economic reports reinforced fears that later this month the Federal Reserve could start to taper the bond-buying program that has supported equities.
Data from ADP showed more private-sector jobs were created in November than economists had forecast. The report is viewed as a preview of the Labor Department’s November employment report, due Friday, which investors are watching closely for hints as when the Fed will take action.
New home sales were higher than forecast in October, rising to an annual rate of 444,000, on expectations of a rise to 426,000. And the Fed’s Beige Book described improving economic conditions around the country.
A report about the service sector of the U.S. economy disappointed. The Institute for Supply Management’s nonmanufacturing purchasing managers index declined by more than expected in November, falling to 53.9 from October’s 55.4. It was forecast to slip to 55.
Yields on the 10-year U.S. Treasury note rose to 2.836%, its highest close since Friday. Bond yields move inversely to bond prices.
Crude oil prices rose 1.17% to $97.16 per barrel. Gold prices rose as well, up 1.78% to $1,242.50 per pounce.
In corporate news: Express (EXPR) fell 23% to $19 after the teen clothing retailer cut its full-year outlook.
J.C. Penney (JCP) fell 4.45% to $9.66 as investors appeared disappointed by the 10.1% same-store sales growth reported for November.
Deere (DE) rose 3.2% to $85.38 after the equipment maker expanded its share repurchase.
CF Industries (CF) rose 10.7% to $237 after the fertilizer maker said its evaluating its dividend payment.
General Motors (GM) rose 1.54% to $38.71 on news that hedge fund Hayman Capital has taken a stake in the automobile maker and says the stock could rise more than 40% in the next 12 to 18 months after the U.S. Treasury sells its stake in the company.
And Intuitive Surgical (ISRG) fell 0.6% to $370.68 following news from the FDA that the firm warned customers last month of problems with certain instruments in its da Vinci surgical robots.
After the closing bell, Walt Disney (DIS) rose 0.7% to $70.47 after announcing a 15% dividend hike. And teen retailer Aeropostale (ARO) fell 3.8% $9 after reporting fiscal third-quarter financial results.

There’s a £60m Bitcoin Heist Going Down Right Now – Watch It In Real Time

Via The New Statesman:
One of the largest heists in bitcoin history is happening right now. 96,000 bitcoins – that’s roughly £60m as of the time of writing – was taken from the accounts of customers, vendors and administrators of the Sheep Marketplace over the weekend.
Sheep was one of the main sites that came to replace the Silk Road when it closed in October, but it too has now closed as a result of this theft. It’s a little hard to work out exactly what’s happened, but Sheep customers have been piecing it together on reddit’s r/sheepmarketplace.
Here’s what happened: someone (or some group) managed to fake the balances in peoples’ accounts on the site, showing that they had their bitcoins in their wallets when they’d actually been transferred out. Over the course of a week the whole site was drained, until the weekend when the site’s administrators realised what was happening and shut everything down.
Originally it was thought that only 5,200BTC – or £3m – was taken, with a message posted on Sheep’s homepage blaming a vendor called “EBOOK101″ for finding and exploiting a bug. However, over the weekend it became clear that the amount stolen was much, much larger.
In a normal robbery that money would be gone by now, but it isn’t. Bitcoin is pseudonymous, not anonymous, and bitcoins can’t just disappear. It works because each and every transaction is public and visible to each and every other person using the Bitcoin network, and a person is only as anonymous as their link to their wallet.
Read more

Distributed by RINF Alternative News

Paul Craig Roberts on the Dollar Demise and the Future of the Negative Interest Rate

Wall St. Banks Hire Children of Chinese Leaders To Make Big Dollars: Some Never Work.

Central Banks and Pentagon Wars

Source: Deviant Investor

We all know "something is wrong" but we keep riding the same corrupt "gravy train" because it works for many powerful people. Consider the interlocking complicity involved in the following:

Iraq and Other Wars:

The previous administration produced "evidence" that Iraq had weapons of mass destruction and then claimed it was necessary to invade Iraq, distribute oil contracts to American and British oil companies, initiate "no-bid" contracts to politically connected American military contractors, massively increase government debt, and create huge profits for selected companies and industries. Those profits flowed back to the financial elite, agreeable congressmen, others in government, and to many American workers.
Even though it is now generally agreed that Iraq had no weapons of mass destruction and no means of launching those non-existent weapons against the United States, a great many connected people and businesses benefited financially from the Iraq War. Interlocking complicity worked well to promote the war and to profit from it.

Pentagon Accounting:

About 12 years ago, Secretary of Defense, Donald Rumsfeld revealed that $2.3 Trillion was "missing" from the Pentagon books. ("War Racket Update" by - site down temporarily)
"A number of knowledgeable observers admitted that the Pentagon's 'books are cooked' and that in essence, a giant cover-up was going on. A mixture of waste and theft on a truly breathtaking scale was and still is underway."
It has been my experience that bad or fraudulent accounting is enabled, encouraged, or actively created by management. We can safely assume that the many highly intelligent people who work at the Pentagon could more accurately and transparently manage their operations if they wanted to do so. Hence, fraud and theft exist because management wants it - many people benefit while accountability is neither encouraged nor beneficial to those who are actually in charge. The powers-that-be, congress, the administration, and military contractors are complicit in working the system so that all parties benefit, other people pay the costs, there is minimal accountability, and the necessary payoffs are made. Interlocking complicity works well for those in charge of Pentagon funds and for those receiving the funds.

Government Debt:

Congress has not passed a budget in five years and has been deficit spending for decades. The shortfall between revenues and expenses is borrowed with the understanding that the debts will never be paid - just "rolled over." The financial and political elite benefit, government pays out massive amounts for military contracts, health care, prescription drugs, retirement programs, Social Security payments, Medicare, unemployment, aid to states, and it goes on and on. That explains how the U.S. government is officially in debt over $17 Trillion and has accrued another $100 - $200 Trillion in liabilities that have been promised but are not currently funded. Since most Americans are benefitting from one or more of these government distributions, most Americans are complicit in this giant borrow, spend and print Ponzi scheme. Because so many people benefit, few individuals or businesses want the process materially changed. Of course many people talk about balancing the budget, cutting spending, and fiscal accountability, but it is only talk. Because Congress has been unable to pass a budget in five years and must borrow a $Trillion or so each year there will be no accountability or budget cutting anytime in the near future. Interlocking complicity rules while we ride the giant government gravy train.

QE and the Levitation of Stock and Bond Markets.

Even a quick glance at the last five years of market prices shows that QE has been a huge benefit to the stock and bond markets and that much of the funny money being "created out of thin air" by the Fed finds its way into those markets. Hence the stock and bond markets have been levitated while "main street" and the bottom 90% (those who have little of their net worth in stocks and bonds) have derived minimal or no benefit from QE. However, most of us realize that the US government cannot limit spending to only the revenue it collects, and that QE greatly benefits the financial and political elite. Interlocking complicity dictates that QE will continue as long as possible, even though "printing money" and debasing the currency have never successfully worked throughout history.

Central Banks and Gold Price Suppression:

Central Banks (Bank of England, Federal Reserve, ECB) have sold or "leased" gold into the market, via bullion banks, to suppress the price of gold and to promote the idea of Pound, Dollar and Euro strength. Since central banking rules allow them to claim that gold is still their asset, even though it is physically gone, this process can work until the central banks are unwilling or unable to sell or "lease" additional gold. The Chinese, Indians, and Russians have purchased the gold directly from bullion banks, or taken delivery on futures contracts, shipped the gold to Switzerland where it has been melted down into kilo bars, and then moved it to the Eastern countries. A huge amount of gold has left the west where it is undervalued and now is vaulted in the East where it is better appreciated.
During the past several years the Chinese have vastly increased their gold holdings at favorable prices while dumping some of their depreciating dollars. The Western central banks further the illusion of value in unbacked debt based paper money while claiming gold is in a bubble, gold and the gold standard are barbarous relics, and enabling paper currencies to survive for a while longer. Interlocking complicity in the gold leasing and gold price suppression scheme currently benefits both the eastern and western countries.


The Pentagon cannot account for $Trillions. Since there is little incentive to stop the fraud, waste, and phony accounting, and since there is a large incentive for it to continue, expect the graft, corruption, black budget items, and payoffs to continue. Interlocking complicity works especially well at the Pentagon.
The US government does not want to cut spending and has a limited ability to increase revenues. Expect borrow and spend politics to dominate until a "reset" occurs and then expect a crisis and many speeches from important politicians who just noticed what has been obvious for decades. Interlocking complicity works well for congressional payoffs, reelection speeches, increasing power to the administrative branch, and, of course, massive profits to the industries that benefit the most from deficit spending, such as military contractors, banking, health care, pharmaceuticals and others.
Gold price suppression benefits western governments and central banks while the Chinese and Russians benefit by purchasing valuable gold with increasingly devalued dollars. Expect gold price suppression to continue until the west runs out of gold that can be melted down and shipped east. However, demand for physical gold is quite strong while supply is limited. Expect gold to trade MUCH higher in the next few years.
Interlocking complicity produces a degree of stability as it helps maintain the status quo, which is very important to the powers-that-be. Interlocking complicity ensures that accountability, oversight, and ethical practices are low priorities, while payoffs and no-bid contracts will maintain their important role in government operations. Interlocking complicity ensures that little change will occur until it is forced upon us.
Ask yourself:
  • Are you prepared for a reset of our financial and social systems?
  • The Chinese are trading increasingly less valuable dollars for increasingly more valuable gold and silver. Should you do likewise?
  • Can a government spend more than it collects in revenue - forever?
  • Debasing the currency has never worked well in the past. Will this time be different for Japan, Europe and the United States?
  • Will Wall Street, Congress, military contractors and the pharmaceutical industry lobby for what is good for you or for them?
Additional Reading:
Ron Paul: The Mythical Merits of Paper Money
Chris Martenson: The Fed Must Inflate
DI: QE + Desperation = Higher Gold Prices
GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

Number Of U.S. Banks Hits Record Low

Back in 1985, there were around 18,000 different federally insured banks operating in the U.S. But in the nearly three decades since, numerous failures and mass consolidation has left us with around 38% of that 1985 number, meaning Americans now have the fewest banking options since the federal government began tracking these stats back in 1934. Most of the vanished banks merged or were snapped up by some larger institution. According to the Wall Street Journal, only 17% of the more than 10,000 banks that stopped existing between 1984 and 2011 were victims of financial ruin.
All it takes is a look at an acquisition-happy institution like Bank of America to see how one fish was gobble up by a slightly larger one, and so on until there are only a few sharks left swimming in the sea.
Before it purchased Countrywide, Merrill Lynch, LaSalle Bank, and Fleet, BofA came out of the merger of NationsBank and BankAmerica. NationsBank had previously purchased Barnett Bank, Boatmen’s Banchshares, and others. It had previously been known as North Carolina National Bank before merging with C&S/Sovran Corp. to become NationsBank.
And that’s just following one branch of the family tree of one of the few large banks still in existence. You’re likely to find similar skeletons of small and mid-size bank corpses in the basements of just about any big bank these days.
The Journal tries, not very convincingly, to make the case that maybe having nearly 1/3 of the number of banks we used to have is a good thing:
The consolidation could help alleviate concerns that the abundance of U.S. banks leads to difficulties in oversight or a less-efficient financial system. Meanwhile, overall bank deposits and assets have grown, despite the drop in institutions.
Yeah, because the remaining banks have shown time and again how amazingly efficient they are… and there is nothing terrifying about having nearly fives times the amount of wealth in the hands of 1/3 the number of financial institutions.
Even more scary is the lack of any new banks on the horizon. Only one new FDIC-insured bank has started up since Dec. 2010, and unless you live in Bird-in-Hand, PA, your banking options are likely dwindling.

Police Chief Asks to be Paid in Bitcoin, City Approves

The city commission in Vicco [Kentucky] approved a measure on Monday to begin paying the city’s police chief in a virtual currency, a move officials say is likely the first of its kind in the nation.
Police Chief Tony Vaughn appeared before the commission last month to officially request that his salary be paid to him in Bitcoin, a new virtual currency which exists only on the Internet and this year has gained significant traction, with its value rising by the end of November to more than $1,000 per coin, according to USA Today. The currency was valued at less than $100 at the beginning of the year.
The city commission in Vicco opted last month to hold off on approving Vaughn’s request in order to research the issue. Commissioner Claude Branson on Monday said officials did their homework, and there doesn’t seem to be any logistical or legal issues to paying Vaughn in Bitcoin.
Read more

Bill O’Reilly: The U.S. Dollar will Collapse – Un-Substanible Physical Path

Very Good Points…. so true… what are we all doing.
WE THE PEOPLE are in deep dodo.. and no one care.
Obama, the BIGGEST – SPENDER in History….
Bill O’Reilly struck a rather apocalyptic tone in his Talking Points Memo tonight, warning viewers of the danger facing the economy and the country if it continues down the same path already half-forged by President Obama.
O’Reilly predicted that no matter how many people try to sound the alarm about where the nation is headed, most people are just too content with their lives to listen or care. O’Reilly opened with a very simple question: are the people to blame for the current state of the government?
He cited nations of citizens falling in lockstep behind men like Adolf Hitler and Fidel Castro. O’Reilly clarified that the United States is not approaching a totalitarian


Expert Testified to Congress Obama’s ‘Ignoring’ Laws Could Lead to Overthrow of Gov’t
It is QUIETLY… SILENTLY happening behind closed doors..
This is a CHILLING list of Executive Orders….
The BIG Question is WHY are these Executive
Orders needed… no other President did this…


Darryl Robert Schoon: By Printing Coupons & Loaning Them As Money, Banks Have Indebted The World Beyond Its Ability To Repay

World's most expensive Christmas wreath studded with 16 rubies and 32 diamonds goes on sale for nearly £3 MILLION (shame it only lasts 12 days)

  • Wreath features gems totalling over 138 carats
  • At cost of £2,835,000 the cost per day is a staggering £236,250
  • Created by Royal flower designer Pasi Jokinen-Carter
  • After it wilts, diamonds can be turned into a bespoke piece of jewellery
By Bianca London

Looking for the ultimate Christmas wreath to make your neighbours green with envy? One luxury website has the answer, assuming you have £3 million to spare.
Studded with over 40 diamonds and rubies totalling over 138 carats, exclusive launches website,, is selling the ultimate Christmas wreath for a cool £2,835,000.
The 60cm wreath is made up of some of the most luxurious flowers and leaves in the world and is created by world-renowned Finnish Floral Designer, Pasi Jokinen-Carter.
That will make the neighbours jealous! A luxury website has unveiled the most expensive Christmas wreath studded with 16 Rubies and 32 diamonds totalling over 138 carats that is being sold for nearly £3m
That will make the neighbours jealous! A luxury website has unveiled the most expensive Christmas wreath studded with 16 Rubies and 32 diamonds totalling over 138 carats that is being sold for nearly £3m

His client portfolio includes the Royal households, country clubs, galleries, and film and TV production houses.
For this high-end commission Jokien-Carter has used Laurus, Lingonberry and Blueberry stems sourced from his country house in Finland - as they are not commercially available in the UK.

Speaking about his latest creation, he said: 'I am passionate about my craft and this recent invitation to create an exclusive wreath, using natural materials and diamonds, has been an exciting and exceptional project.'
The diamonds and rubies for the wreath are provided by 77 Diamonds, who offer the world's largest selection of loose diamonds, some 300,000, or over 70 per cent, of the world's finest polished diamonds.
Exquisite: The wreath is made up of rare flowers from Finland and once it wilts, the diamonds can be transformed into a bespoke piece of jewellery
Exquisite: The wreath is made up of rare flowers from Finland and once it wilts, the diamonds can be transformed into a bespoke piece of jewellery
Exquisite: The wreath is made up of rare flowers from Finland and once it wilts, the diamonds can be transformed into a bespoke piece of jewellery 
Tobias Kormind, co-owner of 77 Diamonds, said: 'It is exhilarating to participate in curating a selection of gems that would create the most sparkling Christmas anyone could wish for; plus a very worthwhile investment for the future.'
The bad news? The dazzling wreath will only last twelve days - that's a cost of £236,250 per day.
However, all is not lost because the stones from the wreath are removable and can be reattached to next year’s wreath, say the creators.
Alternatively, 77 Diamonds is offering the complimentary service of mounting them into a bespoke designed piece of jewellery.

Florist: The 60cm wreath has been created by top Finnish Floral Designer, Pasi Jokinen-Carter, whose clients include the Royal household
Florist: The 60cm wreath has been created by top Finnish Floral Designer, Pasi Jokinen-Carter, whose clients include the Royal household

Marcel Knobil founder of VeryFirstTo, who is selling the wreath, said: 'We are delighted to be able to offer the world’s most expensive Christmas wreath as part of our ongoing endeavor to offer truly exceptional newly launching luxury products and experiences.'
And while the wreath may cost more than the average Briton could ever dream of earning in a lifetime, a donation of £1,000 from the sale will be made to The Prince’s Trust.

IKEA gets 20,000 applications for just 400 jobs amid Spanish unemployment crisis

IKEA store's computer servers crash after it gets 20,000 online applications for 400 jobs in just three days

View of the exterior of the Ikea store in Almhult, Sweden, which was the first Ikea shop in the world
Applications were for jobs as store workers in a shop to be opened next year outside the eastern city of Valencia Photo: Clara Molden
An IKEA shop in Spain says it has received 20,000 applications for just 400 jobs, an unprecedented rush that crashed its computer servers and illustrated the desperation the country's 6m unemployed people face.
Company spokesman Rodrigo Sanchez said the online applications received since Monday were for jobs as store workers in a shop to be opened next year outside the eastern city of Valencia.
He said the most applications the company had received before in Spain were 50,000 in southern Jerez, but that was over a period of a month.
Official figures show Spain may be beginning to emerge from a more than two-year recession but the government admits it will take years to bring down the 26pc unemployment rate.
(Edited by Andrew Trotman)

RBS and Barclays among eight banks fined record £1.4BILLION for rigging interest rate benchmarks in Europe and Tokyo

  • Banks agree fines with EU Commission over claims they formed cartels
  • Figure is the highest anti-trust penalty ever imposed by the EU body 
  • RBS will pay £325m over attempted rigging of Yen Libor and Euribor
  • Rates are used to set price of trillion of dollars of financial products
  • EC boss: Shocking collusion between banks meant to be competing with each other
By Simon Tomlinson

Royal Bank of Scotland and Barclays are among a raft of global banking giants fined a record €1.7 billion (£1.4 billion) for forming illegal cartels to rig benchmark interest rates.
Eight banks have agreed penalties with the European Commission (EC) over allegations they formed cartels to fix two key rates used to set the price of trillions of dollars of financial products from mortgages to complex financial products.
RBS will pay €391 million (£325 million) for its role in the attempted rigging of the Yen Libor and Euribor - the Tokyo and euro area equivalents of the London interbank offered rate (Libor).
Sanctioned: The London headquarters of Royal Bank of Scotland, which is among eight banks which have been fined a record £1.4billion for rigging interest-rate benchmarks
Sanctioned: The London headquarters of Royal Bank of Scotland, which is among eight banks which have been fined a record £1.4billion for rigging interest-rate benchmarks

But Barclays is immune from a potential €690 million (£573 million) penalty after blowing the whistle on the Euribor cartel.
The sanctions - the first from the EC on rate manipulation - are the highest yet for European antitrust enforcement.
Barclays and state-backed RBS have already been fined following an investigation into the rigging of Libor, paying penalties of £290 million and £391 million respectively.

Other banks fined by the EC in the Euribor case are German group Deutsche Bank and French player Societe Generale.
Those involved in the Yen Libor case are RBS, Swiss group UBS, Deutsche Bank, US giants JPMorgan Chase & Co and Citigroup and UK-based wholesale broker RP Martin.
UBS avoided a hefty 2.5 billion euro (£2.1 billion) fine after flagging up the Yen Libor cartel with the EC.
Rate-fixing rap: Barclays has also been fined over the scandal, but is immune from a potential ¿690 million (£573 million) penalty after blowing the whistle on the Euribor cartel
Rate-fixing rap: Barclays has also been fined over the scandal, but is immune from a potential ¿690 million (£573 million) penalty after blowing the whistle on the Euribor cartel
Fellow British bank HSBC is understood to have pulled out of the Euribor settlement talks, alongside US group JPMorgan Chase & Co and French group Credit Agricole, while broker ICAP is said to have refused settlement in the Yen Libor probe.
The EC said cartel investigations involving these firms will continue.
Joaquin Almunia, EC vice-president in charge of competition policy, said: 'What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other.
'Today's decision sends a clear message that the commission is determined to fight and sanction these cartels in the financial sector.'
Scandal: Those involved in the Yen Libor case are RBS, Swiss group UBS, Deutsche Bank, US giants JPMorgan Chase & Co (above) and Citigroup and UK-based wholesale broker RP Martin
Scandal: Those involved in the Yen Libor case are RBS, Swiss group UBS, Deutsche Bank, US giants JPMorgan Chase & Co (above) and Citigroup and UK-based wholesale broker RP Martin

The EC sanctions serve as the latest reminder of wrongdoing in the industry, which has been left reeling following a series of scandals in recent years.
Authorities worldwide have so far fined UBS, RBS, Barclays, Rabobank and ICAP for manipulating rates, while seven individuals face criminal charges.
UBS has paid the largest penalty yet in the clampdown, fined 1.5 billion US dollars (£917 million) late last year.
But Barclays was the first to settle and suffered a major reputational blow, which claimed the scalp of former chief executive Bob Diamond and has led to a major overhaul of practices and culture in the bank.
Barclays said it 'voluntarily' reported the Euribor cartel to the EC and 'co-operated fully' with the investigation.



Good example of how money quote unquote is created. Why paper money doesn't work in the long run.

Fact Check on Venezuela’s Economy

Doomsayers claim it’s troubled. So do Bolivarian haters. Chavez endured flack for 14 years. It’s Nicolas Maduro’s turn.
He prioritizes political, economic and social justice. Washington and internal dark forces despise him for doing so. They want him replaced. Perhaps they want him dead.
He’s using Enabling Law authority responsibly. He represents popular interests. He’s fighting corruption. He’s cracking down on price-gouging profiteers. He’s doing so legally.
US and internal dark forces target Venezuela’s economy. They’ve done it since Chavez took office in February 1999. They haven’t stopped.
They haven’t succeeded. They’re waging a losing battle. Venezuelans value Bolivarian fairness. They’ll defend what’s too valuable to lose.
Wall Street Journal columnist Mary O’Grady reflects the worst of corporate journalism. She specializes in reinventing history.
She does a deplorable job doing it. Her columns read like bad fiction. They don’t pass the smell test. Monied interests own her.
She’s reliable imperial tool. Responsible editors wouldn’t touch her rubbish. Journal editors embrace it.
On December 2, she headlined “The Pope, the State and Venezuela.”
She called him “a severe critic of free-market economics.” She described his policies as “state tyranny.”
“Venezuelans,” she claimed, “are sinking further into poverty under (his) anti-market polices.” He “needs a miracle.” He’s “been lashing out at importers, retailers and landlords.”
She criticized Pope Francis. He released a document last week. He challenged “trickle-down” defenders.
He said they “assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.”
No empirical evidence proves it, he said. He called claiming otherwise “a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”
Not according to O’Grady. She endorses predatory capitalism’s worst features. She claims they lift all boats. She thinks social justice sinks them.
She calls Venezuela “Exhibit A. It is an instruction manual on how to increase human misery,” she said. A litany of lies followed.
“(N)ational chaos cultivates envy, hatred and violence,” she claimed. Maduro lacks “moral authority.” O’Grady mocks legitimate journalism.
She’s one of its most disreputable practitioners. Her columns read like corporate boardroom handouts.
Venezuela’s economy is far from troubled. Don’t expect O’Grady to explain. Disinformation substitutes.
Final 2013 results won’t be as robust as earlier forecast. They remain positive. Q III registered 1.1% growth.
It was the 12th straight positive quarterly result. According to the Central Bank of Venezuela’s (BCV) third quarter report, oil sector growth was 0.7%.
Other sectors grew by 1.7%. Year to date growth is 1.4%. Q II was strongest at 2.6%. Despite lower than expected results to date, Maduro rejected doomsayer reports.
“You tell me a capitalist country in the world or Europe where there is a decline in unemployment in 2013,” he said. Venezuela’s crisis is “fictitious.”
According to the most recent National Institute of Statistics data, unemployment is 7.6%. It’s down from 7.8% in September. It’s an accurate unemployment assessment.
It’s not fake like America‘s. Headline unemployment is 7.3%. Reality is 23.5%. it’s based on 1980′s calculation model.
It was before manipulation corrupted it. Venezuelan unemployment is less than one-third of America‘s troubled economy.
Washington rigs economic data. Doing so conceals how bad things are. Protracted Main Street Depression level conditions persist.
Nothing suggests better times ahead. Misery defines conditions for growing millions. Venezuelans are far better off. Bolivarian benefits include what Americans can’t imagine.
Venezuelans get participatory democracy, quality healthcare at no cost, free education to the highest levels, subsidized food and housing, and much more.
Chavez cut poverty from 60% to 26%. Extreme poverty decreased from over 16% to 7%. Economic growth was impressive for years.
In 2011, it was 4.8%. In 2012, it was 5.6%. Chavez created jobs. Doing so cut unemployment sharply. Venezuelans have Latin America‘s highest minimum wage.
Women without income and disabled people get 60% of minimum wage support. Chavez withdrew Venezuela from IMF/World Bank debt peonage.
Hundreds of thousands of new homes were built. Commerce, communications, construction, and manufacturing grew impressively.
Venezuela has the world’s largest oil reserves. Millions of acres of land were returned to aboriginal people. Doing so let tens of thousands of farmers own their own land for the first time.
Illiteracy was eradicated. Venezuelan democracy is the world’s best. It’s unmatched. It’s elections are open, free and fair. America‘s are fake. Ordinary people get the best democracy money can buy.
All Venezuelans are automatically enfranchised at birth. Fair trade replaced America‘s one-sided free trade model. It excludes fairness.
Maduro continues what Chavez began. He champions Bolivarian principles. He’s advancing them responsibly.
“If we had an actual crisis,” he said, “the first thing that would be affected is job creation. (Unemployment) would shoot up” dramatically. It declined month-over-month.
Poverty is far less a problem than in America. Half of US households are either impoverished or bordering it. They’re one missed pay check away from being unable to pay daily expenses.
BCV data showed government surplus up 82.5% year-over-year. Trade surplus is positive. Foreign capital dependency increased.
Inflation remains unacceptably high. Dark forces manipulate scarcity and price gouging.
Maduro is addressing both issues responsibly. He accused Washington of waging economic war. Obama officials plot Venezuela’s “economic collapse,” he said.
They want a “social explosion.” They’re “preparing a transition government to be installed following chaos.”
Maduro is going all out to prevent it. He imposed price controls. He targeted price gouging profiteers. He accused them of “grotesque overpricing in the electrical appliance sector.”
Crackdowns on speculators and profiteers will continue. Vice President Jorge Arreaza said government efforts “will protect the people against bourgeois parasitism.”
Food, vehicle, hardware and other businesses operate like predatory appliance retailers.
Maduro is using enabling law authority to enforce fair pricing of all products. He wants grotesque profiteering stopped.
On November 7, Center for Economic and Policy Research (CEPR) economist Mark Weisbrot headlined “Sorry, Venezuela haters: this economy is not the Greece of Latin America.”
Indeed not! It’s polar opposite. Year after year, Bolivarian haters predicted Venezuela’s demise.
The claimed its “economy would implode. (T)hey saw economic collapse just around the corner,” said Weisbrot.
They’re still waiting. Since 1999, Venezuela experienced two recessions. Washington’s manipulated 2002-2003 oil management lockout and general strike caused one.
World 2008-2009 recession harmed most economies worldwide. Venezuela was no exception. Since 2003, annual growth averaged 2.7%.
Poverty fell by over half. Significant employment gains were registered. “(A)ccess to health care, pensions and education” improved.
Venezuela currently faces economic problems. Will doomsayers “finally see their dreams come true,” asked Weisbrot?
“Not likely.” They were wrong before. They’re dead wrong now. “(H)ow can a government with more than $90bn in oil revenue end up with a balance-of-payments crisis?”
“(I)t can’t, and won’t,” Weisbrot explained. “In 2012, Venezuela had $93.6bn in oil revenues, and total imports in the economy were $59.3bn.”
“The current account was in surplus to the tune of $11bn, or 2.9% of GDP.”
“Interest payments on the public foreign debt, the most important measure of public indebtedness, were just $3.7bn.”
“This government is not going to run out of dollars.” Bank of America analysts rate Venezuelan bonds “a good buy.”
BCV holds $21.7 billion in reserves. “(O)pposition economists estimate” other government agencies hold another $15 billion.
These and other data reflect economic soundness. When necessary, Venezuela “has the capacity to borrow more internationally,” said Weisbrot.
Hyperinflation remains “very remote.” Q I 2012 inflation “reached a monthly low of just 2.9%.” It’s unacceptably higher now.
“(D)espite its problems, (Venezuela) is very capable of providing healthy growth even while bringing down inflation,” Weisbrot explained.
Corporate manipulated price gouging and hoarding exacerbate it. So did “a cut in the supply of dollars to the foreign exchange market.”
Beginning in October 2012, “importers had to purchase increasingly expensive dollars on the black market.”
Inflation peaked in May at 6.2%. It was 3% in August. It rose in September. Government policy “increased its auction of dollars. (I)t announced a planned increase of food and other imports,” said Weisbrot.
Doing so will likely decrease inflation. Economic problems persist. They’re far different from Greece, Spain, and other troubled Eurozone economies.
Current problems can be resolved. At the same time, 2012 poverty fell 20%. It’s Latin America‘s largest decline. Perhaps it’s the world’s largest.
Job creation cut unemployment. These type data refute an economy in crisis. Problems are more political than economic.
US and internal dark forces bear full responsibility. Maduro’s popularity hasn’t suffered. It’s 55%.
On December 8, Venezuelans vote. They’ll choose mayors and other municipal officials nationwide. Nearly 2,800 positions are at stake.
Opposition dark forces want December 8 to be an anti-Maduro plebiscite. They’re hyping a protest vote.
This year’s campaign differs from last December gubernatorial elections. A national campaign wasn’t initiated. Base support wasn’t mobilized.
Opposition candidates won only three of 23 governorships. What happens this Sunday remains to be seen.
Government candidates are expected to win most municipal posts. Opposition ones hope to register gains.
Strategy includes inflammatory discourse. It features lies and damn lies. Hopefully it’s not working.
A recent Hinterlaces poll showed only 6% of voters intend “to vote against Maduro.” According to company vice president Federico Schemel:
Venezuelans differentiated very well between these elections. (T)he plebiscitary campaign isn’t perceived as such by the population.”
People intend to “vote for candidate(s) they feel (most qualified) to solve problems in the short term.”
According to government campaign chief Francisco Ameliach:
“The most important task for (United Social Party of Venezuela – PSUV) candidates is to mobilize the people in support of Maduro’s economic measures and for Enabling Law” authority.
Maduro declared December 8 “The Day of Love and Loyalty to Hugo Chavez.” It marks the anniversary of his last public address.
He asked supporters to elect Maduro in his absence. “On December 8, the people won’t fail Comandante Chavez,” said Maduro.
He continues Chavez’s tradition. Elections test Bolivarian legitimacy. Maduro is waging war on economic unfairness.
Poll numbers show his popularity increased. Perhaps municipal election results will reflect it. Fixing economic problems depends in part on resolving political ones.
Last December, Bolivarianism emerged triumphant. Hopefully Sunday’s results will reflect strong support for what’s too important to lose.
Dark forces want social justice destroyed. They want predatory injustice replacing it. Dirty tactics are used. Washington is very much involved.
Monday night, much of Venezuela went dark. It did so briefly. Maduro justifiably claimed sabotage. So did National Assembly President Diosdado Cabello, saying:
“I have no doubt that today’s electricity sabotage is part of the right wing’s plan.”
Earlier Maduro warned about opposition forces attacking Venezuela’s electrical grid ahead of municipal elections.
They’ve done it before. They’ll do it again and much more. After power was restored in Caracas, Maduro appeared live on television, saying:
“Be strong against this electrical war that yesterday’s fascists have declared against our people.”
They’re going all out to destroy Bolivarian fairness. They want neoliberal harshness replacing it.
They want what Simon Bolivar called the imperial curse “plagu(ing) Latin America with misery in the name of liberty.”
They want what most Venezuelans won’t tolerate. Bolivarianism is too precious to lose.
Stephen Lendman lives in Chicago. He can be reached at
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
Visit his blog site at
Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.
It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.
The official blog can be found here.

Distributed by RINF Alternative News

Jim Rickards: Decline of the Petrodollar System is Good for Gold

By Nick Giambruno
The petrodollar system is one of the most important indicators to watch in order to gauge the timing of the collapse of the US dollar.
In case you missed it, I previously discussed this crucial topic with Ron Paul (see here and here).
This is naturally relevant to those considering diversifying their political risk through internationalization—what this site is all about.
Once the dollar loses its status as the world's premier currency, I believe your options to take preventative action will have significantly narrowed, if not disappeared altogether.
Hence the premium on taking action before that happens.
In order to better understand all of this and get a better idea of where we are right now and where we are headed, I got in touch with Jim Rickards.
Jim Rickards, as many of you know, is a best-selling author and an expert on the international monetary system and geopolitics.
I'm hard-pressed to think of anyone more qualified than him to comment on this critically important topic and am glad to bring this interview exclusively to International Man readers.
You won't want to miss this fascinating discussion, and you'll find it below.
Until next time,

Nick Giambruno, Senior Editor

Nick Giambruno: Jim, can you give us a summary of the health of the petrodollar in the past, what it looks like now, and what you think it will look like going forward? What is the significance of all this for the dollar's role as the world's premier reserve currency, the international monetary system in general, and the nominal price of gold?
Jim Rickards: The term "petrodollar" is shorthand for an understanding between Saudi Arabia and the United States that the US will guarantee the security of the House of Saud in return for the Saudis agreeing to price oil in dollars, to manage the dollar price of oil, and to redeposit those dollars in the banking system where they can be used to support international lending by major banks.
This lending, in turn, supports purchases of US and Western manufactured goods and agricultural exports by developing economies. From this deal, the US got cheap energy, exports, banking profits, and the ability to operate a fiat currency system. The Saudis got rich and survived. This system has existed implicitly since 1945 and explicitly since 1974 when it was negotiated by Henry Kissinger on behalf of the Nixon administration.
Now the petrodollar system is collapsing for two reasons. The US has abused its privileged reserve currency position by printing trillions of dollars in an effort to create inflation. More recently, President Obama has taken steps to anoint Iran as the regional hegemon of the Middle East, and to ease the way, in stages, toward Iran's possession of nuclear weapons capability. This is viewed as a stab-in-the-back by the Saudis and the Israelis and will lead quickly to Saudi Arabia obtaining nuclear weapons from Pakistan.
There is also a newly emerging alliance among Saudi Arabia, Israel, Egypt, and Russia. The new alignment will have no particular use for US dollars and no reason to support them. This turn of events marks the beginning of a significant diminution in the role of the dollar in the international monetary system. Since the price of gold is, in large part, simply the inverse of the value of a dollar, the decline of the dollar will presage a major increase in the dollar price of gold.
Nick Giambruno: Saudi Arabia is the lynchpin of the petrodollar system, and they feel the US is not holding up its end of the deal, i.e., keeping the region safe for the monarchy. It also appears that the Saudi regime is not militarily self-sufficient and needs an external protector of sort. That said, what actions can the Saudis realistically take to diversify away from the US, and what initial steps would signal they are not bluffing?
Jim Rickards: When the US withdraws from the rest of the world, as it has been doing since 2009, the world does not sit still but instead seeks regional alliances and other alignments to protect their respective security interests. With the US moving closer to Iran and away from Saudi Arabia, it can be expected that Saudi Arabia will react by creating new alliances. It will receive nuclear weapons from Pakistan, conventional weapons from Russia, intelligence cooperation from Israel, and troop strength, if needed, from Egypt. This is basically an alignment of powers that are all disaffected by the recent US tilt toward Iran.
Saudi Arabia will also expand it energy exports to China. Russia and China are two major powers who have expressed dissatisfaction with the dollar system in the recent past. With Saudi Arabia now aligning more closely with Russia and China, the pieces are in place to diminish the role of the dollar and replace it with either a system of regional reserve currencies or a new global currency based on the Special Drawing Right issued by the IMF. These developments will not be completed overnight, but they have begun and will assume greater prominence and visibility in the next several years.
Nick Giambruno: In gauging the sustainability of the petrodollar system, what other factors should we keep a lookout for: alternative economic/monetary/security arrangements from the BRICS countries, a GCC central bank, and the possibility of a yuan denominated oil futures contract on the Shanghai Futures Exchange?
Jim Rickards: All of the developments you mention, a GCC central bank, a BRICS multilateral bank, and the increasing use of the yuan are significant straws in the wind all pointing in the same direction—the decline of the dollar as the global reserve currency. Other similar developments could include a regional ruble zone on the Russian periphery and the creation of a true Eurobond backed by the full faith and credit of all members of the European Monetary System. While no one of these developments is decisive, each one of them represents an alternative to the dollar for a specified set of transactions. Cumulatively these developments could push the dollar past a tipping point, where it collapses suddenly and unexpectedly after an initially slow decline.
Nick Giambruno: Do you think the US has any aces up its sleeve or will otherwise be able to somehow pull a rabbit out of a hat and prevent the diminution of the dollar's role in the international monetary system?
Jim Rickards: There is a set of policy choices the US could make that would preserve and even strengthen the dollar's role as the leading global reserve currency. These include lower taxes, higher interest rates, breaking up big banks, reduced regulation, repeal of Dodd-Frank, reinstatement of Glass-Steagall, banning most derivatives transactions, improved educational outcomes, smart investment in infrastructure, reduced entitlements, and other structural adjustments. I see little prospect of any of these things happening, let alone all of them. As a result, one must conclude that the dollar is heading for collapse even thought that outcome is not inevitable. It is not too late to make structural adjustments, but it is extremely unlikely.
Nick Giambruno: Jim Rickards, thank for your time and insight into this critical issue. I'd like to encourage our readers to check out your upcoming book, The Death of Money: The Coming Collapse of the International Monetary System, which will no doubt be an international hit. I have already pre-ordered it, and our readers can do the same here.

Protest against Fracking and we will take your kids

Peaceful protest in Salford at Barton Moss has been taken to a new level by Greater Manchester Police.Children visiting the site have been targeted by Social Services citing "safeguarding measures" that prevent children from learning the real truth about important issues like FRACKING. Detained for the good part of an hour under secretive "child protection" Acts of parliament (not laws, in fact Act is a very informative name). Thank god legal observers were on site to record this behaviour. Social Worker Harriet Wall whohid her ID badge and refused to give her name works for Salford Social Services 0161 909 6517. This behaviour is pure intimidation by Police working hand in hand with other agencies to harass protesters.

Father, 41, behind billion dollar Doritos Locos dies of brain cancer... having never made a CENT from his idea and after Taco Bell donated just $1,000 towards his medical bills

  • Todd Mills, 41, hit upon the genius idea while watching television in 2009
  • Approached Doritos and Taco Bell and was re-buffed
  • Began a Facebook campaign called 'Taco Shells from Doritos Movement' in 2010 to promote the snack
  • But in 2012 was told it had been already been invented but was invited to be one of the first to try the hybrid taco
  • The Doritos Locos Tacos brand has sold over 600 million units and turned around Taco Bell's fortunes to the tune of $1 billion in sales
By James Nye

The man popularly known as the fast-food visionary who inspired Taco Bell's billion-dollar Doritos Locos Tacos has died of cancer - after never making one cent from them.
Todd Mills, 41, who had a brainwave for the idea while watching TV in 2009 passed away on Thanksgiving, surrounded by his wife and two daughters, Tyler, 19, and Lainey,6, after Taco Bell donated just $1,000 towards his medical bills.
Vice president of media and information at the Little Rock Regional Chamber of Commerce, Mills lobbied Taco Bell and the owners of Doritos for two years using a much loved and humorous Facebook campaign that had millions of followers and in March 2012 finally saw his hybrid snack become a reality.
Scroll down for video
Moment of truth: Todd Mills was invited to Taco Bell's California headquarters to be one of the first to taste the Doritos Locos Tacos - which he conceived of in 2009 while watching television
Moment of truth: Todd Mills was invited to Taco Bell's California headquarters to be one of the first to taste the Doritos Locos Tacos - which he conceived of in 2009 while watching television

It was in August that Mills was struck down by cancer and he was forced to stop work and endured two brain surgeries and lung surgery.
His friends and family set up a website to accept donations to help with his medical bills and on September 24th, Taco Bell donated $1,000 to the fund after a friend reached out to the company via Twitter according to USA Today.
The fund for Mills was seeking to raise $10,000 and with Taco Bell's donation exceeded this to make $11,525 for the father-of two.
The same friends told USA Today that Mills was a proud man 'with a good idea and a good heart' and that he would never have set up such a site himself.

Indeed, his friends often urged him to seek some form of compensation for the taco, especially as he became one of its chief supporters through social media.
Modest to the end though, Mills told the Arkansas Times last year that he was not looking for money, the fact that the meal exists was enough.
'Everybody that I tell about this says 'You should be getting some money off these.'
'I've never once said that I deserved any sort of compensation,' he said. 'I can't be the first person to think of this.'
The MailOnline approached Taco Bell for comment about their donation to Todd Mills' medical bills, but at the time of publication had not received a response.
Proud dad: Todd with his daughter, Lainey, 6, who sadly lost her father on Thanksgiving after his brave battle with cancer unfortunately ended - are both seen here on his You Caring fundraising website
Proud dad: Todd with his daughter, Lainey, 6, who sadly lost her father on Thanksgiving after his brave battle with cancer unfortunately ended - are both seen here on his You Caring fundraising website
Confirmation of donation: This grab taken from Todd Mills' You Caring medical fundraising website shows that Taco Bell put up $1,000 towards the 41-year-olds treatment - of which $11,250 was collected in total
Confirmation of donation: This grab taken from Todd Mills' You Caring medical fundraising website shows that Taco Bell put up $1,000 towards the 41-year-olds treatment - of which $11,250 was collected in total

Since the launch the Doritos Locos Tacos, the range has been expanded to three different flavors and sales last year exceeded $1 billion.
Indeed, more than 600 million units have been sold to date and Taco Bell, which is owned by Yum!Brands, which also owns KFC and Pizza Hut, considers the item to be its most successful launch ever.
However, Mills never received a penny, despite the acknowledgement from both Doritos owner, Frito-Lay and Taco Bell for his part in popularizing the game-changing fast-food snack.
For his part, Mills always shrugged of any attention his bright spark brought him, simply happy to have had his 'cool idea' come true.

The story of how one man helped to change the face of America's fast-food habits began more than three years ago - his wife Ginger said that her husband would often use Doritos in taco salads.
Then in 2009, Mills was eating a normal taco while watching the television and as he described it a 'lightbulb went off'.
'I looked at my wife and said, 'How awesome would it be if this taco shell was a Dorito?' recounted Mills in an interview last year with the Arkansas Times.
The idea would not budge and in late 2010 the successful businessman decided to write a letter to Frito-Lay to pitch it, but he soon got back a reply that basically said, 'Thanks, but no thanks'.
'Imagine this…taco shells made from Doritos,' he wrote to Frito-Lay. 'I know…It’s an amazing thing to ponder.'
The chip-giant told Mills that they only accepted product ideas from employees.
Undeterred by this, Mills took to Facebook to drum up the help of social media to make his dream to have orange Dorito's tacos become a reality.
Wife and husband: Ginger Mills with Todd in a moment of fun - Ginger said that her husband was happy knowing that his 'cool idea' has become a national institution
Wife and husband: Ginger Mills with Todd in a moment of fun - Ginger said that her husband was happy knowing that his 'cool idea' has become a national institution

His page was entitled 'Taco Shells Made from Doritos Movement' onto which he posted updates of his campaign and celebrities holding the as-yet unreal fast-food snack.
Eventually, the page racked up over 3,000 likes. The online food blogs of the New York Times, Wall Street Journal, and Time had linked to the page. The page views soon spiked over a million. 
With his social media campaign and public swell of support, it is unclear how much influence Mills actually had on the decision to go ahead with the snack.
One day, Todd noticed Taco Bell had commented on one of his images.
'He was really excited,' Ginger said to Today. 'Taco Bell was paying attention to him. Of course, we called everyone we knew.'
Then, out of the blue in February 2012, Mills received a phone call from Taco Bell, to invite him to their California headquarters where they were going to show him something special.
One of his final posts: This humorous post was one of the final updates that Mills made to his 'Taco Shells from Doritos Movement' and refers to President George W. Bush giving his 'Mission Accomplished' speech about Iraq in 2003
One of his final posts: This humorous post was one of the final updates that Mills made to his 'Taco Shells from Doritos Movement' and refers to President George W. Bush giving his 'Mission Accomplished' speech about Iraq in 2003

Forest Gump would have approved: Mills used many different memes and celebrities to bolster his campaign to have the snack adopted by Taco Bell and Doritos
Forest Gump would have approved: Mills used many different memes and celebrities to bolster his campaign to have the snack adopted by Taco Bell and Doritos

When he arrived he was shown and tasted his dream come to life - what became known as the Doritos Locos Tacos.
Officials at Taco Bell told him that they had been approached by Frito Lay in 2010 with a proposal to combine their two brands.
And Mills realized that he had written his letter six-months after Frito Lay had come to Taco Bell - removing any possibility of his idea having been appropriated.
Reacting to his death, Taco Bell released a statement to say that Mills was a 'true friend of the Taco Bell family' and fondly remembered his 2012 visit as one of the first to try their greatest creation.
One day: Mills helped to revolutionize the fast food landscape with his backing of the Doritos Locos Tacos
One day: Mills helped to revolutionize the fast food landscape with his backing of the Doritos Locos Tacos

The snack and the campaign: The Doritos Locos Tacos has sold more than 600 million units nationwide and was helped by Todd' social media campaign that utilized people such as President Barack Obama
The snack and the campaign: The Doritos Locos Tacos has sold more than 600 million units nationwide and was helped by Todd' social media campaign that utilized people such as President Barack Obama
The snack and the campaign: The Doritos Locos Tacos has sold more than 600 million units nationwide and was helped by Todd' social media campaign that utilized people such as President Barack Obama

'We are honored to have had his support through the Doritos for Taco Shells Movement on Facebook, and we admire his strength and optimism during his recent battle. Our thoughts and sympathies are with Todd's family during this time,' the company said in the statement.
One of Mill's last Facebook posts, commemorated the launch of his dream with a nachos-flavored taco shell on the bridge of an aircraft carrier with a banner reading, 'Mission Accomplished' behind it - in reference to President George W. Bush's less successful attempt in 2003 to claim he had completed his task in Iraq.
In one final comment to the Arkansas Times last year, Mills joked that although he was happy with the glory, 'If they wanted to send me a big taco check, that would be alright.'

Stemming the Transfer of Wealth from Main Street to Wall Street with Publicly-Owned Banks

From the Editor:

As 2013 draws to a close, state, local, and federal governments are battling debt and interest burdens that are greater than ever. Their receipts are down and their bills are up. The only alternative has been to borrow – at interest – creating an exponentially growing debt. While "conservatives" express alarm at the ever-increasing debt levels and "liberals" denounce calls for austerity and cuts in essential services, there is one concern that should be shared by the 99%: Borrowing at interest increases costs and debt and transfers wealth out of our communities and into the pockets of Wall Street financiers, unless we borrow from our own publicly-owned banks.

From 2000 to 2010, the total debt of state and local governments increased by a factor of 2.5 from $1.2 trillion to approximately $3 trillion. With burdening compound interest, this increased debt has put a strain on the budgets of states and local communities, which are required to balance their budgets, forcing states and communities to not only cut spending, but, in some cases, take on further debt. Some states, including California and New York, have worked to curb their debt spending as their debt burdens had become increasingly unmanageable.

In 2011, according to the US Census Report, revenues for all state and local governments totaled $3.2 trillion, taxes totaled $1.3 trillion, and interest payments on debt totaled $124 billion, or 9.2% of tax receipts and 3.9% of the total revenues. This is bad enough but it is slated to get worse; and the federal situation is already worse.

According to the federal fiscal year 2013 budget report, the total federal budget was $3.5 trillion, personal income tax receipts were $1.3 trillion, and the interest on the debt was $416 billion, or 31.6% of tax receipts. “Net interest” is often quoted, since some of the debt is held by Social Security and other government trust funds. For fiscal year 2013, the net interest payments on the debt totaled $223 billion, or 16.9% of personal income tax receipts, or 6.4% of the total budget.

Debt is an essential tool for financing public infrastructure, spreading the costs over several decades of use. The problem is interest. Interest, which is almost always compounded, results in exponentially increasing interest and debt, as well as exponentially increasing bank assets and financial profits. Even in times of economic stability, typical levels of debt, at interest, increase costs unnecessarily and transfer huge wealth over time out of our local states and communities, enriching and empowering the Wall Street financiers.

In the article, It's the Interest, Stupid! Why Bankers Rule the World, Ellen Brown explains how we can eliminate the burden of interest by recapturing it with our own publicly-owned banks, at the state/local and federal levels. 
Borrowing from its own central bank interest-free might even allow a government to eliminate its national debt altogether. In Money and Sustainability: The Missing Link (at page 126), Bernard Lietaer and Christian Asperger, et al., cite the example of France.  The Treasury borrowed interest-free from the nationalized Banque de France from 1946 to 1973.  The law then changed to forbid this practice, requiring the Treasury to borrow instead from the private sector.  The authors include a chart showing what would have happened if the French government had continued to borrow interest-free versus what did happen.  Rather than dropping from 21% to 8.6% of GDP, the debt shot up from 21% to 78% of GDP.
No ‘spendthrift government’ can be blamed in this case,” write the authors. “Compound interest explains it all!”

In fact, one state, North Dakota, has done just that. It has stemmed the transfer of wealth via interest from the state -- by owning its own bank. Under state law, the bank is the State of North Dakota doing business as the Bank of North Dakota. The Bank of North Dakota holds the state's deposits and provides financing for the state and local economy, cutting out out-of-state financiers. The North Dakota 2013-2015 approved state budget has no interest listed as an outlay, but includes interest income instead. 

Publicly-owned banks, as shown by the example of the state-owned Bank of North Dakota, can eliminate debt-servicing costs given to out-of-state financiers, and use those savings to finance public projects themselves. Further, publicly-owned banks can provide a source of revenue for state and local communities, keeping state and municipal deposits local, feeding the local economy rather than feeding off of it.

Public banking advocates in Vermont, so far unsuccessful in their quest to get the Vermont Legislature to study the feasibility of setting up a state-owned bank, have taken the task upon themselves and released their own preliminary study. It is expected that public banking advocates in other states and communities will follow the example of those in Vermont and others and perform their own studies.

Protectors of the status quo argue that business as usual is acceptable and prudent. However, we know that compound interest increases costs and transfers wealth out of our communities, creating power centers in Wall Street that make a charade of our democracy. As Glen Edens, former HP executive, states: “...a strong financial services industry is simply not good for society. Wall Street does not improve productivity, the model is parasitic, transferring huge resources out of the system...”

As we approach the 100th year anniversary of the Federal Reserve, established by the Federal Reserve Act of 1913, there are increasing calls to “federalize” the private Federal Reserve -- to create a publicly-owned central bank that operates in the public interest. As Canada did from 1939 to 1974, and France from 1946 to 1973, the US government could borrow essentially interest-free from its own “federalized” Fed, resulting in a sustainable economy and a manageably low (or no) federal debt. Even a Harvard professor at the very recent 2013 IMF conference has broached the idea of opening the Fed to accounts for the general public, leading others to take off with the idea of the Fed as a real people's bank.

Assessing the unnecessary interest burden that Main Street endures, the evidence is clear: We the People need public banking for a sustainable and shared prosperity.

Ann Tulintseff
Member of the Board, Public Banking Institute

Growing Expectations Of TBTF Bank Creditor Bailouts Tighten Their Tentacles Around Taxpayers

One of the few rebellious Fed heads, Richmond Fed President Jeffrey Lacker, fired another salvo when he was testifying at the House Judiciary Committee’s hearing. And he hit Wall Street risks that are wrapping their growing tentacles ever more tightly around the economy and taxpayers.
The hearing, according to Chairman Bob Goodlatte, would examine whether the Bankruptcy Code is “best equipped” to deal with the insolvency of large banks, such as the “unusual level of speed” needed for their “efficient and orderly resolution,” and the “unique threats” their collapse would pose to the “broader stability of the economy.”
Lacker was on his turf. For years, he has spoken out against QE. Earlier this year, he committed heresy by admitting that “labor market conditions are affected by a wide variety of factors outside a central bank’s control“; he’d yanked away the Fed’s fig leaf for its QE and zero-interest-rate policies. And in June 2012, before QE3 had appeared on the horizon, he’dstunned his listeners when he said, “Monetary policy doesn’t have a lot of capability right now for enhancing growth.” He dissented at the FOMC meetings in 2012 when he last was a voting member. His concerns were confirmed by QE3’s subsequent failure to budge the economy, though it inflated glorious assets bubbles all around.
Now, in his prepared remarks, he told the Committee that the Bankruptcy Code should be tweaked to make it “feasible to resolve failing financial firms in bankruptcy.” The financial crises showed “glaring deficiencies” in the way “distress and insolvency” of big banks are handled, he said. Meaning, they were all bailed out by the Fed and to a much smaller extent by TARP, when there should have been a system in place to wind the failing ones down in bankruptcy. The bailout of investors has created, he said, “two mutually reinforcing expectations”:
First, many financial institution creditors feel protected by an implicit government commitment of support should the institution face financial distress. This belief dampens creditors’ attention to risk and makes debt financing artificially cheap for borrowing firms, leading to excessive leverage.
This belief also encourages the riskiest types of borrowing, “such as short-term wholesale funding,” that could evaporate at a moment’s notice and leave banks and other companies high and dry, which is what had happened during the financial crisis. And these types of funding then “prompt the need” for an implicit government or Fed “protection,” he said.
Second, policymakers may well worry that if a large financial firm with a high reliance on short-term funding were to file for bankruptcy under the U.S. bankruptcy code, it would result in undesirable effects on counterparties, financial markets, and economic activity. This expectation induces policymakers to intervene in ways that allow short-term creditors to escape losses, such as through central bank lending or public sector capital injections. This reinforces creditors’ expectations of support and firms’ incentives to grow large and rely on short-term funding, resulting in more financial fragility and more rescues.
He cited the Richmond Fed’s research into how expectations of creditor bailouts – the implicit guarantees – have grown over time.
In its 2013 estimate, using 2011 data, the Richmond Fed found that there were $44.5 trillion in total liabilities in the financial system, such as bank deposits and bonds. Of them, $10.6 trillion (23.8%) carried explicit guarantees, such as FDIC deposit insurance. And a stunning $14.83 trillion (33.4%) carried implicit guarantees. Unlike FDIC insurance, these guarantees are issued for free to the beneficiary, and when they come due during a bailout, all Americans are forced to pay, through either government or Fed action, to protect the wealth of the creditors. These implicit guarantees in 2011 amounted to 97% of GDP!
They have done nothing but balloon. The Richmond Fed’s first estimate, using 1999 data, found that implicit guarantees amounted to $3.4 trillion (18% of the liabilities in the financial system). A mere 27.6% of GDP. Another screaming data point – as if we needed anymore – in how Wall Street’s risks have been wrapping their ever larger tentacles around the US economy and the taxpayer.
How could this happen? How could these expectations of creditor bailouts balloon so fast so much? Who encouraged it? Well, the Fed and the government. “Through gradual accretion of precedents,” Lacker explained. One bailout followed by a bigger one, followed by an even bigger one, etc., followed by the massive bailouts during the financial crisis. It has been going on for four decades, he said.
While these implicit guarantees have altered risk-taking on Wall Street, banks have become fewer and bigger. In the mid-1980s, there were over 18,000 federally insured banks. Now there are 6,891. Of the goners, 17% collapsed; the rest were mergers and consolidations, based on FDIC data cited by the Wall Street Journal.
Of the survivors, 98.6% are banks with $10 billion or less in assets that control 12% of all assets in the banking industry. Then there are 70 regional banks with up to $250 billion in assets. They make up 1.2% of all banks but control 19% of all bank assets. Should any of them fail, it would entail private-sector losses and ownership changes with minimal governmental intervention. And then there are 12 megabanks – 0.17% of all banks that control 69% of the banking assets!
Their “owners, managers, and customers believe themselves to be exempt from the processes of bankruptcy and creative destruction,” Dallas Fed President Richard Fisher pointed out when he once again vituperated against TBTF banks that, as “everyone and their sister knows,” were “at the epicenter” of the financial crisis. They “capture the financial upside” of their bets but are bailed out when things go wrong, “in violation of one of the basic tenets of market capitalism.”
While Chairman Bob Goodlatte bent over backwards to address ostensibly the collapse “of large and small financial institutions,” everyone knew he was talking about just 12 banks, the only banks in the country exempt from the Bankruptcy Code. Their bondholders are benefiting, free of charge, from implicit guarantees in the size of America’s GDP. These guarantees have encouraged banks, aided and abetted by the Fed, to pile on mountains of risk as if the financial crisis had never happened.
Bu it has done nothing for the real economy, a rather drab place, where consumers try to make ends meet as they entered the holiday shopping season with shootings, stabbings, tramplings, fights, pepper sprayings…. “Only in America people trample each other for sales exactly one day after being thankful for what they already have,” a tweet explained. But it’s been tough for retailers too. Read…. Strung-out Consumers, Desperate Retailers, Crummy Sales