Saturday, February 9, 2013

They squeal about cuts but the truth is town halls are spending more than ever - by fleecing you

The hue and cry over the town hall cuts demanded by the Coalition government might give the impression that councils across Britain are on their last legs.
Warnings of libraries closing, services being slashed to the bone and waves of redundancies come repeatedly from the mouths of Labour politicians and the unions, all of it reverentially reported by the BBC.
Anyone listening to this relentless message of doom could be forgiven for thinking that councils are actually being forced, in this age of austerity, to impose drastic curbs on their spending.
Look at the official figures, however, and you will be shocked to see that, far from overall council spending being cut, it is actually still racing upwards by billions of pounds a year.
Some success: Eric Pickles has been imploring local councils not to raise council tax above the rate of inflation
Some success: Eric Pickles has been imploring local councils not to raise council tax above the rate of inflation
In the past six years, despite the recession, spending in England alone has risen by more than 25 per cent to an all-time record of more than £170 billion.
Communities Secretary Eric Pickles has been touring the country imploring the local councils not to raise their council tax above the rate of inflation, and with some success. But by focusing debate simply on how much we pay in council tax, our attention has been diverted from the real story of how councils are managing to finance their ever-rising expenditure.

The fact is that our bloated local authorities, with so many of their senior officials now being paid far more than the Prime Minister, have been cunningly devising every kind of new way to take money off us.
It is one of the best-kept secrets in British politics, costing us all ever-more billions of pounds every year. Yet we are scarcely aware of what a revolution it represents in the way we are governed. The truth is that these new money-grabbing ploys earn councils as much every year as they get from council tax itself.
An Essex woman was fined £75 when she was caught by a council official dropping a salt sachet in a KFC car park
An Essex woman was fined £75 when she was caught by a council official dropping a salt sachet in a KFC car park
Consider some examples from across the country during the past fortnight. In Bristol, a Freedom Of Information Act request revealed that in the previous three years the city council has made no less than £1.5 million from catching motorists straying into bus lanes.
In Edinburgh, under a new council scheme enforced by a team of 12 'environmental wardens', householders have been warned that if they continue to put out bags of rubbish next to their approved bins, they face on-the-spot fines of £50.
A Daily Mail front-page story revealed that council fines for dropping litter have in recent years risen ninety-fold - or a jaw-dropping 9,000 per cent increase.
It reported, for instance, how an Essex woman was given an on-the-spot fine of £75 when she was caught by a council official dropping a salt sachet in a KFC car park - and when she failed to hand over the money she faced court costs of a further £400.
Westminster council spent £825,000 upgrading CCTV in the hope of raising £40million a year in fines
Westminster council spent £825,000 upgrading CCTV in the hope of raising £40million a year in fines
Put these and countless  similar instances together and you arrive at one of the most extraordinary government cash-generating operations in British political history.
There was a time, 40 years ago, when the most obvious source of council revenue was the rates - topped up by grants from central government - in return for which we could expect all the services that councils provided, from supplying our water to removing our sewage and rubbish.
But in recent years, even though quite a few of these services, such as water, have been hived off to private firms, councils have devised countless new excuses for demanding our money - by levying charges, fees and penalties for things that used to be free, or at least very much cheaper.
We are only too familiar, for instance, with the ever-rising cost of parking. According to the latest figures, the money we paid to councils in England alone in 2010/11 for on-street parking, including the charges residents pay for parking outside their own homes, had soared to £346 million, whereas 20 years ago it was less than a tenth of that.
On top of this, the number of parking fines issued by councils has more than quadrupled in the past decade, raising well over £300 million a year. One council, Westminster, recently spent £825,000 on upgrading its CCTV cameras, in the hope of raising nearly £40 million a year in fines.
Cornwall Council is so covetous of its parking-fine income that a barber in Liskeard who used a loudhailer to alert drivers to the presence of traffic wardens was accused of causing extreme distress to the wardens, told to hang up his megaphone and placed on a 'cautionary blacklist' by the council.
And with a further £586 million earned by councils from their off-street car parks, income from parking alone now totals a staggering £1.3 billion a year just in England - plus another £323 million a year for those councils, including London, which have introduced 'congestion charging'.
Under the law, the money councils raise from parking charges should be earmarked to improve the transport system. But in a rare flash of official honesty, the chief spokesman for our councils recently admitted to MPs that this law is simply not being obeyed. Giving evidence to the Commons Public Accounts Committee, David Sparks, the chairman of the Local Government Association, confessed that councils were increasing their parking charges simply to boost their income.
Big pop festivals such as Glastonbury or Reading must pay £64,000 for a council licence
Big pop festivals such as Glastonbury or Reading must pay £64,000 for a council licence
'Car parking charges are going up,' he stated frankly, 'to keep council tax down.'
The MPs even found that much of the £1.2 billion given to councils in England by central government for road maintenance and filling in potholes is now being illegally diverted to swell general council revenues.
But cars and roads are just one of the many areas that councils use to punish us. Many people, for instance, are familiar with the sums we must fork out to make a planning application - a service councils at one time provided free on the rates.
Even applying for a garden shed or a loft conversion now costs a minimum of £185, while for larger applications, such as for a housing estate, councils can charge up to £250,000. The total sum planning applications raise for councils in England alone is more than £200 million.
What most of us are rather less familiar with is the proliferation of new licensing charges for every kind of activity, from organising a car boot sale to running a pet shop, a riding stables or even a 'sex establishment' (up to £9,935 a year plus a yearly renewal fee of £5,000, if you are interested).
Pubs that used to pay a yearly £10 to the local magistrates just a decade or so ago for their licence must now pay up to £1,905 to the council (plus £23.50 to notify the town hall if the landlord dies).
Big pop festivals such as Glastonbury or Reading must pay £64,000 for a council licence, even before they pay hundreds of thousands more to hire the police to provide security.

Costly planning: Even applying for a garden shed or a loft conversion now costs a minimum of £185
Costly planning: Even applying for a garden shed or a loft conversion now costs a minimum of £185
There seems to be almost no limit to the ingenuity with which councils think up new ways to charge us. Residents of the Leicestershire village of Ibstock, for instance, were incensed when the council decided to charge them £90 a year for parking in their own back  gardens, because access to them crossed a tiny strip of council-owned land.
In Bexley, Kent, traders were up in arms when the council started fleecing them for placing items on the pavement outside their shops - the florist's, for example, was charged £150 a month for putting flowers in front of its window.
Restaurants and cafes can be charged hundreds of pounds a month for putting tables outside their premises, even when these in no way impede pedestrians.
Yet at the same time, councils like Southwark in London earn tens of thousands of pounds a year by erecting large advertising hoardings on its pavements which do impede pedestrians, forcing them to squeeze round these giant obstacles when out on the street.
Accused: A barber in Liskeard used a loudhailer to alert drivers to the presence of traffic wardens
Accused: A barber in Liskeard used a loudhailer to alert drivers to the presence of traffic wardens
The list of money-spinning devices is endless, and its true extent almost impossible to fathom, for both the Government and the councils tend to shroud it in secrecy in their annual accounts.
What makes it even harder is that accounts for Scotland, Wales  and Northern Ireland are kept  separately but their general  upward trend in spending is  the same.

We can ascertain, however, just what a lucrative earner council-owned cemeteries and crematoria have become for many councils. Like any number of local authorities, Caerphilly is in the process of more than doubling the cost of its burial plots - from £1,043 to £2,437 - and the total annual haul in England from 'services' for the deceased has risen steeply in recent years to more than £200 million.
This is to say nothing of the hundreds of millions a year councils rake in from businesses which must now pay for the collection of their waste - a service which used to be paid for out of local business rates.
The new 'non-domestic' rates, which have replaced business rates, contribute £22 billion a year to council revenues. But they are now re-distributed to local authorities by central government, and businesses no longer get free rubbish collection.
One outrageous little trick used by many councils to justify these ever-rising financial penalties is the way they like to advertise them as 'savings' to their council budget.
Paignton council in Devon did this when it claimed it was going to 'save £120,000 a year' by yet again raising its charges for planning applications and dumping builder's rubble, and by withdrawing an exemption from recycling charges it had given to local charities.
As long ago as 2007, the Lyons Inquiry into local government was already expressing concern that more than a quarter of our councils were earning more from 'sales, fees, charges' and 'other income' than they were from council tax.
But it has reached the point where all these punitive, greedy and often downright sneaky charges contributed an astonishing £25 billion to local authorities in England in 2010/11 - compared to the £26 billion from council tax which gets so much more attention (although well over 60 per cent  of their total revenue comes in  different ways from central government).
As for all the methods by which our councils manage to spend this ever-swelling pot of gold, none has become more of a scandal in recent years than the astronomic sums awarded to council executives in salaries, bonuses and other rewards by each other. Yet these are  the very people responsible for  this runaway rise in council spending.
Among the scores of top officials who made headlines in the past year or two was Sir Howard Bernstein, paid £230,000 a year as chief executive of Manchester, the council famous for organising such delights as paying £2,000 to give young people a chance to 'try stand-up comedy', or £8,000 for 'a sex guide for the over-50s', advising them to 'watch a sexy film'.
Countless have been the officials taking hefty pay rises while their councils slash their services to the public. Take the CEO of Hammersmith and Fulham, whose wages in 2011 rose by £12,000 to £281,667 while his council was apparently making 'the largest cuts in living memory'.
Worse still have been those who claim to be taking a pay cut when in fact they are enjoying a rise, such as the CEO of Essex, who as his council made cuts in services of £98 million, took his own personal 'cut' of £4,000, only then to be given a £6,900 bonus, bringing his pay  to £289,173.
Some of the biggest beneficiaries of all are those who, for one reason or another, take early retirement, such as the Cumbria CEO who walked off with £464,000, or the South Somerset CEO who left early with a pay-off of £570,000, or the controversial CEO of Suffolk who stepped down at a cost to the taxpayers of £350,000, plus another £115,000 to pay for an investigation into her 'domineering management style' (she was cleared).
How telling that it should be these self-same people who are still presiding over the greatest explosion of local authority spending in Britain's history - and how clever they have been to hide the way they are extorting that avalanche of money from the rest of us.

Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%

While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:
And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every "developed world" banana republic near you.

and just as we (and Kyle Bass) have warned - this is what happens to the nominal price of a stock market as currency wars escalate... how do those US investors who flooded Venezuela with cash feel now? bringing back those VEF gains is going to hurt...

The chart above is a free lesson in nominal vs real: the hardest lesson for some 99.9% of the world's population to grasp. One person who certainly knows how to devalue a currency in real terms FDR, whose 70% devaluation of the USD courtesy of executive order 6102, is merely an appetizer of what is about to be unleashed upon the US.
From Bloomberg:
Venezuela devalued its currency for the fifth time in nine years as ailing President Hugo Chavez seeks to narrow a widening fiscal gap and reduce a shortage of dollars in the economy.

The government will weaken the exchange rate by 32 percent to 6.3 bolivars per dollar, Finance Minister Jorge Giordani told reporters today in Caracas. The government will keep the currency at 4.3 per dollar for some products, he said.

A spending spree that almost tripled the government’s fiscal deficit last year helped Chavez win his third term. Chavez ordered the devaluation from Cuba, where he is recovering from cancer surgery, Giordani said. Venezuela’s fiscal deficit widened to 11 percent of gross domestic product last year from 4 percent in 2011, according to Moody’s Investors Service.

The move can help narrow the budget deficit by increasing the amount of bolivars the government gets from taxes on oil exports. While a weaker currency may fuel annual inflation of 22 percent, it may ease shortages of goods ranging from toilet papers to cars.

In the black market, the bolivar is trading at 18.4 per dollar, according to Lechuga Verde, a website that tracks the rate. Venezuelans use the unregulated credit market because the central bank doesn’t supply enough dollar at the official rates to meet demand.

The Fed is Beginning to Remove the Punchbowl… Are You Ready For What’s Coming?

A month ago, we noted that the Fed was becoming increasingly splintered about how to proceed with its monetary policy. At that time we noted that the latest FOMC minutes indicated that the Fed was in fact conflicted about QE 4 despite its public appearance of being unified:
Consider its recent FOMC minutes released on January 3 2013.
With regard to the possible costs and risks of purchases, a number of participants expressed the concern that additional purchases could complicate the Committee’s efforts to eventually withdraw monetary policy accommodation, for example, by potentially causing inflation expectations to rise or by impairing the future implementation of monetary policy. Participants also discussed the implications of continued asset purchases for the size of the Federal Reserve’s balance sheet. Depending on the path for the balance sheet and interest rates, the Federal Reserve’s net income and its remittances to the Treasury could be significantly affected during the period of policy normalization. Participants noted that the Committee would need to continue to assess whether large purchases were having adverse effects on market functioning and financial stability. They expressed a range of views on the appropriate pace of purchases, both now and as the outlook evolved. It was agreed that both the efficacy and the costs would need to be carefully monitored and taken into account in determining the size, pace, and composition of asset purchases.
Source: Fed FOMC minutes
Remember, the Fed only just announced QE 3 in September 2012 and QE 4 in December 2012. At the time of these announcements, the media heralded these moves as indicating that the Fed would act aggressively forever.

Instead, the Fed was actually quite conflicted about QE 4. And we just got yet ANOTHER major warning sign that the Fed is changing tactics.
Indeed, Fed uber-dove, Charles Evans, who called incessantly for more QE throughout 2011-2012, just stated that the Fed may in fact END QE BEFORE unemployment falls to 7%.
Charles Evans, president of the Federal Reserve Bank of Chicago, said today the central bank may stop its asset-purchase program before unemployment falls to 7 percent.
“I tend to think it might be possible to turn off the quantitative easing,” Evans said in a CNBC interview. “We might be able to stop before 7 percent” assuming momentum builds and keeps going.
Federal Reserve Bank of Chicago Chief Executive Officer Charles Evans said that quantitative easing would continue until it’s clear the labor market outlook has improved.
Source: Bloomberg
The bulls and mainstream media are ignoring the implications of this. But this is a serious sign that the Fed will be changing course going forward.

Understand that the Fed has blown a yet another bubble in stocks and cannot simply remove the stimulus punch bowl all at once without risking a total collapse in the market. So the Fed is going to begin managing expectations downward gradually.
The fact that Evans, a man who has called for nothing but more stimulus for more than two years, is now stating point blank that the Fed may end QE before it reaches its target for unemployment is a major warning sign. Do not ignore it.

To find out more about Private Wealth Advisory and how it can help you beat Wall Street and the market…

Phoenix Capital Research

George Soros: China will be the NEW world revered currency

Very important video because this is happening right now!!

Currency Wars Return, 1930s Style: BoJ Doubled Its Inflation Target, China Prints And Injects Record 450 Billion Yuan Into Money Markets, Fed Bought More U.S. Debt This Year Than Treasury Issued And There Was Even A Call Last Week To Print $30 Trillion!! Jim Rogers: Don’t Sell Your Gold and Silver Coins!!

Currency Wars Return, 1930s Style…

The balance of power now rests with Japan, according to the bank, as Japan’s policy-makers’ more dovish approach looks set to bring the world a step closer to a currency war.
The Bank of Japan doubled its inflation target to 2 percent in January and made an open-ended commitment to continue buying assets from next year. This follows a leadership change, with new Prime Minister Shinzo Abe openly calling for aggressive monetary stimulus from the country’s central bank.

“While a currency war is not our base case, the new-found commitment of Japan’s policy-makers does raise the risk of retaliatory action to keep the yen weak,” he said.
“The experience of the 1930s suggests to us that such large currency crises are likely triggered by domestic issues, and that they do create distinct winners and losers. EM (emerging market) policy-makers are already gearing up to make sure they remain on the winning side, but the balance of power for now rests with Japan.”

Will Japan’s “Attempted” Reflation Succeed And Will It Spill Over Into Full-Fledged Currency War?

Yesterday we presented a simplistic analysis of why for Japan “This Time Won’t Be Different“, a preliminary observation so far validated by the just announced Japanese December current account deficit which was not only nearly double the expected 144.2 billion yen, printing at some 264.1 billion yen, but was only the first back-to-back monthly current account deficit since 1985.

In short – at least in the first month of Abe’s great reflation attempt, not only did trade post another whopper of a deficit, but so did the broader current account implying that much more Yen weakness will be needed to generate the structural reforms sought by the new Prime Minister.

Fed Has Bought More U.S. Debt This Year Than Treasury Issued

( – So far this calendar year, the Federal Reserve has bought up more U.S. government debt than the U.S. Treasury has issued.
On Dec. 31, the total debt of the U.S. government was $16.4327 trillion and then-Treasury Secretary Tim Geithner announced that the government had hit what was then the legal debt limit. Last week, however, Congress enacted a law to suspend the federal government debt limit until May 18, 2013, and allow the administration to resume increasing the debt.
By the close of business on Wednesday, Feb. 6, according to the U.S. Treasury, the total federal debt had climbed to $16.4799 trillion—an increase of $47.2 billon for the calendar year.

Top London Properties Now Worth More Than All Rest of UK…

Lessons From The 1930s Currency Wars

With Abe picking his new dovish playmate, and Draghi doing his best to jawbone the EUR down without actually saying anything, it is becoming very clear that no matter what level of bullshit histrionics is used by the politicians and bankers in public, the currency wars have begun to gather pace. Japan’s more open aggressive policy intervention is the game-changer (and increasingly fascinating how they will talk around it at the upcoming G-20), as if a weaker JPY is an important pillar of the strategy to make this export-oriented economy more competitive again, it brings into the picture something that was missing from earlier interactions among central banks of the advanced economies – competitive depreciationThe last time the world saw a fully fledged currency war was in the early 1930s. Morgan Stanley’s Joachim Fels looks at what it was like and what lessons can be drawn for the sequence of events - there are definite winners and losers and a clear first-mover advantage.

Via Morgan Stanley, Back to the 1930s? What Would a Currency War Look Like?
What did the currency war of the 1930s look like?

The backdrop for the currency war of the 1930s was the Gold Standard and the Great Depression (many economists blame the former for the latter). By fixing the value of the currency to the price of gold, the Gold Standard prevented a country from printing too much money. If it did, people would simply exchange it for gold (or for other currencies pegged to gold). Yet, this rigid ‘rule’ also denied policy-makers any flexibility to deal with shocks to their economies. This was the reason why the UK abandoned this regime, setting off a volatile chain of events:…

[SHANGHAI] China’s central bank injected a whopping 450 billion yuan (S$89 billion) into the money markets yesterday. the largest single-day injection on record, showing Beijing’s increased confidence in its ability to use short-term precision tools to manage the money supply.
Traders told Reuters that the infusion of cash was made during ordinary open market operations, using 14-day reverse bond repurchase agreements, which will drain money back out of the system in two weeks. Sure OK !
China Just Threatened a Currency War If the Fed Doesn’t Stop Printing
The Complete World Currency War Heatmap

Calls For Printing $30 – $100 Trillion Now, It Is Out Of Control

KWN: Today one of the brightest men in the financial world warned, “Shadowstats has estimated that the annual Federal deficit for last year was really about $6.6 trillion when one included all of the accruing liabilities and expenditures not included in the $1+ trillion estimate for the deficit … Some estimates are as much as $220 trillion in unfunded debts … There was even a call last week to print $30 trillion (and $100 trillion prior to that in 2011).  It is out of control.” Below is Robert Fitzwilson’s exclusive KWN piece which discusses the troubling reality the West faces going forward and how investors should positions themselves ahead of the coming chaos.
“We have all heard the saying that markets are driven by fear and greed.  The way in which this manifests itself, is that investors become fearful of things that are priced low and greedy for things that are priced high.  It is the only area of our life that people seek to purchase overpriced goods and shun underpriced goods….

Jim Rogers: Don’t Sell Your Gold and Silver Coins!! 

Gold and silver may be off their highs but that hasn’t hurt demand for gold and silver coins. Sales ofsilver eagle coins hit a new record last month and gold coin sales in January reached their highest level in almost 19 months.
“You can’t get [silver coins]. They sell out,” says legendary investor Jim Rogers. “Several mints have run out of coins…because everybody’s worried about the future of the world.”
Rogers, chairman of Rogers Holdings and author of the new book, “Street Smarts: Adventures on the Road and in the Markets,” tells The Daily Ticker that he “wouldn’t rush in right now” to buy more coins, but he’s not selling them either.

KWN: The man who in 2009 amazingly called the bottom of the bear market to the day and announced the world would see a new bull market, legendary Mark Mobius, has some extraordinary thoughts on where he believes gold and other commodities are headed in the future.  Below are the legendary fund managers thoughts on what to expect.

IT’S OFFICIAL: It’s Been Announced That ‘Currency Wars’ Are Back On

Jim Rogers: US Economy In Decline, Tomorrows Economy Driven By People Who Make Real Things


Geithner Admits: "I Never Had A Real Job"

UPDATE - Geithner Joins CFR As Distinguished Fellow (CFR Press Release)
For once, Turbo told the truth on a weekend talk show.  Sort of.  We could add that Geithner never paid taxes like a real taxpayer either.  Geithner's ongoing attempt to distance himself from Wall Street's decade of fraud is laughable.  As President of the New York Fed, Geithner was criminally negligent in his role as Wall Street's chief regulator.

Timmaaayy tells the truth.
"I find that the charge that — the myth that I worked in Wall Street all my life, somewhat amusing.  But it is part of a narrative that hardened.  People came to view the judgments we were making through the prism of a myth … it’s actually very damaging.  It’s completely false, of course, and it, you know, should have been corrected a long time ago.  What I say is that I never had a real job."
Flashback - Geithner with Fareed Zakaria - WSJ
This is worth watching:

 Max Keiser on Geithner's AIG Crime

Uploaded videos (playlist)

Usury is the Weapon For Getting Our Minds - Morris

Soros Fears ‘Rebellion’, Warns “The Euro Could Destroy The EU”

Source: Zero Hedge
From a discussion of the Dutch political system being in the pocket of Big Oil to warning that German policy stipulations and the Euro itself could “potentially destroy the European Union,” amid rebellion, George Soros has drastically reduced all Euro-related exposure from his portfolio – only a few weeks after his cautious optimism that Europe is ‘revived’ in Davos. As Open Europe blog notes, Soros fears that “there is a real danger that the [Euro] solution to the financial problem creates a really profound political problem.” The interview below with Dutch TV shows Soros grave concerns that the Southern nations are “being pushed unwittingly… into a long lasting depression,” as Germany’s austerity program is “counter-productive – cannot actually succeed.” Just as we recently noted the similarities between the European Union and the Soviet Union, so Soros believes the ‘Euro’ itself is “bound to break up the European Union.” It may take generations, he notes, as a terrible tragedy of “lost political freedom and economic prosperity.”
From Davos – two weeks ago…optimism that the banking system had been revived but even then he was concerned…
 …the european banking system, the interbank market, has revived so there’s a general sense of let’s say almost euphoria that the crisis is over. I think that is somewhat premature. because the fundamental internal inconsistencies in the dis-tim have not been addressed, and actually, therefore, you face political dangers.
The Euro is transforming the European Union into something very different from the original conception which was a voluntary association of equal states, and instead of that, the financial created a two-class system where the euro, the creditors and debtors and the creditors are in charge. The political situation I think is going to get worse.


Sacre Bleu! France Collapses Right as Spain, Italy and Greece Become Embroiled in Corruption Scandals

The following is a excerpt from a recent client letter.
The house of cards that is Europe is close to collapsing as those widely held responsible for solving the Crisis (Prime Ministers, Treasurers and ECB head Mario Draghi) have all been recently implicated in corruption scandals.
Those EU leaders who have yet to be implicated in scandals are not faring much better than their more corrupt counterparts. In France, socialist Prime Minister Francois Hollande, has proven yet again that socialism doesn’t work by chasing after the wealthy and trying to grow France’s public sector… when the public sector already accounts for 56% of French employment.
France was already suffering from a lack of competitiveness. Now that wealthy businesspeople are fleeing the country (meaning investment will dry up), the economy has begun to positively implode.
The first sign of this came actually came from Germany. As we noted a few months ago, Germany had prepared a working group to examine the impact of an economic collapse in France.
German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone's second largest economy could come back to haunt Germany and the broader currency bloc.
Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the "wise men", to consider drafting a report on what France should do…
"The biggest problem at the moment in the euro zone is no longer Greece, Spain or Italy, instead it is France, because it has not undertaken anything in order to truly re-establish its competitiveness, and is even heading in the opposite direction," Feld said on Wednesday.
"France needs labour market reforms, it is the country among euro zone countries that works the least each year, so how do you expect any results from that? Things won't work unless more efforts are made."
This German concern has proven to be well founded, as the recent spate of French economic data has been truly horrific.
Auto sales for 2012 fell 13% from those of 2011. Sales of existing homes outside of Paris fell 20% year over year for the third quarter of 2012. New home sales fell 25%. Even the high-end real estate markets are collapsing with sales for apartments in Paris that cost over €2 million collapsing an incredible 42% in 2012.
Since the EU Crisis began in 2008, France and Germany have been the two key countries backstopping the implosion. The fact that France is now facing an economic implosion does not bode well for the future of the Euro or the EU.
The other sovereign backdrop for the EU, Germany, is also experiencing an economic slowdown.
The German economy was hit hard by the euro zone crisis in the final quarter of last year, shrinking more than at any point in nearly three years as traditionally strong exports and investment slowed, the Statistics Office said on Tuesday…
Gross domestic product shrank by 0.5 percent in the final three months of 2012, the worst quarterly performance since Germany fell into a recession during the global financial crisis in 2008/2009 and only the second contraction since it ended.
The parlous fourth quarter pushed overall growth for the year down to 0.7 percent, a sharp slowdown from the 3.0 percent registered in 2011 and a post-reunification record of 4.2 percent in 2010. The 2012 figure was a tad below a Reuters consensus forecast for growth of 0.8 percent.
Thus, we find that Europe’s primary political market props (EU leaders including ECB head Mario Draghi) are coming unraveled at the precise time that EU banks are showing warning signs and the most important EU economies are heading sharply south.
2013 is going to be a very interesting year for Europe.
We have produced a FREE Special Report available to all investors titled What Europe’s Collapse Means For You and Your Savings.
This report features ten pages of material outlining our independent analysis real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world.
It also outlines a number of investments to profit from this; investments that anyone can use to take advantage of the European Debt Crisis.
Best of all, this report is 100% FREE. You can pick up a copy today at:
Phoenix Capital Research

CEO Tells CNBC: 'Big 3 Rating Agencies Are Still Selling Out'

Nothing has changed.  Kroll torches S&P.
Jules Kroll, CEO of a bond rating start-up, discusses the S&P case with David Faber.
"Many of the practices you're seeing in the DOJ's lawsuit with S&P are still going on, shaping things in order to get more business.  The major ratings agencies are still selling out.  S&P needs a great lawyer. The game is not over for Moody's and Fitch, either."
"It's very clear from this lawsuit that S&P will have years of difficulty defending what is really unconscionable behavior.  Those of us in the field understand that this has been taking place for a long time.  This industry was out of control and this lawsuit calls them into question in a serious way."
"This investigation was going on for 18 months before the credit downgrade, how dare S&P suggest that they were singled out because they gave a downgrade of the U.S. credit rating."
Interview details at CNBC...
This story hit the wires this morning.
Keep in mind that Moody's largest shareholder is crony legend Warren Buffett.
US Justice Department, States Weigh Action Against Moody's
The U.S. Justice Department and multiple states are discussing also suing Moody's for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor's is tested in the courts.
Inquiries into Moody's are in the early stages, largely because state and federal authorities have dedicated more resources to the S&P lawsuit, said the sources, who were not authorized to speak publicly about enforcement discussions.
Moody's Shares Fall as Lawsuit Fears Overshadow Earnings
Shares in credit rating agency Moody's fell sharply on Friday as the prospect of a federal fraud lawsuit over its pre-crisis debt ratings overshadowed a 66 percent rise in quarterly earnings and a strong 2013 outlook.

UPDATE - Here's a sample of Warren Buffett's love for taxpayers.


S&P FIGHTS BACK: 'Govt Ramped Up Investigation After U.S. Downgrade'

David Stockman: You're Now In The "Bernanke Bear Trap"

David Stockman: You're Now In The "Bernanke Bear Trap"

Rand Paul 'The Federal Reserve Creates The Boom-Bust Cycle'

Rand Paul 'The Federal Reserve Creates The Boom-Bust Cycle'

TRANSATLANTIC RELATIONS: EU and US plan world’s biggest trade bloc

Source: DW
The world’s two largest economic powers would like to join forces via a free-trade agreement. Yet the hurdles are high. The EU and US are aiming not just for a small trade solution, but for the largest proposal of all.
Economists, politicians and entrepreneurs are practically foaming at the mouth. The planned all-encompassing free-trade agreement between the US and EU would spur growth on both sides of the Atlantic. It would also ensure that the global economic rules of the future are put in place by western countries – and not China.
Economically, a broad free-trade agreement would fundamentally redraw the map of worldwide trade. Goods and services traded between the EU and US constitute the largest bilateral economic partnership in the world. Daily, they amount to more than 1.8 billion euros ($2.4 million). The combined GDPs of the US and EU account for approximately half of worldwide economic output and one-third of the global flow of goods. According to EU estimates, a comprehensive free-trade agreement between the EU and US would raise the EU’s GDP by one-half percent, or 66 billion euros per year. A similar increase is expected for the US.
Political willpower
Within Europe there is broad political support for a trans-Atlantic free-trade agreement. German Chancellor Angela Merkel and British Prime Minister David Cameron have already spoken out in favor of the project. After a task force reported on the opportunities and implications of a Euro-American trade agreement last summer, not only the President of the EU Commission, Manuel Barroso, gave signals of approval, but also US President Barack Obama.
Yet even if the final report of the trans-Atlantic task force recommends a commencement of negotiations when it is released in the next few days, it is still unclear whether a trans-Atlantic free-trade zone will ever become reality.
“A far-reaching free-trade agreement would go further than all other trade agreements in the past combined,” said EU Commissioner for Trade Karel de Gucht in December. “But can we reach that goal? It won’t be easy, but the prospects look good.” Previous deals between the EU and Singapore, Canada, South Korea or Mexico would also pale in comparison to the planned agreement with the United States.
Daniel Gros, the director of the Brussels Centre for European Policy Studies, advocates just such a trade deal unequivocally. But does he see it happening? “I simply don’t believe that the political will is strong enough to overcome the various obstacles,” he told DW.
“The largest problem is the independence of the [national] regulatory authorities,” Gros said. He considers the US Food and Drug Administration a prime example. “Can American authorities accept European certifications without question and vice versa?”
Genetically modified
Similar questions arise with regard to the approval and regulation of numerous goods and services. Thus the EU requires, for example, that all genetically modified foods are labeled when the US has no such restriction. Other complex and previously differentiated services such as insurance and financial products are also meant to be covered under the trade deal.
“I think it’s unrealistic to expect a free trade agreement to harmonize all of those regulatory matters,” said Charles Ries, vice president of the RAND Corporation in Washington DC, in an interview with DW. Ries, who participated in the North American Free Trade Agreement between the US, Canada and Mexico, favors small solutions.
“I would envisage a situation where you had a free-trade agreement that eliminated tariffs and quotas between the United States and Europe,” he added.
But the EU and US view the issue in all-or-nothing terms. “Customs barriers aren’t really the problem in trans-Atlantic trade,” said John Clancy, spokesperson for the European Commissioner for Trade. “The biggest obstacles are the different regulatory standards, which is why we’re not just looking to get rid of customs tariffs, but are trying first and foremost to harmonize all these rules.”
Bad experience
Experts are skeptical as to whether such an agreement can ever be reached. They point to similar visions of free, trans-Atlantic trade from the past that fizzled out in the political chambers of Washington and Brussels.
After the multi-year and ultimately fruitless worldwide trade deal called the Doha Development Agenda failed in 2008, Washington is also tired of endless discussion. In order to gauge the seriousness of Europeans on the matter, the Obama administration has recently been anxious for a clear signal from Brussels.
And Brussels delivered. On Monday the EU announced that its import restriction on live pigs and beef treated with lactic acid would be lifted on February 25. At the EU budget summit, which began on Thursday, the US hopes for another political boost for the plans.
Yet even if the EU and US begin negotiations in the coming months, success is anything but assured. Negotiators from both the US government and the EU Commission will not be free to negotiate as they please. Without the ultimate approval of US Congress and the EU Parliament, there will be no agreement. Other countries, such as Turkey, which has a customs agreement with the EU, or Canada and Mexico, which are linked to US trade through NAFTA, will at the very least have to play an informal role in future negotiations.
A clear timeframe
That’s why many experts have joined American demands for a quick tempo to negotiations and a clear timeframe for achieving them. Within one year of the beginning of talks, experts should be in possession of a fundamental agreement, they argue. After two to three years, a contract should then be agreed upon.
Regardless, warns Daniel Gros, politicians are taking on a risk that’s difficult to calculate in their attempt to forge a trans-Atlantic free-trade agreement.
“When you start with such a big project, but then can’t finish it, then you could possibly end up worse off than if you’d never tried it at all,” he said.

Some Questions about Deflation

Robert Blumen, Contributor
Activist Post

What is deflation?

According to, it is “a fall in the general price level or a contraction of credit and available money”.

Falling prices. That sounds good, especially if you have set some cash set aside and are thinking about a major purchase.

But as some additional research demonstrates, that would be a naïve and simple-minded conclusion. It quickly becomes evident that deflation is a serious economic disease.

According to the St Louis Fed,
While the idea of lower prices may sound attractive, deflation is a real concern for several reasons. Deflation discourages spending and investment because consumers, expecting prices to fall further, delay purchases, preferring instead to save and wait for even lower prices. Decreased spending, in turn, lowers company sales and profits, which eventually increases unemployment.”
The problem with deflation is that it feeds on itself, destroying an economy along the way. It is the macro equivalent of a roach motel: perilously easy to enter but impossible to leave. The problem, you see, is that deflation reduces consumption, which reduces production, eventually shutting down all economic activity.

Wikipedia explains it this way:
Because the price of goods is falling, consumers have an incentive to delay purchases and consumption until prices fall further, which in turn reduces overall economic activity. Since this idles the productive capacity, investment also falls, leading to further reductions in aggregate demand. This is the deflationary spiral.
Deflation is far worse than its doppelgänger, inflation, because the Fed can fight inflation by raising interest rates. Deflation is nearly impossible to stop once it has started because interest rates can only be cut to zero, no lower. For this reason, Ben Bernanke believes that monetary policy should be biased toward preventing deflation more than preventing inflation.

 In case you’re not already scared straight, the deflationary doomsday has already happened in America when (according to the New York Times) it caused the Great Depression.

Japan, according to Bloomberg “has been battling deflation for more than a decade, with the average annual 0.3 percent decline in prices since 2000 damaging economic growth”. The New York Times reports that Japan’s new prime minister Abe “has galvanized markets by encouraging bold monetary measures to beat deflation”.

I hope that everyone is clear on this.

Now that you understand the basics, I have some questions for the people who came up with this stuff.

Why do falling prices make people expect falling prices?

The observation that prices are falling, means that in the recent past, prices have fallen.

One person noticing that the price of a good that appears somewhere on their value scale has fallen for some time might interpret that information and conclude that in the future, the price of that good will be lower. But a second individual might see the same thing and expect the price to level off and stay where it is, and a third might interpret falling prices as an indicator that in the future prices will be higher.

Why should a price having fallen indicate that it will continue to fall? That is only one of three possible future trends. Why should past trends continue indefinitely?

Why will the public mainly choose the first of these three outlooks, more than the other two?

According to economist Jeffrey Herbener, the assumption that falling prices create expectations of more of the same is a feature of certain popular macroeconomic theories in which price expectations are modeled as part of the theory. In his testimony to Congress, Herbener observes that “the downward spiral of prices is merely the logical implication of assumptions about expectations within formal economic models. If you assume that the agents operating in an economic model suffer from expectations that are self-reinforcing, then the model will produce a downward spiral.”

Are expectations self-reinforcing? It would make just as much sense to say that expectations are self-reversing – after people have seen prices go down for a while, they will expect prices to go up.

Are these formal models a good description of human action? Contrary to what these models say, there is no fixed response to an event. In my own experience, I can think of many times I or someone that I know jumped on a low price because we do not expect the opportunity to last.

But what about wages?

The postponement theory depends on the assumption that a fall in the prices will benefit buyers who wait. This is true if we are talking about people who have lots of cash and can sit on it indefinitely. But most of us have ongoing monthly expenses and we depend on our wages to replenish our cash reserves. Our purchasing power at the time when we want to make a delayed purchase, comes from our cash savings and our wages. A fall in wages, if substantial, would wipe out any gains in purchasing power realized from lower prices.

If consumers do not buy today because they expect lower prices tomorrow, then what are their expectations about their wages? Do they anticipate that their wages be the same, higher, or lower? If lower, then by how much? As much as prices have fallen?

If consumers forecast lower prices and stable wages, then why are consumer prices included the models but wages are not? Does deflation only affect consumer goods prices, leaving all other prices untouched?

According to the deflationary death spiral theory, decisions not to buy drag the economy into a death spiral. Does anyone expect that could happen without affecting wages?

And what about asset prices?

In addition to cash savings and wages, individuals decide how much to spend and save taking into account the amount that they have already saved. Someone who is trying to save to meet their family’s future needs will feel less comfortable about spending.

Most people hold some of their savings in cash. That portion of their savings increases in purchasing power when prices fall. But people also save by purchasing financial assets, such as stocks and bonds, or real assets such as property, and rental housing. All of these assets have a price, which could rise or fall. Depending on the mix of cash and other assets that an individual holds, a fall in asset prices could wipe out any gains in purchasing power from the cash portion of their savings.

 Do people take value of their past savings into account when deciding whether to buy or wait? Or do people form expectations about consumer prices only and ignore what might happens to their savings in a deflation?

If falling consumer prices generate expectations of more of the same, what impact do falling prices have on expectations about asset prices? Do buyers who delay purchases expect the prices of their saved assets to be lower as well? If not, then do they expect that consumer prices will be lower and asset prices will be higher?

If deflation causes the economy to disintegrate, will asset prices be spared?

Is it only buying behavior that is affected?

The deflation death star begins to destroy the earth when buying is postponed.

But is it only buying that is affected by expectations about the future? If buying is affected but not selling, then why not?

If consumers expect lower prices of most things, including things that they already own, it is equally logical that they would sell their possessions and their assets in order to buy them back later at a lower price. Selling your home and renting a similar one would be the place to start. Selling your car and leasing would be the next step. Finally sell your saved assets for cash would be equally profitable. Expectations of lower prices should lead to a spiral of selling, driving prices down even faster, leading to more deflationary expectations and more selling until everyone has no possessions and no assets other than cash.

If this happened, then who would buy?

Do prices ever get low enough?

If buyers expect lower prices, then how much lower? Any number in particular? If a buyer expects a specific lower price, and the price reaches that level, will he buy? Or does he always prices to go even lower than they are today, no matter how far they have fallen already?

If expectations of lower prices turn out to be correct, and prices drop to even lower levels, then is there any point where a minority of contrarian buyers defect from the consensus and begin to see a bottom, or even an uptrend? Or do these expectations go on forever adapting to lower prices causing prices to drop indefinitely?

The point of delaying a purchase is so that you can make the purchase in the future and have some additional cash left over to make another purchase or to save. What is the point of delaying a purchase that you never make?

We have all had the experience of buying a new computer or some other device the day before the next version was released that costs less and does more. If you knew would you have waited? Maybe, but maybe not. If you need a computer for work, then you will buy it sooner rather than later.

Many people delayed their purchase of the iPhone 4 in order to buy the iPhone 5, then they bought the iPhone 5. My iPhone4 was worn out by that time and I needed a new phone.

What about the Law of Demand?

According to the law of demand, a greater quantity of a good is demanded at a lower price than at a higher price. If that were true, then people would buy more, rather than postponing purchases.

What happens to the law of demand in a deflation? It turns out at that the law of demand has a loophole: it requires that all other things remain equal. In a deflation death spiral, all things are not equal. Consumer preferences change in response to prices. Stationary supply and demand curves do not exist in such a world. For prices to fall and yet still fail to induce buyers to buy, the quantity demanded must always fall by more than enough to compensate for the lower asking price. The demand curve is always shifting downwards faster than the price falls, to prevent an equilibrium price from ever forming. Economist W. H. Hutt calls this “an infinitely elastic demand for money”.

Does this describe the world that we live in, or any world that we could imagine? Do people really react in such a mechanical way to price changes? How do we explain, for example, shoppers competing to buy at low prices?

Why do sellers not lower prices?

Why is it only buyers whose expectations of lower prices are based on falling prices? Are the expectations of sellers included in the model?

If not, is that because the models assume that sellers not have expectations? Or do the expectations of sellers not match the expectations of buyers?

If sellers have the expectations of lower prices, why do they not lower their prices immediately in order to sell inventory ahead of their competitors?

If buyers and sellers both expect future prices to be lower, why do market prices not converge upon this new, lower level immediately?

If customers are postponing purchases expecting lower prices in the future, but sellers do not cooperate, then inventories will accumulate. If this began to happen, then why would sellers not lower their prices immediately in order to clear out inventories?

All of us are both buyers and sellers, of different things at different times. To say that only the expectations of buyers are affected by falling prices is to say that the same person at one time has expectations about his own future purchases but later the same day, does not have expectations about his own current and future sales. Does the model assume that we have all been lobotomized so the two sides of our brain do not communicate with each other?

Do producers have any control over their costs?

In the previous question, I asked whether sellers expect lower prices as well as buyers. If the producers expected lower prices, why did they go ahead and produce, or order the products with such high costs that they could not make a profit?

If a single business firm is experiencing fewer sales, they may not be able to reduce their costs because a single firm is close to being a price taker in the markets for labor and capital. There are usually alternative uses for their factors that value them more highly, at or close to current prices. But if prices, and sales are falling everywhere, or if everyone expects this to be the case, then why will suppliers not lower their prices if they expect their costs to be lower?

What are people doing with the money that they did not spend?

Suppose that people postpone spending. What do they do with the money not spent? Are they increasing their cash holdings? Or are they spending on investment goods? Saving and investing is a form of spending, only the expenditure is for capital goods rather than consumer goods. In this case, there would be no general decline in total spending, nor employment. Workers would have to change jobs from consumption industries to capital goods industries as Hayek explains in his essay “The Paradox of Savings”, but production would continue.

How much lower prices are necessary to induce people to postpone purchases?

There is a return on the purchase of a consumption good, namely the services provided by the good. This must be balanced against the return on cash by holding until prices are lower. As noted by, Center for Economic Policy Research (CEPR) a small price change is not much of a motivation to wait, if you need a new product:
Samuelson gets some of the other aspects of this issue wrong. For example, he says that Japan's deflation is a problem in part because falling prices cause people to delay purchases since items will be cheaper in the future. This would be true for rapid rates of deflation, but Japan's deflation has almost always been less than 1.0 percent a year. In 2011 its inflation rate was -0.2 percent. This means that if someone was considering buying a $20,000 car, they could save $40 by waiting a year. It is unlikely that this rate of deflation affected the timing of many purchases to any significant extent.
Why do quantities adjust but not costs?

If there is a generalized increase in money demand, then prices need to adjust downwards. Why is it that all the quantity of goods bought and the quantity of labor employed can adjust, but prices cannot?

According to The Asia Times, when deflation strikes, factories lay workers off in order to cut costs. Why cannot producers lower their bid prices to their labor force and their suppliers in order to preserve production? If they could lower their costs, then they could produce profitably at a lower price level.

The general price level does not matter to business firms, so long as their costs are below their sale prices. Why does a deflationary melt-down assume that business can not operate profitably at any nominal price level? Why can business not lower costs?

Is this really what caused the Great Depression?

What about the credit bubble of the 1920s?

What about bank failures? The great contraction of the money supply?

The Smoot-Hawley tarrif?

What about regime uncertainty?

How about new deal wage and price policies that prevented prices from falling, which would have allowed employment to recover?


The deflation death spiral is a theoretical description of a situation but it does not describe the reality of human action, for any number of reasons:
  1. There is in reality always a diversity of expectations among the public. While some people will expect prices to continue in the same direction, others will form the opposite view. Everyone’s expectations will change not only in response to changes in the data, but taking into account their entire life experience, their own ideas, and their situation.
  2. Expectations are not entirely driven by prices. A broad range of things influences our expectations about price.
  3. Lower prices are not always sufficient motivation to delay purchases because everyone prefers to have what they want now, rather than later.
  4. Expectations of buyers tend to be met by sellers, if not at first, then fairly soon. In some cases, buyers can hold onto their cash for a bit longer, but most businesses have no choice but to sell their inventories at what the buyer will pay. In other cases, buyers may not be able to delay purchases, or may not wish to, and will pay what they must in order to buy. 
  5. Everyone – buyers and sellers (and every one of us acts in both of these roles at different times) has expectations not only about consumer prices, but about wages, employment prospects, even asset prices, the economy in general, the progress of our own life, and the future of our family. A coherent plan of saving and spending takes all of these things into account.
  6. Expectations can be met. Buyers have a buying price. Even if not known in advance, they know it when they see it posted. Even if they do not know what they plan to buy in the future, a bargain price will be met by buyers.
  7. People only need so much cash. Beyond that, they start to look around for either consumption goods, or investments.
The other conclusion you can draw from this is to be very wary of accepting the goverment spin on economics. You should also be wary of taking advice from "experts" who base their expectations of outcomes on the way the government says the economic world works. For good advice based on the way that economics actually work, click here.

German job centre offers out-of-work teenager a position in a brothel

  • 19-year-old was 'horrified' when she received letter offering work in brothel
  • Job centre said it was mistake she was not contacted by phone beforehand
  • Centre has said it would never offer jobs in prostitution, but was aware the establishment was in the red light district

  • 'Horrified': A 19-year-old woman was offered a job serving drinks at one of the biggest brothels in the German city of Augsburg by her local job centre (file picture)
    'Horrified': A 19-year-old woman was offered a job serving drinks at one of the biggest brothels in the German city of Augsburg by her local job centre (file picture)
    A German teenager was left 'totally horrified' after a job centre offered her work in a brothel, it has been reported.
    The 19-year-old woman, a trained housekeeper who had been looking for work since November, was offered a job serving drinks at one of the biggest brothels in Augsburg, in Bavaria.
    The teenager said her mother was so horrified at the thought of her daughter working 42-hour weeks at the nude bar, the Colosseum, that she screamed when she heard of the offer.
    The job centre told the Augsburger Allgemeine Zeitung newspaper that they were careful to telephone applicants to talk about the position before sending the letter, according to The Local.
    But the centre's director Roland Fürst said it was a mistake this had not happened in the unnamed teenager's case.
    The centre has now apologised to the teenager and said it would no longer offer work at the bar.
    It said it would also carry out more stringent checks on the companies who advertise through the office.
    Mr Fürst said: 'We would never offer jobs in prostitution.'
    But he added: 'We knew the establishment was operating in the red light district.'

    Eight other potential employees recieved phone calls. Mr Fürst said the fact the 19-year-old was not spoken to on the phone first 'should not have happened'.
    Brothel: The job centre said it would never offer jobs in prostitution, but it 'knew the establishment was operating in the red light district' (file picture)
    Brothel: The job centre said it would never offer jobs in prostitution, but it 'knew the establishment was operating in the red light district' (file picture)

    LAUSD, other California school districts use cafeteria funds meant for poor to cover other expenses, report says

    Squeezed by historic funding shortfalls, school districts across the state in recent years have been illegally dipping into cafeteria funds meant to provide meals to poor students to pay other school expenses, according to a report released Wednesday by a state department.
    The strongly worded report by the California Senate Office of Oversight and Outcomes identified the Los Angeles Unified School District as the biggest offender. LAUSD was among eight school districts across the state ordered to repay a total of $170 million to student meal programs.
    "Perhaps more troubling, department officials candidly acknowledge they have no idea how big the problem may be and fear they may have uncovered only a hint of the ongoing abuse," the report states.
    About $158 million of the $170 million debt belongs to LAUSD, which allegedly shifted money from the cafeteria fund to pay for expenses such as lawn sprinklers and the salaries of employees at the district's television station.
    The report states that none of the school districts mentioned is accused of embezzling money for personal profit. But the redistribution of dollars to other district departments has compromised the quality of the lunchtime period for tens of thousands of low-income students across the state, the investigation found.
    "Cost-saving shortcuts included serving processed rather than fresh foods, short lunch periods, rundown cafeterias and insufficient staff to properly  plan and manage an optimum food service operation," the report states.
    Still, the state office cites instances of outright fraud. Perhaps most egregiously, the Oxnard Union High School District inflated its subsidized meal counts, thereby claiming millions of dollars in state and federal reimbursements to which it was not entitled, the report states. The district - which consists of six high schools - was ordered to repay the meal programs $5.6 million. The last installment was made last year.
    Also prominently named in the report are school districts in Baldwin Park, Santa Ana, San Diego, San Francisco and Compton. The Centinela Valley high school district serving Lawndale and Hawthorne is also named, though officials there say they were dinged for a technicality and are being unfairly lumped in with the others.
    The investigation found that lax oversight of the cafeteria funds by state regulators meant that violations were reported by whistle-blowers who headed up the food services departments. These cafeteria directors often notified authorities at the risk of their jobs, and occasionally at the expense of them.

    Marc Faber - "The Purchasing Power Of The US Dollar Will Going To Decrease Significantly

    The Real New World Order. Bankers Taking over the World

    money (2)
    How quickly best laid plans become passé. New world orders come, it seems, as frequently as eclipses.
    The old world order (ancien régime), along with 16 million people, died during the Great European War which began on June 28, 1914 when the Austrian heir to the throne, Archduke Franz Ferdinand, was assassinated by a Serb nationalist, Gavrilo Princip, in Sarajevo. (Today he would be called a terrorist.) This assassination sent nations that had no desire to go to war into the most destructive war the world had yet experienced.
    Europe at the beginning of 1914 consisted of six major empires and an assortment of minor states that the major empires didn’t care much about. The six major empires, (the Austro-Hungarian, French, German, British, Ottoman, and Russian) were ensnared in military alliances (much like the US is today) which were formed to keep the peace. The diplomats, like those today, believed that forming alliances that balanced the powers of different groups would keep them from attacking each other. The Central Powers consisted of Austro-Hungary, Germany, and the Ottoman Empire; the Triple Entente consisted of the other three. Peace, the diplomats thought was assured. What happened?
    When the archduke was assassinated, the Austrians, confident in their military prowess (as Americans are today), decided to punish Serbia which was attacked on July 28. But the Serbs ambushed the Austrians at the battles of Cer and Kolubara. The Austrians were thrown back with heavy losses. Russia came to the aid of its ethnically related Serbs, and Germany invaded France through Belgium and Luxembourg. Britain came to the defense of France and the Ottoman Empire joined the war in the Balkans on the side of the Central Powers. The alliances that were to ensure the peace changed a single assassination into a massive war. When it was over, the Austro-Hungarian, the German, the Ottoman, and the Russian Empires had vanished and the United States, which joined the war late on the side of the Triple Entente had become a world player. The old world order was gone!
    Woodrow Wilson, the American President, sought to create a new old world order by proposing his Fourteen Points. Wilson wanted to create separate nations out of former colonies and ensure the peace by creating a League of Nations (another peace by treaty scheme). Territorial reductions were made to Germany and Austria, a slew of new and revived nations were created in Eastern Europe, while France and Britain carved up the Ottoman Empire to suit themselves. The new old world order was just a reconfigured old world order. It didn’t last and it didn’t ensure the peace. So much for the best laid plans of diplomats.
    Germany was reborn in 1933 when Adolph Hitler became Chancellor. He, too, sought to create a new world order, one dominated by a Thousand Year Reich (Empire). To that end, his policies were aimed at seizing Lebensraum (living space) for the German people by extending Germany’s borders. Austria and parts of Czechoslovakia were annexed and Poland was invaded. But alas, Poland had a mutual defense treaty (another alliance formed to ensure the peach) with Great Britain and France, so the invasion of Poland started World War II.
    When it was over, Germany again was destroyed and Great Britain and France, for the most part, had had their empires diminished. The United States and the Union of Soviet Socialist Republics (Russia) found themselves at the top of another new old world order.
    The victorious powers, the US, the USSR, China, Great Britain, and France tried again to ensure the peace by creating the United Nations which they attempted to keep firmly in their control by making themselves rulers of the Security Council which had a veto on all UN Activities all five nations didn’t give unanimous approval to. That was to be the new old world order. But it began to come unglued immediately. China was not represented by mainland China which had become Communist but by “Nationalist” China whose government had fled to Taiwan. Communist China soon took the Chinese seat and the two Communist nations formed a bloc while the remaining three Capitalist nations formed another. The United Nations became the Disunited Nations and has remained so to this day. This new old world order was stillborn.
    Sometime after 1950 (because of secrecy, the exact date is unknown) the Bilderbergers, realizing that the old world ancient régime and all of these new old world orders were founded on nation states that kept going to war with each other, began an attempt to create a truly new world order. David Rockefeller writes,
    “We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. . . . It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
    “For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it”
    If there were no nation states, no wars could erupt between them!
    Some believe that these international bankers have succeeded in taking over the world, but it has never succeeded in abolishing nation states. In fact, there is some evidence that nation states may be disintegrating into smaller ones. Scotland is going to hold a referendum on withdrawing from England, Catalonia is talking about withdrawing from Spain, Czechoslovakia has broken up into the Czech and Slovak republics, there is talk again of secession in the US, and no one quite knows what is really happening in the Arab world. A new world order ruled by one government? Not hardly!
    But things began to break down in the 1950s. Until then, wars were fought between armies supported by nation states, and their endings were foreseeable. A war ended when one army, either voluntarily or on command, surrendered. That era appears to have ended. Old world order warfare appears to have become passé.
    When the second world war ended, the Korean Peninsula was partitioned into Northern and Southern sections occupied by the Russians and Americans respectively. Elections for unification were to be held in 1948 but were not; the Americans were unsure the result would favor the South. Open warfare broke out when North Korean forces invaded South Korea in June, 1950. Because the Soviet Union was boycotting the United Nations Security Council at the time, the United States and other countries passed a Security Council resolution authorizing military intervention. The war’s progress favored each side from time to time and continued until July, 1953 when an armistice was signed. Officially, the war still goes on today. The US provided 88% of the 341,000 international soldiers which aided South Korea. The Russians and the People’s Republic of China aided North Korea. The West’s army was international, and the era of never ending, wars may have begun.
    After a short pause, the American hubris led the US to play one-upmanship with France. Since the end of World War II, the French had been trying to maintain its hold on its Southeastern Asian colony of Vietnam. But at the Battle of Dien Bien Phu, the French were soundly defeated and decided to give up the fight. American hubris about its military prowess made American diplomats believe that the US could do what the French could not and began to use American military resources to keep South Vietnam from being united with the North.
    The Pentagon’s military minds viewed this conflict as a traditional two-nation-state one and believed that America’s military only had to defeat a primitive North Vietnamese army to succeed. They were wrong, and after twenty years of fighting, 58,000 Americans, millions of Vietnamese had died, and the Americans fled. But this war marked another first: the army that won all the battles lost the war. That had never before happened in history. Today, winning battles does not win wars. Truly a new era in warfare has begun. What the Pentagon’s commanders failed to realize was that the war was not a two state war. It was a war between an invading army and an indigenous people who could only be defeated by total annihilation. No possible way existed for Americans (or any other nation-state) to “win” this war.
    But Americans are hard learners and they learned nothing from Korea and Vietnam, so after two misadventures that appeared to be successful (Grenada and the 1st Gulf War), the US led another multinational force into Iraq and Afghanistan. After eight years in Iraq and the installation of a new government, the US withdrew without achieving its goals, leaving Iraq in disarray. And after more than a decade in Afghanistan a similar outcome seems to be imminent. Like Vietnam, these wars too are not two-state wars.
    They amount to invading armies battling indigenous peoples who themselves are not united and not under the control of any government, group, or commander. No surrendering army in either country will ever be found. But now there’s a new twist. The forces facing the invaders do not merely consist of local peoples. Those peoples are assisted by non-state but similarly minded multi-state actors. The people opposing the West in Afghanistan are the same groups opposing the West in Libya, Algeria, Syria, Yemen, Mali, Somalia, the Sudan, and elsewhere. People who have been subjugated and exploited by the West have begun an undeclared war on the West and westerners everywhere, and winning this war will require not their defeat but their annihilation. The West cannot do that without annihilating itself in the process.
    The real new world order has emerged–the world’s downtrodden against the West and its puppet, surrogate colonial governments. These non-state but similarly minded actors will determine the course of future world history. There is now a new world order that the West cannot control, that military force cannot subdue, and that concessions cannot placate. Ancien régimes relied on military power to influence events. The true new world order renders military power effete. All it can now accomplish is kill for killing’s sake. Pure barbarity is what the promise of Western Civilization has been reduced to. What a wonderful world we have made!