Economist Tells Congress: U.S. May Be in ‘Worse Fiscal Shape’ Than Greece

(CNSNews.com) -- The U.S. has a $210 trillion “fiscal gap” and “may well be in worse fiscal shape than any developed country, including Greece,” Boston University economist Laurence Kotlikoff told members of the Senate Budget Committee in written and oral testimony on Feb. 25.
“The first point I want to get across is that our nation is broke,” Kotlikoff testified. “Our nation’s broke, and it’s not broke in 75 years or 50 years or 25 years or 10 years. It’s broke today.
"Indeed, it may well be in worse fiscal shape than any developed country, including Greece," he said. (See Kotlikoff---Testimony-to-Senate-Budget-Committe.pdf)
In January, Fitch downgraded Greece, whose debt-to-Gross Domestic Product (GDP) ratio is 175 percent, from Stable to Negative.
“This declaration of national insolvency will, no doubt, shock those of you who use the officially reported federal debt as the measuring stick for what our country owes,” Kotlikoff told committee members who are considering President Obama’s proposed budget for Fiscal Year 2016.
“After all, federal debt in the hands of the public is only 74 percent of GDP. Yes, this is double the debt-to-GDP ratio recorded a decade ago. But it’s still a far cry from Italy’s 135 debt-to-GDP ratio or Greece’s 175 percent ratio.”
However, using the Congressional Budget Office’s July 2014 75-year Alternate Fiscal Scenario projection, Kotlikoff calculated that the U.S.' “fiscal gap” –which he defines as "the difference between our government's projected financial obligations and the present value of all projected future tax and other receipts" - is actually much higher than those of either Italy or Greece.
“We have a $210 trillion fiscal gap at this point,” Kotlikoff told the senators, which amounts to 211 percent of the U.S.’ $18.2 trillion GDP, making it higher than Greece’s 175 percent debt-to-GDP ratio.
The fiscal gap is “16 times larger than official U.S. debt, which indicates precisely how useless official debt is for understanding our nation’s true fiscal position,” said Kotlikoff, a former senior economist on President Ronald Reagan’s Council of Economic Advisers.
“Stated differently, the overall federal government is 58 percent underfinanced,” Kotlikoff testified.
“By way of comparison, the Social Security system, taken by itself, is 33 percent underfinanced.” Last year, Kotlikoff testified on Capitol Hill that the Social Security system was in “significantly worse financial shape than Detroit’s two pension funds taken together.”
Kotlikoff said that not counting “off book” liabilities like Social Security give lawmakers and the public a false sense of the nation’s true fiscal condition.
“What economics tells us is that we can’t choose what to put on the books. All government obligations and all government receipts, no matter what they are called, need to be properly valued in the present taking into account their likelihood of payment by and to the government,” Kotlikoff testified.
“Successive Congresses, whether dominated by Republicans or Democrats, have spent the postwar accumulating massive net fiscal obligations, virtually all of which have been kept off the books,” he noted.

Boston University economist Laurence Kotlikoff (Wikipedia)

“Congress’ economically arbitrary decisions as to what to put on and what to keep off the books have not been innocent,” he continued, criticizing what he called “the Enron-type accounting that’s been going on for decades under both parties.”
“A positive fiscal gap means the government is attempting to spend, over time, more than it can afford,” Kotlikoff explained, adding that every year of delay in addressing the problem makes it that much harder to close the fiscal gap.
For example, starting now, eliminating the fiscal gap would require an immediate 58.5 percent increase in all federal taxes or a 37.7 percent permanent, across-the-board decrease in federal spending.
But if the government waits 30 years, it would require a 77 percent tax increase or a 46.5 percent cut in spending by 2045 to eliminate the fiscal gap.
“Spending six decades raising or extending transfer payments and cutting or limiting taxes helped members of Congress get reelected. But it has placed our children and grandchildren under a fiscal Sword of Damocles that gravely endangers their economic futures,” said Kotlikoff, co-author of The Coming Generational Storm: What You Need to Know About Our Nation’s Economic Future, which was published in 2005.

The NY Fed missed the housing bubble, Libor, London Whale, & more. The Fed Board of Governors has finally had enough.

If you ranked all of government’s financial regulators on how they handled Wall Street’s crime wave during the Great Recession and its aftermath, most of them would wind up tied for last place. But then just under them would be the New York Federal Reserve.
This is the agency Tim Geithner ran during the Bush Administration. It’s the one thatmissed the housing bubble, bailed out AIG, and made sure all of the mega-banks owed money on credit default swaps got paid out at 100 percent. This is the agency a former employee named Carmen Segarra secretly taped to show how officials there rolled over for Goldman Sachs after finding evidence of potential wrongdoing. It’s the one that learned about JPMorgan Chase’s risky practices in the office that made the catastrophic “London Whale” trade four years before that blew up, and did absolutely nothing to investigate or put a stop to them. It’s the one that got early reports of theLibor scandal , the largest rigging of interest rates in world history (literally, a trader at Barclays Bank told a New York Fed official, “We know that we’re not posting, um, an honest rate.”), and did nothing but write a letter to British regulators, telling them to deal with it.

MORE:

http://www.vice.com/read/after-years-of-incompetence-new-york-bank-regulators-are-losing-power-to-washington-309

Top Asset Manager Warns Of Risks In Banking System: “It’s The Biggest Reason To Own Precious Metals”

Mac Slavo
March 10th, 2015
SHTFplan.com

Top alternative asset manager Eric Sprott, whose company has $10 billion in assets under management, sounds the alarm about the day everyone in America finally realizes that the real economy has collapsed.

In a highly informative interview from one of the most respected financial analysts in the world, Sprott explains why he believes gold, silver and hard asset investments are the only way to prepare for the risks associated with a highly leveraged banking system and out of control monetary policy.

I think they’ll just keep running it along until some day something gives. What that giving thing is I’m not exactly certain… Maybe it’s we end up with job losses… people just don’t have the income and all of a sudden you continue to get these weak reports… whether it’s McDonald’s or Caterpillar or HP… and they keep announcing layoffs and so on… it becomes apparent to everyone that there is no recovery…
I think if we look back these last five years, other than the stock market there’s been very little that happened in the real economy that would give anybody confidence. People  have real issues to deal with… when you realize 60% of the population is living paycheck to paycheck it doesn’t take much to tip them over the edge.

(Watch Interview at Future Money Trends)

We have a very insane financial situation going here where the savers are punished and the borrowers get the benefit of it all.
…
In my mind the biggest reason to own precious metals is because of the risks in the banking system… you get nothing for putting your money in the bank… and yet when you have your money in the bank you take on all the risks of a leveraged bank… and I’ve always thought it’s the risks in the banking system that would cause people to go to gold…

And now you have another level of concern out there and that is, of course, the currency risk. We’ve seen so many currencies that have been incredibly weak…

The reasons to own gold are now two-fold.
The reasons to have those assets, which protect you in an economic decline… knowing that an economic decline causes financial problems, which is what’s going to happen here.
…
I continue to be a buyer here… I’ve had a couple of announcements out this week where I’ve taken on significant interest in some of the smaller Canadian producers… I just think that the reasons to think that gold and silver could rally here are higher… the returns on these things could be staggering.

While Eric Sprott is well known for his successful investments in precious metals equities, including his own gold and silver backed Exchange Traded Funds, the Forbes billionaires list  suggests that he also holds as much as 90% of his assets in physical gold and silver.

Sprott, like many others, realizes that the “extend-and-pretend” policies being implemented by the financial and political elite will one day end in disaster for the majority of the population. It’s for this reason that high net worth individuals and others who understand the consequences have been buying up land outside of major cities and preparing emergency strategic relocation plans.

Top Asset Manager Warns Of Risks In Banking System: “It’s The Biggest Reason To Own Precious Metals”

Top alternative asset manager Eric Sprott, whose company has $10 billion in assets under management, sounds the alarm about the day everyone in America finally realizes that the real economy has collapsed.
In a highly informative interview from one of the most respected financial analysts in the world, Sprott explains why he believes gold, silver and hard asset investments are the only way to prepare for the risks associated with a highly leveraged banking system and out of control monetary policy.

I think they’ll just keep running it along until some day something gives. What that giving thing is I’m not exactly certain… Maybe it’s we end up with job losses… people just don’t have the income and all of a sudden you continue to get these weak reports… whether it’s McDonald’s or Caterpillar or HP… and they keep announcing layoffs and so on… it becomes apparent to everyone that there is no recovery…
I think if we look back these last five years, other than the stock market there’s been very little that happened in the real economy that would give anybody confidence. People  have real issues to deal with… when you realize 60% of the population is living paycheck to paycheck it doesn’t take much to tip them over the edge.

(Watch Interview at Future Money Trends)

We have a very insane financial situation going here where the savers are punished and the borrowers get the benefit of it all.
…
In my mind the biggest reason to own precious metals is because of the risks in the banking system… you get nothing for putting your money in the bank… and yet when you have your money in the bank you take on all the risks of a leveraged bank… and I’ve always thought it’s the risks in the banking system that would cause people to go to gold…
And now you have another level of concern out there and that is, of course, the currency risk. We’ve seen so many currencies that have been incredibly weak…
The reasons to own gold are now two-fold.
The reasons to have those assets, which protect you in an economic decline… knowing that an economic decline causes financial problems, which is what’s going to happen here.
…
I continue to be a buyer here… I’ve had a couple of announcements out this week where I’ve taken on significant interest in some of the smaller Canadian producers… I just think that the reasons to think that gold and silver could rally here are higher… the returns on these things could be staggering.

While Eric Sprott is well known for his successful investments in precious metals equities, including his own gold and silver backed Exchange Traded Funds, the Forbes billionaires list  suggests that he also holds as much as 90% of his assets in physical gold and silver.
Sprott, like many others, realizes that the “extend-and-pretend” policies being implemented by the financial and political elite will one day end in disaster for the majority of the population. It’s for this reason that high net worth individuals and others who understand the consequences have been buying up land outside of major cities and preparing emergency strategic relocation plans.

McDonald’s Same Store Sales Drop 4% As Customer Demand Healthier Options

(Bruce Horovitz‘)  February was an ice-cold month for McDonald’s, with same-store sales dropping 4% in its troubled U.S. stores and 1.7% globally.
The burger giant announced the worse-than-expected results Monday, but its stock still posted a gain, closing up 0.6% to $97.71.
The monthly report will be the last to trace back to former CEO Don Thompson. He was replaced by Steve Easterbrook on March 1, and all sales reports going forward will technically fall under Easterbrook’s leadership, who already is under tremendous pressure to quickly right the ship.
The company seemed to concede as much in its statement that went out with Monday’s poor results. “Consumer needs and preferences have changed and McDonald’s current performance reflects the urgent need to evolve with today’s consumers, reset strategic priorities and restore business momentum,” the company said.
Beyond the disappointing U.S. numbers for stores open at least 13 months, monthly sales for the Asia/Pacific, Middle East and Africa region were down 4.4%. The only ray of light was Europe, where sales were up 0.7%.
“While changes are in the works, we cannot identify a near-term catalyst to spur sales,” says Sterne Agee analyst Lynne Collier in a note to investors.

The February results follow a strategic “Turnaround Summit” that executives held with franchisees last week in Las Vegas. The company made news at the summit by announcing plans to curtail the use of human antibiotics in its chicken over the next two years. At an investors’ conference last week, McDonald’s also said it planned to launch a mobile app this summer that may also be part of a loyalty program — a move the chain conceded some key fast-food rivals already have made.
One analyst says McDonald’s is admitting that its troubles run long and deep.
“It’s interesting that McDonald’s had a ‘Turnaround Summit’ last week in an effort to address its U.S. sales decline. The focus for the fast-food chain will be on enhancing the restaurant experience, which it hopes will help curb the decline,” says Joshua Raymond, chief market strategist at City Index UK. “The fact that the firm has openly stated this in their monthly sales statement and used the word ‘turnaround’ gives greater weighting to the issues they are facing.”
One large investment group, which last month sent a letter to McDonald’s directors calling for new membership and leadership of its board, said that beyond new management, McDonald’s still needs to revamp its board.
“We are hopeful Easterbrook can reverse this trend, but believe new vision must be injected at the board-level, too, if McDonald’s is to reposition itself to succeed globally and generationally,” said Dieter Waizenegger, executive director of the CtW Investment Group, in a statement.
In its own statement, McDonald’s spelled out its goal in no uncertain terms: “To be a true destination of choice around the world and reassert McDonald’s as a modern, progressive burger company.”

“47 percent” of U.S. jobs are at risk because of advancing technologies

(Daniel Rivero)  Somewhere out there, a robot is scheming to take my job. About a year ago, a breaking news story about a Los Angeles earthquake was fully written by a robot. Gathering data it received from the U.S. Geological Survey, an algorithm wrote and published the story on the Los Angeles Times’ website less than three minutes after the trembling began.
News organizations freaked out, some labeling the event as the “rise of the robot reporter,” sending all of us into a soul-searching quest to defend ourselves in the face of such a formidable adversary. “But my writing is original, and it oozes with style,” many a reporter defiantly told themselves. “A data-crunching robot could never fill my position!”
At The WorldPost Future of Work conference in London, a similar anxiety has begun to emerge—if not with workers, then with the economists who study them.
“According to our research, 47 percent of jobs in the U.S. are at risk from technology over the next 20 years,” Michael Osbourne, a co-director of the Oxford Martin Programme on Technology and Employment, told me. The group’s research combined U.S. Bureau of Statistics data with a complex machine-learning algorithm of its own to draw its conclusions.
For example, in retail, an algorithm might be a better predictor of customer preferences than a human salesperson thanks to the amount of data companies collect, he said. Logistics will be impacted by fast-moving advancements in autonomous vehicle technology that few took seriously just a few years ago.
“Forklift drivers, truck drivers, agricultural vehicle drivers,” Osbourne listed. “Those jobs could be gone very soon.”
There are some recent trends experts are sharing which show how this new world might look like, when the small percentage of individuals or corporations that own machines (the means of production) are the only ones able to make money, and as the rest of us (the middle class) lose our jobs for the simple fact that #RobotsDoItBetter.
Take the most-talked-about slide of the day (seen below), courtesy of Anthony McAfee, associate director of the Center for Digital Business at the MIT Sloan School of Management. The line that has been going up since about 2002 represents total gross domestic product (GDP) in the U.S. The line that is going down represents wages paid as a percentage of that GDP:

“This is not just an American phenomenon, it is not even a rich world phenomenon. This same decline in labor share is happening in most countries where we have data across the world, including places like China, India and Mexico,” McAfee said.
“China is not offshoring to find cheaper labor,” he added. “There is obviously something else going on here.”
“It’s a societal problem,” Dr. Laura Tyson, professor of Business Administration and Economics, at Berkeley-Haas School of Business told me.
In the U.S., she notes, most job growth is already happening towards the bottom of the pay scale, much of which is driven by people whose traditional middle income manufacturing jobs have been lost to increasingly productive robots in the factory.
“I tend to worry about the quality of the job that will be available for them in the long run,” she said.
Few feel that governments are adequately preparing for the shift. Some, however, feel that increased productivity thanks to machines will let humans focus on something we are infinitely better at doing than robots: creative thinking.
“The remaining jobs will be increasingly creative and increasingly social,” said Osbourne, the Oxford researcher who says 47 percent of jobs are at risk. “I actually think it will be better for society, because these are tasks that we tend to do in our spare time as hobbies, and as we are more displaced by machines it will leave these more fundamentally human tasks to perform.”
Which sounds pretty good for people like me, who would love to refine the craft we feel most passionate about. Except… Osbourne’s final take on my question if this shift might benefit the arts in the long run left me feeling pretty dismal:
“Benefit? Hmmm,” he started. “I think there will be new kinds of art, and more people will be freed up to make art, but wages will probably get less competitive in the arts, especially because there’s going to be a lot more supply.”

When wheelbarrows are filled with useless paper. Commodities historically become the accepted medium of exchange.

When wheelbarrows are filled with useless paper. Commodities historically become the accepted medium of exchange. A stalwart of this basic reality, Alan Greenspan was a full blown laisezz faire capitalist. A direct disciple of Ayn Rand’s objectivist fundamental philosophy. He was very close with Rand. Even inviting her to his swearing in to Gerald Ford’s Council of Economic Advisors before eventually becoming The Chairman of the Federal Reserve from 1987 to 2006. His oversight on tax cuts and Social Security privatization were largely blamed as the catalyst that created the subprime mortgage crisis.

Now the Wall Street Journal Reports The Federal Reserve Bank of New York, once the most feared banking regulator on Wall Street, has lost power in a behind-the-scenes reorganization at the nation’s central bank. Jon Bowne reports on the warning signs leading up to the Fed’s apparent implosion.
“Laissez-faire capitalism is the only social system based on the recognition of individual rights and, therefore, the only system that bans force from social relationships. By the nature of its basic principles and interests, it is the only system fundamentally opposed to war.” Ayn Rand

Did HSBC Just Close All 7 of Its Gold Vaults?

Only a few weeks ago, HSBC announced that it was imposing restrictions on large cash withdrawals. The BBC reported how some HSBC customers were not allowed to withdrawal large amounts of cash, fueling fears of a bank run, or worse.

Zero Hedge reported: “HSBC admitted it has not informed customers of the change in policy, which was implemented in November for their own good: “We ask our customers about the purpose of large cash withdrawals when they are unusual… the reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime.” As one customer responded: “you shouldn’t have to explain to your bank why you want that money. It’s not theirs, it’s yours.”

Now there’s more trouble. Now we’re told that HSBC is “closing” its gold vaults.

Question: Was there anything in them to begin with?

Who Smashed Gold Today And Why As HSBC Shocks Clients By Closing All London Gold Vaults

King World News

Today London metals trader Andrew Maguire spoke with King World News about who smashed the price of gold today and why as HSBC just shocked clients by announcing the closure of all gold vaults in London!
Maguire also discussed what is happening in the physical gold market as well as what the bullion banks are up to.

Today’s Gold Smash Is Western Government Intervention

Andrew Maguire:  “Eric, here we are again after another heavily gamed Non-Farm Payrolls (NFP) report week that evidences just how ‘managed’ the paper markets are. Given the strong Indian and Chinese demand above $1,200 and the currency crosses related to gold that were net-positive all week, there was no reason to paint gold down ahead of today’s NFP. Given that the physical market is strong, the Comex-centric selling has all the hallmarks of ‘official’ selling.

Massive Physical Demand

What I am saying is that there was massive physical buying above $1,200.  So there was no reason for today’s takedown other than to flush the paper markets of some weak-handed longs, and for the commercials to cover shorts and add to their long positions.

Bank Of England And Fed Fingerprints

Real Comex open interest has declined by some 250,000 contracts in the last 4 years, leaving what remains in the hands of a few directional high-frequency trading algorithms controlled by a few CME insiders, who also happen to be the same 6 market-making bullion banks that have gold accounts with the Bank of England. Considering the FED had the NFP data days ahead of the release, it is highly unlikely these agent banks were not privy to the data as well.

What this synthetic gaming has done is drive out almost all ‘real’ open interest into an increasingly liquid physical market outside the tendrils of a handful of collusive banks. This migration has now reached an inflection point and reverse leverage is about to run these banks over.

Physical Demand Exceeds Mine Supply – Takedown Is Naked Short Selling

The downside manipulations have become so embarrassingly obvious to anyone connected to the strong physical markets. There is no way of hiding that these sales are conducted in the face of a market where physical demand continues to exceed mine supply, meaning these sales can only be effected by way of high leveraged naked short selling.

Bullion Banks’ 100/1 Leveraged Paper Positions

These too-big-to-fail banks are once again playing a high-risk game with taxpayer money. They are so obviously mismatched to their underlying physical holdings that large institutional entities are unwinding their fractional gold and silver risks…

Continue this story at King World News

How America Added 17 Million People In 7 Years… And Zero Full-Time Jobs

Dan Popescu @PopescuCo

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How America Added 17 Million People In 7 Years... And Zero Full-Time Jobs http://www.zerohedge.com/news/2015-03-07/amazing-math-bls-how-america-added-17-million-jobs-7-years-and-zero-full-time-jobs …

12:18 AM - 9 Mar 2015

Amazing Math from the Bureau of Labor Statistics

According to the most recent Bureau of Labor Statistics release, the UE (unemployment) rate fell to 5.5% as of February.  The last time the UE rate was this low was May of 2008.

What I’m fascinated by is the fact that the US population grew from February 2008 to February 2015 by 16.8 million persons, or a 5.5% increase in total population, and on a net basis, not a single one of those 16.8 million persons got a FT (full time) job… while a net 2.7 million were lucky enough to get a (or multiple) PT (part time) job.
This means that 14.3 million persons, or 4.4% of the current US population, were added without a single job among them (chart below).  This makes for fascinating math when a 4.4% increase of the total US population without jobs can nearly halve the UE rate down to 5.5%, equal to 2008’s UE rates?!?
http://www.zerohedge.com/news/2015-03-07/amazing-math-bls-how-america-added-17-million-jobs-7-years-and-zero-full-time-jobs

Shadow of Truth Ep.9 - Dr Paul Craig Roberts Unemployed America

Thank you for watching/listening. Subscribe, Share, Like Please visit Dr. Paul Craig Roberts http://www.paulcraigroberts.org Visit Dave Kranzler http://www.i...

Will Mexico’s Oil Give the U.S. Another Excuse for Covert Intervention?

The drug war brought U.S. commandos into Mexico, but the opening of the country’s once publicly-owned energy resources to foreign investors may provide justification for the secretive American presence there to escalate—especially if the cartels are successfully painted as “narcoterrorists.”
Energy resources can never be ignored in geopolitics. And an often forgotten fact is that Mexico is its northern neighbor’s third-largest source of foreign oil—enticingly located right next door.
Mexican petroleum and gas are about to hit the big time, with estimates that as much as $50 billion in new investments could flow into the country by 2018. The bidding began last year, and financiers are looking past today’s sharp drop in oil and gas prices at a lucrative future.
Naturally, outsiders who come drilling will expect a stable environment for profit. Companies do not want blocked shipments, bombed transit routes, kidnapped executives, or other interference from the cartels.
They want certainty, and military action is one way to provide it. Already, the Mexican Army is escorting contractors from Weatherford International, an oilfield services firm founded in Texas. And there is every reason to wonder if Pentagon or U.S. security contractors are assisting in such protection missions. Even members of the U.S. Marshals Service have taken part in operations dressed as Mexican Marines.
Set aside the oilfields, and there is still a lot of money on the line. Mexico is the United States’ third largest trading partner, with half a trillion dollars crossing the border in 2013. Since 2000, U.S. foreign direct investment into the southern country stands at about a third of a trillion dollars.
The official line from the Pentagon is that there is no unusual activity caused by anything. Northern Command, covering the period from 9/11 onward, told WhoWhatWhy, “We do not have a permanent military presence in Mexico, other than those assigned to the U.S. Embassy” and “all other U.S. service men and women only go to Mexico for short duration exchanges on temporary duty.”

“But They Are There”
A private memo WikiLeaks obtained from the intelligence firm Stratfor—analyzed for the first time by WhoWhatWhy in an ongoing investigative partnership—states that United States special forces were conducting joint operations with Mexican special forces in 2011.
The internal document sources this information to someone the firm code-named “US714”: Texas Ranger Captain Aaron Grigsby, then head of the Border Security Operations Center in Austin. It is staffed by intelligence contractors from Abrams Learning & Information Systems, founded by Gen. John Abrams. Grigsby oversaw nearly 300 analysts and their surveillance programs. The job put him in a good position to see what commandos were actually doing in Mexico. [Email-ID 5359940, Feb. 17, 2011]

Here’s what Grigsby told Stratfor. (Note that the document begins with the firm’s standard header information for “insights” and includes the judgment that the source is highly reliable and the information highly credible (Email-ID 1547931)):

Email-ID 1547931: “But They Are There”Date: June 15, 2011 From: Korena Zucha To: Secure List of Senior Analysts Subject: INSIGHT-MEXICO-US special forces in Mexico-US714Source Code: US714 ATTRIBUTION: STRATFOR Security Source SOURCE DESCRIPTION: US Law enforcement Officer with direct oversight of border investigations SOURCE RELIABILITY: A ITEM CREDIBILITY: 2 SOURCE HANDLER: Fred [Burton] U.S. special operations forces are currently in Mexico. Small scale joint ops with Mexico’s, but they are there.

Grigsby did not explain why the commandos were engaging in joint operations with Mexican special operators.
National security policy for energy resources is built across decades, regardless of the dates laws are passed. So it is not unusual that the Stratfor memo was sent two-and-a-half years before December 2013, the month Mexican President Enrique Peña Nieto signed into law constitutional amendments authorizing foreign and private investment into oil and gas fields for the first time in 75 years.
Mexican “energy reform” has been on the U.S. radar for at least a decade. According to a 2006 classified diplomatic cable published by WikiLeaks, Tony Garza, then the ambassador to Mexico, raised the issue at a private dinner with then-President-elect Felipe Calderón. Garza told him: “To draw the investment and energy needed to jump-start Mexico’s economy, foreigners and Mexicans alike [have] to be reassured that the rule of law [will] prevail.”
Calderón launched a military war against the cartels as soon as he took office and only a month later indicated to potential investors that the certainty of law would come. He told the Financial Times that the “underlying strategy” of the operations was “to emphasize not just the issue of security but also that of the rule of law” and that taking on the cartels would provide “an indispensable element for broadening confidence in Mexico and generating much greater investment.”

Dollars and Doom?
The energy resources in Mexico are certainly sizable enough to appeal to big business. U.S. Geological Survey figures from 2012 show the country has about 65 billion barrels of unexploited oil, 118 trillion cubic feet of unexploited natural gas, and about 7,200 million barrels of unexploited liquid natural gas. According to a conservative WhoWhatWhy calculation (some estimates place the figures even higher) based on 2012 prices, this translates into $6.6 trillion of oil and gas.
Note that these lowball amounts already add up to nearly half the 2012 market value of unexploited petroleum and gas in Iraq—a country the U.S. recently resumed bombing, galvanized by the need to protect oilfields from the terrorist Islamic State militants.
Mexico suffers a similar problem in the scope of violence carried out by the drug cartels. On top of the physical danger the narcos pose, they are believed responsible for thefts of pipeline fuel worth $790 million in 2014 alone.
Yet without terrorism as a rallying cry, U.S. “management” of Mexico has to be framed in terms of the drug war—which itself has increasingly become subordinated to counterterrorism—unless, perhaps, U.S. policymakers are able to portray the cartels as “narcoterrorists,”  effectively fusing the War on Drugs with the War on Terror.
The term “narcoterrorism” was launched in the United States largely by Rachel Ehrenfeld, who sits on the Committee on the Present Danger, a hawkish organization that advocates for amping up military budgets. In the 1980s, she portrayed the infamous Colombian cartels as Marxist-Leninist elements of a Soviet-directed global conspiracy. Political scholars found the claim far-fetched, but had it gained more traction, it could have been used as a justification to increase support for Cold War-based U.S. intervention in Central and South America.
After the Soviet Union collapsed and the post-9/11 era began, Ehrenfeld started claiming Mexican drug cartels were tied to terrorists and provided them easy access to the United States. Althouh there is little to no proof of this, the idea itself could build a firmer basis for military action in Mexico.
Indeed, for decades and especially after 9/11, the Drug Enforcement Administration, various members of Congress, the Pentagon, state intelligence centers, police organizations along the border, the media, and others have, with some success, tried to raise the profile of the “narcoterrorism nexus.” That’s the notion that drug traffickers and terrorists are inextricably linked together.
The obvious objection is that one-size-fits-all efforts against the two groups cannot work because they differ wildly. Terrorists are motivated by ideology and try to scare opponents they cannot otherwise defeat into taking self-destructive actions. Narcos are lethal black market businessmen who have one concern: profit. That’s why, with some exceptions, the “narcoterrorism” concept has never truly lifted off—yet.
But with resource corporations now moving into Mexico, preparing to profit hugely from forthcoming production-sharing agreements, the country may see more U.S. commandos stalking its cartels.

The greenback’s dominance in the developing world may be under threat as more emerging economies reduce their reliance on the global trade currency.

Is the dollar losing its clout among EMs?  (gold = monetary insurance)
The greenback’s dominance in the developing world may be under threat as more emerging economies begin to reduce their reliance on the global trade currency.
“Decreasing reliance on the dollar is an important trend that’s going to grow,” said Jim Rickards, chief global strategist at West Shore Funds. “As far as emerging markets, the rise of bilateral trading deals is significant for the dollar’s future as a trade currency.”

Around 80 percent of global trade finance is conducted in dollars, according to January data from SWIFT. But over the past few months, Russia and China have spearheaded a movement to use their domestic currencies for bilateral trade in an effort to distance themselves from dollar-denominated settlements. The countries recently signed a $24 billion three-year currency swaps agreement to double trading.

Meanwhile, Moscow and New Delhi may agree on a currency deal next year, Russian news agency TASS reported two weeks ago. Russia and Egypt are also considering a deal, according to Egyptian media reports last month.

“In some cases, high dollarization can facilitate trade. But there are drawbacks, such as limiting exchange rate flexibility to mitigate against external shocks, and constraining the central bank’s ability to be the lender of last resort. Under such circumstances, consideration could be given to actively promote de-dollarization,” he said.

Do Corporations Really Need More Rights? Why Fast-Track for the TPP Is a Bad Idea

Idea

President Obama is currently pressing members of Congress to pass Fast Track authority for a trade and investment agreement called the Trans Pacific Partnership (TPP). If Fast Track passes, it means that Congress must approve or deny the TPP with minimal debate and no amendments. Astonishingly, our lawmakers have not seen the agreement they are being asked to expedite.
The TPP is presented as an agreement to increase U.S. exports and jobs. But what is really at stake is democracy—in the United States as well as in the 11 other Pacific Rim countries that are parties to the TPP.
Given past agreements on which the TPP is modeled, including the North American Trade Agreement (NAFTA), TPP provisions will likely have significant implications for nearly every aspect of American life—including intellectual property rights, labor and environmental protections, consumer safety and product labeling, government procurement, and national resource management. Given the way these agreements are crafted, we can be quite certain that the implications will favor corporate profits over human well-being. And once the agreement is approved, its provisions will trump national and local laws, including the U.S. Constitution, and will not be subject to review or revision by any national legislative or judicial body—including the U.S. Supreme Court.
It is expected that the TPP will include an Investor State Dispute Settlement provision that gives foreign corporations the right to sue governments for lost profits due to laws—such as environmental standards and safeguards for workers—they claim deprive them of revenue they might otherwise have received. Such claims are settled in tribunals comprised of trade lawyers whose identities are secret. The rulings of these tribunals pre-empt national laws and the decisions of national courts and are not subject to review by any national judicial or legislative body.

Richard Duncan: How Governments Are Using QE to Magically Wipe Away Their Debt

Mar 6 – Cris Sheridan welcomes back Richard Duncan, Chief Economist at Blackhorse Asset Management in Singapore. Richard explains why quantitative easing is a form of debt cancellation and the number one… http://www.financialsense.com/subscribe

Big private banks might be too-big-to-fail, and might be even too-big-to-jail (prosecute). But they are not-too-big-to-abandon….

by CCC4MR
image: http://i1.wp.com/www.kitchener.ca/uploads/634934100466971703_Final.jpg

Waterloo Region Record (TheRecord.com) staff writer Paige Desmond reports:

“Region of Waterloo councillors vote Wednesday (4 March 2015) to approve the 2015 budget and set the spending tone for this term of council. The last term of council hiked taxes 8.9 per cent and this council is expected to start things off with a 2.5 per cent increase—above the 2.4 per cent rate of inflation for 2014. That would add about $44.68 to the property tax bill on a home assessed at $291,000. ‘It’s a big operation. There’s a lot going on at the region, so that’s well within our guidelines and I think we’re in a good shape,’  Councillor Geoff Lorentz said. Top fiscal pressures include debt servicing [i.e. paying a high compounded interest (usury) on the debt to a private commercial bank],rapid transit and staff compensation, though more debate is expected on requests from staff, community organizations and councillors, Lorentz said. Council voted to hikewater and waste water rates by 4.9 per cent and 7.9 per cent respectively in February, staying on track with a plan to increase water rates up to 45 per cent over 10 years.”  
The Region of Waterloo’s debt is fast approaching $700 million, and is rapidly growing as you read this. Debt servicing (i.e. paying a high compounded interest (usury) on the debt to a private commercial bank) will cost the region about $62 million this year. Of that, about $48 million will come from taxpayers. And where will the remaining $14 million in interest payments come from? This huge debt is due to regional government borrowing from private banks at high compounded interest.
Big private banks might be too-big-to-fail, and according to U.S. Attorney General Eric Holder, they might be even too-big-to-jail (prosecute). But they are not-too-big-to-abandon as depositories for government funds. As of the spring of 2010, North Dakota was the only US state sporting a major budget surplus; it had the lowest unemployment and default rates in the US. Why? If the State of North Dakota can bypass Wall Street with its  state-owned public bank (BND), and declare financial independence, so can the Region of Waterloo, Kitchener, Toronto, Ontario, and all other cities and provinces across Canada bypass Bay Street.
Is creating a new bank in Canada too much trouble, perhaps? Apparently not so. Not even for a Canadian grocery store. Loblaw’s bank, President’s Choice Financial, was ranked by J.D. Power Associates, as having the highest customer satisfaction among mid-size Canadian banks several years in a row.

Would creating a public bank in Kitchener be worth the effort? Don’t we have enough banks in Kitchener and in our region already?

Let’s do some math, and see.
Let’s imagine that the Region of Waterloo, and some of small and medium-size businesses, as well as some individual customers, bring their banking business to the Mackenzie King Regional Public Bank of Kitchener. For the sake of simplicity, let’s assume that total deposits at the bank would be 100 million dollars.
Now comes the really sweet part. Due to the “Alchemy” of fractional-reserve bankinglaws, our Mackenzie King Regional Public Bank of Kitchener would be allowed toexpand those 100 million dollars on its balance sheet by a traditional and conservative factor of 20, and actually create so-called new money, out of thin air. That would be a nice, round sum of 2 Billion dollars, interest-free, and tax-free. Do you know of any other business better than this one?
What could the Region of Waterloo do with all this extra interest-free money that would suddenly be in possesion of? It could pay off its entire regional debt, fully finance its budget interest-free, lower the ever-growing property taxes, finance additional social programs and benefits for the poor, and still sport a budget surplus. And think of all those new public banking government jobs created in the region of Waterloo that will pay for themselves.
Instead of borrowing from private commercial banks at usurious interest, why not borrow from the Ontario Public Bank, or from Toronto Public Bank, or from our Mackenzie King Regional Public Bank of Kitchener, or from our PUBLIC BANK OF CANADA interest-free? Usury is not a law of nature; it comes from human greed. That would relieve the top fiscal pressure in the region of Waterloo, instead of having to continually increase taxes, cut social programs and benefits to save money. Why not save all those unnecessary debt servicing payments, a staggering $62 million this year alone, and deposit them all in our Mackenzie King Regional Public Bank of Kitchener instead? Martin Wolf is widely considered to be one of the world’s most influential writers on economics. He is the associate editor and chief economics commentator at the Financial Times:

“One of these radical ideas was proposed by Martin Wolf in the Financial Times. He suggests stripping private banks of their remarkable power to create money out of thin air. Simply by issuing credit, they spawn between 95% and 97% of the money supply. If the state were to assert a monopoly on money creation [via public central bank], government could increase their money supply without increasing debt. Seigniorage (the difference between the cost of producing money and its value) would accrue to the state, adding billions to national coffers. Private commercial  banks would be reduced to being servants, not masters, of economy.” — George Monbiot  theguardian.com

Money, everywhere and always, has been created out of thin air, and simply printed out as fancy paper notes. Anyone can do it. It is the best job ever. Private commercial banks create the money they lend just as public banks do — out of thin air. The difference is simply that a publicly-owned bank returns the profits to the government and the People of the country, while a privately-owned bank siphons the principal plus interest into its capital account, to be re-loaned at further interest, progressively drawing money out of the productive economy.
Have you ever wondered how private commercial banks can afford to pay out all those multi-million dollar year-end bonuses before Christmas? In the US, Pacific Investment Management paid its former chief investment officer, Bill Gross, a bonus of about $290 million. Last year Canada’s big banks gave out $12.2 Billion in bonuses, 13 percent more than a year before. No austerity in the banking sector in Canada! Where do those more-than-generous bonuses come from? From the usury the People of Canada pay to the greedy private banks that are to-big-to-jail. And how was your Christmas last year? If you can’t join them, beat them at their own game —establish a public bank in Kitchener.
Former Chicago Mayoral candidate, and urban planner, Amara Enyia J.D. is a supporter of municipal public banks. The principles Dr. Amara Enyia outlines would also work for a state-owned public bank:
“Right now we are in debt to other financial entities. I think when I last checked it was about $900 million. So the concept of a public bank is the notion of the bank as a public utility, a bank that works for the interests of the city of Chicago. Its allegiance is to the taxpayers. For example, extending lines of credit to small businesses, to homeowners who want to get loans for homes, and repairs on their buildings if you’re a landlord. These are the sorts of things that it’s very difficult to get private financing from traditional banking institutions. The other benefit is infrastructure—having the money to execute infrastructure projects, such as our streets, our sewage systems, all those sorts of projects at low interest rates. Right now, the interest rates are sky high and, with that interest, the city never sees any of those dollars. We’re just paying it out to these other financial entities, so imagine if that interest is actually recirculating back into our economy. It reduces the cost of these projects, but it also means that our money is recirculating back, which is in the interest of the public, the taxpayers. This is something that has worked in North Dakota. They’ve found that the Bank of North Dakota is actually outperforming all of the Wall Street banks. It is something that has been done in Europe, so it exists and the model is there, it’s just a matter of pushing this idea for the city of Chicago.”

Victor Hugo said: “Nothing is more powerful than an idea whose time has come.”

That time is now.
Considering all of the above, who would like to say “No” to the idea of establishing the Mackenzie King Regional Public Bank of Kitchener, and why?
Please, let us know! Thank you.
B. A. Rosenberg

Outrage boils over as B.C. government plans to sell groundwater for $2.25 per million litres

http://www.theprovince.com/news/Outrage+boils+over+government+plans+sell+groundwater+million+litres/10865416/story.html
More than 82,000 people have signed a petition against the government’s plans to sell B.C.’s water for $2.25 per million litres.
“It is outrageous,” says the online petition from SumOfUs.org, that corporations can buy water “for next to nothing.”
B.C.’s Water Sustainability Act (WSA), which comes into effect next January and replaces the province’s century-old water legislation, has been heralded as a major step forward. But politicians and experts are raising doubts over whether the newly announced water fees may be too low to cover the cost of the program, asking if the act simply won’t be implemented properly, or if taxpayers could end up picking up the bill.
Last month, the government unveiled the new water pricing structure, which will include, for the first time in B.C.’s history, groundwater being regulated and subject to fees and rentals.
Critics said that, while it’s a step in the right direction, the prices are still not close to capturing the resource’s value.
Under the new regime, most residential water users won’t see a big difference. Households with wells are exempt from fees, and homes supplied by municipal water systems may pay $1 or $2 more per year, according to the ministry.
But water rates for industrial users, which are a fraction of what some provinces charge, are “like a giveaway” to corporations, critics say.
NDP environment critic Spencer Chandra Herbert said the new legislation is “promising,” but questioned whether it would actually live up to its promise, or just remain “nice words on paper.”
“I don’t think the water’s being properly valued in order to properly protect it,” he said, adding effective water management involves “boots on the ground” to enforce the act, and “policy people” to make decisions.
“A lot of business groups, community groups, farmers — they want to see better protection for their water. I’m just worried we’re not going to get it.”
When Chandra Herbert raised the issue last month in the legislature, Environment Minister Mary Polak replied that British Columbians are “quite proud” that B.C. “has never engaged in the selling of water as a commodity.”
Polak said: “We don’t sell water. We charge administration fees for the management of that resource.”
A Ministry of Environment spokesman said the new fees and rentals have been set to cover the cost of administering the new WSA, estimated at $8 million per year.
In the legislature, Polak pointed to the example of Nestlé, Canada’s largest bottled-water producer, which operates a plant in Hope and, she said, will be “charged at the highest industrial rate.”
Under the old Water Act, Nestlé, like other groundwater users, didn’t need to pay the government anything for water withdrawals. But under the WSA, Nestlé will start paying for the hundreds of millions of litres of groundwater they withdraw, bottle and sell. That rate of $2.25 per million litres — the highest industrial rate in the new price structure — means Nestlé will pay the government $596.25 a year for 265 million litres.
Under the WSA, Nestlé and other groundwater users also will begin paying permit fees. A Nestlé executive said he expects the annual fee for water-bottling companies to be between $1,000 and $10,000.
The government’s review of water pricing is a “once-in-a-generation opportunity,” said Oliver Brandes from the University of Victoria’s POLIS Project. But there’s still “significant uncertainty,” he said, about whether the new system will provide sufficient resources to implement the act.
The WSA, he said, “has the potential to be revolutionary, but only if it’s fully — key word, fully — implemented, which requires dollars.”
Someone needs to pay that bill, Brandes said, whether it’s B.C. taxpayers or water users. And linking that cost recovery to the large-scale industrial users, he said, may be not only more ecologically and financially sustainable, but more fair as well.
If the new fees fail to cover the cost of the program, that could effectively mean industries enjoy cheap water subsidized by taxpayers, said David Zetland, a professor of economics and a water pricing expert.
“And if the taxpayer’s subsidizing it, that’s a scandal,” said Zetland, who previously taught at SFU.
The government expects that won’t happen, but Zetland suspects, with the current rates, “taxpayers are going to be on the hook.”
John Challinor, Nestlé Waters Canada’s director of corporate affairs, said: “All monies collected should be used solely to support the management and enforcement of the regulation. This program should not be subsidized by taxpayers who don’t draw groundwater.”
The program should be “self-funded,” Challinor said, with pricing “based on a full cost recovery model” to cover mapping of watersheds, audits, management and enforcement.
“We have always agreed to pay our fair share for groundwater. But, we also believe that all commercial, municipal and domestic groundwater users should pay their fair share.”