Saturday, January 30, 2010

White House asks Justice Department to look for other places to hold 9/11 terror trial

Alleged 9/11 mastermind Khalid Sheikh Mohammed after his arrest in March 2003.
Alleged 9/11 mastermind Khalid Sheikh Mohammed after his arrest in March 2003.

The White House ordered the Justice Department Thursday night to consider other places to try the 9/11 terror suspects after a wave of opposition to holding the trial in lower Manhattan.

The dramatic turnabout came hours after Mayor Bloomberg said he would "prefer that they did it elsewhere" and then spoke to Attorney General Eric Holder.

"It would be an inconvenience at the least, and probably that's too mild a word for people that live in the neighborhood and businesses in the neighborhood," Bloomberg told reporters.

"There are places that would be less expensive for the taxpayers and less disruptive for New York City."

State and city leaders have increasingly railed against a plan to try Khalid Shaikh Mohammed in Manhattan federal court since Holder proposed it last month.

Sen. Chuck Schumer said he was "pleased" that the administration is reconsidering the location of the trial.

Earlier in the day, Schumer spoke "with high-level members of the administration and urged them to find alternatives," said the senator's spokesman, Josh Vlasto.

The order to consider new venues does not change the White House's position that Mohammed should be tried in civilian court.

"President Obama is still committed to trying Mohammed and four other terrorist detainees in federal court," spokesman Bill Burton said Thursday.

"He agrees with the attorney general's opinion that . . . he and others can be litigated successfully and securely in the United States of America, just like others have," Burton said.

Burton referred questions about the location debate to the Justice Department. While not commenting publicly, a department official disputed the characterization that the White House ordered the possible move.

But another insider told the Daily News that Justice officials have been caught off guard by the fiery opposition in New York.

"They're in a tizzy at Justice over Bloomberg," a federal law enforcement official said. "It's like a half-baked soufflé - the plan is collapsing."

Julie Menin, the chairwoman of Community Board 1 who helped rally opposition to the plan, called the shift "a step in the right direction."

"I'm thrilled the White House is reconsidering," Menin said. "The trial has to be moved out of New York City."

Meanwhile, a source told The News that Police Commissioner Raymond Kelly was the driving force behind the push by Manhattan business leaders to change the mayor's mind on the trial.

Kelly made an "extremely powerful" speech to a roomful of 150 prominent business leaders about how disruptive and costly the trial would be for lower Manhattan at an annual police charity event on Jan. 13, the source said.

"What turned this around was when Ray made a presentation to the Police Foundation," the source said. "Everyone went from thinking, 'Justice will be served' to thinking 'We are screwed.' "

What followed was a barrage of complaints to the mayor from some of New York's most powerful tycoons - part of a tide of pressure that led Bloomberg to turn against hosting the trial.

Estimates put the cost of a multiyear terror trial in lower Manhattan at about $200 million a year. Leaders have suggested other venues for the trial, such as the Military Academy at West Point or Stewart Air National Guard Base in upstate Newburgh.

The federal government has said they would reimburse the city for the costs, most of which cover overtime for increased security, but they won't reimburse business owners for lost revenue during the chaos, said Steven Spinola, president of the heavyweight business group Real Estate Board of New York.

"Is the federal government going to give the city $1 billion plus the cost of propping up businesses? I don't think so," Spinola said.

"The mayor clearly has been thinking about this. The tide is turning," he said.

With Kenneth Lovett, James Gordon Meek and Rocco Parascandola

ManBearPig Attacked by Science!

Today I’d like to more thoroughly address specific planks of Anthropogenic Global Warming Theory (AGW) that I think deserve further scrutiny. Over the past year AGW rhetoric has reached deafening levels, and advocates have successfully framed the hypothesis as unassailable. Propagandists have yolked AGW with “wise stewardship” and today it’s common for skeptics of AGW to be derided as ignorant anti-environmentalists. But I don’t things are nearly so simple.

Unfortunately, once people become emotionally invested in a position, it can be very difficult to provoke them into changing course. Liberals and progressives hailed the election of Obama as the most wondermous thing since sliced-bread. A year into his presidency, with a battlefield full of broken promises behind him and the insinuation of institutionalized corruption and illegal forced detentions stretching into the foreseeable future, many of those same liberals and progressives have fallen into an exasperated, listless complacency. They became emotionally invested in the “hope” engendered by Obama, and when the reality failed to live up to the myth, they were forced into cognitive dissonance, apathy, or synthesis. If you meet someone who still supports Obama, dig a little and you’ll find the cognitive dissonance – and, I would argue, the same could be said of supporters of AGW.

To get us started, I think we should rehash the essential assumptions of AGW:

• As atmospheric levels of C02 increase, Earth’s median temperature increases.

• As Earth’s median temperature increases, atmospheric imbalances precipitate increases in the frequency and strength of weather events (e.g., hurricanes, tornadoes, droughts).

• Humans are directly exacerbating this process through the burning of fossil fuels and any activity that yields C02 as a byproduct.

• Increased median temperatures are melting the polar ice caps and causing glaciers to recede or vanish.

Since AGW has the pleasant benefit of being a bonafide scientific theory, it suggests falsifiable claims. If these claims can be demonstrated invalid, the theory is in need of reconsideration. On the other hand, if emotional investment and cognitive dissonance are high enough, no amount of contradictory data will matter. Young Earth Creationists make a fine example of this psychopathology. In spite of overwhelming tangible evidence that their theory is invalid, they fall back on dogma or the Bible – and no amount of science will provoke them into reconsidering their position. Thankfully, AGW is far easier to in/validate than dogma/the Bible, because it makes so many suppositions that are easily testable.

Let’s begin with the most crucial component of AGW – C02. Here’s a graph of historical global C02 levels and temperatures. According to their analysis: “Current climate levels of both C02 and global temperatures are relatively low versus past periods. Throughout time, C02 and temperatures have been radically different and have gone in different directions. As this graph reveals, there is little, if any correlation, between an increase of C02 and a resulting increase in temperatures.”

If we realize that C02’s correlation with global temperature is not a given, the entire edifice of AGW begins to crumble. Therefore, it’s difficult to get adherents of AGW to accept the implications of this data. Again and again they’ll fall back on the assumption that the correlation between C02 and global temperatures is incontrovertible, but they must avoid an ever-expanding amount of dissonant data:

Professor Richard Lindzen of MIT’s peer reviewed work states “we now know that the effect of CO2 on temperature is small, we know why it is small, and we know that it is having very little effect on the climate.”

The global surface temperature record, which we update and publish every month, has shown no statistically-significant “global warming” for almost 15 years. Statistically-significant global cooling has now persisted for very nearly eight years. Even a strong el Nino – expected in the coming months – will be unlikely to reverse the cooling trend. More significantly, the ARGO bathythermographs deployed throughout the world’s oceans since 2003 show that the top 400 fathoms of the oceans, where it is agreed between all parties that at least 80% of all heat caused by manmade “global warming” must accumulate, have been cooling over the past six years. That now prolonged ocean cooling is fatal to the “official” theory that “global warming” will happen on anything other than a minute scale. – (Science & Public Policy Institute: Monthly CO2 Report: July 2009)

“Just how much of the “Greenhouse Effect” is caused by human activity?

It is about 0.28%, if water vapor is taken into account– about 5.53%, if not.

This point is so crucial to the debate over global warming that how water vapor is or isn’t factored into an analysis of Earth’s greenhouse gases makes the difference between describing a significant human contribution to the greenhouse effect, or a negligible one.” – (Geocraft)

(28/01/10) ETA:

Despite the apparent bias of many climate researchers, they do have one thing right; carbon levels have risen notably over the twentieth century from about 300 ppm to 375 ppm. While still far from the estimated levels of around 3,000 ppm during the time of the dinosaurs (appr. 150 MYA), the rising levels do mark a legitimate trend. However, there is increasing evidence that the rising carbon, contrary to alarmist reports is actually having remarkably little effect on global temperatures.

A new study authored by Susan Solomon, lead author of the study and a researcher at the National Oceanic and Atmospheric Administration in Boulder, Colo. could explain why atmospheric carbon is not contributing to warming significantly. According to the study, as carbon levels have risen, the cold air at high altitudes over the tropics has actually grown colder. The lower temperatures at this “coldest point” have caused global water vapor levels to drop, even as carbon levels rise.

Water vapor helps trap heat, and is a far the strongest of the major greenhouse gases, contributing 36–72 percent of the greenhouse effect. However more atmospheric carbon has actually decreased water vapor levels. Thus rather than a “doomsday” cycle of runaway warming, Mother Earth appears surprisingly tolerant of carbon, decreasing atmospheric levels of water vapor — a more effective greenhouse gas — to compensate. – (Daily Tech)

Next, let’s further consider the hypothetical tangential effects of AGW – e.g., rising global temperatures melt icecaps, etc.:

Climatologists Baffled by Global Warming Time-Out: “Global warming appears to have stalled. Climatologists are puzzled as to why average global temperatures have stopped rising over the last 10 years. Some attribute the trend to a lack of sunspots, while others explain it through ocean currents.”

‘AGW – I refute it thus!’: Central England Temperatures 1659 – 2009: “Summary: Unprecedented warming did not occur in central England during the first decade of the 21st century, nor during the last decade of the 20th century. As the CET dataset is considered a decent proxy for Northern Hemisphere temperatures, and since global temperature trends follow a similar pattern to Northern Hemisphere temps, then the same conclusion about recent warming can potentially be inferred globally. Based on the CET dataset, the global warming scare has been totally blown out of proportion by those who can benefit from the fear.”

50 Years of Cooling Predicted: “‘My findings do not agree with the climate models that conventionally thought that greenhouse gases, mainly CO2, are the major culprits for the global warming seen in the late 20th century,’ Lu said. ‘Instead, the observed data show that CFCs conspiring with cosmic rays most likely caused both the Antarctic ozone hole and global warming….’

In his research, Lu discovers that while there was global warming from 1950 to 2000, there has been global cooling since 2002. The cooling trend will continue for the next 50 years, according to his new research observations.”

A comparison of GISS data for the last 111 years show US cities getting warmer but rural sites are not increasing in temperature at all. Urban Heat Islands may be the only areas warming.

Rise of sea levels is ‘the greatest lie ever told’:

If there is one scientist who knows more about sea levels than anyone else in the world it is the Swedish geologist and physicist Nils-Axel Mörner, formerly chairman of the INQUA International Commission on Sea Level Change. And the uncompromising verdict of Dr Mörner, who for 35 years has been using every known scientific method to study sea levels all over the globe, is that all this talk about the sea rising is nothing but a colossal scare story.

Despite fluctuations down as well as up, “the sea is not rising,” he says. “It hasn’t risen in 50 years.” If there is any rise this century it will “not be more than 10cm (four inches), with an uncertainty of plus or minus 10cm”. And quite apart from examining the hard evidence, he says, the elementary laws of physics (latent heat needed to melt ice) tell us that the apocalypse conjured up by Al Gore and Co could not possibly come about.

The reason why Dr Mörner, formerly a Stockholm professor, is so certain that these claims about sea level rise are 100 per cent wrong is that they are all based on computer model predictions, whereas his findings are based on “going into the field to observe what is actually happening in the real world”. – (

Since the early Holocene, according to the findings of the six scientists, sea-ice cover in the eastern Chuckchi Sea appears to have exhibited a general decreasing trend, in contrast to the eastern Arctic, where sea-ice cover was substantially reduced during the early to mid-Holocene and has increased over the last 3000 years. Superimposed on both of these long-term changes, however, are what they describe as “millennial-scale variations that appear to be quasi-cyclic.” And they write that “it is important to note that the amplitude of these millennial-scale changes in sea-surface conditions far exceed [our italics] those observed at the end of the 20th century.”

Since the change in sea-ice cover observed at the end of the 20th century (which climate alarmists claim to be unnatural) was far exceeded by changes observed multiple times over the past several thousand years of relatively stable atmospheric CO2 concentrations (when values never strayed much below 250 ppm or much above 275 ppm), there is no compelling reason to believe that the increase in the air’s CO2 content that has occurred since the start of the Industrial Revolution has had anything at all to do with the declining sea-ice cover of the recent past; for at a current concentration of 385 ppm, the recent rise in the air’s CO2 content should have led to a decrease in sea-ice cover that far exceeds what has occurred multiple times in the past without any significant change in CO2. – (C02

See also:

The Global Warming Scandal Heats Up: “The IPCC has been forced to admit that the claim made was actually taken from an article published in 1999. The article was based around a telephone interview with an Indian scientist who has admitted that he was working from pure speculation and his claims were not backed by research.”

The Dam is Cracking: “[The claims of Himalayan glacial melting] turned out to have no basis in scientific fact, even though everything the IPCC produces is meant to be rigorously peer-reviewed, but simply an error recycled by the WWF, which the IPCC swallowed whole.

The truth, as seen by India’s leading expert in glaciers, is that “Himalayan glaciers have not in anyway exhibited, especially in recent years, an abnormal annual retreat.” …

Then at the weekend another howler was exposed. The IPCC 2007 report claimed that global warming was leading to an increase in extreme weather, such as hurricanes and floods. Like its claims about the glaciers, this was also based on an unpublished report which had not been subject to scientific scrutiny — indeed several experts warned the IPCC not to rely on it.”

Arctic Sea Ice Since 2007: “According to the World Meteorological Organization, Arctic sea ice has increased by 19 percent since its minimum in 2007, though they don’t make it very easy to see this in the way that they report the data.”

Now let’s consider some of the agents and institutions that are strong advocates of AGW:

Howard C. Hayden, emeritus professor of physics from the University of Connecticut, told a Pueblo West audience that he was prompted to speak out after a visit to New York where he learned that scaremongering billboards about the long-term effects of global warming were being purchased at a cost of $700,000 a month.

“Someone is willing to spend a huge amount of money to scare us about global warming,” Hayden said. “Big money is behind the global-warming propaganda.”

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Lawrence Solomon: Wikipedia’s Climate Doctor:

Connolley took control of all things climate in the most used information source the world has ever known – Wikipedia. Starting in February 2003, just when opposition to the claims of the band members were beginning to gel, Connolley set to work on the Wikipedia site. He rewrote Wikipedia’s articles on global warming, on the greenhouse effect, on the instrumental temperature record, on the urban heat island, on climate models, on global cooling. On Feb. 14, he began to erase the Little Ice Age; on Aug.11, the Medieval Warm Period. In October, he turned his attention to the hockey stick graph. He rewrote articles on the politics of global warming and on the scientists who were skeptical of the band. Richard Lindzen and Fred Singer, two of the world’s most distinguished climate scientists, were among his early targets, followed by others that the band especially hated, such as Willie Soon and Sallie Baliunas of the Harvard-Smithsonian Center for Astrophysics, authorities on the Medieval Warm Period.

All told, Connolley created or rewrote 5,428 unique Wikipedia articles. His control over Wikipedia was greater still, however, through the role he obtained at Wikipedia as a website administrator, which allowed him to act with virtual impunity. When Connolley didn’t like the subject of a certain article, he removed it — more than 500 articles of various descriptions disappeared at his hand. When he disapproved of the arguments that others were making, he often had them barred — over 2,000 Wikipedia contributors who ran afoul of him found themselves blocked from making further contributions. Acolytes whose writing conformed to Connolley’s global warming views, in contrast, were rewarded with Wikipedia’s blessings. In these ways, Connolley turned Wikipedia into the missionary wing of the global warming movement.” – (National Post)

The ‘ClimateGate’ scandal that broke a few months ago warrants some elaboration, too. For previous posts on this topic, see:

Using ClimateGate to Reason with ManBearPig
ClimateGate Crashes ManBearPig’s Party
ManBearPig Meets the Vikings
ManBearPig on Life Support?

That foundation established, let’s take a closer look at who was involved with ClimateGate:

For a thorough, email-by-email elaboration of exactly what the ‘big deal’ is, see here:

Climategate publicly began on November 19, 2009, when a whistle-blower leaked thousands of emails and documents central to a Freedom of Information request placed with the Climatic Research Unit of the University of East Anglia in the United Kingdom. This institution had played a central role in the “climate change” debate: its scientists, together with their international colleagues, quite literally put the “warming” into Global Warming: they were responsible for analyzing and collating the various measurements of temperature from around the globe and going back into the depths of time, that collectively underpinned the entire scientific argument that mankind’s liberation of “greenhouse” gases—such as carbon dioxide—was leading to a relentless, unprecedented, and ultimately catastrophic warming of the entire planet.

The key phrase here, from a scientific point of view, is that it is “unprecedented” warming. There is absolutely no doubt that mankind has liberated huge quantities of carbon dioxide into the atmosphere over the past two centuries. But mankind did not “create” this carbon dioxide out of nothing. It was released by the burning of “fossil fuels”, created by the Earth over millions of years from the remains of plants and animals (who themselves ultimately obtained their nutrition from those plants). So where did those plants get their energy and carbon dioxide from? They absorbed the radiant energy of the Sun, and breathed in carbon dioxide from the atmosphere, as plants continue to do today. In other words, when we burn fossil fuels, we are utilizing a small part of the solar energy that had been collected and stored by plants over millions of years, and in the process we are liberating into the atmosphere the carbon dioxide that those plants had absorbed from the atmosphere in the first place.

This may sound like a fairly benign sort of natural cycle, until you realize that a couple of hundred years is a mere blink of an eye compared to the millions of years it took for the planet to build up those resources. It is right for scientists to worry about whether that massive and almost instantaneous “kick” to the planet may throw the equilibrium of the biota into complete chaos. It is a valid question, of ultimate global importance—one that most people would have thought would have demanded the most careful, exacting, and rigorous scientific analyses that mankind could muster.

Climategate has shattered that myth. It gives us a peephole into the work of the scientists investigating possibly the most important issue ever to face mankind. Instead of seeing large collaborations of meticulous, careful, critical scientists, we instead see a small team of incompetent cowboys, abusing almost every aspect of the framework of science to build a fortress around their “old boys’ club”, to prevent real scientists from seeing the shambles of their “research”.

The Proof Behind the CRU ClimateGate Debacle: Because Computers Do Lie When Humans Tell Them Too: “As you can see, (potentially) valid temperature station readings were taken and skewed to fabricate the results the “scientists” at the CRU wanted to believe, not what actually occurred.”

Unearthed Files Include “Rules” for Mass Mind Control Campaign: “The intruded central computer was not only filled to the brim with obvious and attempted ostracizing of scientists who don’t blindly follow the leader, the files also reveal that the folks of the IPCC made use or considered making use of a disinformation campaign through a ‘communication agency’ called Futerra.

The agency describes itself as ‘the sustainability communications agency’ and serves such global players as Shell, Microsoft, BBC, the UN Environment Programme, the UK government and the list goes on. The co-founder of Futerra, Ed Gillespie explains: ‘For brands to succeed in this new world order, they will have to become eco, ethical and wellness champions.’

The document included within the climategate treasure-chest is called ‘Rules of the Game’ and shows deliberate deception on the part of this agency to ensure that the debate would indeed be perceived as being settled. When facts do not convince, they reasoned, let us appeal to emotions in order to get the job done.”

Climategate goes SERIAL: now the Russians confirm that UK climate scientists manipulated data to exaggerate global warming: “Climategate has already affected Russia. On Tuesday, the Moscow-based Institute of Economic Analysis (IEA) issued a report claiming that the Hadley Center for Climate Change based at the headquarters of the British Meteorological Office in Exeter (Devon, England) had probably tampered with Russian-climate data.

The IEA believes that Russian meteorological-station data did not substantiate the anthropogenic global-warming theory. Analysts say Russian meteorological stations cover most of the country’s territory, and that the Hadley Center had used data submitted by only 25% of such stations in its reports. Over 40% of Russian territory was not included in global-temperature calculations for some other reasons, rather than the lack of meteorological stations and observations.”

ClimateGate Expanding, Including Russian Data and Another Research Center: “Well now some Russian climate officials have come forward stating that the data they handed over to the Hadley Centre in England has been cherry-picked, leaving out as much as 40% of the cooler temperature readings and choosing the hottest readings to make it appear things were warmer than they actually are (regardless of whether the temperature is human-induced or natural).”

Scientists using selective temperature data, sceptics say:

Two American researchers allege that U.S. government scientists have skewed global temperature trends by ignoring readings from thousands of local weather stations around the world, particularly those in colder altitudes and more northerly latitudes, such as Canada.

In the 1970s, nearly 600 Canadian weather stations fed surface temperature readings into a global database assembled by the U.S. National Oceanic and Atmospheric Administration (NOAA). Today, NOAA only collects data from 35 stations across Canada.

Worse, only one station — at Eureka on Ellesmere Island — is now used by NOAA as a temperature gauge for all Canadian territory above the Arctic Circle.

The Canadian government, meanwhile, operates 1,400 surface weather stations across the country, and more than 100 above the Arctic Circle, according to Environment Canada. – (

The ClimateGate emails were highly damning, and have led to Phil Jones’ (one of the researchers at the centre of the scandal) resignation and an investigation into Michael Mann’s ’scholarship’. Furthermore, the UN is also ‘investigating’ the ’scholarship’ underlying the scandal, but if something as incontrovertible as the Goldstone Report can get whitewashed, I have little hope for a meaningful or just analysis in a scandal of this magnitude. In theory, science is self-correcting; but in practice it’s “defend your thesis at all costs”.

Nevertheless, each of our original four suppositions are demonstrably ambiguous – if not outright invalid. Therefore, science – and empiricism – invalidates AGW.

Humanity has irrevocably altered – blighted? – the Earth, but C02 levels are far less relevant than other forms of industrial pollution: mercury-seeping lightbulbs, dioxin pollution, gene drift, cell phone-induced genetic damage, and all manner of other harmful and silly endeavours pose greater unambiguous threats to humanity than C02. Therefore, if you really want to help clean up the Earth, leave the AGW rhetoric in the dustbin and let’s get on with disempowering the hegemons.

French court acquits Dominique de Villepin of slander and forgery

Former prime minister cleared of charges related to Clearstream smear campaign against President Nicolas Sarkozy

Former French prime minister Dominique de Villepin arrives at court for the verdict in his trial

Former French prime minister Dominique de Villepin arrives at court for the verdict in his trial in relation to the 'Clearstream' affair. Photograph: Boris Horvat/AFP/Getty Images

Nicolas Sarkozy was left disappointed and humiliated today after his loathed rival, the former French prime minister Dominique de Villepin, was cleared of all wrongdoing in an alleged smear campaign against the president.

In a dramatic triumph for the debonair, poetry-writing politician, who had never ceased to claim he was in court merely at the whim of a leader who detested him, De Villepin was cleared of all charges levied during the so-called Clearstream affair. Standing beneath the arches of the ­Palais de Justice before a scrum of journalists and applauding supporters, De Villepin walked free from the court with a smile on his permanently tanned face, declaring his innocence had been recognised after years of "rumour and suspicion".

"I salute the courage of the court, which has allowed justice and law to triumph over politics," he said, with a flourish of the hallmark rhetoric which earned him global renown as France's foreign minister in the runup to the Iraq war.

"I am proud to be the citizen of a country, France, where the spirit of independence remains alive," he said, adding: "I harbour no resentment, no grudge. I want to turn the page."

Sarkozy, the key plaintiff who had reportedly vowed to hang his rival "by a butcher's hook", issued a terse statement "noting the severity of certain findings" concerning de Villepin. He added that he would not be appealing – a needless point given it is the role of the public prosecutor, and not him, to do so.

After five years of investigation and a trial which heard 112 hours of evidence, De Villepin, 56, was cleared of any knowing involvement in an elaborate scam which had tried falsely to accuse Sarkozy and others of stashing covert kickbacks in secret accounts in the Luxembourg bank Clearstream.

Prosecutors had requested he face an 18-month suspended prison sentence as well as a fine of €45,000 (£39,000), but in the verdicts read out from a 326-page ruling it was two other men in the dock who shouldered responsibility.

Jean-Louis Gergorin, a former executive of defence aviation group EADS, was ordered to serve three years in prison – including 21 months suspended – and pay a €40,000 fine.

The court said he was the "brains" behind the scheme and the anonymous figure who in 2004 sent an investigative judge a copy of the forged listings. Gergorin, 63, said he would appeal.

Imad Lahoud, a former minor intelligence source who now teaches maths in a Parisian secondary school, was sentenced to 18 months in jail for forging the listings. Management consultant Florian Bourges was sentenced to four months in prison, while the journalist who broke the initial story based on the faked listings, Denis Robert, was cleared of all involvement.

For Sarkozy, who turned 55 today, the verdict is a huge blow that risks vindicating De Villepin's claims that the French president had brought the trial purely in order to take down a rival. "I thought you were coming to wish me a happy birthday," he joked when journalists spoke to him this morning.

For the newly exonerated former prime minister, the ruling clears the path for a political revival after two and a half years in the wilderness. It is the worst-kept secret in Paris that the urbane writer of Napoleon history texts and protégé of Jacques Chirac has his eye on the 2012 presidential elections.

The two men's vicious battle to become the leader of the post-Chirac French right split the UMP down the middle and, though only a handful of MPs in his party now openly consider themselves part of the De Villepin clan, observers say the man who calls Sarkozy "the dwarf" could yet win round those disillusioned with the president's policies.

Today, in his statement outside the court, De Villepin said he wanted to "turn to the future to serve the French people".

It will now be up to his recently created Gaullist political organisation, Club Villepin, to get behind him in a bid to enable him to do so. Supporters want to see the group, run by Brigitte Girardin, a former minister from the Chirac era, be transformed into a political party which could then provide an official platform for Villepin to present himself as an ­"alternative" rightwing challenger to Sarkozy.

The Elysée has been quick to pour scorn on such an idea, and many observers argue that despite the boost given to him by today's verdict, de Villepin has too much to do – both in terms of reputation and resources – to make it a real possibility.

"Villepin has no party, no money, practically no MPs. No one will follow him," Franck Louvrier, Sarkozy's media adviser, told Le Monde.

How is Decimating Education Not a "Systemic Crisis"?

The San Francisco Chronicle is reporting that San Francisco's school Superintendent Carlos Garcia is having to make the tough decision to cut $56m in school funding to bridge a $113m budget shortfall. The paper quotes Superintendent Carlos Garcia describing the cuts as "horrible and deplorable" that rival those experienced during the Great Depression.

His plan, presented to the school board Tuesday night, would eliminate up to 400 district positions, including 100 teachers resulting from an increase in K-3 class size, from 22 students to 25. Garcia also called for decimating summer school, teacher training and other programs; shrinking paychecks across the board through unpaid furloughs; cutting busing, especially for high school students; cuts to school programs for under served students; and cuts to STAR/Dream School funding for struggling schools.

"I absolutely take no pride in what I'm going to share with you," he said earlier in the day. "There are things in here that go against my beliefs." Art, music, libraries, physical education and High School Exit Exam help would be among the many things to be affected along with the district administrators, teachers or other staff members who run those programs.

The district faces the huge shortfall because of state cuts to education over the past few years combined with the state's decision not to provide cost-of-living increases last year, this year and probably even next year based on the governor's proposed budget.

Clearly GOD is on Lloyd Blankefein's side and NOT with America's children. Bankers after all are "god's chosen people". Why else would they get $145 BILLION in bonuses, while school teachers get laid off because a district has a $56 million shortfall. Or could it be that the teachers and students unlike our bankers are not "America's Best and Brightest" and therefore undeserving of a bailout?

Bernanke and Timmy G have justified the taxpayer funded trillions that flowed to Wall Street to stem a "systemic crisis". Is decimating education not a "systemic crisis" as well? Can America truly compete in a technologically driven global economy, if its slashes education funding to schools and universities? When the nation can find unlimited money to bailout Wall Street, not to mention $1 trillion in annual defense spending to fight purposeless wars, why not for education? How about slashing 10% off defense and providing for our schools?

Folks should note that no governments in India or China are passing such stupid budget decisions. They understand that when faced with a choice between funding unnecessary defense projects or providing for their economic future, they choose the latter.

In any economy CAPITAL is a scarce resource, so it is up to us to deploy it intelligently into the most productive assets, that will provide us with the best return on our investment. Would education for our children not be a better asset to invest in, rather than a war or senseless Wall Street bailouts? Is it not time to start a war AGAINST "cutting education funding"? That would be a just cause worth fighting for.

Marc Faber, On China Bubble

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Keiser Report №12: Markets! Finance! Scandal!

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The Holocaust Industry: All about money? 1/3

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US economy races back to enjoy strongest growth since 2003

The US economy enjoyed its fastest growth in more than six years in the final months of 2009, as a rebuilding of inventories by factories helped offset a weak jobs market.

The US economy grew by 5.7pc in October-December, the quickest pace in more than six years, with housebuilding getting a lift from a tax credit for first-time buyers

The world's biggest economy chalked up annualised growth of 5.7pc in the fourth quarter, beating the expectations of Wall Street analysts, and marking its best performance since 2003.

However, the figures from the Commerce Department in Washington D.C. also showed that the US economy contracted 2.4pc in 2009, its worst performance since just after World War II.

The numbers revealed a sharp slowing of the inventory cutbacks that have been forced on companies by a downturn that began in late 2007. A smaller drop in inventories alone contributed 3.4 percentage points of the growth in the quarter. Inventories declined at a much slower $33.5bn annual pace compared with $139.2bn rate in the third quarter. The second quarter had seen inventories fall at a record $160.2b pace in the second quarter.

Although there hasn't yet been official confirmation that the US is out of recession - that verdict comes later from its National Bureau of Economic Research - the numbers from the Commerce Department show it's growing again.

“Business are now feeling confident enough to deploy a larger portion of the recent strong corporate earnings rebound into new investment spending,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, told Bloomberg.

Despite signs of recovery, there is growing pressure on President Obama to the unemployment rate down from 10pc. The president used his key State of the Union address to Congress on Wednesday to outline measures to help the country's thousands of small businesses and get more people back to work.

The administration will be hoping that consumer spending, which makes up the lion's share of the economy, holds up in the face of longer unemployment queues. Today's figures show consumer spending climbed at a 2pc pace in the fourth quarter, weaker than the 2.8pc seen in the third quarter but still stronger than forecast.

UK banks downgraded by credit rating agency

Standard & Poor's blames move on Britain's weak economic environment and banks' dependence on state support

A Northern Rock bank branch in central London. It is understood nearly all the options to take over Northern Rock are likely to include redundancies

Northern Rock, one of the banks in which the British government has a majority stake. Standard & Poor's said reliance on state support contributed to its move to downgrade the banking industry's rating

Britain's banking industry was downgraded by the international credit rating agency, Standard & Poor's, as a result of the country's "weak economic environment" and the banks' "high" dependence on state support.

In its second major intervention in Britain in the past year, the agency announced that it was demoting Britain's banking industry by one tier to its Group 3 out of 10. Banks in Canada, France and Germany are in the first and second groups.

The agency, which placed Britain on "negative watch" last May, said it had acted in light of Britain's "weak economic environment, the reputational damage we believe has been experienced by the banking industry, and what we see as the high dependence on state-support programs of a significant proportion of the industry". The government has a majority stake in two banks – RBS and Northern Rock.

Nigel Greenwood, S&P's credit analyst, said: "In our opinion, the weak UK economy will continue to hinder the credit profile of the UK banking industry. This reflects the sharp decline in economic output and our expectation that the unwinding of the high level of debt – of the government, households, and certain industrial segments – will weigh heavily on relative economic growth prospects and banks' financial performance.

"In our opinion, the near collapse of a number of financial institutions damaged the reputation of the UK banking system. This led to wide-ranging state support, including significant government stakes in two of the four major banking groups. We note that there is a wide dispersion in credit quality among UK banks and that some banks did not require direct government support."

The intervention by S&P comes less than a year after it announced that Britain could lose its AAA credit rating. In May last year the agency said there was a "one in three" chance that Britain's rating on its sovereign debt might be cut. A lower credit rating pushes up the cost of borrowing.

Mark Hoban, the shadow Treasury minister, said: "This is disappointing but demonstrates the need for reforms to the banking sector so that we don't repeat the mistakes of the last decade. The plans set our in our white paper, From Crisis to Confidence: A Plan for Sound Banking, should help restore the reputation of the UK banking sector."

California Man Pleads Guilty to Filing 250 Tax Returns for Dead People, Claiming $2m in Refunds

From a Department of Justice press release:

Haroon Amin of Upland, Calif., pleaded guilty Monday to conspiracy to defraud the United States ... In December 2008, Amin and Ather Ali of Diamond Bar, Calif., were indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals. Ali is scheduled to begin trial on March 2, 2010. According to the indictment, in 2002 and 2003 Amin and Ali filed at least 250 fraudulent tax returns, falsely stating that the deceased individuals earned wages from which income tax was withheld. These false returns claimed more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali and their co-conspirators, including to various mailboxes opened by Ali using false forms of identification. Most of these refund checks were then delivered overseas to be deposited in bank accounts in Armenia and Pakistan.

Banksters Fight Back: Deficiency Judgments

Remember my repeated warnings about consulting with both a lawyer and CPA before defaulting on your debts - including mortgages - on purpose?

Well, here's why doing so is a good idea:

King is among a rising number of borrowers who are learning that they can be on the hook for years after losing their homes. Amid a crisis that stripped $6.4 trillion, or 28 percent, from the value of U.S. residential real estate since the 2006 peak, lenders are exercising their rights to pursue unpaid mortgage balances. To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors.

In some cases they can seize wages, tap bank account and lay liens.

This is very situational and state-specific.

Oh, and don't think that a short sale protects you from this. It doesn't necessarily, and some banks are slithering snakes in their short sale agreements...

“Banks are being very careful to preserve their rights, either outright in the short sale agreement or by using vague language that leaves that door open,” Hillard said. About 90 percent of people who do a short sale think they are “off the hook.”

Again, let me reiterate:





Secret Banking Cabal Emerges From AIG Shadows

Jan. 29 (Bloomberg) — The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System

Treasury Secretary Timothy Geithner was head of the New York Fed at the time of the AIG moves. He maintained during Wednesday’s hearing that the New York bank had to buy the insurance contracts, known as credit default swaps, to keep AIG from failing, which would have threatened the financial system.

The hearing before the House Committee on Oversight and Government Reform also focused on what many in Congress believe was the New York Fed’s subsequent attempt to cover up buyout details and who benefited.

By pursuing this line of inquiry, the hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve.

This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

Geithner’s Bosses

The New York Fed is one of 12 Federal Reserve Banks that operate under the supervision of the Federal Reserve’s board of governors, chaired by Ben Bernanke. Member-bank presidents are appointed by nine-member boards, who themselves are appointed largely by other bankers.

As Representative Marcy Kaptur told Geithner at the hearing: “A lot of people think that the president of the New York Fed works for the U.S. government. But in fact you work for the private banks that elected you.”

And yet the New York Fed played an integral role in the government’s bailout of banks, often receiving surprisingly free rein to act as it saw fit.

Consider AIG. Let’s take Geithner at his word that a failure to resolve the insurer’s default swaps would have led to financial Armageddon. Given the stakes, you might think Geithner would have coordinated actions with then-Treasury Secretary Henry Paulson. Yet Paulson testified that he wasn’t in the loop.

“I had no involvement at all, in the payment to the counterparties, no involvement whatsoever,” Paulson said.

Bernanke’s Denials

Fed Chairman Bernanke also wasn’t involved. In a written response to questions from Representative Darrell Issa, Bernanke said he “was not directly involved in the negotiations” with AIG’s counterparty banks.

You have to wonder then who really was in charge of our nation’s financial future if AIG posed as grave a threat as Geithner claimed.

Questions about the New York Fed’s accountability grew after Geithner on Nov. 24, 2008, was named by then-President- elect Barack Obama to be Treasury Secretary. Geither said he recused himself from the bank’s day-to-day activities, even though he never actually signed a formal letter of recusal.

That left issues related to disclosures about the deal in the hands of the bank’s lawyers and staff, rather than a top executive. Those staffers didn’t want details of the swaps purchase to become public.

New York Fed staff and outside lawyers from Davis Polk & Wardell edited AIG communications to investors and intervened with the Securities and Exchange Commission to shield details about the buyout transactions, according to a report by Issa.

That the New York Fed, a quasi-governmental body, was able to push around the SEC, an executive-branch agency, deserves a congressional hearing all by itself.

Later, when it became clear information would be disclosed, New York Fed legal group staffer James Bergin e-mailed colleagues saying: “I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals — too many counterparties, too many lawyers and advisors, too many people from AIG — to keep a determined Congress from the information.”

Think of the enormity of that statement. A staffer at a body with little public accountability and that exists to serve bankers is lamenting the inability to keep Congress in the dark.

This belies the culture of secrecy obviously pervasive within the New York Fed. Committee Chairman Edolphus Towns noted during the hearing that the bank initially refused to disclose even the names of other banks that benefited from its actions, arguing this information would somehow harm AIG.

‘Penchant for Secrecy’

“In fact, when the information was finally released, under pressure from Congress, nothing happened,” Towns said. “It had absolutely no effect on AIG’s business or financial condition. But it did have an effect on the credibility of the Federal Reserve, and it called into question the Fed’s penchant for secrecy.”

Now, I’m not saying Congress should be meddling in interest-rate decisions, or micro-managing bank regulation. Nor do I think we should all don tin-foil hats and start ranting about the Trilateral Commission.

Yet when unelected and unaccountable agencies pick banking winners while trying to end-run Congress, even as taxpayers are forced to lend, spend and guarantee about $8 trillion to prop up the financial system, our collective blood should boil.

Is US Bank Breaking the Law?

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The Alex Jones Show 1/2: It's Over For Tim Geithner!!

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They Don't Own Shovels, Crowbars Or Even Gloves!

The ever exploding twin towers of US debt and trade deficits are to be expected from a country that's engaged in two foreign invasions, maintains over 170 military bases overseas, gives trillions of dollars to foreign bankers, yet produces nothing anyone in the world wants or can use.
With corruption, graft, fraud, deception, ignorance, and mismanagement, political regime after political regime has finally collapsed the US economy, and our middle-class along with it, all by the careful design of the International Monetary/Banking Cartel.
Soon, we'll be hearing of the glories of "Recapitalization" from the chattering-class of Cartel mouth-pieces, those who perform on television as talking-heads, that pretend to analyze the day's news.
Long story cut short, Recapitalization is being conducted by those who destroyed our economy, the International Monetary/Banking Cartel, by buying up our nation's natural resources, our water, and our infrastructure, with about 10 cents on a very inflated dollar. We are giving the Cartel the very rope with which to hang us from a tree on property we used to own. Yes, now that the Cartel has bankrupted America, with the help of their many stooges in government, their current governmental underlings are selling off America to the very same Cartel that has bankrupted us all.
This Cartel stratagem is obvious and easy to see, as it has been played out in so many 3rd world countries, like Haiti. The Cartel ensures that national debts become so large, that people in these impoverished countries don't even own shovels, or crowbars, or even gloves with which to dig each other out of rubble caused by earthquakes. Wide spread individual poverty, begins at a national level, when a government goes into such debt to the international bankers that they have no resources to put into their infrastructure of factories, mills, highways, water treatment plants, railroads, harbors, bridges, and anything else that makes national production possible; and these infrastructure facilities fall into disuse and disrepair; then jobs disappear and citizens face poverty, the exact deterioration of our economy that has been going on in America for, at least, the past half century.
According to of the 597,340 bridges in the US, 73,784 are structurally deficient, which the Department of Transportation defines as needing significant maintenance, rehabilitation, repair, or replacement.
Any cursory examination of America reveals we should be re-building infrastructures, rather than destroying foreign ones, and letting our own infrastructure fall into ruin. But due to unilateral wars of aggression, due to the misappropriation of trillions of dollars, and without the will to do what is right for our country, our faux-leaders choose more mounting debt and call it a "stimulus" to our economy, when it's a mere bandage on a shotgun wound that creates more infection.
Riding on the shoulders of Recapitalization is something you'll be hearing more about: Public-Private Partnerships (PPPs). PPPs are technically defined as partnerships between government and business; when in fact, PPPs are a take-over of America's wealth by foreign, private oligarchs.
Already, from USA Today we're told "Roads and bridges built by US taxpayers are starting to be sold off, and so far, foreign-owned companies are doing the buying."
Even Homeland Security tells us that 80 percent of our 3,200 port terminals, nationwide, are now operated by foreign companies and countries.
The Pocahontas Parkway, in Virginia, has been sold to a Cartel front, Transurban, headquarted in Melbourne, Australia, for $611 million.
The Chicago Downtown Parking System has been sold to another Cartel front, Morgan Stanley, a global financial service (sic) firm for $563 million.
The Chicago Skyway has been sold to Macquarie Infrastructure Group/Cintra -still another Cartel front, for $1.8 billion. Macquarie has, also, bought the Indiana Toll Road for $3.8 billion.
The Commonwealth of Pennsylvania is trying to sell the Pennsylvania Turnpike for an estimated $10 billion.
Chicago's Midway Airport is for sale for an estimated $2 to $3 billion.
The New Jersey Turnpike, the Garden Parkway, and the Atlantic City Expressway are for sale for as little as an estimate $10 billion.
And on and on it goes, and will go, until a hand-full of private oligarchs own America's infrastructure, which they'll then only maintain parts of.
Expect to pay heavily to use the Cartel's decaying toll roads, roads we've paid for many times over. Rates at the Cartel's municipal parking garages will steadily increase, until only those in the financial sector will be able to afford them. Taxes will continue to rise as our government continues to borrow ever more money from the International Banking Cartel, ensuring America's indebtedness and poverty for many generations to come.
Candidate Obama, while campaigning for the presidency, repeatedly claimed his budget would cut our national deficit by half by the end of his term. Instead, Obama shattered all spending records for first year presidents. In a narrow sense, Obama is a mere tool of selected oligarchs; in a wider sense, he is a front man for Wall Street. Ultimately, Mr. Obama, his top-level appointees, practically every member of congress, and the entire Supreme Court are all governmental lackeys of the International Monetary/Banking Cartel.

Chinese Banks cut lending for January: First sign of mega depression?

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State of the Republic Address Part 1 of 3

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Foreclosures new hot spots

The new foreclosure plague is tied more to the economy than bad mortgages. Here are 10 cities where defaults grew the fastest in 2009.

Boise, Idaho
Foreclosure rate: One in every 21 homes
Percent increase from 2008: 103%
National rank: 24th
Unemployment rate: 10.1%

Boise's population has more than doubled since 1980, and its economy has diversified over the past half century. Tech industries have come into the mix, and Micron Technology is now the city's largest employer.

As in many Western cities, the real estate market here was quite volatile during the boom. The median home price jumped from about $150,000 during 2003 to $260,000 at its peak in 2006, according to the Wells Fargo-National Association of Home Builders housing opportunity index. Since then prices have dropped more than 32%.

Christine Loucks, an economics professor for Boise State University, attributes the foreclosure runup in town to two main causes: A small speculative bubble that has burst and the economic slowdown.

"With the rapid population increase, there was strong demand for housing," she said, "and that led to buying for speculation."

When prices started to slow down, the speculators pulled out, driving prices down further and trapping some buyers underwater. Many flippers were caught in the downswing and lost their homes.

Job losses also began to mount. Micron laid off 1,500 to 2,000 workers, HP slowed some of its operations, and the financial and construction industry employers also cut jobs.

"Residential construction just stopped," said Loucks.

Add it all up and Boise went through a similar -- though less severe -- cycle as frothier markets in California, Nevada, Florida and Arizona.

The Danger behind the Fed's Exceptional Profits

A few days ago, the Fed announced that it had "earned" a record-high amount of money in 2009. Then it turned $46 billion over to the Treasury. Here we are in the midst of a serious recession, with the unemployment rate high, the housing market still in a slump, and the stock market making only small steps toward recovery. In this climate, the Fed is making profits.

That's impressive, isn't it? Unfortunately, the Fed's huge earnings are a signal that the economy is still in terrible shape and that its condition is worsening.

Let us take a closer look at the Federal Reserve's balance sheets, at least to the extent that they are available to us. One year before reaching their record-high profits, the Fed's assets consisted of nearly $500 billion in government assets. These consisted of Treasury bonds and assets issued by Fannie Mae and Freddie Mac, the two giants of the real-estate market whose solvency is guaranteed by the federal government. Since Fannie and Freddy are currently owned by the state, their assets should be treated as state securities.

During 2009, the Fed was engaged in aggressive interventions in the financial markets; through various operations, it increased the amount of state assets in its possession to $1.8 trillion. The amount of government assets on the Fed's balance sheet more than tripled. With this huge increase in assets held, $46 billion is merely a 2.5 percent return, which was provided directly by the government.

Therefore, the Fed's so-called "profits" are not a sign of the coming of a great revival for economy. They rather mean that a "Keynesian trick" has hid the decline in economic welfare. This trick is often referred to as a "policy mix" — a mixture of fiscal and monetary policies.

Here is how it works. The newly elected President Obama increased the budget deficit to a record high. The Treasuries for that debt are released to the "free market." At the same time, the Fed started its open-market operations, i.e., printing money and buying public debt in order to put it on the balance sheet. Then, when this debt approached maturity, the state paid the Fed for the issued debt (instead of paying to the private investors).

But that is not all. Contrary to the claims of some groups, the Fed is not a private bank: it cannot keep the profits earned from holding public debt. Over 90 percent of the money that the Treasury pays the Fed goes … back to the Treasury. Thus, the modern state receives earnings from printing money while giving a small fee to its financial intermediary.

"From the market point of view the Fed is a bankrupt institution."

Here, in a nutshell, lies the whole mystery of the modern "print on demand" scheme. There are no free lunches, but there are lunches being paid for by somebody else.

Some news agencies claim that the Fed's profits show that taxpayers did not lose money as a result of the massive bailout programs. However, the facts are that Fed earned the money through government securities. When the government does pay the Fed in order to boost its "earnings," the money safely returns to the government.

Thus, the government and the central bank can show profits ad infinitum by endlessly pouring money from the Treasury's account to the Fed's account and vice versa. Or better yet, the Fed can pay the Treasury several times more by printing trillions of US dollars, buying companies on Wall Street, and achieving small dividends.

Thus, the so-called "profits" are not evidence that the US economy is doing well. Far from it, these profits are proof that the printers are working long hours. Moreover, the state took upon itself huge liabilities, which call into question the solvency of the entire American financial system. It makes the hypothesis of a return of high inflation more probable (although this scenario is currently still less likely than further "deflation" of the credit).

We should use this opportunity to touch upon a different problem, the accounting rules for the Federal Reserve. Unlike most financial institutions, the Fed does not comply with the "mark to market" rule, the principle according to which, in case of assets losing their value, the books need to be revalued in order to reflect the market price.

If the securities issued by Fannie and Freddy and bought by the Fed suddenly declined in value by 50 percent, the Fed would not need to book the losses on these assets. This mechanism makes the central bank not only a lender of last resort but also a market creator of last resort.

The question arises, what might happen if the Fed was faced with the need to resell the assets in order to increase interest rates or stop inflation.

Then we may find out that the Fed would not be able to sell these securities at the booked price. To convince the private banks to buy them through open-market operations, it might need to reduce the price. Then the Fed would have no other choice than to record the actual losses. This could even result in the Fed reaching negative equity.

If it came to this, there are two possible scenarios. In the first, the central bank would be recapitalized by the Treasury. This would be an interesting scenario, in which the power to tax would support the power to print, not the other way around. In the other scenario, since nothing precludes the Fed from having negative equity — it's not a private company, traded on the stock market — there would be no consequences. It might well continue its operations without any noticeable difference.

But wouldn't that mean a collapse of the dollar? The value of liabilities would be much higher than the value of assets, while the dollar would not even be covered by state-issued bonds.

In either case, one thing is certain: from the market point of view the Fed is a bankrupt institution. History provides an example of a currency backed by a phony real-estate market: French assignats, which ended up being completely devalued.

The only thing keeping the Fed alive is the protective umbrella of the American state and its legal-tender laws. This is not a parasitic relationship but a symbiotic one. What remains to be seen is how strong this symbiotic bond is and how long it will take to succumb to unavoidable decay.

A Growing Share of Americans' Income Comes From the Government

While most eyes were focused on the better-than-expected gross domestic product data for last year's fourth quarter, this week's report from the Commerce Department's Bureau of Economic Analysis also included details on U.S. personal income.

Along with wages and salaries, dividends and interest income, this category includes personal current transfer receipts, which the BEA defines as "income payments to persons for which no current services are performed and net insurance settlements." That is, government social benefits (and, to a very minor extent, net transfers received from businesses).

As you can see from the following graph, while the relationship between personal income and GDP has not changed all that much over the course of the past six decades, the share of income accounted for by transfer payments has jumped more than 200 percent.


The latest data also confirms that the financial crisis has played a major role in boosting Americans' dependence -- for lack of a better word -- on government largesse, with the run-up over the past two years accounting for around a quarter of the relative increase since 1947.

With an ever-greater share of Americans receiving some sort of financial assistance from the government, the obvious question is how -- or whether -- this shift will affect the political landscape, especially when it comes to making tough choices about social programs, in particular, and public finances, in general.

If and when policymakers decide, for example, that the time is right to rein in spending and cut back on public sector borrowing, will the political will be there to see those efforts through? Or, as cynics might suggest, is a financial crash landing the only real "exit strategy" that is on the table right now?

I guess we'll find out soon enough.


FOREWORD: At certain times, focusing on the big picture is important not just for investment success, but for personal welfare, and even survival. We believe such times are here. It is estimated that 98% of Americans have never held a gold coin in their hands. Yet 100% of Americans regularly handle Federal Reserve Notes. From a contrarian standpoint, the financial message from those two statistics is clear. Even so, gold is much more than money or an investment medium; it stands for liberty and throughout history has facilitated escape and ensured freedom. Never having touched a gold coin is the monetary equivalent to never having breathed fresh air, felt the warmth of sunshine, looked up at the stars or risen from the gutter. Fiat Federal Reserve Notes are becoming nothing more than sewage decomposing in the vast, toxic septic tank of predatory Washington politics, epic Federal Reserve arrogance and error, blatant Wall Street fraud and outright Master Class plunder. Below, we outline America's troubling and compounding predicament, and urge you to think about how to protect yourself from its consequences, both financially and personally.


Stewart Dougherty

Thanks to the endless barrage of feel-good propaganda that daily assaults the American mind, best epitomized a few months ago by the "green shoots," everything's-coming-up-roses propaganda touted by Federal Reserve Chairman Bernanke, the citizens have no idea how disastrous the country's fiscal, monetary and economic problems truly are. Nor do they perceive the rapidly increasing risk of a totalitarian nightmare descending upon the American Republic.

One stark and sobering way to frame the crisis is this: if the United States government were to nationalize (in other words, steal) every penny of private wealth accumulated by America's citizens since the nation's founding 235 years ago, the government would remain totally bankrupt.

According to the Federal Reserve's most recent report on wealth, America's private net worth was $53.4 trillion as of September, 2009. But at the same time, America's debt and unfunded liabilities totaled at least $120,000,000,000,000.00 ($120 trillion), or 225% of the citizens' net worth. Even if the government expropriated every dollar of private wealth in the nation, it would still have a deficit of $66,600,000,000,000 ($66.6 trillion), equal to $214,286.00 for every man, woman and child in America and roughly 500% of GDP. If the government does not directly seize the nation's private wealth, then it will require $389,610 from each and every citizen to balance the country's books. State, county and municipal debts and deficits are additional, already elephantine in many states (e.g., California, Illinois, New Jersey and New York) and growing at an alarming rate nationwide. In addition to the federal government, dozens of states are already bankrupt and sinking deeper into the morass every day.

The government continues to dig a deeper and deeper fiscal grave in which to bury its citizens. This year, the federal deficit will total at least $1,600,000,000,000 ($1.6 trillion), which represents overspending of $4,383,561,600 ($4.38 billion) per day. (The deficit during October and November, 2009, the first two months of Fiscal Year 2010, totaled $296,700,000,000 ($297 billion), or $4,863,934,000 ($4.9 billion) per day, a record.) Using the GAAP accounting method (which is what corporations are required to use because it presents a far more accurate and honest picture of a company's finances than the cash accounting method primarily and misleadingly used by the U.S. government), the nation's fiscal year 2009 deficit was roughly $9,000,000,000,000 ($9 trillion), or $24,700,000,000 ($24.7 billion) per day, as calculated by brilliant and well-respected economist John Williams. ( Fiscal Year 2010's cash- and GAAP-accounting deficits will likely be worse than 2009's, given government bailout and new program spending that is on steroids and psychotic.

Putting Fiscal Year 2009's $9,000,000,000,000 ($9 trillion) deficit another way, 17% of America's private wealth, accumulated over a period of 235 years, was wiped out by just one year's worth of government deficit spending insanity.

Given this, is it any surprise that Treasury Secretary Geithner has announced that the release of the nation's FY 2009 supplemental GAAP financial statements has been delayed? Remember, this is the same Secretary Geithner who bullied people to cover up the sordid details of the AIG, or more accurately, the taxpayer-funded, multi-billion dollar, Santa Claus bailout and bonus bonanza for Goldman Sachs. Do you really think this government, characterized as it is by fiscal and monetary secrecy, lies, chicanery, cronyism and stonewalling, wants the people to know what is actually happening? Obviously, it does not, so it hides from the public the inexcusable facts.

It is estimated that the top 1% of Americans control roughly 40% of the nation's wealth. In other words, 3 million people own $21,400,000,000,000 ($21.4 trillion) in net private assets, while the other 305 million own the remaining $32,000,000,000,000 ($32 trillion). 77,000,000 (77 million) Americans (the lowest 25%) have mean net assets of minus $2,300 ($-2,300) per person; they live from paycheck to paycheck, or on public assistance. The lower 50% of Americans own mean net assets of $27,800 each, about enough to purchase a modest car. Obviously, it would be impossible to retire on such an amount without significant government or other assistance. Meanwhile, the richest 10% of Americans possess mean net assets of $3,976,000 each, or 143 times those of the bottom 50%; the top 2% control assets worth more than 1,500 times those in the bottom 50%. When you combine these facts with Wall Street's typical multi-million dollar annual bonuses, you get an idea of wealth inequality in America. Historically, such extreme inequality has been a well-documented breeding ground for totalitarianism.

If the government decides to expropriate (steal) or commandeer (e.g., force into Treasuries) America's private wealth in order to buy survival time, such a measure will be designed to destroy the common citizens, not the elite. Insiders will be given advance warning about any such plan, and will be able to transfer their money offshore or into financial vehicles immune from harm. Assuming that the elite moves its money to safety, there would then be $120,000,000,000,000 ($120 trillion) in American debt and liabilities supported by only $32,000,000,000,000 ($32 trillion) in private net worth, for a deficit of $88,000,000,000,000 ($88 trillion). In that case, each American would owe $285,714.29 to balance the country's books. (Remember to multiply this amount by every person in your household, including any infant children.)

If the common people suspect that something diabolical was in the works, a portion of the $32 trillion in non-elite wealth could be evacuated as well prior to a government expropriation and/or currency devaluation, resulting in less money for the government to steal. What these statistics mean is that it is absolutely impossible for the government to fund its debt and deficits, even if it steals all of the nation's private wealth. Therefore, the government's only solutions are either formal bankruptcy (outright debt repudiation and the dismantling of bankrupt government programs) or unprecedented American monetary inflation and debt monetization. If the government chooses to inflate its way out of this fiscal catastrophe, the United States dollar will essentially become worthless. You can be absolutely certain that a PhD. in economics, such as Dr. Bernanke, is well aware of these realities, despite what he might say in speeches. For that matter, so are Chinese schoolchildren, who, when patronized by Treasury Secretary Geithner about America's "strong dollar," laughed in his face. One day, perhaps America's school children will receive a real education so that they, too, will know when to laugh at absurd propaganda.

The government has announced that during the fiscal years from 2010 through 2019, it will create an additional $9,000,000,000,000 ($9 trillion) in deficits, an amount that is almost certain to be understated by trillions given the country's current economic trajectory. The government assumes that this vast additional deficit will be funded by others, such as the Chinese, as it is a statistical fact that the United States will be incapable of funding it.

Furthermore, with the budgetary equivalent of a straight face, the Office of Management and Budget reports in its long-term, inter-generational budget projection that the United States government will experience massive, non-stop deficits for the next 70 (SEVENTY) years, requiring the issuance of tens of trillions of dollars of additional debt. The OMB does not project even one year of surplus during the entire seventy year budget period.

These deficits and debts are now so gargantuan that they have become surreal abstractions impossible even for sophisticated financiers to begin to comprehend. The common citizen has absolutely no idea what these numbers mean, or imply for his or her future. The people have been deluded into thinking that America's arrogant, egomaniacal, always-wrong-but-never-in-doubt fiscal witch doctors and charlatans, including Greenspan, Rubin, Summers, Geithner and Ponce de Bernanke, have discovered a Monetary Fountain of Youth that endlessly spits up free money from the center of earth, in a geyser of good will toward the United States. Unfortunately, this delusion is false: there is no Monetary Fountain of Youth, and contrary to the apparent beliefs of the self-deified man-gods in Washington, D.C., the debt and deficits are real, completely out of control, and 100% guaranteed to create catastrophic consequences for the nation and its people.

When government "representatives" deliberately sell into slavery the citizens of a so-called free Republic, they have committed treason against those people. This is exactly what has happened in the United States: the citizens have been sold into debt slavery that they and their descendants can never escape, because the debts piled onto their backs can never, ever be paid. Despite expensive and sophisticated brainwashing campaigns emanating from Washington, claiming that America can "grow" out of its deficits and debt, it is arithmetically impossible for the country to do so. The government's statements that it can dig the nation out of its fiscal hole by digging an even deeper chasm have become parodies and perversions of even totally discredited and morally disgusting Keynesianism.

The people no longer have elected representatives; they have elected traitors.

The enslavement of the American people has been orchestrated by a pernicious Master Class that has taken the United States by the throat. This Master Class is now choking the nation to death as it accelerates its master plan to plunder the people's dwindling remaining assets. The Master Class comprises politicians, the Wall Street money elite, the Federal Reserve, high-end government (including military) officials, government lobbyists and their paymasters, military suppliers and media oligarchs. The interests and mindset of the Master Class are so totally divorced from those of the average American citizen that it is utterly tone deaf and blind to the justifiable rage sweeping the nation. Its guiding ethics of greed, plunder, power, control and violence are so alien to mainstream American culture and thought that the Master Class might as well be an enemy invader from Mars. But the Master Class here, it is real and it is laying waste to America. To the members of the Master Class, the people are not fellow-citizens; they are instruments of labor, servitude and profit. At first, the Master Class viewed the citizens as serfs; now that they have raped and destroyed the national economy, while in the process amassing unprecedented wealth and power for themselves, they see the people as nothing more than slaves.

America's public finances are now so completely dysfunctional and chaotic that something far worse than debt enslavement and monetary implosion, terrible curses unto themselves, looms on the horizon: namely, a Master Class-sponsored American dictatorship.

Throughout history, the type of situation in which America now finds itself has been a fertility factory for tyranny. The odds of an outright overthrow of the people by the Washington and Wall Street Axis, or more broadly, the Master Class are increasing dramatically. The fact that so few people believe an American dictatorship is possible is exactly why it is becoming likely.

Dictatorships have blighted history and ruined lives since the beginning of civilization. In recent times alone, tyrants such as Hitler, Stalin, Lenin, Ceausescu, Amin, Hussein, Mussolini, Tojo, Kim, Pinochet, Milosevic, Tito, Batista, Peron, Pol Pot, Mugabe, Marcos, Somoza, Mengistu, Bokassa, Sese Seko, Franco, Ho Chi Minh, Mao, and Castro have power-sprayed blood onto the screen of time and ravaged mankind with murder, torture and human oppression. A full catalog of history's tyrants would require a book of hundreds of pages. In the past 100 years alone, over 200 million human beings have been annihilated by wars, ethnic cleansings and government assassinations. Just when we think that civilization has been able to rise above tyranny's inhumanity and disgrace, a new dictator appears on the scene to start the process all over again. Every time this happens, fear and submission paralyze the vast majority of the affected masses, leading them to "follow orders" and lick autocracy's blood-stained boots.

History has proven to tyrants that oppression works. In fact, it is easy to control a populace, once you control the money, markets, military (including police), media and minions (the recipients of welfare, social security, free health care, government jobs and the like, who are dependent upon the state and likely to be compliant). This is exactly where the United States is today.

Recent American events paint an ominous picture of a Master Class that is now in total control.

When 90% of the American people vehemently rejected the $700,000,000,000 ($700 billion) TARP bailout plan, the Master Class put it on a fast track and approved it anyway.

When a clear majority of the American people said no to a government takeover of Chrysler and GM, the Master Class poured billions of taxpayer dollars into those corporate sinkholes and took them over anyway.

When the people said no to multi-trillion dollar crony bailouts for the bankers and insurers whose corruption had caused global financial mayhem, the government pledged to those elite insiders more than $13,000,000,000,000 ($13 trillion) of the people's money anyway.

When the people expressed astonishment and anger that Wall Street planned to pay itself record 2009 bonuses, in the midst of America's worst-ever fiscal and financial crisis caused by them, Wall Street stuffed its pockets with taxpayer-supported bonus money anyway.

When the people said no to a proposed $40,000,000,000 ($40 billion) bailout of AIG and its elite trading partners such as Goldman Sachs (an amount that subsequently exploded to $180,000,000,000+ ($180+ billion)), the Master Class went underground, covertly misappropriated taxpayer money and made the payoffs anyway.

When Fannie Mae and Freddie Mac were nationalized at enormous taxpayer expense, the government approved $6,000,000 individual pay packages in 2009 (150 times the average American wage) for the CEOs of both failed companies anyway.

When a clear majority of the people said no to nationalized health care, even after being bombarded by a multi-million dollar, lie-drenched propaganda campaign designed to bamboozle them, the House and Senate passed nationalized health care bills anyway.

When more than seven million American workers lost their jobs and were subsisting on unemployment benefits and food stamps, federal government employees, who now earn DOUBLE what private sector workers earn, were given another round of pay and benefits increases anyway.

When private sector workers' 401Ks and IRA retirement plans plummeted in value due to economic collapse and endemic Wall Street-orchestrated market corruption (including systemic front running, flash trading, naked short selling and other manipulations), government "defined benefit," lifetime-cost-of-living-adjusted pension plans, despite already being under-funded by $2,000,000,000,000 ($2 trillion), were made richer than ever anyway.

The long, shameful litany of events signaling the total divorce between the Master Class and the people of the United States doesn't stop there. It goes on and on.

The message from the American Master Class to the American people is simple and clear:

We Defy You.

Governments that openly defy the people are either already totalitarian or in the process of becoming so. Monetarily, the United States clearly functions as a totalitarian dictatorship already, with a Federal Reserve that operates in secrecy, creates limitless amounts of debt and currency at will, and showers trillions of dollars upon favored Master Class insiders with zero transparency or accountability whatsoever. The Federal Reserve is so shameless about its dictatorial powers that it flatly refuses to provide details about multi-trillion dollar bailouts and rescues of privileged elites, in open defiance of Congress and the people. The fact that they get away with these blatant acts of defiance demonstrates the true extent of the Master Class chokehold on America.

If the Master Class were a benign despot and if its policies and programs actually worked, that would be one thing. But that is not the case. Rather, its programs are in a complete shambles.

Every single government entitlement program in the United States is bankrupt. This includes Social Security ($17,500,000,000,000 under-funded; $17.5 trillion); Medicare Part A ($36,700,000,000,000 under-funded; $36.7 trillion); Medicare Part B ($37,000,000,000,000 under-funded; $37 trillion); Medicare Part D ($15,600,000,000,000 under-funded; $15.6 trillion), Government and military pensions ($2,000,000,000,000 under-funded; $2 trillion), Food Stamps (current under-funding difficult to measure because the number of recipients is exploding; hundreds of billions under-funded versus original projections, minimum); and the list goes on. The above under-funding amounts are NET of projected tax receipts over the next 50 years. But the current recession has invalidated virtually all long-term budget and tax receipt assumptions, meaning that the true under-funded amounts are now greater than current, already mind-boggling estimates.

While the above statistics are terrifying enough to any citizen with a functioning brain, what is Twilight Zone-eerie and a far more serious cause for alarm is the casual indifference with which the Master Class is now making the country's dire and irreparable fiscal circumstances even worse.

The nationalized health care program will cost at least $1 trillion over the next ten years, and most likely multiples of that. It is being crammed down America's throat by a bankrupt government that does not have the money today and will not have the money tomorrow to pay for it. Worse is the fact that the same government that has bankrupted each and every existing social program now intends to directly or indirectly control the health care of all citizens. Based on the government's existing track record and the health care program's enormous complexity, invasiveness and cost, the probability that it will become a national fiscal and humanitarian catastrophe is roughly 100%.

"Cap and Trade" is a multi-trillion dollar tax scam being foisted onto the American public without a legitimate debate or popular referendum. You might be surprised to learn that "Climate Revenues" are already included in the federal budget, starting with $79,000,000,000 ($79 billion) in fiscal year 2012, which begins only 20 months from now. During fiscal years 2012 through 2019, the government expects to collect $646,000,000,000 ($646 billion) in "Climate Revenues," a completely new tax category. Have any of your elected traitors told you that they have enacted $646,000,000,000 ($646 billion) in "Climate" taxes beginning twenty months from now and continuing forever? These "Climate Revenues" are based on junk science, lies and hysteria, and have been pimped by greed-diseased parasites who seek to make billions from operating and manipulating the Cap and Trade "marketplace." Favored elitists such as Hank Paulson, Al Gore, General Electric and Goldman Sachs, among others, have positioned themselves to profit from the nation's upcoming Cap and Trade tax misery and economic debilitation.

The reality is that the giant Ponzi scheme called the United States of America is running out of money. In any Ponzi scheme, money must constantly be poured into the top of the funnel in order to pay the redeemers at the bottom. As the number of redeemers has grown, tax receipts have fallen far short of covering their withdrawals, a problem that has now become an outright government funding emergency further aggravated by the fiscal, financial and economic crises.

If the Washington and Wall Street Axis were not legally able to create and distribute counterfeit American money, the Ponzi scheme would have collapsed already. Trillions of new, out-of-thin-air, printing-press and electronic "dollars" have bought the Axis additional time, but new sources of revenue must immediately be found to keep the scam alive. Congress is fully aware of this reality. Outright tax increases would be bad politics during a recession that is morphing into a depression, and also bad for 2010 re-election campaigns, so they cannot be implemented. Therefore, Congress continues to advance the health care and Cap and Trade agendas, which are nothing but taxation Trojan Horses festooned in righteousness and sanctimony, despite overwhelming popular opposition.

If the nationalized health care program is passed, revenues and fees will kick in immediately in 2010, whereas costs will not begin to accrue until 2012 and later. The government plans to spend the revenues immediately to forestall a total fiscal collapse. Nationalized health care has absolutely nothing to do with health care; it has to do with creating an immediate revenue stream to help fix the current government funding crisis. Similarly, Cap and Trade has nothing to do with fixing the environment. It, too, is nothing more than a massive tax increase similarly designed to address the government's epic funding shortfall, with thick slices of pork thrown in for privileged insiders and deceitful propagandists like bloated "Father of the Internet" and now "Savior of the World" Al Gore.

The last thing the Master Class wants is for the people to understand the disastrous state of the nation's finances. Master Class brainwashing tells the people that it is "negative" and "pessimistic" to look at the facts, despite the fact that psychological health is characterized by the ability to identify and deal with reality. The Master Class wants the people to put on Bozo the Clown happy faces and let sugar plums and green shoots dance in their brains as they write one check after another to pay for Cap and Trade, nationalized health care, and a mind-numbing assortment of other taxes and fees.

On Sunday night, November 30, 2009, North Korea's dictator Kim Jong Il (a name that says it all, even better than Made-off's), an international poster child of Master Class psychological illness, devalued his country's currency by 99%. This vicious tyrant, who has given birth to a national hell on earth, is chauffeured in Mercedes Benz limousines, drinks the finest imported whiskies and dines in imperial dignity on foods prepared by personal chefs while his citizens starve to death on the streets or, at best, eke out a subsistence living. Kim became paranoid that the people were actually figuring out how to improve their pitiful, impoverished lives in tiny ways, so he decided to wipe them out. The people were given one week to exchange their money at a rate of 100 old Won for 1 new Won. Any lifetime family savings in excess of roughly $700.00 were simply confiscated by the North Korean government. To keep the people in line, the military and police were put on high alert, fully prepared to kill or arrest any protesters.

On January 9, 2010, Venezuela's strong man Hugo Chavez devalued his country's currency by 50%, overnight and without warning, causing immediate ADDITIONAL inflation, shortages of food and supplies, and general financial chaos throughout the nation. Venezuela's inflation rate before the devaluation was running at 27%.

While you might be shaking your head in pity over the plight of the citizens of North Korea and Venezuela, ask yourself this: could this not happen in the United States?

On April 5, 1933, President Franklin D. Roosevelt, an Obama hero, outlawed gold ownership overnight by signing Executive Order 6102, which gave the people three and one-half weeks to surrender all privately-owned bullion to the government for a price of $20.67 per ounce. On January 30, 1934, nine months after collecting the people's gold, Roosevelt devalued the dollar 69% overnight, by raising the gold price from $20.67 to $35.00 per ounce.

Since its founding in 1913, the Federal Reserve has devalued the dollar by 98+% thanks to endless money printing and debt creation, a corrosive and impoverishing process that is now accelerating. In the past year, the Fed has engineered $20+ trillion in bailouts, subsidies and guarantees for well-connected and lucky scavengers and opportunists, an amount equal to roughly 40% of the total private wealth created in this country since its inception. All because a few elitist government man-gods with an almost perfect record of error and failure have deemed in their imperial wisdom that it shall be so. The citizens, whose hard-earned wealth is being systematically destroyed by this continual, government-decreed monetary debasement were never invited to the debate or given a say, which is par for the course for dictatorships. This massive de facto devaluation now hangs over the people's wealth like a great monetary sword of Damocles.

Conceptually, whether it is a 50% overnight devaluation in Venezuela, a 69% overnight devaluation in the United States, a 98% devaluation in America over time, or a 99% overnight devaluation in North Korea, what is the difference? The fact is: there is no difference; monetary debasements are all the same. In each and every case, the people's wealth is stolen via government edict, while the people stand by helplessly and in shock.

So one must ask: For whom does the bell toll? A foreign "them," or a domestic us? Who is to say that you will not be told tomorrow morning that, effective immediately, in accordance with some perversely named mandate such as the "American Monetary Security, Wealth Preservation and Terrorism Prevention Act," enacted by emergency for "the safety of the nation and the financial well being of the citizens," all existing currency and bank balances will be redenominated in "New Dollars," at a conversion rate of 1 new for every 100 old currency units? Would this not simply be another, almost predictable act of defiance toward the American people by the Master Class? And if that happened, do you honestly believe that the Master Class would not have been alerted in advance and allowed to make special preparations for itself ahead of the devaluation? Do you think they intend to go down in the same ship as the people they defy? If such a currency devaluation were announced, what could you do about it? March on Washington? But how would you get there if your money had been wiped out?

Despite what you may hear from State Media, which includes virtually all establishment news organizations, particularly financial ones (e.g., CNBC), America is on the precipice. No bankrupt nation in history has ever defended or preserved the freedoms of its citizens. In fact, it has been the exact opposite: in desperation, bankrupt governments have routinely plundered their citizens' wealth and imposed totalitarian controls. What will make things different for the United States, the largest debtor nation in all of recorded civilization?

The United States government cannot ever, possibly pay its debts, is pathologically incapable of controlling its spending or curbing its hunger for both domestic and international empire and persistently refuses to tell the American people the truth. If America's citizens were told the truth and given the benefit of true leadership, as opposed to the guile and dishonesty of an endless array of political liars and hacks, perhaps they could rally and defeat the problems that afflict them. But instead, they are fed by the Master Class a steady diet of narcotic propaganda that deludes, confuses and enervates them. The truth cannot set people free if it is never told, and that is the essence of America's gathering tragedy.

In a future article, we will detail specific developments you should watch for to chart the course of America's ominous and potentially deadly national storm. The current, grave situation is already a clear call to action. When the signals become even more urgent, it will be late in the game to take protective action, and possibly too late. Citizens should begin to prepare now not just for financial survival, but for the personal security of themselves and their loved ones should a Category 5 economic and political hurricane rip into the nation, something that becomes more likely every day.

With respect to personal finances, in virtually every national currency devaluation and major political upheaval in the past, gold has represented sanctuary for the affected people. Gold has not just preserved wealth, but personal freedom as well. While governments can devalue fiat currencies, they cannot, by edict, devalue gold. Yes, they can try to manipulate its price, but unless all governments join in the collusion, ultimately the price will return to market. The market for gold is global, and demand exists in all nations and among all peoples. Should the government attempt to confiscate gold, it will be an outright admission that the financial system is collapsing, and the people will know better than to hand over to a corrupt government their only means of survival. The most important point is this: devalued currencies never rise again. Once they are destroyed, they are gone forever, and those whose wealth had once been denominated in them are wiped out. As you have no doubt heard before, not one fiat currency has survived over time, and that is an indisputable fact. More significantly, no fiat currency has ever suffered the abuse that has been inflicted upon the United States dollar, meaning that it is at extreme risk. Gold has been money for 5,000 years. It has not merely survived, it has prevailed over each and every fiat currency collapse throughout history. Given this, the most important financial question a person can ask him- or herself today is: How is my wealth denominated at this time? And given its denomination, is my wealth likely to be safe in current and evolving circumstances?

One thing is certain: as the epic David and Goliath monetary battle unfolds, between the people fighting to defend their hard-earned wealth on one side, and a Master Class that greedily and pathologically wants to plunder them on the other, the price of gold will become extremely volatile for a period of time. Volatility will, in fact, tell you that the War on Wealth has officially been declared, and will be your signal to do whatever you must to protect what is yours. As the government Goliath and its Master Class allies short tonnes of bullion into rigged futures markets in a desperate attempt to make gold look dangerous and risky, the Davids will be coming forth not just in the United States but from all corners of the globe, buying 10 grams here and one ounce there. There are 6.8 billion Davids, versus one diseased Master Class that numbers in the small millions. There is no way the Master Class can defeat the people, if the people finally rise up and say "No More of Your Plunder. No More of Your Cold and Soulless Financial Oppression. No More of Your Cynical and Godless Exploitation."

If you find the above argument compelling, you should consider how to protect yourself from Executive Orders that could be issued at any time, under any pretext, and that could be extremely hostile to your financial and/or personal health and well being. One simple way to start is to purchase one ounce of gold for yourself and each member of your household, and much more if you can afford it. That is not financial advice; it is merely the common sense generously communicated to you by history.

Stewart Dougherty is a specialist in inferential analysis, the practice of identifying historic and contemporary patterns and then extrapolating their likely effects upon the future. Dougherty was educated at Tufts University (B.A., magna cum laude), and Harvard Business School (M.B.A. and an academic Fellow). He can be reached at He is not affiliated with or compensated by those he references or recommends. He does not offer investment or trading advice, and nothing in this article should be construed as such. This article represents the author's personal opinions, and nothing more. The reader has the author's permission to share, print, forward or post this article provided that the content is not changed and the author is acknowledged. Copyright 2010 by Stewart Dougherty, with all rights reserved.