Tuesday, June 18, 2013

Housing starts miss expectations, but overall tone upbeat

WASHINGTON (Reuters) - Housing starts rose less than expected in May, likely reflecting labor and material constraints, but the overall trend remained consistent with strength in the housing market.
Though permits for future home construction fell, that followed a surge in April, which hoisted them above the 1 million-unit mark. The pullback last month reflected a drop in the volatile multi-family sector, but permits for single-family construction touched their highest level in five years.
The Commerce Department said on Tuesday housing starts rose 6.8 percent to a seasonally adjusted annual rate of 914,000 units. April's starts were revised up to show a 856,000-unit pace instead of the previously reported 853,000 units.

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Economists polled by Reuters had expected groundbreaking to rise to a 950,000-unit rate last month.
Builders, who are ramping up construction to meet demand for housing against the backdrop very low inventory, have been complaining about labor shortages and increased material costs.
Sentiment among single-family home builders hit a seven-year high in June, a report showed on Monday, amid optimism over current and future home sales.
Lean inventories are pushing up home prices, which are in turn boosting consumer confidence and spurring consumption, helping soften the blow on the economy from tighter fiscal policy and slowing global demand.
The Federal Reserve has targeted housing as channel to boost growth, through monthly purchases of $85 billion in government and mortgage-backed securities.
Though residential construction only accounts for about 2.5 percent of gross domestic product, housing has a wider reach on the economy. Analysts estimate that for every single-family home built, at least three jobs lasting for a year are created.
Starts are expected to top a 1 million-unit pace this year.
Last month, groundbreaking for single-family homes, the largest segment of the market, rose 0.3 percent to a 599,000-unit pace. Starts for multi-family homes increased 21.6 percent to a 315,000-unit rate.
Permits to build homes fell 3.1 percent last month to a 974,000-unit pace. Permits for multi-family homes dropped 10 percent to a 352,000-unit rate. Permits for single-family homes rose 1.3 percent to a 622,000-units, the highest since May 2008.
(Reporting By Lucia Mutikani; Editing by Neil Stempleman)

More investors hold bullish U.S. bond bets before FOMC: survey

NEW YORK (Reuters) - More investors raised their positions in longer-dated U.S. Treasuries holdings in the latest week in advance of the Federal Reserve's two-day policy meeting, according to a survey released on Tuesday.
A total of 19 percent of its Treasuries clients said on Monday they were "long" in their duration on U.S. government debt, or owning more longer-dated Treasuries than their benchmarks, up from 11 percent a week earlier, the latest J.P. Morgan Securities survey showed.
This was the highest share of its clients who said they were long in their duration in about five months.
By holding more longer-dated Treasuries, investors add duration or interest rate risk to their portfolios in anticipation of a market rally when longer-dated bonds generate higher returns than shorter-dated debt.
Treasuries prices have slid and their yields have jumped in recent weeks due to worries the U.S. central bank might reduce its $85 billion monthly purchases of Treasuries and mortgage-backed securities later this year, as the U.S. economy has shown tentative signs of sustainable growth.
The rebound in Treasuries longs likely stemmed from bargain-minded investors who bought them after their longer-dated yields rose to 14-month highs last week.
There has also been a persistent view the Fed will stick with its current pace of bond purchases as long as unemployment remains high and inflation runs below its 2 percent target.
Benchmark 10-year Treasury notes traded 7/32 lower in price early Tuesday with a yield of 2.203 percent, up 2.5 basis points from late on Monday. The 10-year yield reached a 14-month high of 2.293 percent a week ago. (US/)
The Federal Open Market Committee, the central bank's policy-setting body, will convene later Tuesday. It is expected to release a policy statement and economic forecasts at 2 p.m. on Wednesday, followed by a conference with Fed Chairman Ben Bernanke. (FED/DIARY)
The bond market has stabilized in recent days, although intraday volatility remained high. This suggested there are fewer investors who are "short" in their Treasuries duration, or own fewer longer-dated Treasuries than their benchmarks.
In J.P. Morgan's latest survey, a total of 15 percent of its Treasuries clients said they were "short," down from 28 percent a week earlier.
The share of "longs" exceeded "shorts" by 4 percentage points in the latest week, compared with a week ago when shorts exceeded longs by 17 points, J.P. Morgan said.
The share of investors who said they held Treasuries equal to their benchmarks rose to 66 percent, from 61 a week earlier.
Among active clients, who are viewed as making speculative bets in Treasuries, 77 percent said their longer-dated Treasuries holdings matched their benchmarks, up from 61 percent the prior week.
The survey showed 15 percent of active "longs," up from 8 percent the prior week.
Only 8 percent of active clients said they were short in duration versus their benchmarks, down sharply from 31 percent a week earlier.
J.P. Morgan surveys 40 to 60 of its Treasuries clients weekly, of which 60 percent are fund managers, 25 percent are speculative accounts and 15 percent are central banks and sovereign wealth funds.
It asks 10 to 20 of its active clients each week about their Treasuries holdings, of which 70 percent are speculative accounts and the rest are money managers.
(Reporting by Richard Leong; Editing by Nick Zieminski)

Bernanke Bombshell? President Hints at Fed Chair’s Future

Bernanke bombshell or not? President Obama is signaling that the Fed Chair will be leaving an empty seat when his term is over in January. How surprised are you? Vote below, and as always feel free to post something in our comments section. But first listen to Hot Stock Minute's Lauren Lyster and Yahoo! Finance Senior Columnist Mike Santoli discuss the matter. The pair also talk about market-moving newspaper columns, and the latest economic data.
How surprised are you to hear that Ben Bernanke will likely leave the Fed next year?

2,383 people have responded


US Treasury Gold – Is It There?

The official gold holdings (rounded numbers) of the US Treasury Dept. are as follows (link is here):
US Treasury Gold physical market
Does anyone really think that gold is unencumbered, unleased, and actually physically there?  Yes, I know…
a)   They would not lie to us, right?
b)   The official numbers must be true, right?
c)   They seem like trustworthy people, right?
d)   Why wouldn’t it be there?
Glad you asked that question.  Why wouldn’t it be there?  Gold is a bit like an “anti-dollar.”  The Federal Reserve creates new dollars by the trillions – dollars are their product.  Gold has been real money for 5,000 years world-wide.  Federal Reserve notes have been passed off as money for a few decades, and in that time they have lost most of their value as measured against commodities such as wheat, gasoline, and cigarettes.
It could have been worse!  Western central banks (officially) and governments sold a considerable sum of gold during the 1990s to help repress the price of gold and to slow the apparent decline in the value of paper money.  They also “leased” an unknown amount of gold to bullion banks who also sold that gold into the market.  The leases are still “on the books” so the central banks officially still own the gold, even though it is probably long gone – likely to China, Russia, India and the Middle East.
Yes, central banks and governments have motive, means and opportunity to suppress the price of gold.  They want to support their product (dollars, euros etc.) and to defeat the competition – gold.  If you were a central banker or treasury official who was inflating his currency and consequently reducing its purchasing power, wouldn’t you want to suppress the price of gold to delay recognition of your involvement in the devaluation process?
So why not just do an audit?  This is a simple question with a complex set of answers.  Here are a few.
a)   The US gold has not been audited in over 50 years.  This must seem strange to any thinking person but it appears unlikely to change.
b)   If the Treasury agrees to an audit and the gold is not there, the result will be much unpleasantness – possible indictments, damaged reputations, social unrest, chaos, disillusionment, and destroyed trust – and there is plenty of disillusionment and destroyed trust already.
c)   If the Treasury performs an audit and the audit claims the gold is actually there, will anyone believe the results of the audit?  Is it truly unencumbered – not sold, leased, or hypothecated?  Would we even believe an audit had been actually performed?
d)   If the Treasury acknowledges the lack of a credible audit for over 50 years, and then says “we don’t think it is necessary,” will anyone take them seriously?
e)   The Treasury might claim an audit would be too expensive, but the US government probably wastes the cost of an audit every few hours, so that explanation is likely to sound hollow and stupid.
Bottom line:  The whole subject of an audit is fraught with potential trouble for both the Treasury and the Fed.  The simple solution is to stonewall the audit question and “extend and pretend.”
The problem is that the questions just won’t die.  GATA has researched the subject thoroughly and suggests that much of the Treasury gold is probably gone.  Eric Sprott has examined the export numbers (official US government export data) and concluded that somehow the US exported about 4,500 tons of gold more than can reasonably be accounted for.
Germany asked for their gold back – a measly 300 tons – and was told it would take seven years to return their gold.  It the gold was physically in the vault and unencumbered, it should have taken a few weeks at most.  Seven years – really?  This must seem strange to any thinking person.
From Bill HolterI would like to address the biggest (in my mind) conspiracy theory (fact) of all.  It has been “said” for nearly 60 years that the U.S. has 8,400 tons of gold left.  First off, there has been no audit done since 1956, not even Senators or Representatives (except for one time in the ’70′s for glance) have been allowed to actually see the gold.  “Trust us” is what the population has heard, “trust us” is what foreigners are told…trust us, trust us, trust us.  The problem is that so much anecdotal evidence has been dug up by GATA and others.  Eric Sprott just last month looked at the U.S. gold export numbers going back 10 years or more and found that 4,500 tons OVER AND ABOVE what are reported as production has been shipped out.  Where did that gold come from?  When looked at with your 3rd grade mind in gear, there is no way that the gold is really there.
… Forget about all of the past official memos uncovered.  Forget all of the evidence that GATA has uncovered over the last 15 years.  Forget that Germany asked for their gold and were told “wait 7 years.”  Forget that gold and silver prices have not acted like any other market since the mid 90’s and those prices have now crashed 3 times in the face of massive demand.  Forget that 2 of the smash downs occurred WHILE the CFTC was supposedly “investigating” the silver market.  Forget that 40% of the world’s total gold production was sold in reckless fashion in less than 12 trading hours (who would, could, do this?)  FORGET IT ALL!  …trust us.  …  All of this “conspiracy stuff” when put together rather than separately makes sense.”
I don’t know how much of the US Treasury gold remains, but I have two (only slightly serious) suggestions:
a)   A very large number of readers on the www.deviantinvestor.com site have voted over the past several months regarding what % of the gold they think remains in the US Treasury.  The choices were all of it, most of it (>75%), about half (40% to 75%), some (20% – 40%) or very little (<20 21="" 40="" 60="" about="" and="" another="" b="" believe="" clearly="" do="" less="" little="" nbsp="" not="" official="" readers="" remains.="" remains="" story="" than="" the="" very="">Only 3% think it is all there.
  A weighted average suggests that the voters on this site believe approximately 20% of the gold physically remains and is unencumbered. b)  Nixon temporarily closed the “gold window” almost 42 years ago.  Since that time, the official CPI shows that the dollar has lost about 83% of its value.  For simplicity, let’s assume that 17% of the dollar’s purchasing power remains, and assume that 17% of the gold remains.
We don’t know how much of the gold remains.  Does it really matter?
Do any of the following matter?
a)   Government promises
b)   Central bank promises
c)   Integrity of politicians
d)   Integrity of hundreds of present and past Treasury employees
e)   Backing for $Trillions in debt besides “full faith and credit”
f)    A possible solution to the massive debt problem of the US government.  If the gold is still there, value it at some large number, say $15,000 – $30,000 per ounce, and then back the dollar with gold.  This is not my idea – some very intelligent people have advocated it.  If the gold is mostly gone, this option is less likely.
  • Fort Knox:  Per the voting and dollar devaluation “method” – assume about 20% of the official gold remains – physically in the vaults, unencumbered, not hypothecated or leased to bullion banks.  Yes, I know, this is not defensible, scientific, statistically significant, or verifiable.  But it sounds about right to me.
  • Denver:  Assume about the same
  • West Point:  Assume about the same
  • Federal Reserve Bank of New York:  Ask the Germans!  Assume very little remains.
How much physical gold do you have?  How much do you want when you contemplate nearly $17,000,000,000,000 in official US government debt, another $100 – $200 Trillion in unfunded liabilities, and nothing backing that unbelievable amount of debt except the “full faith and credit” of what is clearly a government that won’t balance a budget and must resort to printing dollars to pay its bills?
How much gold do you have stored in a secure (off-site) facility? Learn more about physical gold outside the banking system.
GE Christenson  |  The Deviant Investor

Bank of America Paid Bonuses to Foreclose: Lawsuit

Getty Images
Bank of America routinely denied qualified borrowers a chance to modify their loans to more affordable terms and paid cash bonuses to bank staffers for pushing homeowners into foreclosure, according to affidavits filed last week in a Massachusetts lawsuit.
"We were told to lie to customers," said Simone Gordon, who worked in the bank's loss mitigation department until February 2012. "Site leaders regularly told us that the more we delayed the HAMP [loan] modification process, the more fees Bank of America would collect."
In sworn testimony, six former employees describe what they saw behind the scenes of an often opaque process that has frustrated homeowners, their attorneys and housing counselors.
They describe systematic efforts to undermine the program by routinely denying loan modifications to qualified applicants, withholding reviews of completed applications, steering applicants to costlier "in-house" loans and paying bonuses to employees based on the number of new foreclosures they initiated.
The employees' sworn testimony goes a long way to explain why the government's Home Affordable Modification Program, launched in 2008 during the depths of the housing collapse, has fallen so far short of the original targets to save millions of Americans from being tossed from their homes.
Bank of America denied the allegations in the affidavits, which were filed in a Massachusetts lawsuit on behalf of dozens of BofA borrowers in 26 states.
"We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank's practices and the dedication of our employees," a spokesman said in a statement. "While we will address the declarations in more depth when we file our opposition to plaintiffs' motion next month, suffice it is to say that each of the declarations is rife with factual inaccuracies."
Since the housing crisis unfolded in 2007, BofA and other large mortgage servicers have maintained that the widespread delays in processing loan modifications largely resulted from an overwhelming and unprecedented wave of troubled loans.
But regulators have repeatedly cited lenders for mistreating borrowers trying to modify their mortgages. In April 2001, five big banks—including Bank of America—settled a sweeping complaint with 49 states and several federal regulators about their foreclosure and loan modification practices. The banks agreed to provide $26 billion in relief and adhere to a sweeping series of new rules when modifying loans.
Later this week, a monitor assigned to track the bank's practices will issue a report that's expected to cite ongoing violations of those new rules.
(Read More: Banks Slow to Clean Up the Mortgage Mess)
In their sworn testimony, the former Bank of America employees detail a series of specific company policies designed to provide as little foreclosure relief as possible.
"Based on what I observed, Bank of America was trying to prevent as many homeowners as possible from obtaining permanent HAMP loan modifications while leading the public and the government to believe that it was making efforts to comply with HAMP," said Theresa Terrelonge, a Bank of America collector until June 2010. "It was well known among managers and many employees that the overriding goal was to extend as few HAMP loan modifications to homeowners as possible."
The reason was fairly simple, according to William Wilson Jr., who worked as a manager in the company's Charlotte, N.C., headquarters, where he supervised 13 mortgage representatives working on with customers seeking HAMP loan modifications.
After stonewalling qualified borrowers seeking an affordable HAMP loan, Bank of America representatives could upsell them to a more costly "in-house" loan modification, with rates 3 points higher than the 2 percent rate available under HAMP guidelines, Wilson testified.
"The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification, but had little choice but to accept a more expensive and less favorable in-house modification," he said.
Courtney Scott was among the Bank of America customers who experienced repeated delays and denials for a government-sponsored modification of the mortgage on her suburban Atlanta home. The retired nurse and grandmother grew increasingly frustrated after bank representatives repeatedly requested she fill out paperwork covering the same information.
So she was surprised when the bank approved her six months later for an "in-house" modification.
"I got the [HAMP] denial in January, 2010 and then in June they came back with an in-house offer saying 'Congratulations, you've been approved for a modification,'" said Scott. "But it only lowered my payments by about $7 and some cents."
Scott turned down the offer and the bank moved to foreclose,an action she is contesting with the help of an attorney.
Scott's frustration in complying with the banks request was designed to motivate her to agree to the in-house modification according to the former Bank of America workers.
In his affidavit, Wilson said most of the information the bank repeatedly requested from homeowners was already available in multiple document review systems. Some completed applications were denied one at a time, while other borrowers were rejected en masse in a process known as "the blitz," Wilson said.
"Approximately twice a month, Bank of America would order that case managers and underwriters 'clean out' the backlog of HAMP applications by denying any file in which the financial documents were more than 60 days old," he said. "These included files in which the homeowner had provided all required financial documents."
The procedures described in the affidavits will come as no surprise to attorneys working with borrowers trying to save their homes from foreclosures, according to Max Gardner, a North Carolina bankrupctcy attorney who trains other lawyers on legal strategies to thwart foreclosure
"This policy—of dragging it out as long as we possibly can and tell [the homeowner] you didn't qualify or the mod failed or we didn't get this document or you didn't sign it in the right place or we lost this form—is consistent with what we've seen," he said.
(Read More: As Investors Return to Jumbo Mortgages, Big Banks Sell)
Beyond the policy of denying affordable loan applications, Bank of America also encouraged its employees to move loans to foreclosure—even when the process could have been prevented, according to said Erika Brown, a former bank customer service representative.
"These homeowners were eligible for loan modifications under HAMP, sent back all the required documents and made all their required payments under a trial plan," she said. "Bank of America nevertheless damaged their credit ratings by reporting them delinquent, tacked on additional charges to their loans, increased the amounts it considered as being owed and often referred these homeowners to foreclosure."
Banks In Repo Mode
There has been a sudden rise in bank repossessions, which is the final stage of a foreclosure when the bank takes your home, reports CNBC's Diana Olick.
The motivation for mortgage servicing companies like Bank of America to move loans to foreclosure is driven by the often perverse economics of the modern mortgage servicing business, according to consumer advocates and attorneys defending against foreclosures.
When the tens of millions of loans written during the housing boom of the mid-2000s were sold off to investors, lenders like Bank of America took over the job of collecting checks, making property tax and insurance payments, assessing late fees and other clerical work.
When a borrower defaults on a loan and the bank forecloses, investors who own the loan typically bear the loss on the unpaid principal balance. But the foreclosure process generates a lucrative stream of fees for mortgage servicers—for everything from property inspections to legal work required to seize a home.
Those added fees provide mortgage servicers like Bank of America with a financial incentive to foreclose—and a disincentive to provide a more affordable loan, according to consumer advocates. The company shared those incentives—and disincentives—with its workers, based on foreclosure quotas spelled out in monthly meetings with managers, according to Gordon.
"A collector who placed 10 or more accounts into foreclosure in a given month received a $500 bonus," she said. "Bank of America also gave employees gift cards to retail stores like Target or Bed Bath & Beyond as rewards for placing accounts into foreclosure. Bank of America collectors and other employees who did not meet their quotas by not placing a sufficient number of accounts into foreclosure each month were subject to termination. Several of my colleagues were terminated on that basis."
Bank of America agreed to abide by HAMP program guidelines, which require it to modify loans for qualified buyers, when it accepted $25 billion in bailout funds from the government in 2008 following the housing collapse. In return for the financial lifeline, the bank agreed to help millions of struggling homeowners by rewriting mortgages with more affordable terms. As an added incentive, the government agreed to pay a cash bonus for every loan that was modified successfully.
But, according to the former employees, while the bank was lying to borrowers, it was also falsifying its performance when reporting to the government the number of loans that had been modified.
"Often this involved double counting loans that were in different stages of the modification process," according to Steven Cupples, who supervised a team of Bank of America underwriters until June 2012. "It was well known among Bank of America employees that the numbers Bank of America was reporting to the government and to the public were simply not true."
—By CNBC's John W. Schoen. Follow him on Twitter

Russia Does Have the Military Strength to Deter War in Syria and Iran Standing Against Banker’s Agenda

There is a reality the warm mongers in Congress and in Israel do not look at. Ever since September 11,2001. All the illegal wars in Afghanistan and Iraq have a severe attrition rate.  Our military equipment is worn down. The Soldiers and Marines are burned out over multiple deployments to the Middle East. The people of Israel of getting war weary. The Americans are burned out going to war. We have no sane leadership with a coherent foreign policy to rely on to keep the peace. We have become the rogue aggressor hell bent on going to war with nations who are not a threat to our national security. Orchestrated by Puppet Leaders.
The Russian Federation has no choice but to take stand and say no more bombing and invading sovereign nations who have not threatened the United State or Israel. But to set up private central banking to put a nation in perpetual debt to the bankers. The Bankers need a war in an effort to distract the public for the following reasons:
-There is no gold in the Federal Reserve vault. The Central bank might be insolvent.
- They cannot steal the pension funds.
- They cannot implode the economies of Western Europe and the United States with a distraction of a war or a false flag attack as an excuse to attack a nation.
-They cannot steal the personal bank accounts. They tried to distract us with a chemical attack in Syria to try to justify starting war.
-Without a war distraction. They cannot use the derivatives debt which is their own and not the people’s debt to bring down the economies and force people to pay these derivatives. These Mortgage backed securities and Credit Default swaps is the lynch pin that can bring down the private central banks and the Zombie bankers if they are forced to pay this debt which is more money owed than is in existence. Something Max Kaiser and Alex Jones will not talk about.
-Without a war which I do not think will work anymore because the devices of wars is exposed to the people and any effort to start a conflict has been exposed a staged event they started to blame the other as an excuse to attack is now showing their hand being desperate to start a war because the Money junkies are in trouble. Without a major distraction minus phony space aliens landing. The Bankers are screwed.
Russia stands in the way of these wars for conquest for the Bankers. The Russian Federation is a threat to private central bankers. They have required NGSs funded by these foundation of the Central Bankers to register as foreign agents because they were undermining and trying to destabilize Russia to overthrow the Russian Federation and bring in a puppet leader.
Russia plays chess very well. Russia being a deterrent for unjust and unnecessary wars for the Central Bankers to distract us from the financial meltdown trying to consolidate power. I know Russia will prevent this war helping implode these Private Central Banks and the Zombie Bankers.
These Private Central Bankers will be a threat to Russia. Russia holding the line against western aggression will bring long term stability in International relations with trade and commerce compared to wars and financial slavery.
The Russians know slavery all to well. They know puppet leaders like the back of their hand. Putin stands for Russia’s long term stability of his people in a peaceful society. He is his own man and makes no bones about it. He has no choice but to stand with Iran and Syria because if Russia allows the west to over run these sovereign countries. Than in the future, NATO forces will be miles outside of Moscow.
Russia has much to lose standing on the sidelines. These central bankers if allowed to stay in power ruling puppet governments to start wars to set up a private central bank with a debt based currency. The Russian Federation will be in the sites if they stay silent. The survival of Russia depends on standing with Iran and Syria.
 Not standing for the sovereignty of Syria and Iran condemns the Russian people to perpetual debt slavery.

Can Bernanke Keep the Rally Going?

by Phoenix Capital Research

The markets are rallying today because Bernanke and the Fed meeton Wednesday and will announce their new policies (if any).
Someone might want to explain to them that the Nikkei just collapsed in spite of Central Bank policy. The bank of Japan announced it would buy $1.4 trillion worth of assets (roughly 25% of Japan’s GDP) in early April. The Nikkei has already wiped out almost all of the gains since that time.

Still, US bulls continue to hope that Bernanke will engage in even more QE, despite the fact the Fed has an $85 billion per month QE policy in place already, which comes to over $1 trillion in QE per year.
Given that the Fed’s balance sheet is already over $3 trillion and will be over $4 trillion within 12 months, one has to wonder just what Bernanke can do. His best bet is to retire in January and let someone else try and manage the mess he created.
So let’s see what happens on Wednesday. The markets will likely rally until then on hopes of more juice from Bernanke. But if he should disappoint at all (read: not announce something more or at least strongly hint at doing so) then buckle up.
For more market insights and commentary, visit us at:
Best Regards
Graham Summers

Whenever Margin Debt Goes Over 2.25% Of GDP The Stock Market Always Crashes

by Michael
Bubble - Photo by Jeff Kubina
What do 1929, 2000 and 2007 all have in common?  Those were all years in which we saw a dramatic spike in margin debt.  In all three instances, investors became highly leveraged in order to “take advantage” of a soaring stock market.  But of course we all know what happened each time.  The spike in margin debt was rapidly followed by a horrifying stock market crash.  Well guess what?  It is happening again.  In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars.  The previous high was 381 billion dollars which occurred back in July 2007.  Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall.  The stock market just continues to rise even though the underlying economic fundamentalscontinue to get worse.  So should we be alarmed?  Is the stock market bubble going to burst at some point?  Well, if history is any indication we are in big trouble.  In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed.  That certainly does not mean that the market is going to crash this week, but it is a major red flag.
The funny thing is that the fact that investors are so highly leveraged is being seen as a positive thing by many in the financial world.  Some believe that a high level of margin debt is a sign that “investor confidence” is high and that the rally will continue.  The following is from a recent article in the Wall Street Journal
The rising level of debt is seen as a measure of investor confidence, as investors are more willing to take out debt against investments when shares are rising and they have more value in their portfolios to borrow against. The latest rise has been fueled by low interest rates and a 15% year-to-date stock-market rally.
Others, however, consider the spike in margin debt to be a very ominous sign.  Margin debt has now risen to about 2.4 percent of GDP, and as the New York Times recently pointed out, whenever we have gotten this high before a market crash has always followed…
The first time in recent decades that total margin debt exceeded 2.25 percent of G.D.P. came at the end of 1999, amid the technology stock bubble. Margin debt fell after that bubble burst, but began to rise again during the housing boom — when anecdotal evidence said some investors were using their investments to secure loans that went for down payments on homes. That boom in margin loans also ended badly.
Posted below is a chart of the performance of the S&P 500 over the last several decades.  After looking at this chart, compare it to the margin debt charts that the New York Times recently published that you can findright here.  There is a very strong correlation between these charts.  You can find some more charts that directly compare the level of margin debt and the performance of the S&P 500 right here.  Every time margin debt has soared to a dramatic new high in the past, a stock market crash and a recession have always followed.  Will we escape a similar fate this time?

S&P 500
What makes all of this even more alarming is the fact that a number of things that we have not seen happen in the U.S. economy since 2009 are starting to happen again.  For much more on this, please see my previous article entitled “12 Clear Signals That The U.S. Economy Is About To Really Slow Down“.
At some point the stock market will catch up with the economy.  When that happens, it will probably happen very rapidly and a lot of people will lose a lot of money.
And there are certainly a lot of prominent voices out there that are warning about what is coming.  For example, the following is what renowned investor Alan M. Newman had to say about the current state of the market earlier this year
“If anything has changed yet in 2013, we certainly do not see it. Despite the early post-fiscal cliff rally, this is the same beast we rode to the 2007 highs for the Dow Industrials. The U.S. stock market is over leveraged, overpriced and has been commandeered by mechanical forces to such an extent that all holding periods are now affected by more risk than at any time in history.”
Unfortunately, most Americans never get to hear such voices.  Instead, most Americans rely on the mainstream media to do much of their thinking for them.  And right now the mainstream media is insisting that we are not in a stock market bubble…
Forbes: “Why Stocks Are On Solid Footing And This Is No Bubble
ABC News: “AP Survey: Economists See No Stock Market Bubble
Businessweek: “Prognostications: It’s Not a Stock Bubble
Yahoo: “This Is NOT a Stock Bubble! Says Ben Stein
MarketWatch: “Is a stock bubble coming? No, say economists
So what do you think?
Do you believe that we are in a stock market bubble that is about to burst, or do you believe that everything is going to be just fine?
Please feel free to express your opinion by posting a comment below…

JPMorgan calls for authoritarian regimes in Europe

By Stefan Steinberg
In a document released at the end of May, the American banking and investment giant JP Morgan Chase calls for the overturning of the bourgeois democratic constitutions established in a series of European countries after the Second World War and the installation of authoritarian regimes.
The 16-page document was produced by the Europe Economic Research group of JP Morgan and titled “The Euro Area Adjustment—About Half-Way There.” The document begins by noting that the crisis in the euro zone has two dimensions.

First, the paper argues, financial measures are necessary to ensure that major investment houses such as JP Morgan can continue to reap huge profits from their speculative activities in Europe. Second, the authors maintain, it is necessary to impose “political reforms” aimed at suppressing opposition to the massively unpopular austerity measures being carried out at the behest of the banks.
The report expresses satisfaction with the implementation of a number of financial mechanisms by the European Union to secure banking interests. In this respect, the study maintains, reform of the euro area is about halfway there. The report does, however, call for more action by the European Central Bank (ECB).
Since the eruption of the global financial crisis in 2008, the ECB has made trillions of euros available to the banks to enable them to wipe out their bad debts and commence a new round of speculation. In the face of mounting pressure from the financial markets, ECB chief Mario Draghi declared last summer that he would do whatever was necessary to shore up the banks.
This, however, is not sufficient as far as the analysts at JPMorgan are concerned. They demand a “more dramatic response” to the crisis from the ECB.
The harshest criticisms in the document, however, are reserved for national governments that have been much too tardy in implementing the type of authoritarian measures necessary to impose austerity. The process of such “political reform,” the study notes, has “hardly even begun.”
Towards the end of the document, the authors explain what they mean by “political reform.” They write: “In the early days of the crisis it was thought that these national legacy problems were largely economic,” but “it has become apparent that there are deep-seated political problems in the periphery, which, in our view, need to change if EMU (the European Monetary Union) is to function in the long run.”
The paper then details problems in the political systems of the peripheral countries of the European Union—Greece, Spain, Portugal and Italy—that have been at the center of the European debt crisis.
The authors write: “The political systems in the periphery were established in the aftermath of dictatorship, and were defined by that experience. Constitutions tend to show a strong socialist influence, reflecting the political strength that left-wing parties gained after the defeat of fascism.
“Political systems around the periphery typically display several of the following features: weak executives; weak central states relative to regions; constitutional protection of labour rights; consensus-building systems which foster political clientalism; and the right to protest if unwelcome changes are made to the political status quo. The shortcomings of this political legacy have been revealed by the crisis. “ Whatever the historical inaccuracies in their analysis, there can not be the slightest doubt that the authors of the JPMorgan report are arguing for governments to adopt dictatorial-type powers to complete the process of social counterrevolution that is already well underway across Europe.
In reality, there was nothing genuinely socialist about the constitutions established across Europe in the postwar period. Such constitutions were aimed at securing bourgeois rule under conditions where the capitalist system and its political agents had been thoroughly compromised by the crimes of Fascist and dictatorial regimes.
The constitutions of European states, including those of Italy, Spain, Greece and Portugal, were elaborated and implemented in collaboration with the country’s respective Socialist and Communist parties, which played the key role in demobilising the working class and permitting the bourgeoisie to maintain its rule.
At the same time, however, Europe’s discredited ruling classes were well aware that the Russian Revolution remained a political beacon for many workers. They felt compelled to make a series of concessions to the working class to prevent revolution—in the form of precisely the social and constitutional protections, including the right to protest, that JPMorgan would now like to see abolished.
To some extent, the bank’s criticism of European governments for their lack of authoritarianism rings hollow. Across Europe, governments have repeatedly resorted in recent years to police state measures to suppress opposition to their policies.
In France, Spain and Greece, emergency decrees and the military have been used to break strikes. The constitution adopted in Greece in 1975, following the fall of the colonels’ dictatorship, has not prevented the Greek government from sacking public workers en masse. And in a number of European countries, ruling parties are encouraging the growth of neofascist parties such as the Golden Dawn movement in Greece.
For JPMorgan, however, this is not enough. In order to avoid social revolution in the coming period, its analysts warn, it is necessary for capitalist governments across Europe to move as quickly as possible to set up dictatorial forms of rule.
At the end of the document, the authors put forward a series of scenarios that they claim could result from the failure of European governments to erect authoritarian systems. These variants include: “1) the collapse of several reform-minded governments in the European south, 2) a collapse in support for the euro or the EU, 3) an outright electoral victory for radical anti-European parties somewhere in the region, or 4) the effective ungovernability of some Member States once social costs (particularly unemployment) pass a particular level.”
This is the unadulterated voice of finance capital speaking. It should be recalled that JPMorgan is deeply implicated in the speculative operations that have devastated the lives of hundreds of millions of workers around the world. In March of this year, a US Senate committee released a 300-page report documenting the criminal practices and fraud carried out by JPMorgan, the largest bank in the US and the world’s biggest dealer in derivatives. Despite the detailed revelations in the report, no action will be taken against the bank’s CEO, Jamie Dimon, who enjoys the personal confidence of the US president.
The same bank now presumes to lecture governments. Seventy years after the assumption of power by Hitler and the Nazis in Germany, with catastrophic consequences for Europe and the world, JPMorgan is leading the call for authoritarian measures to suppress the working class and wipe out its social gains.

They Know: Billionaires Are Quietly And Rapidly Dumping Millions of Shares of Stock

After the massive crash that rocked global markets in 2008, as Congress, central bankers and major financial institutions met in secret to mitigate the crisis, billionaires like Warren Buffet were buying up shares of some of the hardest hit companies.
At the time, the world was literally on the brink of an unprecedented economic collapse. It was so serious, in fact, that members of Congress were told that should they fail to come to an agreement the fallout would leave the United States in such a state of disarray that martial law would be declared and tanks would be deployed to major American cities.
In the midst of it all, as if they had a private pipeline into the bailout meetings, the big boys were positioning themselves to profit. And profit they did, as the stock market rose from 6500 points in late 2008 to record highs as recently as last month. They made billions of dollars on the backs of bailouts funded by taxpayers who were themselves struggling to pay their mortgages and put food on the table.
They knew then what their friends at the Federal Reserve, Treasury and investment banks were planning to do. And they took the opportunity to make a killing.
Now, with the stock market indicating to the masses that the promised recovery has taken hold, and with mainstream analysts arguing that happy days are here again, those same moguls of finance who were undoubtedly tipped off in 2008, are making some very big moves yet again.
But these particular moves are  exactly the opposite of what you might expect given that we’re at the beginning of a supposed recovery:
Despite the 6.5% stock market rally over the last three months, a handful ofbillionaires are quietly dumping their American stocks . . . and fast.
Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of “disappointing performance” in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods.
In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.
With 70% of the U.S. economy dependent on consumer spending, Buffett’s apparent lack of faith in these companies’ future prospects is worrisome.
Unfortunately Buffett isn’t alone.
Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.
Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.
So why are these billionaires dumping their shares of U.S. companies?
From Money News via StanDeyo.com
The simple answer is… they know.
They know that this market has been propped up by trillion dollar infusions from the Federal Reserve.
They know that Americans have lost 55% of their wealth since this crisis started.
They know nearly 25% of Americans are out of work (as opposed to the official 7.5% figures from the BLS) and that no meaningful jobs are being created.
They know that half of American households require government assistance, 100 million people are on welfare and nearly a quarter of them need nutritional assistanceto put food on the table..
They know that the economic growth rates being disseminated to the people are completely bogus because they fail to account for the inflationary impact of the Fed’s monetary expansion.
They know this is wholly unsustainable, and they are getting out of Dodge before the next phase of this crisis takes hold and hammers the world yet again.
Ben Bernanke’s magic show will soon come to an end, and all of his tricks will be exposed for the statistical illusions they really are.
Billionaires know this and they are preparing for the inevitable. The government, likewise, is preparing for financial collapse and the potential for widespread violence that will follow.
You should be doing the same.

Shock: Iceland Defies EU, Freezes Membership Bid

"We are going to do it our way, this is our decision," Sveinsson, 45, said in an interview in Brussels today. "This government is not going to keep on pushing forward this application. At some time, there will be a referendum, but I cannot tell you when and by whom." EU leaders had celebrated the prospect of welcoming Iceland -- a developed nation where the economy grew 1.6 percent in 2012 -- as a sign the bloc's appeal isn't limited to poorer nations in the south. Iceland's snub changes that. "It was not easy for me as a person" to learn of the new mood in Reykjavik, EU Enlargement Commissioner Stefan Fule said after meeting Sveinsson last night. He urged the government in Reykjavik not to take "unlimited time" on its EU options... – News of Iceland
Dominant Social Theme: A little bump in the road.
Free-Market Analysis: The mainstream press was in full cry over Edward Snowden late last week, but there was big news regarding Iceland and the EU.
Iceland's new government is no more apt to speed an entry into the EU than previous administrations. Representatives reaffirmed a decision to halt efforts to join the European Union. Reasons included worries over control of Iceland's resources and the continued euro crisis.
Foreign Minister Gunnar Bragi Sveinsson would not commit to EU pleas either for a rapid referendum on joining the EU or on restarting the process. It is not clear why Eurocrats would want a referendum anyway when fully three-quarters of Iceland residents are against joining, according to polls.
But the continued "freeze" is certainly stoking fears in Brussels. The myth of EU invincibility is shattering on Iceland's stubborn, frozen shores. That is all but unacceptable. It is the reason the Eurocrats made Irish voters vote twice on a constitutional treaty, until they "got it right." And why they have continued to inflict "austerity" on the ruined economies of Spain and Greece.
Now the EU no longer appears to be the overwhelming force that brooks no resistance. Here's how the EU Observer put it:
The main purpose of the trip [to Brussels] had been "to tell the commission that the new government has made decision to put negotiations on hold. "We are part of Europe and want to strengthen our relationship in other ways," [Gunnar Bragi Sveinsson] added.
Speaking during a frosty press conference with reporters on Thursday (13 June), Stefan Fule, the Czech commissioner responsible for EU membership bids, admitted that Iceland's decision was a personal blow.
"It was not easy for me as a person (to take the decision)," said Fule. But he added: "I am also a professional and I respect without any questions and any doubt, the will of elected representative and citizens".
The EU has suffered so many reversals at this point that we have lost count. The euro itself has proven to be a disaster, sinking half of Europe. Germany faces a constitutional crisis over ECB inflating – on the backs of the "Fatherland," of course. And most recently, the British Tories, pushed into a corner, agreed to set up an actual referendum on the issue of whether or not the Brits should stay in the union.
Absent a miracle (of the worst kind) citizens of Iceland surely won't be part of a Charlemagne's neo-empire, one built in secret and foisted on 300 million people without their consent.
The corruption, political backstabbing, ever-escalating regional costs, job-sapping regulations, authoritarian Napoleonic justice (guilty until proven innocent) and all the rest is not to be strapped to the backs of weary Icelandic citizens.
They continue to say "no." They won't be rushed. The clear implication is that they are through. Both parties are anti-EU. Perhaps this is a watershed moment. Perhaps indeed this will be seen historically as the high-water mark of this wretched "experiment."
Conclusion: Perhaps the tide will gradually recede now.

Living on Minimum Wage

At least one part of the labor force has expanded significantly since the recession hit: the low-wage part, made up of burger flippers, home health aides and the like.
Put simply, the recession took middle-class jobs, and the recovery has replaced them with low-income ones, a trend that has exacerbated income inequality. According to Labor Department data, about 1.7 million workers earned the minimum wage or less in 2007. By 2012, the total had surged to 3.6 million, with millions of others earning just a few cents or dollars more.
In his State of the Union address in February, President Obama made raising the federal minimum wage his banner economic proposal. The White House argued that increasing the wage to $9 an hour from its current $7.25 and indexing it to inflation would lift hundreds of thousands of families above the poverty line.
Combined with tax measures the administration has supported, Alan B. Krueger, the departing chairman of the White House’s Council of Economic Advisers, said that raising the minimum wage would undo “a lot of the rise in inequality we’ve seen over the last 20 years.”
But the proposal has gone nowhere. Democrats in Congress put forward a bill raising the minimum wage to more than $10 an hour, and their Republican counterparts voted it down.
Many conservatives and some economists say that raising the cost of employing workers results in fewer workers. “What happens when you take away the first couple of rungs on the economic ladder, you make it harder for people to get on,” John A. Boehner, the House speaker, has said.
Mr. Krueger disagrees. His work with David Card of the University of California, Berkeley (later replicated by others) demonstrated in a real-life experiment that raising the minimum wage did not result in businesses shedding workers, perhaps in part because it helped reduce turnover.
But for now, it seems the minimum will stay where it is. Because of inflation, the minimum wage loses value over time if it is not bumped up. Accounting for inflation’s effects, it is now worth less than in the 1960s and 70s. And, as the people pictured here can attest, getting by on it — whether the federal minimum or a state version, which can be somewhat higher — is getting harder.
—Annie Lowrey
Dilip Vishwanat for The New York Times
Ashely Sanders, 20, St. Louis
Where she works: Hardee's
“I have bills to pay, and I need to provide the necessities for my son. He’s 6 months old.
“I get food stamps; they help to feed the five other adults in my household, too. I want to move out of my mom’s house, but it’s difficult to put pennies aside. I plan to return to cosmetology school, but I need to find a better job.”
Bryan Thomas for The New York Times
Denis Belioglo, 19, Queens, N.Y.
Where he works: Telco Stores
“I came to New York from Moldova with my mother and younger brother about six months ago. We live with my grandparents. My mother is ill and can’t work. My grandmother works and my grandfather gets food stamps. I have a green card and was lucky enough to find a job as a stock attendant through the Edith and Carl Marks Jewish Community House.
“As an immigrant, getting that first job is important. It has also improved my English. If I made more money, it would be easier to go to school.”
Khalim Bhatti for The New York Times
Anita Braden, 40, Camp Hill, Pa.
Where she works: Fire Mountain Restaurant
“I’m a cashier and bakery worker in a restaurant and a single mother. Four of my five children and one grandchild live with me. I get food stamps, and I’m trying to get more hours. My boyfriend has moved in to help me. I’m always stressed. I worry about everything, and that stress gets passed on to my kids. They want to work to try and help me. It breaks my heart.”
Bryan Thomas for The New York Times
Kevin Meagher, 53, Austin, Tex.
Where he works: First Workers' Day Labor Center and Labor Ready
“I have a college education and then some, and I can’t find a full-time job at present. Minimum wage is not enough to have a decent standard of living in Austin. I’m lucky because I rent a room from a friend for less than the market rate. I also take part in medical studies for extra money. I never thought I’d be doing that.”
Bryan Thomas for The New York Times
Amin Arnold, 25, Manhattan
Where he works: Guitar Center
“I produce electronic dance music. My goal is to be a full-time musician, but for now I work as a salesperson. New York City is a good place for an artist, but it’s extremely difficult living here. One of my colleagues is sharing a bedroom. I’m living with a family member here, but it’s still tough after I pay rent and buy food.
“I was in college until I had to drop out because of finances. There’s no way I can save to return to school and find better work.”
Jeffrey Phelps for The New York Times
Marvin Jones, 45, Milwaukee
Where he works: McDonald's
“I’m a maintenance man at McDonald’s. When my grandbabies come over on the weekend, I spend on them, making sure that they eat and are comfortable. I eat McDonald’s the last two weeks of the month because I have no food left.”

Eric Sprott: Physical Demand for Gold and Silver is Draining Supplies, New Highs and More

Eric Sprott: Physical Demand for Gold and Silver is Draining Supplies, New Highs and More
Eric Sprott, President and CEO of Sprott Asset Management, says extreme physical demand for gold and silver is draining supplies. Sprott predicts, “Somebody’s going to fail here. All the data I look at says the Western central banks . . . that have been selling gold are running on fumes now . . . so, it’s very close at hand.” Join Greg Hunter as he goes One-on-One with money manager Eric Sprott.

Oil set to test $100 as summer driving season gets underway: chart watchers

Oil set to test $100 as summer driving season gets underway: chart watchers
17 June 2013
, by William L. Watts (marketwatch - Blogs)

While the start of summer driving season is providing its typical fundamental fodder for rising oil prices, the monthly futures charts are repeating a pattern that points to a test of the $100-a-barrel-level and above for crude oil futures, say technical analysts at RBC Capital Markets.

Chart watchers Javed Mirza and Ray Hanson note that crude has been stuck in a $15 price range since last summer, [b]narrowing to a tighter band between $90 and $95 a barrel since April[/b], forming what chartists call a symmetrical triangle pattern.

Such narrowing patterns often end with strong moves, they note, adding that they see a bias to the upside.

West Texas Intermediate oil futures on Friday ended at their highest level since late January, according to FactSet, and traded up 47 cents in recent action at $98.32 a barrel.

The RBC chartists see more room to the upside:

We expect WTI Oil to move higher over the coming quarter and to challenge resistance near $100 with next resistance near $114.

Support is near $85 which, if broken, would negate our positive outlook.

Brent crude $101.40 and U.S. crude $93.14 – 31 May 2013
Brent crude $102.21 and U.S. crude $93.33 – 03 June 2013
Brent crude $102.58 and U.S. crude $94.96 – 11 June 2013
Brent crude $104.79 and U.S. crude $96.60 – 13 June 2013
Brent crude $106.20 and U.S. crude $97.71 – 14 June 2013
Brent crude $105.84 and U.S. crude $97.89 - 16 June 2013
Brent crude $106.06 and U.S. crude $98.02 a barrel now

Fake Store Fronts in Belfast to Boost Economy?

WeAreChange goes to Belfast see for themselves the way Northern Ireland has decided to handle the economic hardships in their neighborhoods. Throught various...

U.S. Could Soon Become A Large-Scale Spain Or Greece, Teetering On The Edge of Financial Ruin. Billionaire Tells Americans To Get Prepare!

U.S. Is Going To Be ‘A Lot Worse’ Than Greece

Dark days are ahead for U.S. investors.
That’s according to a well-respected author and investor, making a recent appearance on Yahoo Finance’s “Breakout.”
Peter Schiff, the CEO of Euro Pacific Capital, says that the during President Obama’s second term, the country will face both a currency crisis and a sovereign debt crisis. “It’s going to be the same thing that is happening in Europe or Greece, but it’s going to be a lot worse.”
Schiff also said the country faces higher unemployment, higher food and energy prices, and “sharply higher interest rates.”
This isn’t the first time that Schiff has painted a grim outlook for the country. A few months ago, Schiff generated headlines by saying that the economic, financial, and employment collapse the country has endured in the past few years was only the beginning. He says what we experienced in 2008 “wasn’t the real crash. The real crash is coming.”

Billionaire Tells Americans to Prepare For ‘Financial Ruin’

The United States could soon become a large-scale Spain or Greece, teetering on the edge of financial ruin.
That’s according to Donald Trump, who painted a very ugly picture of where this country is headed. Trump made the comments during a recent appearance on Fox News’ “On the Record with Greta Van Susteren.”
According to Trump, the United States is no longer a rich country. “When you’re not rich, you have to go out and borrow money. We’re borrowing from the Chinese and others. We’re up to $16 trillion in debt.”

He goes on to point out that the downgrade of U.S. debt is inevitable.
“We are going up to $16 trillion [in debt] very soon, and it’s going to be a lot higher than that before he gets finished. When you have [debt] in the $21-$22 trillion, you are talking about a downgrade no matter how you cut it.”

Bank Earnings Seen Buffeted by Rates Rising Without More Growth 
ProPublica: Fannie, Freddie Are Being Set Up to Fail – Again 
Efforts in Washington to reform mortgage giants Fannie Mae and Freddie Mac have been a glaring failure to date, and in fact could boomerang to make the next housing crisis worse, according to the investigative journalism group ProPublica.
US Regulator: Deutsche Bank ‘Horribly Undercapitalized’ 
A top U.S. banking regulator called Deutsche Bank’s capital levels horrible and said it is the worst on a list of global banks based on one measurement of leverage ratios.
55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know

If We Can’t Stop Corporations from Hiding in Cayman Islands to Avoid Taxes, We All Need to Become Pirates

Artist Paolo Cirio’s introductory video to Loophole4All.com teaches everyday people how to pursue tax loopholes by becoming a pirate and hijacking an offshore company.
With leaders from eight of the world’s wealthiest countries discussing economic policies that will affect citizens worldwide, the G8, always a symbol of undemocratic governance, is particularly contradictory this year. British Prime Minister David Cameron, host of the summit in Northern Ireland, is calling for a crackdown on widespread global tax evasion. But he might as well be called prime minister of major tax havens for his role overseeing London and the Crown Dependencies.
As usual, G8 members will advance measures aimed at maintaining, rather than resolving, these contradictions. Their proposals will not contain any changes that might distress corporate interests.
A mere 100 miles southeast of the summit, Dublin serves as a tax haven and a center of massive tax evasion for many of the wealthiest corporations. American companies like Cisco and Apple set up subsidiaries in Dublin to evade U.S. taxes, since corporate tax rates are roughly three times lower in Ireland than in the United States. Apple’s Irish affiliate actually paid no taxes on $30 billion in profit over the last four years. Corporate CEOs defend such tax evasions by presenting themselves as job creators acting for the benefit of the economy as a whole, but they leave out the data showing the decline of the middle class and consequent increases in poverty and homelessness. Ireland is not such a great place for normal people, with its severe austerity and outrageously high unemployment.
If corporations don’t pay taxes, then it follows that when people buy iPhones, search on Google or order items on Amazon, everyone loses hospitals, schools, road maintenance and eventually pensions. Meanwhile, the lucky employees of untaxed companies get higher wages that directly produce unaffordable living costs for people employed by local and public businesses. Only those who work for the regime of major firms can survive.
People who raise their voices against the injustice of this situation by taking to the streets outside G8 summits have met escalating violence from security forces. In my twenties, I joined several anti-G8 protests across Europe, facing riot police that regularly employed tear gas, water cannons and clubs against peaceful demonstrators. At the Genoa summit in 2001, I dodged the massacre at the Diaz school out of pure luck. I have not always had the same fortune, and violent repression and mass arrests have become ordinary in the decade since.
Although street protests are crucial in manifesting dissent, we need to supplement public demonstrations with new, creative strategies of subversion. For instance, with the project Loophole4All.com, I managed to unsettle corrupt Cayman Islands authorities and international accounting firms by creating a caricature of the Certificate of Incorporation used by shell companies set up in the Caymans. At the same time, I drew attention to thousands of fraudulent companies, engaging the public in an unusual form of civil disobedience that threatens the offshore financial system.
Political innovation should be considered an art form that challenges brutal repression and creates solutions for global governance. I believe that artists can create legislative and financial models for the complex needs of the 21st century, incorporating humor, beauty and interactivity into new forms of social organization. Just as creativity and concrete social goals come together in architecture, contemporary artists should intervene in proposing policies that work for our times, while guiding us in interpreting and unveiling the invisible truths of our world.
The absurdity of the unsolved legality of offshore business helps to expose to everyone the disorder of our times and the need for radical change. The vast exploitation of discrepancies among legal jurisdictions undermines the notions of law and national borders that are central to contemporary civilization. Globalization has outstripped the power of governments, businesses and citizens; each is left powerless against the other.
This article originally appeared on: AlterNet

Rotting, Decaying And Bankrupt – If You Want To See The Future Of America Just Look At Detroit

Michael Snyder
Economic Collapse
June 17, 2013
Eventually the money runs out.  Much of America was shocked when the city of Detroit defaulted on a$39.7 million debt payment and announced that it was suspending payments on $2.5 billion of unsecured debt, but those who visitmy site on a regular basis were probably not too surprised.  Anyone with half a brain and a calculator could see this coming from a mile away.  But people kept foolishly lending money to the city of Detroit, and now many of them are going to get hit really hard.  Detroit Emergency Manager Kevyn Orr has submitted a proposal that would pay unsecured creditors about 10 cents on the dollar.  Similar haircuts would be made to underfunded pension and health benefits for retirees.  Orr is hoping that the creditors and the unions that he will be negotiating with will accept this package, but he concedes that there is still a “50-50 chance” that the city of Detroit will be forced to formally file for bankruptcy.  But what Detroit is facing is not really that unique.  In fact, Detroit is a perfect example of what the future of America is going to look like.  We live in a nation that is rotting, decaying, drowning in debt and racing toward insolvency.  Already there are dozens of other cities across the nation that are poverty-ridden, crime-infested hellholes just like Detroit is, and hundreds of other communities are rapidly heading in that direction.  So don’t look down on Detroit.  They just got there before the rest of us.
The following are some facts about Detroit that are absolutely mind-blowing…
1 – Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the highest per-capita income in the entire nation.
2 – Over the past 60 years, the population of Detroit has fallen by 63 percent.
3 – At this point, approximately 40 percent of all the streetlights in the city don’t work.
4 – Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.
5 – 210 of the 317 public parks in the city of Detroit have beenpermanently closed down.
6 – According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.
7 – Approximately one-third of Detroit’s 140 square miles is either vacant or derelict.
8Less than half of the residents of Detroit over the age of 16 are working at this point.
9 – If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.
10 – According to one very shocking report, 47 percent of the residents of Detroit are functionally illiterate.
11 – Today, police solve less than 10 percent of the crimes that are committed in Detroit.
12 – Ten years ago, there were approximately 5,000 police officers in the city of Detroit.  Today, there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.
13 – Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.
14 – The murder rate in Detroit is 11 times higher than it is in New York City.
15 – Crime has gotten so bad in Detroit that even the police are telling people to “enter Detroit at your own risk“.
16 – Right now, the city of Detroit is facing $20 billion in debt and unfunded liabilities.  That breaks down to more than $25,000 per resident.
As Detroit Emergency Manager Kevyn Orr noted last week, it took a very long time for Detroit to get into this condition…
“What the average Detroiter needs to understand is that where we are right now is a culmination of years and years and years of kicking the can down the road,” said Orr, adding that his proposal should not be seen as a “hostile act” but as a step in the right direction.
Does that sound familiar?
It should.
U.S. politicians have also been kicking the can down the road for “years and years and years”.
But eventually you can’t kick the can down the road anymore.
Sometimes it is helpful to step back and look at what we have done to ourselves over the past several decades.
For example, back in 1980 the U.S. national debt was less than one trillion dollars.  Today, it is rapidly approaching 17 trillion dollars.
And our debt binge has greatly accelerated under Barack Obama.
During Barack Obama’s first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.
Isn’t that insane?
In fact, if you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
The following are a lot more facts about our exploding national debt from one of my previous articles entitled “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“…
#1 While Barack Obama has been president, the U.S. government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in.
#2 During the fiscal year that just ended, the U.S. government took in2.449 trillion dollars but it spent 3.538 trillion dollars.
#3 During fiscal year 2011, over a trillion dollars of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.
#4 Over the past four years, welfare spending has increased by 32 percent.  In inflation-adjusted dollars, spending on those programs has risen by 378 percent over the past 30 years.  At this point, more than100 million Americans are enrolled in at least one welfare program run by the federal government.  Once again, these figures do not even include Social Security or Medicare.
#5 Over the past year, the number of Americans getting a free cell phone from the federal government has grown by 43 percent.  Now more than 16 million Americans are enjoying what has come to be known as an “Obamaphone”.
#6 When Barack Obama first entered the White House, about 32 million Americans were on food stamps.  Now, 47 million Americans are on food stamps.  And this has happened during what Obama refers to as “an economic recovery”.
#7 The U.S. government recently spent 27 million dollars on pottery classes in Morocco.
#8 The U.S. Department of Agriculture recently spent $300,000 to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.
#9 During 2012, the National Science Foundation spent $516,000 to support the creation of a video game called “Prom Week”, which apparently simulates “all the social interactions of the event.
#10 The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build “a Greek yogurt factory in New York.
#11 The National Science Foundation recently gave researchers at Purdue University $350,000.  They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.
#12 If you can believe it, $10,000 from the federal government was actually used to purchase talking urinal cakes up in Michigan.
#13 The National Science Foundation recently gave a whopping$697,177 to a New York City-based theater company to produce a musical about climate change.
#14 The National Institutes of Health recently gave $666,905 to a group of researchers that is studying the benefits of watching reruns on television.
#15 The National Science Foundation has given 1.2 million dollars to a team of “scientists” that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.
#16 The National Institutes of Health recently gave $548,731 to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.
#17 The National Science Foundation recently spent $30,000 on a study to determine if “gaydar” actually exists.  This is the conclusion that the researchers reached at the end of the study…
“Gaydar is indeed real and… its accuracy is driven by sensitivity to individual facial features”
#18 Back in 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#19 The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATO combined.  In fact, the United States accounts for 41.0% of all military spending on the planet.  China is next with only 8.2%.
#20 In a previous article, I noted that close to 500,000 federal employees now make at least $100,000 a year.
#21 In 2006, only 12 percent of all federal workers made $100,000 or more per year.  Now, approximately 22 percent of all federal workers do.
#22 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.
#23 During 2010, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.
#24 The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005.  When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more.  By June 2010, the U.S. Department of Defense had994 civilians earning $170,000 or more.
#25 During 2010, compensation for federal employees came to a grand total of approximately 447 billion dollars.
#26 If you can believe it, close to 15,000 retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually.  That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.
#27 During 2010, the federal government spent $33,387 on the hair care needs of U.S. Senators.
#28 During 2010, U.S. Senators pulled $72,370 out of the “Senate Restaurant Fund”.
#29 During 2010, an average of $4,005,900 of U.S. taxpayer money was spent on “personal” and “office” expenses per Senator.
#30 In 2013, 3.7 million dollars will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.
#31 During 2011, the federal government spent a total of 1.4 BILLION dollars just on the Obamas.
#32 When you combine all federal government spending, all state government spending and all local government spending, it comes toapproximately 41 percent of U.S. GDP.  But don’t worry, all of our politicians insist that this is not socialism.
#33 As I have written about previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983.  Today, that number is sitting at an all-time high of 49 percent.
#34 Back in 1990, the federal government accounted for just 32 percent of all health care spending in America.  This year, it is being projected that the federal government will account for more than 50 percent of all health care spending in the United States.
#35 The number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
#36 In one of my previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
#37 If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for each and every household in the United States.
#38 In the United States today, more than 61 million Americansreceive some form of Social Security benefits.  By 2035, that number is projected to soar to a whopping 91 million.
#39 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
#40 When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars.  Now it is about 16.7 trillion dollars.  That is an increase of 6.1 trillion dollars in a little more than 4 years.
#41 The federal government has now run a budget deficit of more than a trillion dollars for four years in a row.
#42 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#43 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#44 Some suggest that “taxing the rich” is the answer.  Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
#45 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been 5 trillion dollars instead of 1.3 trillion dollars.
#46 The United States already has more government debt per capitathan Greece, Portugal, Italy, Ireland or Spain does.
#47 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.
#48 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
#49 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
#50 The U.S. national debt is now more than 37 times larger than it was when Richard Nixon took us off the gold standard.
#51 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
#52 The U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.
#53 Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent.  If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.
#54 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
#55 Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay.  Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”.  His calculations have led him to the conclusion that the federal government is facing a fiscal gap of 222 trillion dollars in the years ahead.
Please share this article with as many people as you can.  We are in the process of committing national financial suicide and time is rapidly running out to do anything about it.
Just like Detroit, a day is rapidly approaching when America will not be able to kick the can down the road anymore.
Sadly, our politicians don’t seem inclined to do anything about it and most of the population seems to think that our exploding national debt is not a significant problem.
By the time it becomes clear how wrong they were, it will be far too late to do anything about it.