Monday, August 1, 2011

Congressional Sources: Republicans and Democrats Reach Tentative Debt Deal

Democratic and Republican Congressional sources involved in the negotiations tell ABC News that a tentative agreement has been reached on the framework of a deal that would give the President a debt ceiling increase of up to $2.4 trillion and guarantee an equal amount of deficit reduction over the next 10 years.
The details are still being worked out, and a senior White House aide tells ABC News, "talks continue but there is no deal to report."
Congressional leaders plan to brief their members on the framework tomorrow.  The reaction from both parties' rank-and-file will determine whether this tentative deal becomes a final deal.
Here, according to Democratic and Republican sources, are the key elements:
  • A debt ceiling increase of up to $2.1 to $2.4 trillion (depending on the size of the spending cuts agreed to in the final deal).
  • They have now agreed to spending cuts of roughly $1.2 trillion over 10 years.
  • The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase).  This deficit reduction could take the form of spending cuts, tax increases or both.
  • The special committee must make recommendations by late November (before Congress' Thanksgiving recess).
  • If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare. This "trigger" is designed to force action on the deficit reduction committee's recommendations by making the alternative painful to both Democrats and Republicans.
  • A vote, in both the House and Senate, on a balanced budget amendment.
Democrats won't like the fact that Medicare could be exposed to automatic cuts, but the size of the Medicare cuts is limited and they are designed to be taken from Medicare providers, not beneficiaries.
Two sources briefed on the framework say the automatic cuts would hit Defense spending harder than Medicare.  A Republican briefed on the framework says this will be unacceptable to many Republicans because it could force them to face a choice between accepting tax increases (if that is what the committee recommends) or automatic cuts that would gut the Pentagon's budget.

SNL: Obama Takes A Break From The G-20 To Decide The Fate Of American Companies

A pretty funny clip from back in 2009.
Obama has decided which American companies will continue to exist (and receive a subsidy) and which will be asked to go quietly out of business.
"My administration intends to do to every industry in this country, exactly what we are doing to the automakers. Every company will be vetted for fiscal soundness. Those judged best able to compete in the global economy will be offered a governmental subsidy. The others will be asked to cease operations at once. Hopefully, they will do so voluntarily, if not, they will be shut down by force."

Now even troops are warned they may not be paid with no solution to debt crisis in sight

  • Soldiers told their salaries are lower priority than interest payments to foreign bond-holders

  • Renewed bi-partisan talks run late into the night at White House as leaders make desperate last-minute stab at compromise

  • Reports of 'significant progress'

  • Senate Majority Leader Harry Reid postpones closure vote on his bill until 1pm on Sunday

  • American soldiers in Afghanistan have been warned they may not be paid after President Obama failed in an 11th-hour attempt to reach a settlement over the U.S. deficit.
    In a crisis that has potentially devastating consequences for the world economy, the U.S. will run out of money to pay its bills next Wednesday unless squabbling Washington legislators raise the country's $14.3 trillion (£8.7tn) debt ceiling.
    Troops fighting in Afghanistan have been told that the Obama administration is expected to make their salaries a lower priority than interest payments to foreign bond-holders.
    Defeated: U.S. Senate Majority Leader Harry Reid on Saturday after the House rejected a Democratic proposal to raise the nation's debt ceiling
    Defeated: U.S. Senate Majority Leader Harry Reid on Saturday after the House rejected a Democratic proposal to raise the nation's debt ceiling
    More than $1.2 trillion of America's vast debt is owned by China and another $328bn is owned by UK private investors and pension funds.
    The Obama administration is expected to continue to pay them next month, along with pensioners.

    Other social programmes, including medical care for the poor and help for the country's unemployed, also will be fully funded, according to insiders.
    But that will leave no money to pay federal employees, including troops.
    America's top military official, Admiral Mike Mullen, delivered the stunning news to soldiers at a meeting at Kandahar air base in southern Afghanistan.
    Asked if they will be paid if Mr Obama is unable to resolve the deadlock, he said: 'I honestly can't answer that question.
    U.S. gross public debt
    'I have confidence that at some point in time, whatever compensation you are owed, you will be given.'
    Troops will be ordered to continue to work, the admiral said. Economists say the U.S. could be plunged into recession if the Republican-controlled House and the Democratic Senate cannot agree on legislation.
    After weeks of intense partisanship, talks went late into the night at the White House on Saturday as leaders made a desperate, last-minute stab at compromise to avoid a government default.
    Some reports suggested 'significant progress' was being made.
    'There is very little time,' declared President Barack Obama.
    Mr Obama met with top Democrats at the White House and spoke by phone with Senate Republican leader Mitch McConnell.
    Tension: Even if the U.S. continues to make interest payments to creditors, it will unnerve the markets, said city analysts
    Tension: Even if the U.S. continues to make interest payments to creditors, it will unnerve the markets, said city analysts


    Q: When will the U.S. officially run out of money?
    A: Wednesday.
    Q: Why is it broke?
    A: The U.S. government has reached its maximum debt level of $14.3 trillion.
    Q: Why doesn't it raise the debt ceiling?
    A: Because Tea Party militants have vetoed it.
    Q: Why?
    A: Because they want big spending cuts and refuse to back tax rises.
    Q: What is the official Republican position?
    A: Lift the debt limit in return for $1 trillion spending cuts.
    Q: What is President Obama's position?
    A: A bigger rise in the debt ceiling to avoid another crisis before the U.S. elections next year.
    Q: What if the U.S. defaults?
    A: It could suffer the humiliation of losing its triple A credit rating.
    Q. What is a triple A rating?
    A. The highest rate of credit worthiness a government can achieve.
    Q. What happens if the U.S. loses it?
    A. The government could have to pay more to borrow money.
    Q: How will that affect ordinary Americans?
    A: More firms will go bust, interest rates on credit cards and home loans will rise.
    'He needs to indicate what he will sign, and we are in those discussions,' McConnell said of the President.
    He added he had also spoken with Vice President Joe Biden, who played a prominent role in earlier attempts to break the gridlock that has pushed the country to the verge of an unprecedented default.

    A day after the Republican-controlled House of Representatives passed a bill to cut the deficit and raise the ceiling on government borrowing, the debt saga shifted to the Democratic-led Senate where lawmakers scrambled for a deal.
    Senate Democrats pushed ahead with their own plan, but sought to attract bipartisan support by adding some elements of a proposal offered by Senate Republican leader Mitch McConnell.
    But Senate Republicans appeared to have the votes to block that bill and the House quickly crushed the Democrats' proposal before the Senate acted on it, rejecting the measure 246 to 173 in a fast-tracked vote set by the Republican leadership.
    Senate Majority Leader Harry Reid postponed a closure vote on his debt plan, originally expected to happen at 1am on Sunday to 1pm.
    'There are many elements to be finalized.  Many elements to be finalised. There is still a distance to go before any arrangement can be completed.
    'But I believe we should give everyone as much room as possible to do their work,' he said.
    'No one believes this will really happen,' a City financial expert told The Mail on Sunday, 'so no one has thought through the consequences.
    Even if the U.S. continues to make interest payments to creditors, it will unnerve markets and probably lead to a lowering of its credit rating.
    'That means the value of U.S. bonds held by banks will fall and they will have to raise more capital in order to meet their required asset levels and that in turn could force up interest rates, causing a recession.'
    Senate Democrats killed a bill passed by the Republican-controlled House late on Friday.
    Democrats opposed it as 'extremist' while Right-wingers said it did not go far enough.
    And all 43 Republicans in the Senate have signed a letter, saying they will not vote for a rival Democrat plan to raise the debt limit.
    Mr Obama pleaded for compromise, saying: 'There is very little time.' As the warring continued, Mr Obama was described by The New York Times, as 'largely a bystander'.

    Read more:

    Gold Price At $15000 Per Ounce

    Nation of scare tactic and lies

    As America Continues to Tank, What Will You Do?

    Anthony Wile
    The Daily Bell

    Over the course of the past dozen or so years I have had the pleasure of rubbing shoulders with some of the more savvy free-market thinkers around. And during much of that time, my own formulative views of the world have tended to ebb and flow as I processed information from a variety of sources, most importantly my own real-life experiences.

    One of those free-thinkers who had a big impact on me was Harry Browne. We all suffered a great loss when Harry passed away a few years ago, but his message of how people could obtain personal freedom in an unfree world is as powerful and relevant today as it was when Harry wrote the book on that in 1973.

    It is very easy for all of us to become mesmerized by the blitzkrieg of information that seems to constantly invade our minds. It is so overpowering at times that, without proper discipline, one can find themselves missing out on the joys of life and dwelling only in darkness. And that is not a healthy way to go through life. Harry understood that – better than most.

    The only true commodity of scarcity is time. And the only time that truly matters is yours and mine. Each of us has an expiry date and what we do with our time between the two goal posts should be left to each person to determine in their personal pursuit of self-interest.

    Now obviously there are some basic "rules to the road" that determine how people should interact in a functional civil society. Personally, Richard Maybury has done the best job I know of reducing it down to a managable number – two. That's it, two simple natural laws that make it very easy for anyone to checkmate their conscience before taking action. Here they are:

    1) Do all you say you are going to do.
    2) Do not encroach on other persons or their property.

    That's it folks. Two simple and easy to understand "rules" through which any person with an IQ above 50 should be able to navigate their way through life. The first law governs acts of contract and civil engagement, while the second deals with acts of a more criminal nature. But together, both cover the gammut of potentialities that we all face in our daily lives.

    Understanding that self-interest and the pusuit of maximizing one's life does not conflict with either of these two natural laws is perhaps the first step in appreciating the power of a truly free society – one in which each person is his or her own master and determines how they wish to spend their time.

    Today, for most people caught up in the daily struggle to maintain their heads above water, it is difficult to see how one can actually "break free" from a system that is anything but. And this was no different in 1973 when Harry wrote his bestselling book, How I Found Freedom in an Unfree World.

    When we are born, we are born free. As we grow older and are shepherded through public schools and out into the work force, we begin to face the realities of a centralized society – one that continually tries to collectivize people's time under a life-long bond to the State. It is as if there are fields full of gallows with fresh nooses swaying gently in the winds of time awaiting the necks of all the fresh blood entering the workforce. The heads slip in and the serpent-like noose fastens itself – for life. And once a person succumbs to the pressure, they lose their ability to think. For who has time to think when one's life (time) is constantly being robbed by a collectivist State?

    The answer is YOU. You do not have to accept the burdens being levied upon your shoulders by the "time-taxing" power elite and YOU CAN LIVE FREE. To do so is to remember that YOU WERE BORN FREE. It is your right to live free and die free too. Your life is yours to live and as long as the two natural laws mentioned above are respected and adhered to, your right to spend your time as you choose is yours and yours alone. The question you may be asking now is: How do I break free?

    Read Full Article

    CHART: The Real Inflation Rate Is 11% According To CPI Calculations From 1980s (June Update)

    The chart above has been updated to include data for the most recent month.
    UPDATE - The real inflation numbers have now been updated thru May; it is above 10%.
    UPDATE - Congress is discussing changing CPI calculation again, this time to save as much as $220 billion over ten years.
    Methodology, data and details inside.
    From Shadow Stats
    The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980.  In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living. Further definition is provided in our CPI Glossary.  Further background on the SGS-Alternate CPI series is available in the Archives in the August 2006 SGS newsletter.
    By John Melloy
    Executive Producer, CNBC's Fast Money
    After former Federal Reserve Chairman Paul Volcker was appointed in 1979, the consumer price index surged into the double digits, causing the now revered Fed Chief to double the benchmark interest rate in order to break the back of inflation. Using the methodology in place at that time puts the CPI back near those levels.
    Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter.
    Since 1980, the Bureau of Labor Statistics has changed the way it calculates the CPI in order to account for the substitution of products, improvements in quality (i.e. iPad 2 costing the same as original iPad) and other things. Backing out more methods implemented in 1990 by the BLS still puts inflation at a 5.5 percent rate and getting worse, according to the calculations by the newsletter’s web site,
    “Near-term circumstances generally have continued to deteriorate,” said John Williams, creator of the site, in a new note out Tuesday. “Though not yet commonly recognized, there is both an intensifying double-dip recession and a rapidly escalating inflation problem.  Until such time as financial-market expectations catch up with underlying reality, reporting generally will continue to show higher-than-expected inflation and weaker-than-expected economic results in the month and months ahead.”
    Continue reading at CNBC...


    While the Wall Street bought Republicans and Democrats continue their Kabuki theater over the debt ceiling foolishness in Washington. Main Street continues to darken as over 25 million Americans are either unemployed, underemployed or have dropped out of the labor force in a politically unacknowledged depression where one in 46 homes are in foreclosure: Allen L Roland
    According to Newsweek, close to 20 percent of all American men between the ages of 25 and 54 do not have a job at the moment and this fact is continually ignored by the Obama administration as well as Congress. On top of that, the housing market is still depressed after home prices began to tumble in 2007 and now over 11 million homes in American are vacant and one out of every 46 homes is in foreclosure.
    As Paul Krugman, NY Times wrote on July 21 (The Lesser Depression) ~ The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It’s not a response to public opinion. In a recent CBS News/New York Times poll, 53 percent of the public named the economy and jobs as the most important problem we face, while only 7 percent named the deficit. Nor is it a response to market pressure. Interest rates on U.S. debt remain near historic lows.”
    And as Paul Craig Roberts writes: "The US economy is driven by consumer demand, but with 22.3% unemployment, stagnant and declining wages and salaries, and consumer debt burdens so high that consumers cannot borrow to spend, there is nothing to drive the economy.
    This is the best graphic I've seen regarding unemployment in the United States ~ and this doesn’t even include the underemployed or those have dropped out of the labor force which would make it over 16% ~ or over 20% if you factor in youth who are unable to enter the workforce or those job holders who have taken early retirement. Watch this shocking 30 second geographic graphic of a recession becoming a depression ~ county by county from January 2007 to February 2011. Click here ~
    Mind boggling isn’t it ~ when you graphically see where we REALLY are pursuant to unemployment. Let’s make it clear ~ we are not in a recovery ( as Ben Bernanke obliviously states ) or a “painfully slow“ recovery ( as President Obama often says ) Try telling that to the close to 100 million Americans who are effectively caught in poverty (using far more realistic measures than the government does) or the 6.5 million households with mortgages that are delinquent or in foreclosure ~ or the millions of Seniors whose monthly Social Security check has become their only means of economic survival.
    Government figures show the economy grew at a weak pace of 1.3% in the second quarter and a revised 0.4% pace in the first quarter ~ confirming a stagnating recession which is rapidly becoming a depression. Economist Justin Wolfers of the University of Pennsylvania’s Wharton School of Economics correctly said he thinks there’s a 40% chance the economy has already been in a major recession for the past four months ~ a fact the current administration still refuses to acknowledge with a national election fast approaching.
    It appears the Obama administration, like the Bush administration, is still committed to bailing out Wall Street in a vain attempt to re-inflate the same credit/debt bubble that burst in 2008 ~ but most Americans have barely enough money to survive and are crushed with personal debt.
    Sy Harding , StreetSmartPost, summed up yesterday how Washington still fiddles while the economy continues to burn ~ “While media focus has been almost entirely on the short-term debt ceiling foolishness in Washington, not much attention has been paid to the more serious worsening of the six-month recessionary trend in the economy…The consensus forecast of economists and the Fed was that under the influence of QE2 stimulus, growth would improve to 3.5% in the March quarter and for the rest of the year, with the economy’s underpinnings improving so it could stand on its own when QE2 expired in June. Instead, March quarter GDP growth declined to only 1.9%. Economists and the Fed were sure that was only temporary and left their forecasts for the June quarter and rest of the year at 3.2% growth. Continuing negative economic reports in May and June forced them to scramble to lower their June quarter growth forecasts dramatically, to 2.8%, 2.6%, 2.0%, and finally to 1.8%....Meanwhile, small businesses account for most of the jobs in the U.S., and the National Federation of Independent Businesses (NFIB) reported last week that its Small-Business Optimism Index dropped in June for the fourth straight month, and “is solidly in recession territory.” That does not bode well for an improvement in the jobs picture going forward.”
    So as Washington continues its kabuki theater regarding the debt ceiling crisis ~ Sy reminds us that raising the debt ceiling will not change what is already happening in the economy and will most likely will worsen a deteriorating economy ~ “An agreement to raise the debt ceiling would likely include long-term government spending cuts, basically a withdrawal of the stimulus that a high level of government spending has been providing to the economy. And failure to raise the debt limit would create serious problems for the U.S. in global financial markets, and raise interest rates in the U.S. ~ both of which would be serious additional negatives for the economy.”
    It’s time to face reality and finally get beyond the lies and misinformation that caused and perpetuate our current economic crisis by recognizing that we are in a deepening recession, we’re broke and millions of Americans want truthful answers and jobs ~ not lies, hype and theater.
    Congress is now on a path to do exactly what the American people don't want. Americans want shared sacrifice in deficit reduction. Congress is on track to give them the exact opposite: major cuts in the most important programs that the middle class needs and wants, and no sacrifice from the wealthy and the powerful. Is it any wonder, therefore, that the American people are so angry with what's going on in Washington? I am too: Senator Bernie Sanders / Vermont
    And I am too, are you?
    Allen L Roland

    Freelance Alternative Press Online columnist and psychotherapist Allen L Roland is available for comments, interviews, speaking engagements and private consultations ( )
    Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website He also guest hosts a monthly national radio show TRUTHTALK on

    G. Edward Griffin: The Barbaric Metal

    This is the seventh installment in a series of chapter summaries from G. Edward Griffin's must-read book The Creature From Jekyll Island.  This book may be the most important "red pill" available and we highly recommend that you read the full book.  Buy it today at RealityZone.

    G. Edward Griffin

    Buy Here
    Activist Post

    Chapter 7 Summary: The Barbaric Metal

    Knowledge of the nature of money is essential to an understanding of the Federal Reserve.  Contrary to common belief, the topic is neither mysterious nor complicated.  For the purposes of this study, money is defined as anything which is accepted as a medium of exchange.  Building on that, we find there are four kinds of money: commodity, receipt, fiat and fractional.  Precious metals were the first commodity money to appear in history and ever since have been proven by actual experience to be the only reliable base for an honest monetary system.  Gold, as the basis of money, can take several forms: bullion, coins, and fully backed paper receipts.  Man has been plagued throughout history with the false theory that the quantity of money is important, specifically that more money is better than less.  This has led to perpetual manipulation and expansion of money supply through such practices as coin clipping, debasement of the coin content, and, in later centuries, the issuance of more paper receipts than there was gold to back them.  In every case, these practices have led to economic and political disaster.  In those rare instances where man has refrained from manipulating the money supply and has allowed it to be determined by free-market production of the gold supply, the result has been prosperity and tranquility.

    Get the book for yourself or for others you want to wake up.  It reads like a mystery novel and is filled with colorful metaphors that make the seemingly complex world of banking very easy to comprehend. Visit RealityZone for your copy today. Summary is re-printed with permission from G. Edward Griffin.

    See other parts below:
    PART 1: The Journey to Jekyll Island
    PART 2: The Name of the Game is Bailout

    PART 3: Protectors of the Public
    PART 4: Home, Sweet Loan
    PART 5: Nearer to the Heart's Desire
    PART 6: Building the New World Order

    News Alert: Economic Collapse - Peter Schiff says: US in Depression - De...

    Catastrophe: When the Dollar Crashes

    Banks love student loans

    Last year the Department of Education released statistics on default rates of student loans. Arizona scored last, with a cumulative score of 10.9 percent. And, according to Jeannie Carlisle’s article on September 15, 2010 in, Tucson College was highest in 2008 student loan defaults at 34.6 percent. (Carlisle, 2010)

    Why should taxpayers care about student loan defaults?

    Student loans, or “money from the government” is really money from taxpayers, backed by taxpayers, insured by taxpayers with losses reimbursed by taxpayers. Banks get the commissions, interest, penalties and fees on all that taxpayer money. And student loans are real big money in the twenty first century. From 2005 to 2008, college tuition increased four times faster than the Consumer Price Index. (Lewin, 2008)

    US Student debt - less than $200 billion in 2000 - surpassed US credit-card debt to top $1 trillion in 2011. And per-student-debt now averages $23,000 - up 8 % from last year. (Lowry, 2011)
    For more background see Examiner article, 7/5/11,  “Is college tuition a crime?”

    Federally insured student loans are different than most debt. Students making loans for the last twenty years have had many ways to temporarily avoid payment. According to Dave Swindle, former “collector” of student loans, payment deferrals are relatively easy.

    A lost job means 2 to 3 years “unemployment deferment”. A job not paying well can mean 3 years’ worth of “economic hardship deferment”. If there are other more important bills to be paid, some lenders offer as much as 5 years of “forbearance time”. If the loan is still a problem, the government offers a Title IV administrative forbearance - with the same qualifications as the “economic hardship deferment”. Many student loans go years without payments being made and, of course, the loan’s interest grows and grows, as does the bank’s eventual profit. (Swindle, 2011).

    Does the bank lose money if a student actually defaults on their loan? No. After about a year of no payments and no deferrals - the Federal Government reimburses the bank and the loan is sold to a collection agency. (Swindle, 2011)

    This inverted money tree – in Tucson and Arizona and nationwide – in the name of education for all, is one reason the cost of Government has skyrocketed.

    Carlisle, J. (2010). Tucson has the highest student loan default in the US.

    Lewin, T. (2008). New York Times. Downturn expected to drive tuition up.

    Lowry, R. (2011). Real Clear Politics. Tuition skyrockets…while learning plummets.

    Swindle, D. (2011). PJ Tatler. Yes, the higher education bubble will pop this decade and here’s one reason why.

    "Economic Armageddon": Washington’s Response to a Failed Ecomomy: More War

    As the second decade of the 21st century began, the US economy had not recovered from the Great Recession that began in December 2007.
    The economy’s failure to recover was despite the largest fiscal and monetary stimulus in the country’s history. There was a $700 billion bank bailout, a $700 billion stimulus program, a couple of trillion in “quantitative easing,” that is, in debt monetization or the printing of money to finance the government’s expenditures. In addition the Federal Reserve’s balance sheet had expanded by trillions of dollars as the Fed purchased troubled mortgage bonds and derivatives in its effort to keep the financial system solvent and functioning. According to the Government Accountability Office’s audit of the Federal Reserve released by Senator Bernie Sanders, the Federal Reserve provided secret loans to US and foreign banks totaling $16.1 trillion, a sum larger than US Gross Domestic Product (GDP).
    Despite the enormous fiscal and monetary stimulus, the economy remained dead in the water.
    In 2011 the deficit in the federal government’s annual expenditures was 43 percent of the budget. In other words, the US government had to borrow, or the Fed had to monetize, 43 percent of federal expenditures during fiscal year 2011. Despite this unprecedented fiscal and monetary stimulus, the economy did not recover.
    At the end of the first decade of the 21st century, the economy’s decline was temporarily halted by federal subsidies for car and home purchases. The $8,000 housing subsidy helped newlyweds purchase starter homes as the subsidy was a big chunk of the down payment in a depressed housing market. The car purchase subsidy moved future demand into the present. When these subsidies expired, the economy’s life support was turned off.
    Problems with the statistical reporting of unemployment, inflation, and GDP disguised the worsening economy. Seasonal adjustments used to smooth the data over the course of the year were not designed for prolonged recession. Neither was the “birth-death” model used by the US Bureau of Labor Statistics (BLS) to estimate non-reported jobs from new start-up companies and losses from companies that have gone out of business. The birth-death model was designed for a growing economy and during downturns overestimates the number of new jobs created.
    The “substitution effect” used in the consumer price index (CPI) underestimates inflation by assuming that consumers substitute cheaper foods for those that rise in price. For example, if the price of New York strip steak rises, this does not show up in the CPI, because of the assumption that people shift their purchases to a less expensive cut such as round steak.
    The widely used “core inflation” measure does not include food or energy. Core inflation is a useful measure for those who want to put an optimistic spin on the outlook.
    By underestimating inflation, the government can overestimate real GDP growth, thus creating a fictional rosy outlook. Similarly, by using the employment measure known as U.3, the government underestimates unemployment.
    The “headline” unemployment rate, the one emphasized by the media and the financial press, stood at 9.2 percent in June, 2011. But this rate does not include any discouraged workers. A discouraged worker is a person who has ceased looking for a job, because there are no jobs to be found. A discouraged worker is not considered to be in the work force and is not counted among the U.3 unemployed.
    The federal government knows that this is phony and has a U.6 measure of unemployment that counts the short- term discouraged. This measure, seldom reported by the media, stood at 16.2 percent in June, 2011.
    Statistician John Williams ( continues to count also the long-term discouraged workers according to the way it was officially done in 1980. In June, 2011, this full measure of the US unemployment rate was 22.7 percent.
    In other words, by 2011 between one-fifth and one-fourth of the US work force were without jobs.
    As 2011 progressed, the United States faced three simultaneous economic crises. One crisis arose from the loss of US jobs, GDP, consumer income, and tax base caused by corporations offshoring their production for the US market. Instead of making their products at home with American labor and providing Americans with jobs and states and localities with tax revenues, US corporations provided countries such as China, India, and Indonesia with GDP, jobs, consumer income and a tax base. This practice meant that economic stimulus was unable to revive the US economy as Americans cannot be called back to work jobs that have been moved abroad.
    Another crisis was the financial crisis resulting from deregulation, fraud, and greed. Securitization of mortgages meant that issuers of mortgages no longer had any incentive to ascertain the credit worthiness of the borrower, because the issuers sold the mortgages to third parties who combined the mortgages with others and sold them to investors.
    As mortgages were issued for fees, the more mortgages issued, the higher the income from fees. In order to collect fee income, some issuers faked credit reports for borrowers. With the housing market booming, many people took mortgages in order to make money on the resale of the properties. With housing prices rising rapidly, down payments and credit worthiness became concerns of the past. The financial crisis was made worse by the ability of investment banks to get around capital requirements and, thereby, leverage their equity by incurring enormous debt. When all the bubbles burst, the house of cards collapsed.
    The third crisis was the $1.5+ trillion annual federal budget deficits, which were too large to be financed without the Federal Reserve buying the Treasury’s new debt issues. Known as monetizing debt, the Federal Reserve purchased the Treasury’s bills, notes, and bonds by creating a checking account, which the Treasury would then draw upon to pay the government’s bills. The outpouring of Treasury debt raised concerns about the dollar’s exchange value and role as reserve currency, and it raised fears of inflation. Gold and silver prices rose as the dollar declined in foreign exchange markets.
    Any one of these crises was serious. All together, they implied economic armageddon.
    There was no obvious way out, but even if one could be found, the government was focused elsewhere — on wars.
    In addition to ongoing military operations in Iraq, Afghanistan, Pakistan, Yemen and Somalia, the US and NATO began military operations against Libya on March 19, 2011. As with the existing wars, the real purpose of the aggression against Libya was not acknowledged, but it became clear that the war’s purpose was to evict China from its oil investments in eastern Libya. Unlike the previous Arab protests, the Libyan rebellion was an armed uprising in which some saw the CIA’s hand.
    The Libyan war upped the risk, because although hiding behind the veil of Arab protest, the US was actually confronting China. Similarly, in the US-supported armed rebellion in Syria, Washington’s target was the Russian naval base at Tartus. Overthrowing the Assad government in Syria and installing a US friendly regime would put paid to Russia’s naval presence in the Mediterranean.
    By hiding its purposes behind Arab protests in Libya and Syria that it might have initiated, Washington avoided face-to-face conflicts with China and Russia, but nevertheless the two powers understood that Washington was striking at their interests. This elevated the recklessness of Washington’s aggressive policies by initiating confrontation with two nuclear powers, one of which held financial power over the US as America’s largest foreign creditor.
    China’s oil investments in Angola and Nigeria were another target. To counter China’s economic penetration of Africa, the US created the American African Command in the closing years of the first decade of the 21st century. Disturbed by China’s rise, the US undertook to prevent China from having independent sources of energy. The great game that in the past has always led to war is being played out once again.
    September 11, 2001, provided Washington with a new “threat” to replace the Soviet threat, which had expired in 1991. Despite the absence of the Soviet threat, the military/ security budget had been kept alive for a decade. September 11, 2001, injected rapid growth into the military/security bud- get. A decade later the budget stood at approximately $1.1 trillion annually, or approximately 70 percent of the federal deficit which was crippling the dollar and threatening the US Treasury’s credit rating.
    Focused on Middle Eastern wars, Washington was losing the war for the US economy.
    As the expectation of economic recovery evaporated over the course of 2011, the need for war became more imperative. (See, “Sen. Graham ‘Very Close’ to War.”)
    Former associate editor of the Wall Street Journal and columnist for Business Week, Dr. Paul Craig Roberts served on personal and committee staffs in the House and Senate, and served as Assistant Secretary of the Treasury for Economic Policy during the Reagan Administration. He has held academic appointments in six universities. He was awarded the US Treasury Silver Medal and the Legion of Honor by the President of France.

    7/29/2011 - Peter Schiff On Money In Motion- We Are Defaulting On Our Debts By Inflating Them Away

    Ron Paul "How Do You Solve The Debt Problem By Raising The Debt?"

    The Pentagon Rules America: Militarism and the Crisis of the Civilian Economy

    “Have we as a nation gone mad, waging war in the Persian Gulf while society crumbles?” Seymour Melman asked rhetorically when I interviewed him for The Progressive 19 years ago.

    Even though Melman, a
    professor emeritus at Columbia University's school of industrial engineering, departed this life in 2004, his question still haunts our society, as the American War Machine since then has only gained in momentum, immensity, universality and cruelty.
    To answer Melman: “Yes, we have gone mad.” That's because presidents and Pentagon chiefs start new wars even before they finish fighting the old ones! Who can recall a time in our history when the U.S. initiated aggressive wars against five nations(Afghanistan, Iraq, Pakistan, Libya, Yemen)?
    Between 1947 and 1989, Melman said, the U.S. spent $8.2 trillion (in 1982 dollars) on the military. When I said I couldn't grasp a figure that large, Melman replied, “Think of it this way: In 1982, the total money value of all America's manufacturing, industry and its infrastructure amounted to $7.3 trillion. You could have replicated the largest part of everything made by people in this country with what the military got.” (Everything made by everybody? All the houses? All the highways? All the schools? All the hospitals? A new America? Everything?)
    Melman went on to say, “Half of every dollar you pay in Federal taxes goes into the military account. Pentagon contractors are awash in billions while the infrastructure that underpins our economy collapse around us and human misery spreads everywhere.”
    Fast-forward: Today, the Pentagon still gets roughly half of every tax dollar. The War Resisters League estimates 54% of the pie goes to the military compared with 30% for all human resources, 11 percent for general government and 5% for physical resources..
    Defense contractors are awash in profits while lines lengthen at soup kitchens, foreclosed families sleep in shelters, 20 million are jobless or underemployed, food stamp use sets records, summer jobs for teens have vanished, and President Obama appears willing to rat out the elderly on Social Security and Medicare as too costly while he authorizes new CIA drone attacks on Pakistan.
    The Pentagon budget does more than absorb tax dollars. It punishes the civilian sector in many ways. For instance, it has siphoned off so much scientific talent the U.S. has long since fallen behind Japan and Germany in innovative technologies. “We're paying the price for building colossal military power,” Melman said. “It's set in motion a process of technical, industrial and human deterioration. We're losing millions of productive jobs because U.S. firms with U.S. factories can't even hold our home markets against foreign competition.”
    While the Pentagon turns out B-2 bombers at $865 million a copy, foreign creators are flooding our markets with cars, bikes, tape recorders, shoes, machine tools, movie cameras, calculators, TV sets, and integrated microcircuits.” Melman said that 19 years ago and it holds true today.
    One reason the U.S. fell behind, Melman explained, is that “about 30 percent of the nation's engineers, scientists and technicians work directly or indirectly for the military. The loss to the civilian economy is incalculable.” Consumer electronics, he said, “declined dramatically while the Government employs thousands of electronic engineers in its military labs.”
    That was true when Melman spoke and it is true today. We have an army of death scientists toiling away in germ warfare labs ($50 billion wasted on this nauseating research alone since 9/11), in space warfare labs, in nuclear warfare labs, in electronic warfare labs, as well as in labs specializing in conventional ways to kill people.
    Melman said one reason for the continuing dominance of the MIC is that the U.S. “is now a military form of state capitalism in which top managers of the military forces and their economy have dominant power---economic, political and military.” Translation: the Pentagon rules!
    Today, Melman might add the Pentagon spends more for war than all 50 states spend for all peaceful purposes; that the Pentagon's armed forces are bigger than the next dozen countries combined; that the Pentagon leads the world in arms sales; and that the Pentagon operates 800 overseas bases for “defense” when, in fact, they are used, like Diego Garcia in the Indian Ocean, for aggression.
    As of Jan. 1 of this year, the National Priorities Project of Northampton, Mass., says, the Pentagon has spent $445 billion to wage war in Afghanistan and $815 billion for Iraq, for a total of $1.26 trillion. This at a time when the American Society of Civil Engineers reckons $2.2 trillion is needed to restore our infrastructure. Example: 33% of all roads are in poor or mediocre condition. Does the Pentagon need to spend $19.3-billion on atomic energy when the same sum could pay 295,000 elementary school teachers?
    Cutting the Pentagon down to size and converting to civilian economy will require “a new coalition of working people, professionals, trade associations, mayors---all suffering from the prosperity of the military-industrial complex, all needing a turn away from militarism.” “What we need,” Melman concluded, “is a political opposition that would take down the entire military system.”
    We saw the faintest stirrings of hope for change in June when the U.S. Conference of Mayors passed a resolution to spend at home the $125 billion the Pentagon is wasting this year waging wars in the Middle East. In depressed Detroit, the unemployment level is 38% and Rep. John Conyers(D-Mich.) blames the White House's lack of leadership for the lack of job creation. Given our infrastructure needs alone, why isn't there a job or job-training for every person who is willing to work?
    To support President Obama's medieval war-making is what Professor Melman would rightly have called “mad.” It fits the dictionary definition of insanity as “utterly senseless” and “irrational.” It also fits the view of insanity which observes that the insane repeat their mistakes over and over. That's today's war machine, bigger and deadlier than ever. Welcome to the United Loony Bin of America.#
    Sherwood Ross runs a public relations firm for good causes and contributes articles regularly from his Anti-War News Service. Reach him at

    Sherwood Ross is a frequent contributor to Global Research.  Global Research Articles by Sherwood Ross

    President Barack Obama takes debt battle to Twitter, loses more than 40,000 followers in one day

    During this speech Friday, President Obama asked American to email, call, and tweet GOP Congressional leaders, and ask them to support a bipartisan debt solution.
    Martin H. Simon/Pool
    During this speech Friday, President Obama asked American to email, call, and tweet GOP Congressional leaders, and ask them to support a bipartisan debt solution.

    President Obama brought his debt battle to Twitter and he lost – more than 40,000 Twitter followers.

    Obama asked Americans Friday to call, email, and tweet Congressional leaders to “keep the pressure on” lawmakers in hopes of reaching a bipartisan deal to raise the nation’s $14.3 trillion debt limit ahead of an Aug. 2 deadline.

    Obama’s campaign staff used the @BarackObama Twitter account to post the Twitter handles of tweeting GOP leaders – state by state, tweet by tweet.

    “Tweet at your Republican legislators and urge them to support a bipartisan compromise to the debt crisis,” Obama’s campaign staff wrote on his account before launching the day-long Twitter campaign.
    The campaign appears to have served its purpose: Republican Twitter accounts were flooded with pleas for compromise.

    Not everyone is a fan of the presidential spam. By Friday evening, the President had lost more than 40,000 Twitter followers - and counting.
    Many members of the Twitterati took to the social media platform to voice their annoyance over the barrage of partisan tweets. A search for “@BarackObama unfollow” turned up scores of irritated posts.

    “Honestly, @BarackObama, I’m going to have to unfollow you if you don’t stop filing up my Twitter inbox soon,” tweeted Bostonian @melisthreadgill, a self-described “Progressive activist”.

    “Can’t believe I had to unfollow @BarackObama for spamming Twitter. Really, really strange behavior,” wrote @Arevill inConnecticut.

    “I want to unfollow @BarackObama but his desperation is too entertaining,” tweeted @rdpatrick of Lavonia, Georgia.

    While his follower number appears to have taken its biggest dive in recent memory, Obama’s Twitter account still had a whopping 9,362,880 followers at 7:30pm Friday night, down from 9,402,898 Friday morning - and he's still the third-most followed person on the planet.

    Sources: Debt deal calls for up to $2.8 trillion in savings

    Click to play
    GOP leader 'confident' debt deal on horizon
    • NEW: The deal being negotiated calls for up to $2.8 trillion in savings and would extend the debt limit through 2012
    • The Senate delays a key procedural vote on Reid's debt plan by 12 hours
    • House rejects Reid's plan to raise the debt ceiling
    • Congress must raise the $14.3 trillion debt ceiling by August 2 or risk default
    What will it take to find a solution to the U.S. Debt crisis? Wolf Blitzer and Don Lemon break down the hurdles and options in "GET IT DONE -- Countdown to Debt Crisis," a CNN Special Report Sunday night at 9 ET on CNN.
    Washington (CNN) -- The framework of a tentative deal to raise the nation's debt ceiling calls for up to $2.8 trillion in total deficit reduction over the next decade, two sources familiar with the negotiations told CNN late Saturday night.
    The agreement, still being negotiated by the White House and bipartisan congressional leaders, would allow the debt ceiling to be raised by enough to last at least through the end of 2012.
    The debt limit would be increased in two stages, both of which would occur automatically -- a key Democratic demand that would prevent a repeat of the current crisis before the next election.
    The agreement includes upfront spending cuts in the range of roughly $1 trillion, the sources said. A special congressional committee would recommend additional spending reductions of up to $1.8 trillion no later than Thanksgiving. If Congress failed to approve the recommended cuts by late December, automatic, across-the-board cuts -- including both defense and Medicare -- would take effect.

    News of a possible deal came shortly after the Senate delayed consideration of Majority Leader Harry Reid's debt ceiling proposal late Saturday night, pushing back a key procedural vote by 12 hours.
    The vote to stop debate and end a GOP filibuster on the plan will now be held at 1 p.m. ET on Sunday, as opposed to 1 a.m.
    Reid, D-Nevada, said he was asking for a delay to provide additional time for negotiations underway at the White House.
    There are "many elements to be finalized" and still "a distance to go," Reid said. "We should give everyone as much room as possible to do their work."
    Reid's announcement capped a day of sharp partisan voting in the House and extended talks behind closed doors between congressional and administration officials. Concern continued to grow that Congress will fail to raise the nation's debt ceiling in time to avoid a potentially devastating national default next week.
    Earlier in the day, the Republican-controlled House rejected Reid's plan -- partisan payback for the Democratic-controlled Senate's rejection of GOP House Speaker John Boehner's plan Friday night.
    House members rejected Reid's plan in a 173-246 vote. Most Democrats supported the measure; every Republican voted against it.
    Forty-three of the Senate's 47 Republicans, meanwhile, sent a letter to Reid promising to oppose his plan as currently drafted. Maine's Olympia Snowe and Susan Collins, Massachusetts' Scott Brown, and Alaska's Lisa Murkowski declined to sign it.
    Regardless, Democrats plowed ahead with the talks in the hope that modifications could be made to win over at least seven Senate Republicans and reach the 60-vote threshold required to clear the measure through the Senate and ultimately the House.
    Senate Minority Leader Mitch McConnell, R-Kentucky, spoke with Vice President Joe Biden several times Saturday, according to a senior administration official. Reid and House Minority Leader Nancy Pelosi, D-California, met with Obama at the White House.

    As the day wore on, Democratic and Republican leaders appeared at odds over whether any progress was being made toward a final agreement. At one point, both Boehner, R-Ohio, and McConnell declared that a deal was close -- an assertion which prompted Reid to take to the Senate floor and insist that the claim was the simply "not true."
    The Republicans are holding "meaningless press conferences" and "refuse to negotiate in good faith," Reid said. "The process has not been moved forward during this day."
    "I'm more optimistic than my friend the majority leader," McConnell replied. "I think we've got a chance of getting there."
    One Democratic source cited concern among congressional Democrats that Obama could be close to cutting a deal with Republicans at their expense.
    While the political maneuvering continued, the clock continued to tick down. If Congress fails to raise the current $14.3 trillion debt ceiling by August 2, Americans could face rising interest rates and a declining dollar, among other problems.
    Some financial experts have warned of a downgrade of America's triple-A credit rating and a potential stock market plunge. The Dow Jones Industrial Average dropped for a sixth straight day on Friday.
    Without an increase in the debt limit, the federal government will not be able to pay all its bills next month. Obama recently indicated he can't guarantee Social Security checks will be mailed out on time.
    For their part, Republicans continued to trumpet Boehner's proposal. The measure cleared the House Friday, but only after a one-day delay during which the speaker was forced to round up support from wary tea party conservatives. Boehner's deal with conservatives -- adding a provision requiring congressional approval of a balanced budget amendment to the Constitution in order to raise the debt limit next year -- was sharply criticized by Democrats, who called it a political nonstarter.
    Boehner's "gone to the dark side," Pelosi said Saturday. "Let's go from the dark side to the bright side."
    Democratic leaders vehemently object not only to the balanced budget amendment, but also the GOP's insistence that a second debt ceiling vote be held before the next election. They argue that reaching bipartisan agreement on another debt ceiling hike during an election year could be nearly impossible, and that short-term extensions of the limit could further destabilize the economy.
    Obama urged compromise Friday, and asked Senate Democrats and Republicans on Friday to take the lead in the congressional deliberations.
    "This is not a situation where the two parties are miles apart," the president insisted. But "we are almost out of time."

    Leaders of both parties now agree that any deal to raise the debt ceiling should include long-term spending reductions to help control spiraling deficits. But they have differed on both the timetable and requirements tied to certain cuts.
    Both the Reid and Boehner plans suffered setbacks earlier this week when the nonpartisan Congressional Budget Office released reports concluding that they fell short of their stated deficit reduction goals.
    Boehner's plan, which has since been revised, proposed generating a total of $917 billion in savings while initially raising the debt ceiling by $900 billion. The speaker has pledged to match any debt ceiling hike with dollar-for-dollar spending cuts.
    His plan, however, would require a second vote by Congress to raise the debt ceiling by a combined $2.5 trillion -- enough to last through the end of 2012. It would create a special congressional committee to recommend additional savings of $1.6 trillion or more.
    Any failure on the part of Congress to enact mandated spending reductions or abide by new spending caps would trigger automatic across-the-board budget cuts.
    The plan, as amended Friday, also calls for congressional passage of a balanced budget amendment before the second vote to raise the debt ceiling, which would likely be required at some point during the winter.
    As for Reid's plan, a revised version he proposed Friday would reduce deficits over the next decade by $2.4 trillion and raise the debt ceiling by a similar amount. It includes $1 trillion in savings based on the planned U.S. withdrawals from military engagements in Afghanistan and Iraq.
    Reid's plan also would establish a congressional committee made up of 12 House and Senate members to consider additional options for debt reduction. The committee's proposals would be guaranteed by a Senate vote with no amendments by the end of the year.
    In addition, it incorporates a process based on a proposal by McConnell that would give Obama the authority to raise the debt ceiling in two steps while providing Congress the opportunity to vote its disapproval.
    Among other things, Reid has stressed that his plan meets the key GOP demand for no additional taxes. Boehner, however, argued this week that Reid's plan fails to tackle popular entitlement programs such as Medicare, which are among the biggest drivers of the debt.
    A recent CNN/ORC International Poll reveals a growing public exasperation and demand for compromise. Sixty-four percent of respondents to a July 18-20 survey preferred a deal with a mix of spending cuts and tax increases. Only 34% preferred a debt reduction plan based solely on spending reductions.
    According to the poll, the public is sharply divided along partisan lines; Democrats and independents are open to a number of different approaches because they think a failure to raise the debt ceiling would cause a major crisis for the country. Republicans, however, draw the line at tax increases, and a narrow majority of them oppose raising the debt ceiling under any circumstances.
    CNN's Ted Barrett, Kate Bolduan, Gloria Borger, Keating Holland, Brianna Keilar, Jeanne Sahadi, Xuan Thai, Jessica Yellin, Barbara Starr and Deirdre Walsh contributed to this report.