Friday, November 4, 2011

ILO report warns of sharp employment downturn, social unrest

The International Labour Organization, an agency of the United Nations, released a report Monday pointing to a disastrous global jobs situation and a “vicious cycle” sending the world economy into a new downturn.
“The next few months will be crucial for avoiding a dramatic downturn in employment and a further significant aggravation of social unrest,” warns the opening editorial to the World of Work report, released ahead of a G20 meeting later this week.
In addition to documenting the employment situation, affecting both advanced and “developing” countries, the reports presents a damning portrait of contemporary world capitalism: growing financialization, declining taxes on the wealthy and corporations, and a collapse in the share of income going to the working class.
Three years after the crash of 2008, “economic growth in major advanced economies has come to a halt and some countries have re-entered recession, notably in Europe,” the ILO notes. “Growth has also slowed down in large emerging and developing countries.”
The vast majority of countries categorized as having advanced economies—mainly in the United States and Europe—have seen a slowdown in employment growth in the most recent quarter, and more than half have seen employment declines. At the same time, about half of those countries categorized as “emerging or developing” have seen declines in employment, including Russia and Mexico.
The advanced economies have 13 million fewer jobs today than in 2007, with the United States (6.7 million) and Spain (2.3 million) accounting for more than half of this figure. Due to the growth in the labor force, to restore pre-crisis employment rates, 27 million jobs would have to be added in advanced countries, and 80 million globally, over the next two years.
The jobs situation is particularly bleak for young people, and this holds true in almost all parts of the world. “Among countries with recently available data, more than one in five youth [aged 15-24], i.e. 20 percent, were unemployed as of the first quarter of 2011—against total unemployment of 9.6 percent.”
According to the ILO’s projections, which assume no further slowdown in global growth, the employment rate in advanced countries is not expected to return to pre-crisis levels until far past 2016.
Figure 1. Employment Rate Projections for Advanced Economies (ILO)
The prospects of a recovery in employment and economic growth are undermined by a number of factors, including a renewed financial crisis in Europe and a turn by governments throughout the world to fiscal austerity. Sharply declining wages for workers, particularly in advanced countries, are leading to a fall-off in consumption.
“In short,” the ILO writes, “there is a vicious cycle of a weaker economy affecting jobs and society, in turn depressing real investment and consumption, thus the economy and so on.”
Any prospect of a return to growth is also undermined by increasingly bitter national conflicts between the different capitalist powers. “While in 2008-2009 there was an attempt to coordinate policies, especially among G20 countries, there is evidence that countries are now acting in isolation,” the report states.
The ILO expresses the hope that governments will institute job-creation programs to resolve the crisis. However, the impossibility of this happening is highlighted by the fact that the report cites the United States as the only major advanced country to advance a “national jobs plan.” In fact, the Obama administration’s proposal, even if enacted in full, would be no more than a drop in the bucket. Since it was announced in September, it has already been scaled down significantly. Whatever is passed will consist largely of tax cuts for corporations.
The economic crisis is, predictably, producing a sharp increase in social discontent. The year 2011 has already seen a significant growth of the class struggle, beginning with the revolutionary upheavals in the Middle East and North Africa. They have since expanded to Europe, Latin America, and the United States, including in the Occupy Wall Street movement that began in September.
According to a metric of “social unrest” based on various indicators, including unemployment, the ILO calculates that 40 percent of the countries surveyed have seen a significant increase in the prospect of unrest. The likelihood of social unrest has increased particularly sharply in advanced countries. Moreover, the majority of countries worldwide reported a collapse of public confidence in national governments.
Dissatisfaction over the availability of quality jobs is over 80 percent in sub-Saharan Africa and over 70 percent in Central and Eastern Europe. It is over 60 percent in the Middle East and North Africa, though significantly higher in some countries, including Egypt.
Anger over the jobs situation is higher than 70 percent in Greece, Italy, Portugal and Spain—countries that are currently at the center of the European-wide drive to slash social programs and eliminate all previous gains of the working class.
The financialization of the world economy
Global social conditions have deteriorated sharply since the Crash of 2008, precipitated by the collapse of a massive speculative bubble inflated over the previous decade. While the fall of global stock markets led to an immediate decline in the wealth of the financial aristocracy, the actions of governments, led by the United States, have served to quickly reverse this trend.
In addition to documenting global labor conditions, the ILO report includes some important data on the financialization of the world economy, and the parallel process of wealth transfer—both before and after the 2008 crash.
It notes, disapprovingly, that in the aftermath of the crash “countries have increasingly focused on appeasing financial markets” rather than restoring employment, and that this “has often centered on fiscal austerity and how to help the banks—without necessarily reforming the bank practices that led to the crisis, or providing a vision for how the real economy will recover.”
In 2008, the capital share among financial corporations worldwide fell by more than 25 percent, after a decade of steady growth. Only a year later, however, shares were back to pre-crisis levels, a direct product of the various bank bailout schemes.
Figure 2. Evolution of capital shares by type of corporations (ILO)
“On the other hand,” the ILO noted, “the decline in the non-financial sector has been more gradual, but capital shares for this group—which account for 87 percent of employment in advanced countries—continue to decline.”
This has produced what the report refers to as a “paradox”: “The impact of the global economic crisis of 2007-08 on the financial sector was short-lived initially—despite it being at the very origin of the downturn.”

The growth of corporate profits since the crash have accrued largely to financial corporations. Non-financial corporations, moreover, instead of investing have funneled money into the stock market. “In 2009, more than 36 percent of profits were distributed in terms of dividends, compared with less than 35 percent in 2007 and less than 29 percent in 2000…”
This process of financialization is part of a longer-term trend, in which wealth accumulation through speculation has increasingly replaced productive investment. Far from reversing this trend, the economic crisis has only exacerbated it.
At the same time, an ever smaller share of income has gone to the working class. According to the ILO, “the wage share—the share of domestic income that goes to labor—has declined in almost three quarters of the 69 countries for which data is available.” This is also a long-term trend.
In addition to direct infusions of money into the banks, the transfer of wealth to the corporate and financial aristocracy has been facilitated by a tax policy that places an ever greater share of the tax burden on the working class.
Figure 3. Top personal income tax rate—world average (ILO)
Between 2000 and 2008, 43 percent of countries decreased their top income tax rate, while 70 percent of countries decreased their corporate profit tax rate. During the same period, 30 percent of countries increased value added taxes or consumption taxes, which disproportionately target the working class.
Overall, the top personal income tax rate globally fell from 31.4 percent in 2003 to 29.1 percent in 2009. Corporate taxes have fallen from 29.5 percent to 25 percent in the same period.
Again, this trend has only continued since the 2008 crisis. The proportion of government revenue from regressive consumption taxes has increased, while the income and corporate taxes have declined.
The ILO’s policy recommendations, on the other hand, are both grossly insufficient and utterly incapable of realization within the framework of capitalism. In addition to a jobs program, it hopes that governments will cooperate to increase the share of income going to the workers, while placing greater constraints on the financial system.
What the report in fact demonstrates, however, is that any attempt to resolve the crisis in the interests of the working class runs into direct conflict with the capitalist system and the financial aristocracy that controls it.

Feds File Massive Fraud Case Against Allied Home Mortgage

Federal prosecutors sued Allied Home Mortgage Capital Corp. and two top executives Tuesday, accusing them of running a massive fraud scheme that cost the government at least $834 million in insurance claims on defaulted home loans.
Houston-based Allied and its founder and chief executive, Jim Hodge, were the subject of July 2010 stories by ProPublica, which detailed a trail of alleged misconduct, lawsuits and government sanctions spanning at least 18 states and seven years. Borrowers recounted how they had been lied to by Allied employees, who in some cases had siphoned the loan proceeds for personal gain. Some borrowers lost their homes.

Despite years of warnings, the federal government had not — until this week — impaired the company's ability to issue new mortgages.
The suit, filed Tuesday in U.S. District Court in Manhattan, seeks triple damages and civil penalties, which could total $2.5 billion. Simultaneously, the U.S. Department of Housing and Urban Development suspended the company and Hodge from issuing loans backed by the Federal Housing Administration. The company was also barred from issuing mortgage-backed securities through the Government National Mortgage Association (Ginnie Mae).
Allied has billed itself as the nation's largest, privately held mortgage broker, with some 200 branches. (At one point, the company operated more than 600.) The sprawling network made Hodge a rich man with properties in three states and St. Croix in the U.S. Virgin Islands and two airplanes to get to them.
Allied and Hodge played the "lending industry equivalent of heads-I-win and tails-you-lose," U.S. Attorney Preet Bharara said at a news conference Tuesday. "The losers here were American taxpayers and the thousands of families who faced foreclosure because they could not ultimately fulfill their obligations on mortgages that were doomed to fail."
The government's complaint alleges that between 2001 and 2010, Allied originated 112,324 home mortgages backed by the FHA, which typically go to moderate- and low-income borrowers. Of those, nearly 32 percent — 35,801 — defaulted, resulting in more than $834 million in insurance claims paid by HUD.
In 2006 and 2007, the company's default rate was a "staggering" 55 percent, the complaint said.
In addition, another 2,509 mortgages are currently in default, which could result in another $363 million in insurance claims paid by HUD.
Borrowers told ProPublica last year that company employees falsified records to bolster their credit worthiness and lured them into unaffordable deals by lying about the terms.
The government's complaint says: "Allied has profited for years as one of the nation's largest FHA lenders by engaging in reckless mortgage lending, flouting the requirements of the FHA mortgage insurance program and repeatedly lying about its compliance."
Tuesday's action against Allied follows criticism that the government has been slow to act on rampant fraud and abuse in the mortgage market. In the case of Allied, the government had reams of evidence of possible misconduct. Among ProPublica's findings last year:
  • Allied had the highest serious delinquency rate among the top 20 FHA loan originators from June 2008 through May 2010.
  • Nine states had sanctioned the firm from 2009 to mid-2010 for such violations as using unlicensed brokers and misleading a borrower.
  • Federal agencies had cited or settled with Allied or an affiliate at least six times since 2003 for overcharging clients, underpaying workers or other offenses.
  • At least five lenders had sued, claiming Allied tricked them into funding loans for unqualified buyers by falsifying documents and submitting grossly inflated appraisals, among other allegations.
Allied spokesman Joe James said the company was aware of the government lawsuit but had not received a copy of it and could not comment.
Hodge did not return a phone call and email message seeking comment. But last year, he told ProPublica that the problems experienced at some of Allied's branches should not tarnish his firm's overall record. "If you look at the volume that we did or do," he said, "it's not significant."
In an interview Tuesday, Helen Kanovsky, HUD's general counsel, defended the time it took her department to take action.
"We had tried sanctions before," she said. "We had assessed civil monetary penalties, and that had not worked.
"The extraordinary remedy that we have — to be able to terminate somebody's FHA capacity [and] basically put them out of business — requires a very high level of evidence and a high level of proof."
The government's 41-page lawsuit details an alleged scheme by Allied to deceive HUD about its employees and the risks associated with its loans. For years, it operated a network of "shadow" branches that were not approved by HUD and falsely certified that they met legal requirements.
Allied also disguised the high default rates of some branches, the complaint alleges, by tinkering with their addresses to apply for new HUD identification codes for the same offices. When HUD updated its system to prevent such manipulation, Allied simply moved all of its branches to a sister company and obtained new IDs, "thus again achieving a clean slate on its default rates," the suit said. The sister firm, Allied Home Mortgage Corp., is also named as a defendant.
Hodge created a "culture of corruption," the suit said. He "intimidated employees by spontaneous terminations and aggressive email monitoring, and silenced former employees by actual and threatened litigation against them."
In one case, Hodge instructed his chief information officer to capture the password for the personal email account of Jeanne Stell, the company's executive vice president and compliance officer. Then he installed an electronic listening device under the information officer's desk, the complaint alleges.
Allied also was employing felons, including a state manager who had been sentenced to 60 months in prison for distributing methamphetamine, as well as a branch manager running the office under a false name, the suit said.
The government joined a whistleblower lawsuit filed by a former Allied branch manager in Massachusetts, Peter Belli. In addition to Allied and Hodge, the suit also names Stell as a defendant.
Belli had filed other suits against Hodge and Allied. He said Tuesday that, while his legal pursuit of his former employer has been long and hard, "I never really ever felt like quitting because I was married to the cause."
Allied is also facing at least one federal criminal investigation into its now-shuttered Hammond, La., branch. In multiple lawsuits, borrowers allege that the office deceived them from 2005 through 2007 by misrepresenting loan terms, falsifying records, failing to pay off prior mortgages and diverting hundreds of thousands of dollars.
At his news conference, Bharara said Tuesday's filing was a civil matter and that the investigation into Allied is continuing. "We will go wherever the facts lead us."

US Fed cuts growth forecasts for 2012

The Federal Reserve said it now expects US growth to be weaker and unemployment higher than it thought in its last set of forecasts, as the central bank left the door open to fresh measures to help the world's biggest economy.

Fed chairman Ben Bernanke said consumer confidence was back where it was during the depths of the recession
As expected, the Fed held interest rates at 0pc to 0.5pc, but cut its economic growth forecasts for 2012 to between 2.5pc and 2.9pc, down from 3.3pc to 3.7pc.

It also took a more gloomy view on jobs, predicting unemployment will stick at 8.5pc to 8.7pc next year against the 7.8pc to 8.2pc range it had forecast.

While acknowledging the economy had shown improvement in the third quarter, Fed chairman Ben Bernanke struck a downbeat note in his last press conference of the year.

"Right now consumer confidence is where it was during the depths of the recession. That's discouraging," he said.

Mr Bernanke refused to be drawn on whether a fresh round of stimulus is likely, but strongly suggested there is more the bank could to do tackle unemployment. "Cyclical unemployment left untreated, so to speak, can become structural unemployment," he said.

Unlike the Bank of England, the Fed is tasked with both lifting employment and controlling inflation

In a statement, the Fed left open the possibility of taking further steps later to try to boost the sluggish economy. But it gave no hint as to what those moves might be.

The vote was 9-1. Charles Evans, the president of the Chicago Federal Reserve Bank, dissented. The statement said he wanted to take stronger action.

REMINDER: Here's Who's Freaking Out Now That Greece Will Hard Default

Image: ap

A disorderly default in Greece just became a much bigger possibility, after PM George Papandreou announced a referendum on austerity yesterday.
If the Greeks vote no, this could be the end of Greece's participation in the euro, and spark contagion that could spread across Europe.
The Bank for International Settlements keeps a running tally of who has the biggest sovereign exposure to Greece. Although Japan, France, and Germany have all cut their debt exposure to Greece since earlier this year, they still stand to lose big if Greece decides austerity isn't worth it.
See who else has massive public debt exposure to Greece.

Spanish government debt exposure to Greece totals $502 million

Spanish government debt exposure to Greece totals $502 million
Total lending exposure: $1.15 billion
Source: Bank for International Settlements

Switzerland's government debt exposure to Greece totals $529 million

Switzerland's government debt exposure to Greece totals $529 million
Total lending exposure: $3 billion
Source: Bank for International Settlements

Belgian government debt exposure to Greece totals $1.9 billion

Belgian government debt exposure to Greece totals $1.9 billion
Image: AP
Total lending exposure: $10.5 billion
Source: Bank for International Settlements

U.S. government debt exposure to Greece totals $1.94 billion

Total lending exposure: $8.7 billion
Source: Bank for International Settlements

Italian government debt exposure to Greece totals $2.4 billion

Italian government debt exposure to Greece totals $2.4 billion
Total lending exposure: $4.5 billion
Source: Bank for International Settlements

UK government debt exposure to Greece totals $3.96 billion

Total lending exposure: $14.7 billion
Source: Bank for International Settlements

French government debt exposure to Greece totals $13.4 billion

French government debt exposure to Greece totals $13.4 billion
Total lending exposure: $56.94 billion
Source: Bank for International Settlements

German government debt exposure to Greece totals $14.1 billion

German government debt exposure to Greece totals $14.1 billion
German chancellor Angela Merkel & Greek prime minister George Papandreou
Image: AP
Total lending exposure: $23.8 billion
Source: Bank for International Settlements

Greek banks hold $62.8 billion in Greek debt

Source: Reuters

But banks in Europe have been working to cut their exposures

Greek banks downgraded by S&P

Greek banks downgraded by S&P
Four of Greece's largest banks were downgraded by S&P in June. From Financial Mirror:
The rating agency said Wednesday that the financial profiles of National Bank of Greece, EFG Eurobank, Alpha Bank and Piraeus Bank “are exposed to significantly heightened risks as a result of deterioration in Greece's creditworthiness and Greek depositors' perceptions of a possible government debt restructuring.”

Moody's expected to downgrade Soc Gen, BNP Paribas, and Credit Agricole this week

Moody's expected to downgrade Soc Gen, BNP Paribas, and Credit Agricole this week
French financial stocks have taken another hit today sparked by expectations of a Moody's downgrade of French banks this week. Back in June, Moody's had put three banks on review for a possible downgrade because if their exposure to the Greek domestic economy, in terms of sovereign debt and/or to the country's banking sector.

Romania and Bulgaria's banking sectors, and sovereigns, highly exposed to Greek banks

Romania and Bulgaria's banking sectors, and sovereigns, highly exposed to Greek banks
Image: AP
Romania and Bulgaria's private sectors, and their public sectors, are exposed to the Greek banking sector. If Greece's banking sector is slammed in a default, the result could be a lack of funding for the Romanian and Bulgarian sovereigns, private enterprises, or worse, according to Nomura (via FT Alphaville). From Nomura:
- A new Vienna Initiative: Despite an event in the Greek banking system those same banks are still required to maintain capital exposure into Emerging Europe. EBRD and EU provide support and other incentives to make this happen. Such a move however would be difficult and impose additional burdens on an already highly stressed Greek banking sector.
- Business slowdown (least bad outcome): Greek banks severely constrain lending in domestic subsidiaries as parent company funding crowds out domestic business. This is anti-growth for Romania and Bulgaria, though arguably it has already started to occur.
- Greek bank consolidation (bad outcome): Greek banks are forced to consolidate, perhaps into some form of good bank/bad bank set-up. Consolidation causes asset sales in Bulgaria and Romania. With limited foreign interest likely, government or domestic money would be needed, meaning net currency outflow. If a sale was not possible capital withdrawal would then be likely.
Capital withdrawal (very bad outcome): Greek banks are forced to draw down capital from subsidiary banks to shore up their own balance sheets. The capital flight causes balance of payments stress (requiring reserve utilization and in Romania’s case potentially tapping the precautionary SBA).
- Subsidiary default threat (very bad outcome): Removal of parent company support causes domestic banks to default but EBRD and the Romanian/Bulgarian government step in and nationalize or cause consolidation within Romania to absorb the bank.
- Outright parent company default (worst outcome): Parent company support is removed, capital is withdrawn, there is a fire sale of Emerging Europe assets. (Even if Greek banks were nationalized or bailed out would the Greek government really want to support Romanian and Bulgarian subsidiaries?)

Austria banks have significant positions in Eastern Europe

Austria banks have significant positions in Eastern Europe
Image: Wikimedia
Austrian banks like Erste Bank, have positions in Eastern Europe which may come under threat if those countries slowdown as a result of a Greek default. At the end of June however, Raiffeisen Bank International kept its exposure to Greek sovereign debt at zero, according to Reuters.
From a Fitch comment on May 24 (via Reuters):
"However, their individual ratings also consider Fitch's expectation that impaired loans in some (central and eastern European) markets have yet to peak and -- in the case of Erste and notably RBI -- the banks' only modest capitalization if the forthcoming repayment of government participation capital and preparations for Basel III are taken into account,"

The ECB holds a significant amount of Greek debt

As of May JP Morgan (via The New York Times), estimated that the ECB owned about €40 billion in Greek bond debt after it had been buying Greek bonds in the open market for about a year. A 50% of write-down on Greek debt could cause €35 billion in losses to the ECB. The ECB had also lent an additional €91 billion to Greek banks. In the event of a Greek default, that debt may become worthless, and the ECB may be forced to recapitalize through taxpayer funds, from the rest of the eurozone.

If a restructuring does occur, the risk trade will be clobbered.

JP Morgan: There will be a flight to US treasuries and yields will fall there as a result of renewed risk aversion. This will widen spreads on high grade corporate bonds as a result.

Other countries will have a much harder time entering the Euro.

Other countries will have a much harder time entering the Euro.
Morgan Stanley: The Greek crisis will make the EMU much more concerned about who they let into the Euro zone in the future. They will start to check more economic criteria, such as external imbalances and budget positions.

ECB: Rate hike cycle may be stalled

ECB: Rate hike cycle may be stalled
The ECB kept interest rates steady at its last meeting. Intended to curb inflationary pressures on the eurozone, rate hikes may have to be halted if a Greek restructuring damages the continent's banking system.

Macedonia, and Albania will be hit too

Macedonia, and Albania will be hit too
Morgan Stanley: When the Greek economy slides, foreign workers from Albania and Bulgaria may lose jobs and stop sending home remittances. Also, FDI to Macedonia (7% of its GDP) and Bulgaria (8% of GDP) will decrease. Note: Data from 2010.

But Greece isn't the only euro nation under fire.

Occupy Oakland general strike – as it happened

Thousands of workers are expected to support the 'Occupy Oakland' movement with an attempt to shut down the city

Occupy Oakland
Oakland's police officers' association have criticised the city's mayor. Photograph: Ben Margot/AP
Scott Olsen Occupy Oakland An undated photo of Iraq war veteran Scott Olsen, who remains in serious condition after he was hit by a police projectile at an Occupy Oakland protest. Photograph: Keith Shannon Photograph: Keith Shannon
12:00pm: Thousands of protesters are expected to gather in Oakland, California, for a general strike and mass day of action in support of the Occupy Oakland movement.
Workers, university students and school pupils are all being urged to rally near the Occupy camp, with banks and large corporations expected to be targeted by marches.
The strike aims to "shut down" the city, culminating with a march to the port of Oakland to prevent the transit of cargo.
Activity is expected to centre on 14th Street and Broadway – where Scott Olsen, a former marine, was hit and seriously injured by a police projectile last week.
Three demonstrations are planned, one at 9am local time (12pm ET), another at noon (3pm ET), and a third at 5pm (8pm ET). There are likely to be other, spontaneous "autonomous actions" – probably marches on banks and large corporations – taking place through the day.
Our reporter Adam Gabbatt is on the scene in Oakland and will be providing live updates. We also have reporters in New York at Occupy Wall Street and will be monitoring developments from other Occupy sites throughout the day.
Anti-war Iraq veterans march to Occupy Wall Street's camp at Zucotti Park in New York Anti-war Iraq veterans march to Occupy Wall Street's camp at Zucotti Park in New York. Photograph: Spencer Platt/Getty Images
12.04pm: In New York, a veterans' march in under way. Reporter Ryan Deveraux writes:
Men and women representing each branch of the US military have come together in New York City to stand in solidarity with the growing Occupy Wall Street movement. Dozens of veterans chose to march from the Vietnam veterans memorial in Lower Manhattan to Zuccotti Park – re-named Liberty Square by demonstrators who set up camp there six weeks ago.
Military support for the movement was bolstered last week when Scott Olsen, a US marine who served two tours in Iraq, was critically wounded protesting in Oakland after police fired tear gas canisters and less-than-lethal rounds into the peaceful crowd.
Among those marching today is navy veteran Joshua Shepherd, who was standing next to Olsen when he was injured. The veterans, including men and women who served in a number of conflicts over many generations, began their demonstration using Occupy Wall Street's signature call and response amplification system, the "human mic", to declare themselves members of the so-called 99%.
12.34pm: My colleague Adam Gabbatt is in Oakland, and send this dispatch:
About 300 people turned out for the first rally of a day of action in Occupy Oakland.
Demonstrators have called for a general strike in the city, converging around three demonstrations at 9am, 12pm and 5pm, with marches on banks and the Port of Oakland planned throughout the day.
Numbers in the camp swelled overnight ahead of the strike, with all available space at the base of Frank H Ogawa plaza filled.
Among the newcomers was Kyle Vachon, who travelled from Occuy Chico on Tuesday night, arriving at 9pm. He was sitting at the Chico camp when a friend asked if he wanted to attend.
"He was like: 'Dude, we're going to Oakland, do you wanna go to Oakland?'," Vachon said. "Then he said: 'Get in the car.'"
Vachon travelled down with three others and stayed in a tent overnight. He was planning to march today.
At the 9am rally, protesters gathered in the crossroads at Broadway and 14th, at the corner of Frank H Ogawa plaza and where Scott Olsen, an Iraq war veteran, was injured during clashes with police on Tuesday 25 October.
In the warm sunshine protesters turned back traffic as they listened to speakers explain the plans for the day.
Occupy Oakland has pledged to march on any banks not supporting the strike – so, all banks – from 2pm, while demonstrators will march to and picket the Port of Oakland from 4pm, bidding to shut down shipping trade for the day.
Cat Brooks, Occupy protester and campaigner for justice for Oscar Grant – the 22-year-old black man killed by Oakland police at a Bart subway station – said the action was about "saying no to the 1% and yes to the 99%".
"This is a warning, a test, to the 1%. We don't need them; they need us."
1.50pm: Here's more from Ryan Devereaux in New York, watching the march of servicemen and women in support of Occupy Wall Street.
Led by Scott Olsen's friend, Navy veteran Josh Shepherd, service men and women marched in two-by-two columns along sidewalks through Lower Manhattan.
As the march made its way into the financial district, a police barricade was moved aside and the veterans were allowed to move onto Broad Street. For what seems to be the first time since the demonstrations in New York City began six weeks ago, Occupy Wall Street protesters were allowed onto Wall Street itself.
With six New York City Police Department officers on horseback looking on, the procession paused in front of the New York Stock Exchange. There, Shepherd read a brief statement reiterating the oath members of the armed forces take to defend the US constitution. He then added: "We are here to support the Occupy Wall Street movement."
At the intersection of Broadway and Wall Street, the veterans stopped and observed a moment of silence for Scott Olsen, before passing the financial district's iconic bull statue.
Turning in the direction of the Occupy Wall Street encampment at Liberty Square, the cadence of "Left, left, left, right, left," was paused by a call-back chant of, "Hold your heads and hold them high, the 99 percent is passing by."
The veterans arrived to the plaza amid cheers and applause. One young man described the passing troops as his "heroes."
2.21pm: Back in Oakland, Adam Gabbatt reports that the first of three planned marches of the day is now over. Here's a picture from earlier:
Occupy Oakland protesters march in the Californian city Occupy Oakland protesters march in the Californian city. Photograph: Adam Gabbatt/ Adam has been to the port of Oakland– there were reports that longshore workers were on strike this morning and trucks were not being let in: this isn't true. Adam reports: "Everyone I spoke to here says is a longer line than usual, but as a result of workers walking out over safety issue yesterday."
Cranes are operating, and trucks can be seen moving in and out of the port, Adam says.
2.37pm: This picture gives a sense of the scale of the protest in Oakland today.
Occupy Oakland protesters rally in front of the State of California building Occupy Oakland protesters rally in front of the State of California building. Photograph: Ben Margot/AP Adam Gabbatt estimates that a crowd of around 1,000 marched through the streets, bringing traffic to a halt. He reports that police appeared content to let the march take place, and did not make any attempt to halt it.
2.48pm: Here's more detail from Adam Gabbatt in Oakland on the situation at the city's port.
Rumours were rife this morning that Occupy Oakland's general strike had scored an early victory by encouraging longshore workers to shut down the Port of Oakland.
Protesters plan to march to the port later today, but were told that it had already been shut by workers refusing to work – apparently as a show of support for the Occupy movement.
I headed down to the port at 10am to check out the rumours. They weren't true. While there was a backlog of trucks in a line at the port, the line was moving, as were cranes, which were busy loading and unloading containers.
Workers said there was a longer line than usual, but this was due to workers having walked out yesterday over a separate issue relating to safe working practices.
Returning to #OccupyOakland, speakers at the corner of Frank H Ogawa plaza were already backtracking on earlier claims the port had closed, but warning it was only a matter of time.
"Earlier we told you the Port of Oakland was closed. The port of Oakland is not closed... yet," Clarence Thomas, a Longshore worker at the port, told the 1000 strong crowd.
Another speaker said plans go ahead for a picket of the port this afternoon. Protesters plan to march to the waterfront from 4pm.
There was a police presence at the port at 10.30am, in the form of around 20 officers on motorcycles, but it was unclear if this was in preparation for the Occupy Oakland action.
2.52pm: Adam has been speaking to Emily Yates, a friend of Scott Olsen, who is still in hospital after being hit by a projectile apparently fired by police when they tried to clear the Occupy Oakland camp last week.
Adam Gabbatt byline Yates is a fellow Iraq war veteran, having served two tours, and along with Olsen is a member of Iraq Veterans Against the War.
She said Olsen had shown his support for the march by liking a post on Facebook. "[The post] said that we're carrying thoughts of him today at the strike," Yates said.
Yates added that Olsen was "aware of all the stuff that is happening, and he's really stoked about it." Yates is meeting fellow Iraq Veterans Against the War later today and will be part of the march to the Port of Oakland.
Emily Yates, a friend of Scott Oslen, speaks to the Guardian
3.30pm: In New York, Iraq war veterans, who had earlier marched along the sidewalks of Lower Manhattan to Zuccotti Park, have been addressing crowds at the Occupy Wall Street camp. Ryan Devereaux writes:
Gathered at the east end of the park e a young man in an Iraq Veterans Against the War t-shirt, and fatigues kicked off a press conference for the demonstrators occupying the plaza.
"My name is Joesph Carter," he said through the human mic, "I am a two-time Iraq war veteran and this is the only occupation that I believe in.
"For too long our voices have been silenced, suppressed and ignored in favour of the voices of Wall Street and the banks and the corporations. Their money buys them disproportionate influence over the decision-makers in Congress.
"For ten years we've been engaged in wars that have enriched the wealthiest one percent, decimated our economy and left our nation with a generation of traumatized and wounded veterans that will require care for years to come."
4.24pm: In Oakland, another march is under way – this time, writes Adam Gabbatt, a loose confederation of the Oakland education association and general Occupy protesters.
Adam Gabbatt byline John Robb, from Fairfax, California, managed almost singlehandedly to shut down a Chase bank branch.
"I got here at 10.30am, one my own," Robb told the Guardian from his position seated in front of the entrance.
"Security kept pushing me away, but I stayed by myself for another 30 minutes. Then someone else arrived, they still pushed us away. Then the big march came past and we called everyone over, they came and the bank locked the doors."
The march Robb referred to is a loose confederation of the Oakland education association and general Occupy protesters. Since leaving Frank H Ogawa plaza te march has increased to perhaps two thousand strong and is currently encamped outside Bank of America's HQ.
Some protesters voiced their desire to smash the bank's windows; other protesters stood in front of the bank and prevented them from doing so.
Occupy Oakland protester John Robb Occupy Oakland protester John Robb. Photograph: Adam Gabbatt/

5.45pm: Here's a summary of events today.
Thousands of people have been marching in Oakland, California, where an attempt by police to break up an "Occupy" camp a week ago led to Iraq veteran Scott Olsen suffering a serious head injury. The day has so far passed off with good humour and without trouble. But the protesters' desire to "shut down" the city with a general strike appear not to have materialised.

Rumours that the Port of Oakland had been shut down by the protests proved unfounded.
There were longer lines at the port after workers walked out yesterday over a separate issue relating to safe working practices. But most workers turned up for work today.
In New York, army veterans have marched through lower Manhattan to the Occupy Wall Street Camp at Zuccotti Park. The march passed off without incident, and veterans have been speaking in support of Olsen and the Occupy movement at Zuccotti Park.
9.30pm: Good evening, we're re-opening our live coverage of the Oakland general strikes with reports coming through via Reuters that protesters have ''effectively shutdown" Oakland port operations. The Port has issued the following statement:

At this time, maritime operations are effectively shut down at the Port of Oakland. Maritime area operations will resume when it is safe and secure to do so.
10.02pm: Adam Gabbatt has filed this dispatch from the protest march.
Adam Gabbatt byline Thousands joined the march to shut down the Port Of Oakland, protesters appearing to surprise themselves with the strength of the turn out.
As the march weaved through downtown Oakland it was difficult to assess size, but when protesters walked up the bridge to the port, affording the first opportunity to look back at the crowd, there were gasps and whoops.
The demonstration stretched some 300m, spanning six lanes of traffic, with little to no police presence for the first two hours.
Once inside the port protesters were welcomed by truck drivers hooting horns. The younger and more agile quickly scaled trucks, waving flags as thousands of protesters continued to walk into the main port area.
An impromptu, human mic facilitated, discussion decided the group would split into four groups, each picketing a separate gate or area.
I was with the last group to stop, who only did so when their path towards Bay Bridge - they havent decided yet whether to occupy it - was blocked by a line of 40 police officers in riot gear.
The bulk of the group - perhaps 500-600 people - remained 400m from the police line, chanting "We have achieved what we wanted," but a trickle of about 30 marched on.
The smaller group stopped in front of the police line, and there was a (peaceful) impasse, before the police left without explanation.
Some 20 people marched on, toward Bay Bridge, while the bulk of the group remained 400m back, in the darkness.
The aim was to prevent Longshore workers getting into the port for the start of their 7pm shift. They seem to have achieved it.
Live blog: Twitter
10.16pm: The latest from @occupyoakland on the port shutdown: At port of America with 500 people Port is shut down people picketing in circles and chanting- cops down road are staying put
10.36pm: Here is the full statement from the Port of Oakland - contained within, a request for those marching to allow workers to get home to their families safely.

Oakland, Calif.— November 2, 2011 — At this time maritime operations are effectively shut down at the Port of Oakland. Maritime area operations will resume when it is safe and secure to do so.

Safety, security, respect and dignity for everyone remain of paramount importance. We continue to ask that everyone remain calm, respectful, and safe.

Specifically, we ask that the marchers allow port workers safe passage home. Please allow your fellow 99% to get home safe to their families.

The Port of Oakland is an economic engine: Through our activities and those of our tenants and customers we support over 73,000 jobs in our region and are connected to more than 800,000 jobs nationwide. These are jobs for the 99%.
11.08pm: Adam Gabbatt is now heading back to the main Occupy Camp.

Protesters were in place to blockade the port, in four separate groups, from 6pm. The plan was to block Longshore workers from getting to their 7pm shift, but some got impatient, chanting to "take the [bay] bridge" after hearing erroneous reports that the San Francisco occupy contingent had occupied their side.
The demands were tempered, and most protesters sat and waited - awaiting for confirmation from arbiters at the international Longshore workers union as to whether the port had officially closed. By 8pm this hadn't come, and the crowd had halved in size.
I've just left the port and headed for the main Occupy Oakland camp. The fresh rumour is that there will be a march, or marches, at 10pm. Whether they will be peaceful, like most of the action today, or tainted by the violence that saw Chase, Wells Fargo and Bank of America all damaged this afternoon, remains to be seen.
11.20am: Police have said a pedestrian, identified by local media as a protester, was struck by a vehicle in downtown Oakland during the march and taken to a local hospital. There are varying reports as to the extent of the person's injuries, but no official word as yet.
11.33pm: Some more on the situation regarding the protester hit by a car. This piece from the San Francisco Chronicle reports that two people were injured and both appeared to be conscious in hospital.
11.45pm: Following many false reports on twitter that a protester hit by a car had died, Acting Oakland Police Chief Howard Jordan confirmed they were taken to a local hospital for treatment of non-life-threatening injuries.
12.14am: Time for a summary of the latest this evening.

Police estimated that a crowd of about 3,000 gathered at the Port of Oakland by early evening. Some had marched from the California city's downtown, while others had been bused to the port.
Occupy demonstrators forced a halt to operations Oakland's port which is the fifth busiest port in the US, on Wednesday night.
In a statement put out by Oakland Port confirming the closure, officials said maritime area operations would resume "when it is safe and secure to do so."
Acting Oakland Police Chief Howard Jordan said the pedestrian hit by a car was taken to a local hospital for treatment of non-life-threatening injuries.
Coverage is now moving to a new blog. You can follow more Oakland updates on our keyword page here.

Let Them Eat Cake: 10 Examples Of How The Elite Are Savagely Mocking The Poor

There is absolutely nothing wrong with working hard and making a lot of money, but there is something wrong with being completely arrogant and smug about it.  Today, many among the elite are savagely mocking the poor, and that is a huge mistake.  You shouldn’t kick people when they are down.  There are tens of millions of Americans that are deeply frustrated about losing their homes, losing their jobs or barely being able to survive in this economy.  These frustrations have been one of the primary reasons for the rise of the Tea Party movement and the rise of the Occupy Wall Street movement.  What these movements have in common is that people in both movements are sick and tired of the status quo and they want something to be done about our broken system.  There are huge numbers of families out there right now that have just about reached the end of their ropes.  Instead of showing compassion, many of the ultra-wealthy have decided that it is funny to mock the poor and those that are suffering.  So how are all of these protesters going to respond to the “let them eat cake” attitude of the Wall Street elite?  The protesters are being told that nothing that they can do will change anything and that they should be grateful for what Wall Street and the ultra-wealthy have done for them.  They are essentially being told that they should just shut up and go home.  So will we see these protest movements become discouraged and die down, or will the patronizing attitudes of so many among the elite just inflame them even further?
Right now, there really are two different “Americas”.  In one America, the stock market is surging, corporate profits are soaring and BMW is operating factories at 110% of capacity just to keep up with demand.
In the other America, unemployment is rampant, millions of families are being kicked out of their homes and more than 45 million Americans are on food stamps.
There is more economic frustration in this country today than there has been at any other time since the Great Depression.  We are watching pressure build to very dangerous levels.
It is important to note that I certainly do not agree at all with the solutions being put forward by the organizers of the Occupy Wall Street protests.  As I have written about previously, collectivism is one of our biggest problems, and more collectivism is not going to solve anything.
But it is definitely understandable that people are incredibly upset about this economy and that they want to protest.  Most Americans realize that something is fundamentally wrong with our economic system.
Unfortunately, most of them do not understand how we have gotten to this point or what it is going to take to fix things.  That is one of the reasons why I write about economic issues so much.  We desperately need to educate America.
But what is undeniable is that there is a growing rage in this country that protest movements such as the Occupy Wall Street are giving a voice to.
Our system is badly broken.  The people out there protesting in the streets may not understand much, but they do understand that something needs to change.
The Wall Street elite should be taking these protests as a signal that they need to get their house in order.  The status quo just is not going to cut it.  But instead of taking leadership and calling for significant change, many among the elite are openly mocking the protesters.
The incredible arrogance displayed by so many on Wall Street and by so many in Washington D.C. is absolutely appalling.
The following are 10 examples of how the elite are openly mocking the poor in America today….
#1 According to an article in The New York Times, poor families that lost their homes to foreclosure were openly mocked during a Halloween party thrown by the law firm of Steven J. Baum.  This particular law firm represents many of the largest mortgage lenders in the United States….
The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.
Photos from this Halloween party are posted on The New York Times website.  To say that they are appalling would be a huge understatement.  The following is how The New York Times described one of the photos….
In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.
#2 To many on Wall Street, the OWS protests are one big joke.  In fact, Wall Street executives have been spotted sipping champagne while watching the Occupy Wall Street protests from their balconies.
#3 In response to the Occupy Chicago protests, signs were put up in the windows of the building where the Chicago Board of Trade is located that spelled out this sentence: “We Are The 1%“.
#4 Many columnists for major financial publications have had no fear of mocking the Occupy Wall Street protesters.  For example, Doug Hirschhorn recently wrote the following for Forbes….
As your Occupation of Wall Street continues, you may want to grasp a few things. First, it is not going to change anything in the short term and probably not much in the long-term either.
I hate to be the bearer of that news, but money makes the world go round and “Wall Street” is all about money. Second, the top traders, banks and hedge funds are still going to out earn and generate substantial profits from speculating on the disconnects in the prices of things generated from all the moving parts in the global economy and it has nothing to do with why you lost your house or job or can’t find a job. If anything the successful ones are helping you, your pensions funds, retirement savings and the economy in general. If Wall Street stops. The world stops. Period.
#5 Instead of attempting a balanced report on the Occupy Wall Street protests, Erin Burnett of CNN openly made fun of them during a recent broadcast.  After being a stalwart on CNBC for so many years, Burnett has very close ties to Wall Street and apparently she does not like anyone criticizing her friends.  You can see video of Burnett mocking the Occupy Wall Street movement right here.
#6 Barack Obama continues to mock the poor by telling them to cut back on vacations and little luxuries like going out to eat while at the same time sending his own family out on incredibly expensive vacations.  The following is one example I noted in an article earlier this year….
Barack Obama recently made the following statement to American families that are struggling to survive in this economy: “If you’re a family trying to cut back, you might skip going out to dinner, or you might put off a vacation.” A few days after making that statement Obama sent his wife and children off on yet another vacation, this time to a luxury ski hotel in Vail, Colorado.
Later on in that same article I mentioned another outrageously expensive vacation taken by the Obamas that was paid for by our taxes….
Back in August, Michelle Obama took her daughter Sasha and 40 of her friends for a vacation in Spain.
So what was the bill to the taxpayers for that little jaunt across the pond?
It is estimated that vacation alone cost U.S. taxpayers$375,000.
During a time when so many millions of American families are deeply, deeply suffering it is truly appalling that the residents of the White House would be so insensitive.
#7 Republican presidential candidate Herman Cain recently declared that anyone that is unemployed or poor in America should only blame themselves….
“Don’t blame the big banks. If you don’t have a job and you’re not rich, blame yourself.”
#8 Sometimes our politicians are so insensitive that it is almost hard to believe.  In an interview with George Stephanopoulos of ABC News while she was still the Speaker of the House, Nancy Pelosi stated that we need poor people to have less children because it costs the government so much money to take care of them….
PELOSI: Well, the family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now and part of what we do for children’s health, education and some of those elements are to help the states meet their financial needs. One of those – one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the federal government.
STEPHANOPOULOS: So no apologies for that?
PELOSI: No apologies. No. we have to deal with the consequences of the downturn in our economy.
#9 Warren Buffett has some interesting observations on class warfare.  He is one of the few wealthy Americans that is willing to say what everyone else is thinking.  Back in 2006, Buffett was quoted as saying the following in an article in The New York Times….
“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”
Buffett was not taking pride in the fact that the elite have won, but there are many others among the elite that are very proud of what they have done and they are not afraid to look down on the poor.
The level of income inequality that we have in the United States today isabsolutely amazing.  According to data from a few years ago, the average household income for the top 0.01% of all Americans was $27,342,212.  According to that same data, for the bottom 90% of all Americans the average household income was just $31,244.
#10 Every single day, our “representatives” in Washington D.C. are living the high life at our expense.  It is amazing that out of the entire population of the United States, we continue to overwhelming elect rich people to Congress.  As I noted in a recent article, more than half of all the members of Congress are millionaires, and the median wealth of a U.S. Senator in 2009 was 2.38 million dollars.
Without a doubt, the wealthy rule over us all and they intend to maintain control and perpetuate the system which has rewarded them so handsomely.
When necessary, they are not afraid to call in the police to bust some skulls.  Sadly, we are already seeing some brutally violent confrontations between law enforcement authorities and Occupy Wall Street protesters in many areas of the country.  The other day, I wrote about the horrific violence that took place in Oakland recently….
Unfortunately, the authorities are not just going to sit by and watch these protests happen.  In fact, they are already clamping down hard in many areas of the nation.  For example, police in Oakland recently used tear gas and rubber bullets to break up the Occupy protest in that city.  When police opened fire, the streets of Oakland literally became a war zone for a few minutes.  You can see shocking videos of the violence herehere and here.
Power and wealth have become incredibly concentrated in the United States today.  As one scientific study demonstrated recently, the elite control almost the entire global economy.  In fact, the University of Zurich study discovered that there are just 147 gigantic corporations at the core of it all.
It is not a good thing that such a very small group of people completely dominates all the rest of us.
Once again, there is absolutely nothing wrong with working hard, making great contributions to society and becoming very wealthy.
However, what we have today is a fundamentally broken system that funnels most of the wealth and most of the power into the hands of the ultra-wealthy and the gigantic corporations that they own.
It would be great if the American people could come together and work to make some positive changes to our system.
But right now, it appears that strife, discord and hatred are going to continue to rapidly grow in this country.  We have become a very divided nation and we are watching anger and frustration grow to very dangerous levels.
All of this is a recipe for mass chaos.  Our country is marching toward a date with disaster and right now we show no signs of changing course.
Please pray for America.
We definitely need it.

More here:

Lagarde sees move on IMF loan after Greece vote

Christine Lagarde has pledged to expedite the next
stage of the Fund's loan for Greece after the vote
© AFP Lionel Bonaventure

WASHINGTON (AFP) - IMF chief Christine Lagarde welcomed Greek Prime Minister George Papandreou's commitment to hold his euro referendum soon and pledged to move on the next stage of the Fund's loan for Greece after the vote.

"I welcome the Prime Minister's indication that the referendum which has been announced will take place as soon as possible so that the Euro Summit agreement can be implemented expeditiously," Lagarde said in a statement in Cannes, France ahead of the G20 summit there.

"As soon as the referendum is completed, and all uncertainty removed, I will make a recommendation to the IMF Executive Board regarding the sixth tranche of our loan to support Greece's economic program," she added in the statement released in Washington, the Fund headquarters.

Lagarde stressed that she was "convinced that the agreement reached by the leaders of the Euro Area at their Summit last week, which includes a substantive reduction in Greece's debt burden and additional financial support for a new ambitious program, will greatly benefit Greece by helping to restore growth and create jobs. "

President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany meanwhile warned that Greece must decide if it wants to abide by the terms of a bail-out deal and to stay in the euro.

Sarkozy warned that not a further cent in rescue loans would be transferred until Greeks made a clear response, with Athens set to run out of funds and default in weeks unless it receives eight billion euros.

"We hope to pursue Europe with our Greek friends," Sarkozy told a press conference following crisis talks with Papandreou, Merkel and EU and IMF officials.

On Monday, Papandreou shocked Europe by saying he would put the terms of a bail-out deal agreed last week with European leaders to a referendum, sending panic through markets, which thought the rescue plan a done deal.

Papandreou has said that a referendum could be held as early as December 4, and acknowledged that Greece's future in the euro was at stake.

© AFP -- Published at Activist Post with license

Fed Passes China to Become Largest U.S. Creditor

The Federal Reserve has surpassed China as the single largest creditor of the U.S. government.

UniCredit’s Chief U.S. Economist Harm Bandholz is out Thursday with the details:

As a result of its asset purchase program (QE2), the Federal Reserve at the end of 1Q held about 14% of total outstanding federal debt (debt held by the public). It is, therefore, now the single-largest creditor of the US government.

According to separate data from the Treasury Department, China is ranked second. It owned in late March Treasuries worth USD 1,145bn, which is slightly less than 12% of the total amount outstanding.

After the Fed and China, the biggest holders of U.S. debt are

the household sector
state and local governments
and private pension funds.
In addition:

By the end of this month, the Fed will have boosted its Treasury holdings by another USD 250bn (annualized 1tr), and will own about 16% of all outstanding Treasuries (not to mention the 15% of GSE mortgage-backed securities)…

As QE2 ends in three weeks, the critical question remains, “who will buy them thereafter?” We think that private households and foreign investors, who have both been very cautious in recent months, will ramp up their Treasury purchases again. But they might ask for higher yields than the US central bank did.

Bond bulls beware!

15 Trillion Dollars In Debt, 45 Million Americans On Food Stamps And Zero Solutions On The Horizon

How does a country end up 15 trillion dollars in debt? 30 years ago, we were just a little over a trillion dollars in debt. How in the world do supposedly rational people living in “the greatest nation on earth” allow themselves to commit national financial suicide by allowing government debt to explode like that? It almost seems like there should be some sort of official ceremony in Washington D.C. to commemorate this achievement. It really takes something special to be able to roll up 15 trilliondollars of debt. To get to this level, we really had to indulge in some wild spending. For example, did you know that the U.S. national debt grows by more than 2 million dollars every single minute? All of this debt has fueled an unprecedented boom of prosperity for the last 30 years, but now that prosperity is drying up. Today, there are over 45 million Americans that are on food stamps. America is being deindustrialized at a blinding pace and there are not nearly enough jobs for everyone. Poverty is exploding all over the nation, and millions of families have lost their homes to foreclosure. Unfortunately, there are zero solutions on the horizon. The leaders of both major political parties seem even more clueless right now than in past years. We really could use some hope, but hope is in very short supply.

When evaluating the health of America’s economy, it is important not to look at the short-term numbers. Rather, the key is to look at the long-term trends and the balance sheet numbers.

For example, if a mother and a father gave their teenage kids a bunch of credit cards and told them to go out and buy whatever they wanted, that would create a lot of “economic activity”, but it would also send that family to the poorhouse really quickly.

Well, we have basically done the same thing as a nation. We are drowning in debt, and all of this debt is going to destroy us financially.
Unfortunately, the federal government continues to spend money as if there was no tomorrow. Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.

When you are running up a credit card, it can be a lot of fun and it can seem like there aren’t any consequences.

But when it comes to debt, there are always consequences. The following is what former Republican Senator Alan Simpson (of the Simpson-Bowles Commission) recently had to say about the horrific debt crisis we are currently facing….

“It’s very simple. If you spend more than you earn, you lose your butt”

In the United States, we love to have the government spend money on all sorts of things, but we never want to pay for it.

So the debt just keeps piling up higher and higher.

A lot of Republicans say that spending on social programs has gotten out of control. A lot of Democrats say that spending on the military has gotten out of control.

They are both right. As I have written about previously, the U.S. military accounts for close to half of all the military spending in the world. In fact, U.S. military spending is greater than the military spending of the next 15 countriescombined.

Yes, we will always need a very powerful military, but we can have one without going broke in the process.

But an even larger problem is our rampant spending on social programs.

The following comes from a recent article by Janet Tavakoli….

In 1950 spending for social programs was only one percent of the total Federal Budget. As the economy grew, social programs expanded to include Social Security, Medicare, Medicaid, Food Stamps, Unemployment Compensation, Supplemental Security for the Disabled, and educational programs. In 1983 as the United States pulled out of an ugly recession and brought inflation under control, social programs consumed 26% of the budget. In fiscal year 2012, they’ll eat up an estimated 57% of the budget.

Tens of millions of Americans have become absolutely addicted to government money. Nobody ever wants “their government benefits” to be cut, but nobody ever seems to want to have their taxes raised to pay for them.

To get a really good idea of how government transfer payments have absolutely skyrocketed over the years, just check out this chart.
Obviously, the course that we are on is not anywhere close to sustainable.

To say that the “war on poverty” was a failure would be a huge understatement.

The more money we seem to spend on social programs, the more that poverty seems to grow.

Right now, there are over 45 million Americans on food stamps. The economy is supposed to be “recovering”, but the number of Americans on food stamps has grown by over 8 percent in just the past year.

Food stamps are the modern equivalent of the old-fashioned bread lines. The federal government is now feeding an almost unbelievable number of Americans.

According to the Wall Street Journal, nearly 15 percent of all Americans are now on food stamps. That means that approximately one out of every seven Americans is dependent on the federal government for food.

That is not just a crisis – that is a total nightmare.

So what can be done?

Well, we certainly shouldn’t let our people starve in the streets.

But handouts should only be a temporary solution.

What these people really need are good jobs. Unfortunately, our “leaders” have created a business environment in this country that is incredibly toxic, and they have stood by as millions upon millions of good jobs have been shipped out of the country. That is one of the reasons why I write about the insane trade policies of the globalists over and over and over. The American people need to understand that globalization is going to mean a continuing loss of jobs for this country and it is going to result in the destruction of the middle class.

If we are not going to provide good jobs for American workers, then we are going to have to pay higher taxes in order to feed them and take care of them.

But what happens when the “safety net” breaks?

Even now, a lot of state and local governments all over the country are flat broke and they are cutting back on assistance for the poor.
The following is a brief excerpt from a recent article about this issue that was posted on the Fiscal Times….

For years, hundreds of thousands of people in dire straits – mentally or physically disabled, homeless and unemployed, ineligible for federal welfare, disability, or food subsidies – could generally count on state or local government largesse for modest handouts of cash to help scrape by. Under the rubric of “General Assistance,” these down-and-out Americans received modest payments – often no more than a few hundred dollars a month – to help defray the cost of necessities including rent, food, clothing, toilet paper, aspirin, phone cards, and bus tickets.

But in the midst of the worst recession of modern times and changing attitudes about the poor, many states have been gradually chipping away at general assistance programs or eliminating them altogether. Only 30 of 50 states currently offer any form of general assistance – down from 38 in 1989. And just this week, Washington State formally ended its “Disability Lifeline” program for an estimated 18,000 to 22,000 economically desperate residents.

Sadly, even more of us may be joining the ranks of the poor soon. The layoffs just keep on coming.

Normally, most major store closings do not happen until after the holiday season. You see, the reality is that most troubled retailers tend to want to bring in one more year of holiday sales before they finally shut the doors. If you announce store closings before the holidays, that is going to make holiday shoppers less likely to shop at those stores.

So that is why some of the recent store closing announcements have been so troubling.

For example, it just came out that all 46 Syms and Filene’s Basement storesare closing.

Also, Gap recently announced plans to close 189 stores in the United States.

So if this is what we are already seeing now, what is going to happen after the holidays?

That is a very good question.

So many jobs are being lost all around the nation. These days, there is massive competition for just about any job that is available.
People are getting desperate. They just want to be able to pay the bills and take care of their families.

The other day, thousands upon thousands of people lined up to apply for casino jobs in south Florida. Scenes like this are going to become even more frequent in the years ahead.

So do our politicians have any solutions?

Of course not.

The worst of the Republican candidates are actually at the top of the polls. The cold, hard truth is that Romney, Cain and Perry are all clueless when it comes to the economy.

Of course you might as well call Barack Obama “Captain Clueless” when it comes to the economy. Obama keeps giving great speeches about jobs while at the same time signing more “free trade” agreements that will send thousands more businesses and millions more jobs out of the country. Even the CEOs on Obama’s jobs creation panel are shipping huge numbers of jobs out of the United States.

Obama gave a speech in Washington D.C. today that exemplified his clueless approach to the economy. During the speech, Obama made the following statement….

“If Congress tells you they don’t have time, they got time to do it. We’ve been in the House of Representatives, what have you guys been debating? John, you’ve been debating a commemorative coin for baseball? You have legislation reaffirming that In God We Trust is our motto. That’s not putting people back to work. I trust in God, but God wants to see us help ourselves by putting people back to work”

First of all, Obama is not putting people back to work. He has been helping big corporations ship jobs out of the country at a record pace.
Secondly, how does he know what God wants?

A lot of people actually think that the phrase “God helps those who help themselves” is in the Bible.

But it isn’t.
A while after the Obama speech, White House Press Secretary Jay Carney made matters worse when he told reporters the following….

“I believe the phrase from the Bible is ‘The Lord helps those who help themselves”

But once again, there is no such verse in the Bible.

Okay, so quoting a “mystery verse” from the Bible is not that big of a thing at the end of the day, but this is yet another example of how the Obama administration just can’t seem to get anything right.

Look, everyone makes mistakes once in a while. I know that I certainly do.

But when you are wrong about almost everything almost all of the time, that is a major problem.

Especially when you are the president of the United States.

But both political parties are to blame for the mess that we are in. Budget deficits exploded during Republican administrations just like they have under the Democrats.

Both political parties are responsible for us being 15 trillion dollars in debt.
Both political parties are responsible for 45 million Americans being on food stamps.
Both political parties are responsible for the fact that there are not nearly enough good jobs.
If Barack Obama, Mitt Romney or Rick Perry is elected in 2012, we are just going to have more of the same.
America is running out of time. If we are going to change course, we need to do it immediately.

The borrower is the servant of the lender. We are enslaving ourselves and we are enslaving future American generations by going into so much debt.

Shame on the politicians that have rolled up so much debt in our name and shame on us for continuing to send those same politicians back to Washington D.C. time after time after time.
It is so sad to watch what is happening to America.