Friday, June 21, 2013

Dow, S&P turn flat; Nasdaq at session lows

NEW YORK (Reuters) - The Dow and S&P 500 turned flat on Friday, erasing earlier gains while the Nasdaq dropped to a session low, pressured by Oracle Corp (ORCL.O).
Financials were among the weakest shares of the day, with Citigroup Inc (C.N) down 4.1 percent to $45.88 and Bank of America (BAC.N) down 3.7 percent at $12.41.
The Dow Jones industrial average (.DJI) was up 12.19 points, or 0.08 percent, at 14,770.51. The Standard & Poor's 500 Index (.SPX) was up 0.44 points, or 0.03 percent, at 1,588.63. The Nasdaq Composite Index (.IXIC) was down 13.49 points, or 0.40 percent, at 3,351.15.
(Reporting by Ryan Vlastelica; Editing by Bernadette Baum)

Analysis: China cash squeeze exposes risks from short-term funding

An employee hands Renminbi banknotes to a customer at a branch of the Industry and Commercial Bank of China in Hefei 
An employee hands Renminbi banknotes to a customer at a branch of the Industry and Commercial Bank of China in Hefei, Anhui province October 9, 2008. REUTERS/Stringer

By Gabriel Wildau
SHANGHAI (Reuters) - The mirror that China's central bank is holding up in front of the country's banks is providing uncomfortable viewing. Too many banks are reliant on short-term funding markets to survive, and a shake up in the sector is needed.
The central bank has engineered the current cash crunch as a warning to overextended banks but a growing concern, analysts say, is of a miscalculation that sets off a full-blown crisis.
The central bank's determination to rein in rapid credit growth has sent interbank lending rates soaring to record highs, sparking panic and swirling speculation that banks are defaulting on deals as they scramble to secure short-term funds.
Analysts suspect a particular target of the central bank is non-bank lending, or shadow banking, which has boomed in recent years.
"A more structural factor behind this squeeze is that banks are using liquidity tools to support their long-term business. That should be a strong warning sign for the industry," said Hu Bin, senior China banking analyst at Moody's Investor Service in Hong Kong.
In particular, Hu says, some banks are relying on short-term interbank borrowing to come up with the cash necessary to meet repayment obligations on high-yielding investment products, a similar reliance that caused problems for some Western banks during the global financial crisis.
"Everyone in the system is impacted by this, even all the way at the top in terms of the largest banks in the country," said Charlene Chu, senior director at Fitch Ratings.
"It's certainly a lot more swift and arguably more effective in reining in the growth of shadow credit. But it does create a lot of repayment risk within the system between financial institutions and there is potential for unintended consequences."
Overall financing in the Chinese economy increased 52 percent in the first five months of 2013 compared to the same period last year, which analysts say was led by a surge in shadow banking activity and wealth management products that promised investors high returns.
Fitch estimated that total sales of wealth management products reached 13 trillion yuan by the end of the 2012, more than 16 percent of total bank deposits.
More immediately, it estimated that more than 1.5 trillion yuan in wealth management products will mature in the last 10 days of June. That may explain the scramble by some banks to secure short-term funds, which are often used to meet the repayment obligations.
Banks have created wealth products by packaging various assets like money market deposits, corporate bonds and informally securitized loans.
Many of these products are held off-balance-sheet, which allows banks to meet state-mandated loan-to-deposit ratios and still create new loans.
Many are also based on long-dated assets, so when payouts are due to investors, banks often raise cash by issuing new products - or by borrowing in the interbank market.
Authorities have tried to regulate the shadow banking sector and in particular these wealth management products but with little impact on the sector's growth. Now the central bank is playing hard ball with the banks by refusing to provide liquidity to the money markets, which this week drove the interest rate for some banks to borrow short-term funds to 25 percent or higher.
"The critical question now is how long is this going to go on," said Fitch's Chu on the sidelines of a conference in Sydney. "If this is going on for quite a while and we really start to get a shake out of institutions, the question is what potentially would they do to try and address some of that and would consolidation be on the radar screen."
Smaller banks, whose less extensive branch networks give them less access to customer deposits, are especially vulnerable to the credit squeeze.
At the end of 2012, interbank assets accounted for 25 percent of the total assets of mid-sized banks examined by Michael Werner, senior bank analyst at Bernstein Research. That compared with 15 percent in 2009, he said in a report this month.
Therefore, a wave of defaults on interbank loans could seriously threaten the solvency of smaller banks, he said.
"Speaking with a lot of Chinese banks, you often hear, 'this is not a risk because these loans always get repaid.' I think that type of mentality is going to get thrown out the door," Werner said.
At the end of 2012, mid-sized Minsheng Bank's (1988.HK) interbank funding of less than one year accounted for 29 percent of its non-equity liabilities, the highest among the Chinese banks that Bernstein covers.
Werner says other mid-sized banks like Everbright Bank , Industrial Bank , and Ping An Bank are also highly dependent on short-term borrowing.
To be sure, the level of reliance on short-term funding is no where near the levels of some Western banks before the global credit crunch. Short-term funding may have accounted for more than half of such liabilities at Lehman Brothers at the end of 2007, a research paper by staff economists at the Federal Reserve Bank of New York showed in 2010. Lehman's collapse set off the global financial tsunami.
Banks that find themselves overly reliant on short-term funding face a choice: they can shrink their balance sheets so that more assets are funded by deposits, or they find other more stable funding sources.
If they choose the latter, equity and long-term debt are possibilities. But resorting to these more expensive funding sources would pressure banks' net interest margins, hurting profitability.
China's central bank appears to prefer de-leveraging.
"The central bank appears to be determined to force banks and other financial institutions, such as funds, brokerages and asset managers, to de-leverage," said a trader at a major Chinese state-owned bank in Shanghai.
"That hardline stance suits the recent government policy of clamping down on non-essential businesses by financial institutions, such as shadow banking, wealth management, trust operations and even arbitrage," he said.
An article in a China central-bank backed newspaper called the Financial Times suggested the cash crunch and a rumored default had provided impetus for China to accelerate the roll-out of a new deposit insurance system.
Such a system would eliminate the need for authorities to bail out individual banks by ensuring that depositors were protected even if a bank found itself short of funds.
(Additional reporting by Lu Jianxin: Editing by Neil Fullick)

Insight: Losses loom for investors enmeshed in mortgage chaos

By Michelle Conlin
(Reuters) - Since the financial crash, banks have been accused of wrongfully foreclosing on homeowners because they failed to create and maintain proper mortgage paperwork. Now, there are signs that chaotic document management is harming investors in mortgage bonds, too.
A review of loan documents, property records and the monthly reports made available to investors show that mortgage servicers are reporting individual houses are still in foreclosure long after they have been sold to new buyers or the underlying mortgages have been paid off.
These delays enable banks and other mortgage servicers to continue to charge monthly fees to investors in these mortgage-backed securities, the banks' investor reports show. It means that investors are buying mortgage bonds that may have billions of dollars of undisclosed losses that will become apparent only at a later stage. It could also lead to a new round of litigation for banks just when some appeared to have been putting their mortgage problems behind them.
The review, conducted by foreclosure investigator Lisa Epstein, found hundreds of instances across the United States where information about the status of individual home loans was incorrect. The information about the mortgages is sent from the mortgage servicer, which handles tasks such as collecting monthly mortgage payments and handling foreclosures, to the trustee of the mortgage bonds, which administers monthly reports and makes sure investors get paid.
In 2009, Epstein helped uncover the robo signing scandal, in which she discovered that banks had hired low-level workers to pose as executives, signing hundreds of legal affidavits a day without verifying a single word, as is required by law. The reporting lag issues she identified in mortgage bonds involved many of the same mortgage servicers who engaged in robo signing.
"This is all part and parcel of having servicers who are unable to keep the documentation straight," said Linda Allen, a banking professor at Baruch College, who specializes in mortgage servicing. She said Epstein's methodology was sound.
Mortgage experts estimate these reporting delays could mean that billions of dollars in losses may still be hidden in these bonds. Mortgage servicers may have also been charging late fees, property inspection fees, legal fees and other penalties against these loans long after they have been paid off, inflating the losses, they said.
"The losses are building up inside these deals, and this is going to happen all over the place," said William Frey, founder of Greenwich Financial Services, which specializes in securitization.
Frey said his team analyzed about 500 mortgage-backed securities originated by every major bank and that he has yet to find a single bond where the accounting adds up as it should.
In one case, Reuters found that Bank of America Corp had been collecting a monthly servicing fee of $50.73 from investors on a loan that had been paid off nearly two years ago, investor reports show.
Bank of America filed a document at a local county office on July 22, 2011 showing that the $162,400 loan on a cream-colored duplex in Greenacres, Florida, owned by a drywall hanger named Roman Pino, had been satisfied and "cancelled." But investors in Pino's loan and more than 6,700 other similar mortgages that are bundled together in a subprime mortgage bond still have not been informed that the loan no longer exists, according to the last investor report in May.
Bank of America spokesman Lawrence Grayson said reporting lags are not typical, and can occur because a sale or mortgage insurance proceeds may not be finalized. Loans can sometimes be subject to litigation, which could explain the ongoing charging of fees, he said.
The bank declined to comment on the specifics of Pino's loan. According to Fitch Ratings, the loan did not have mortgage insurance.
Bank of New York Mellon Corp, the trustee, said that in keeping with industry practice, it relies on the information provided by the mortgage servicer.
Some of these latent losses are beginning to surface. Earlier this month, for example, investors learned of $1 billion in losses on dozens of subprime bonds, containing more than 75,000 home loans that were created during the housing boom. Many of the losses were not reported for a year or more.
"For whatever reason, these losses were basically pending out there for a while, and the reporting mechanism finally caught up and hit the bonds in the trust," said Roger Ashworth, an analyst with mortgage advisory firm Amherst Securities.
The bonds' trustee, Wells Fargo & Co, said that it relied upon the servicer, Ocwen Financial Corp, for the reclassification.
Ocwen said it stands by its monthly reporting. It added that it has helped tens of thousands of struggling families save their homes from foreclosure and significantly lowered investor losses, benefiting investors in mortgage bonds.
Latent losses could play a role in some of the settlements that investors have already reached with banks over other mortgage misrepresentations.
For example, many of the mortgage bonds with reporting lags that Epstein identified are the same securities that are at issue in ongoing litigation between Bank of America and investors in those securities.
Bank of America settled with 22 large investors, including two of the biggest - Pacific Investment Management Co and Blackrock Inc - agreeing to pay $8.5 billion to end legal liability for more than one million Countrywide Financial mortgages whose borrower histories and credit quality were allegedly misrepresented by the bank.
Some other investors in the bonds, including American International Group Inc and Grand Rapids Police and Fire Retirement System, have objected to the settlement. They project the losses to be more than $100 billion.
An AIG spokesman said no one had reviewed the individual loans to analyze the merits of the settlement, which was originally over what the bank had told investors about the quality of the loans.
If opponents to the settlement prevail, the reporting lag issues could crop up in the discovery phase of the case.
BlackRock and Bank of America declined to comment on the case. PIMCO did not respond to a request for comment.
Estimates of latent losses in mortgage bonds vary. In a report on Monday, Fitch Ratings said that it had talked to major servicers and more such losses were possible, though it was unable to quantify the amount.
In June last year, independent credit rating agency R&R Consulting analyzed $1.4 trillion worth of residential mortgage-backed securities that were not guaranteed by a government-sponsored entity like Fannie Mae.
It found an estimated $300 billion in total expected future losses, meaning borrowers who were either in foreclosure, bankruptcy or 90 days delinquent. But of those, the firm says there are $175 billion that investors haven't learned about.
"There is such a thing as gravity, and sooner or later you have to do something with these numbers," said R&R founder Ann Rutledge.
(Reporting by Michelle Conlin in New York; Editing by Paritosh Bansal, Martin Howell and Leslie Gevirtz)

Wall Street plunges, S&P posts biggest drop since November 2011

By Ryan Vlastelica
NEW YORK (Reuters) - Stocks fell more than 2 percent on Thursday, extending the previous day's sharp decline as investors fretted over the Federal Reserve's plan to begin reducing its stimulus later this year if the economy strengthens.
The S&P 500 recorded its biggest daily decline since November 11, 2011, on the year's heaviest day of trading. All 10 S&P sectors were sharply lower, with 94 percent of stocks traded on the New York Stock Exchange down for the day and more than four-fifths of Nasdaq-listed shares ending lower.
The Dow Jones industrial average dived 353.87 points, or 2.34 percent, at 14,758.32. The Standard & Poor's 500 Index was down 40.74 points, or 2.50 percent, at 1,588.19. The Nasdaq Composite Index dropped 78.57 points, or 2.28 percent, at 3,364.64.
The Fed's program of bond-buying has fueled stock market gains this year, sending indexes to a series of all-time highs. A trend emerged of investors buying on market dips and limiting stocks' decline.
David Joy, chief market strategist at Ameriprise Financial in Boston, said it wasn't clear that pattern would continue.
"There's money leaving the market from people who were convinced that the rally has been mostly attributable to the Fed, and the rise on the 10-year yield is a concern since it happened so quickly," he said. "It's too early to say whether this represents a buying opportunity or if the weakness will continue."
The S&P 500 index closed below its 50-day moving average for only its second time this year. An extended break below that level, a key technical measure of the recent trend in stocks, could add to selling pressure. It also closed under 1,600 for the first time since May 2.
About 9.29 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.36 billion shares.
Bernanke on Wednesday said the central bank's policy of buying $85 billion in bonds per month could start to wind down this year if the economy is strong enough and could finish in mid-2014.
"Remember that tapering would be a vote of confidence in the market, which would be good news," said Joy, who helps oversee $708 billion in assets. "And for the moment, the Fed is still very accommodative, with things remaining data-dependent. Those are signs that declines of this magnitude may not be justified."
Also adding to the market's concerns, China's interbank funding costs surged as the government ignored market pressure to inject funds into the market despite more evidence China's economy is slowing. Chinese stocks dropped 2.8 percent.
Among the U.S. sectors hit hard on Thursday were homebuilders, down 6.7 percent on concerns of higher borrowing rates. Data on Thursday showed sales of existing U.S. homes rose in May rose to a 3 1/2-year high.
Builder PulteGroup Inc fell 9.1 percent to $18.87 as the biggest decliner on the S&P 500, followed by D.R. Horton Inc, down 9 percent to $21.31.
The benchmark 10-year U.S. Treasury note fell 15/32, with the yield at 2.408 percent.
The S&P has fallen about 4 percent from its all-time closing high on May 21 of 1,669.16. Other markets around the world have also have fallen dramatically, with the MSCI's all-country world markets index dropping 3.7 percent, its largest single-day drop in 19 months.
Each of the 10 S&P industry sectors fell more than 1 percent with consumer staples leading the losses with a 3 percent drop. Kroger fell 6.1 percent to $32.98 after the company said its sales growth missed expectations in the first quarter.
Energy shares were also sharply weaker, dropping alongside a 2.9 percent slump in the price of crude oil.
Walt Disney shares fell 3.7 percent to $61.98 after Goldman Sachs removed the stock from its "conviction buy" list.
Shares of Ebix Inc lost 44 percent to $11 a day after the insurance software provider said that it and an affiliate of Goldman Sachs would cancel their planned merger.
Oracle Corp fell in extended trading after the company reported an increase in new software sales that was at the low end of its own forecasts.
On the upside, GameStop Corp jumped 6.3 percent to $40.94 a day after Microsoft Corp said users of its forthcoming Xbox One game console will be able to lend or sell used disc-based games, a plus for GameStop's used games business.
Jabil Circuit Inc rose 1.5 percent to $20.12 a day after announcing an unspecified number of job cuts as part of a restructuring plan.
(Editing by Nick Zieminski and Kenneth Barry)

USDA Announces 38 Million Dollar Sugar Bailout to Prevent Big Sugar Bailout

Living Not Surviving – by Ahmed Serag
Despite the near 17 TRILLION dollars in debt this country already has, and the complete failure of federal bailout programs throughout recent and past decades, and despite the Congress of the United States being on the brink of passing an unfunded 1 TRILLION dollar farm bill-which the house thankfully just rejected 234-195-the United States Department of Agriculture has announced it will be spending 38 million dollars on a preventative sugar bailout, thanks to information gathered by the Star Tribune  
The government logic behind the USDA’s plan to spend 38 million dollars in the sugar market has been shared with the individuals, families, and businesses whose money will be used, because that’s the level of transparency the Obama administration promises to deliver when it steals your money for something it needs.
The Department of Agriculture announced that it will implement an estimated 38 million dollar  minor bailout in sugar purchases to  ”forestall a larger bailout” that could range between 100 and 300 million dollars if farmers default on federal loans.
Current federal loans in the program are estimated to be 700 to 800 million dollars, but the government, like normal people and businesses, makes mistakes, and these numbers are just estimates. Although, unlike mistakes made by individuals and businesses that affect those who voluntarily participate and associate, when the government screws up, it screws everyone, because everyone is forced to participate and associate.
By purchasing sugar that the farmers will have to give up at a lower price, the USDA hopes it will artificially create demand & raise sugar prices, allowing farmers in the federal loan program to pay back the loan in money earned from possible sales and purchases at artificially raised sugar prices. 
In case some readers are not familiar with government logic, like that of this situation, a common government solution to a government created problem is to actually take the problem and use it as a solution. For example, when it comes to debt, the solution is more debt, or when it comes to war, the solution is more war. Even if the problem isn’t solved by more of the same, it’s a win-win situation for government, meaning a lose-lose for someone else (wonder who that could be). The government benefits by distracting those it harms with the new problems it creates, and by creating dependency in the population with the negative effects of previous legislation and constant barrage of damaging new legislation.
In this specific case, sugar prices are as low as they have been in recent history, and the bankrupt government’s loan program and central planners require participating farmers produce a specific amount of sugar and pay the government a certain amount of the loan. More clearly, the USDA is betting other people’s money that the participating farmer’s debt to the government will be paid back by the government going more into debt with a bailout so that at a future date, the government doesn’t have to go more into debt with a larger bailout because of defaulted loans to indebted farmers.
If it sounds confusing, you’re right on track.
This is a bailout to prevent a bailout, classic keynesian economics that has created artificial booms and very real crashes throughout history. Though the aforementioned article describes the situation as the federal government “supporting sugar prices”, what is really going on is the federal government inflating sugar prices.
With the sugar bailout and the influx of federal fiat dollars into the sugar industry, the federal government will create an artificial demand for sugar, and cause a rise in sugar prices, which the USDA plans farmers will profit from. Of course, the little snippet that is always left out seems to be the discussion on what occurs when artificial demand disappears,can no longer be created, or has tapped out trust.
You may find this government sugar bailout situation familiar, and you would be right if you did. This should remind you of the recent and ongoing situation with the boom and bust cycle that occurred with the housing and financial crisis, and over and over before that, as a result of the Federal Reserve’s “wealth without production” policy, where money is created with no value, without production, and thrown into industries without real market demand.
In the housing crisis, the loaning standards were not just lowered, but artificially lowered to deliver expensive houses and debt to people who couldn’t afford them, and that debt was overvalued and sold to companies who malinvested their money based on skewed and artificial information because of government intervention. And as a result, when the market could take no more, and a correction was due, companies purchasing overvalued debt crashed, and the people who were supposedly being helped, lost their jobs and their homes, and ended up in a worse situation than they were in before. And some of those companies, whom knew exactly what was going on and profited for years, were actually bailed out with the money of the people who had to suffer the consequences of the federal reserve/federal government’s boom and bust economic model.
Whether it’s the big sugar bailout, or the housing bailouts, the value of everyone’s dollars, in savings and in value of property, is devalued when the government creates money out of thin air and based on centrally planned economics, creates artificial demand with it.  Not only that, but the very companies that participate in the crisis, at the opportunity and command of Government, get bailed out by the Government (your money + the value of your money) when they fail.
This entire idea that printing fake and valueless money that we don’t have, and adding billions and trillions in debt, to create something that wasn’t there or shouldn’t be there, like the demand for sugar, or a loan to someone who isn’t ready for it, may last for a very short time (the “boom”), but is always followed by a massive bust that leaves the people who were supposed to be helped and the people who didn’t need help in a worse situation.
Then, the politicians attempt to take advantage of the larger percentage of the population that needs help and the newly government-created dependency by creating authority it didn’t have before and repeating the cycle with a larger bailout, like the one the USDA is warning it will implement if this minor sugar bailout does not succeed.
This USDA sugar bailout situation is all too familiar, and like it should have been to bailouts in the past and should be now to avoid familiar economic damage and disaster, the answer is NO MORE BAILOUTS and NO MORE GOVERNMENT INTERVENTION. 

You can contact the Department of Agriculture HERE and let them know what you think of their sugar bailout at your expense.

As California Sinks Into Debt, Governor Brown & Co. Give Themselves Raises

jerry brownMoonbattery
Uh oh. California is drowning in red ink:
A financial report issued by state auditors finds that the state of California is in the red by an unsustainable $127.2 billion.  
The report says that the state’s negative status increased that year, largely because it spent $1.7 billion more than it received in revenues and wound up with an accumulated deficit of just under $23 billion in fiscal year 2011-2012, the Sacramento Bee stated.
The response of the liberal bureaurats responsible for creating this crippling debt was both appalling and predictable:
A state panel on Wednesday approved a 5% pay raise for Gov. Jerry Brown, legislators and other state elected officials…
The panel’s action boosts the salary of Brown from $165,288 to $173,987 in December, and increases legislators’ pay from $90,520 to $95,291 at the same time. Raises will also be provided to the state attorney general, state treasurer and other constitutional officers.
By putting the cartoonishly irresponsible Jerry Brown back in office, California voters elected to go over the cliff; over the cliff they go. This happened because the population of the erstwhile Golden State has been permanently transformed by massive (and largely illegal) Third World immigration. Now that whites are a minority, whoever is most likely to keep the looting spree going right up to the point of total economic collapse is assured of election. Applying this phenomenon nationwide is the purpose of the current amnesty bill.

McConnell to Newsmax: IRS Scandal Reveals Obama Effort to Silence Critics

Senate Minority Leader Mitch McConnell tells Newsmax in an exclusive interview that Democrats have been engaged in a "rampant effort" to quiet their critics.

The Kentucky Republican also says that effort has backfired on the Obama administration with disclosures that the IRS targeted conservative groups for extra scrutiny.

And he expresses confidence that an investigation by the Republican-controlled House will determine exactly who ordered the targeting.

Story continues below video.

McConnell was first elected in 1984 and has served as the Minority Leader since January 2007. He holds senior positions on the Appropriations, Agriculture, and Rules Committees.

On Friday, McConnell will deliver a key address on the First Amendment at the American Enterprise Institute in Washington, D.C.

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In his interview with Newsmax TV on Thursday, McConnell shares the concerns he will highlight in his address.

"I spoke to this issue a year ago at the American Enterprise Institute ... and pointed out the abuses of the IRS that were happening already," he says.

"I'd been getting complaints from tea party groups about the difficulty of getting their tax-exempt status, which they're entitled to under the law. I pointed out efforts to intimidate groups into not buying television advertising that were being proposed over at the Federal Communications Commission, and other examples of executive branch efforts to quiet the voices of their critics.

"So I'm going to go back to the AEI tomorrow with what could best be described as the 'I told you so speech,' because the [Inspector General] at the IRS has confirmed that these groups were, in fact, being targeted.

"Now an investigation is underway in the House of Representatives and we'll find out who did it and who ordered it."

McConnell recently wrote an op-ed piece for The Washington Post stating there is ample evidence to suggest that the culture of intimidation in which the IRS tactics were allowed to flourish goes well beyond one agency or a few rogue employees.

"It started when the president shook his finger at the Supreme Court during the State of the Union a few years ago, and basically he has lectured them about the decision they made that relates to political free speech," he explains.

"It's not surprising. Not only did the president single out individuals in the country for a special tax, you had the Democratic members of the U.S. Senate writing to the IRS suggesting they do exactly what they ended up doing.

"There's no question that after the Democrats lost the Congress in November 2010, they turned to the bureaucracy to try to quiet their critics. We see it at the FEC, the SEC, at the Department of Health and Human Services. This was a fairly rampant effort encouraged by the most prominent Democratic elected officials in the country. And so it's not really surprising.

"I'm not suggesting here that the president picked up the phone and called IRS official Lois Lerner, but all she had to do was read the newspaper or turn on the TV to know what the president and his allies were hoping the bureaucracy would do to quiet the voices of his critics."

Asked if a special prosecutor is needed to look into the IRS targeting, McConnell responds:

"The Congress is likely to do the most responsible investigation. Any prosecutor appointed by the Justice Department would be kind of like the administration investigating itself.

"They could take that step if they chose to, but the investigation that will have the most credibility is the one conducted by the Republican House, and rather than jumping to conclusions, we need to have a complete and thorough investigation and let the facts lead us wherever they take us."

As for what solutions McConnell would propose to protect the individual rights guaranteed in the First Amendment, McConnell tells Newsmax: "The solution is to defend the First Amendment. It served us well for over 200 years and all these efforts to intimidate American citizens into not speaking up and to try to prevent them from promoting causes that they support need to stop.

"I don’t think we need to pass anything. We need to stop doing what we're doing in trying to intimidate American citizens. The president needs to accept the fact that not everybody's going to applaud what he's doing, that being criticized is part of public life, and efforts to quiet the voices of your critics always backfire, and this has backfired on him as well."

It appears that a comprehensive immigration reform bill is going to pass in the Senate. Asked if immigration legislation will be signed into law this year, McConnell observes: "We've still got about a week and a half to go on the immigration bill and I just don’t want to handicap the prospects of it clearing the Senate. It's much too early to tell."

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"We still have plenty of really significant amendments, including ones that seek to strengthen the border, that have not yet been voted on. So you won't have a clear line on this issue until probably the end of next week," McConnell said."

© 2013 Newsmax. All rights reserved.

Next Phase of Syrian Invasion Begins -- The Central Bank Connection

Freda Art
Brandon Turbeville
Activist Post

As the secular Syrian government continues to mop up the mobs of death squads made up of mercenaries, religious fanatics, and the criminally insane (as well as cannibals), the second phase of destabilization is quickly taking shape - that is, the establishment of “no-fly zones” and the arming of the death squads by the West with even heavier weapons than they have previously been given. The destruction of Syria is thus apparently scheduled to take exactly the same form as that of Libya.

It is important to remember that, in the case of the latter country, the Anglo-Americans also funded terrorist death squads to cause a civil war inside the country, engaged in a propaganda campaign against Ghaddaffi’s government, and established “no-fly zones” inside Libya.

The rest, as they say, is history. After the establishment of a “no-fly zone,” air strikes began against Libyan military, governmental, and civilian targets. Death squads were simultaneously empowered further and assisted by the presence of Western intelligence, special forces, and military boots on the ground inside Libya.

Although Assad has proven more capable than Ghaddaffi of withstanding the initial onslaught set in motion by the Anglo-Americans than Ghaddaffi and has demonstrated better political connections with other powerful nations, the fate of Libya awaits Syria if something is not done to derail this war machine.

Yet, while many have become aware of the fundamentalist and fanatical nature of the death squads which have run rampant in Syria over the last two years -- and some are even aware of the nature of their funding -- a very common question that confronts these observers is, simply, “why?”

When one analyzes past acts of conquest and aggression as well as current and future imperialist moves, it becomes clear that there is rarely only one reason for the implementation of any aspect of an agenda on any level.

Although Anglo-American imperialism, by no means, began on September 11, 2001, overt acts of aggression, destabilization, and invasion have increased both in frequency and intensity since that time. Ever since 9/11, however, the people of the Western world and the American public in particular have been provided with “reasons” for these military adventures and, thanks to the alternative media and a small minority of courageous researchers, activists, etc., they have also been provided with the “real” reasons.

Taking several of the targets into consideration, these reasons include vast oil reserves, oil pipelines,[1] opium fields, strategic positioning, no-bid contracts for the defense industry and military-industrial complex, and mineral deposits.

In the proper context of the specific nations being discussed, each and every one of the above-listed justifications are both valid and accurate.

Still, in the context of Syria, it is important to understand the impetus of invasion specific to the imperialist quest against the Middle Eastern nation.

While fuel for the military-industrial complex and no-bid contracts doled out to multi-billion dollar military defense firms to rebuild what was destroyed in the conflict is no doubt on the list of reasons for the destruction of Syria, it is well known that Syria represents a strategic stronghold for Russia in terms of influence in the region. Because a confrontation with both Russia and China appear to be in the cards of the Anglo-Americans, the weakening of a strategic position of Russia in the Middle East (with Iran to be the next target) would not only be considered quite the geopolitical coup, it is a virtual necessity if one is determined to engage a nation as powerful as Russia in the long run.

Yet there is one more underlying reason for Western military intervention in Syria that is rarely discussed publicly, even among many alternative media outlets - the goal of total domination by the private central banking system.

It is true that both debt and the control of currency is one of the most effective means of enslaving an entire population without their knowledge. Continually chasing financial freedom with no ability to pay off debt and save for the future ensures that a sizable majority of the population will not have the means, time, or energy to resist the totalitarian methods imposed upon them.

Likewise, it is true that by controlling a nation’s currency, one essentially controls the nation. Governments who are beholden to third parties and private banks for their money are not governments at all – they are receiverships existing solely at the pleasure of the controlling oligarchy. As Mayer Amschel Rothschild once stated, “Give me control of a nation’s money supply and I care not who makes its laws.”

Thus, when one takes a look at the worldwide banking system and, in particular, the amount of countries with government-owned, non-Rothschild affiliated central banks, one easily sees a monopolistic system coming into view. In addition, when one takes a closer look at those countries with government-owned central banks, independent of Rothschild and major financier control, it becomes even clearer that maintaining a government-mandated structure of currency and central banking places a nation on a very dangerous list.

Enter Syria.

Existing as one of the last nations on the face of the earth that has not allowed itself to become subservient to a privately-owned central bank, Syria now finds that national financial independence does not come without the price of presenting oneself as a preferred target for the banking cartels and the nations they control.

All in all, the Syrian banking system largely consists of four state-owned banks and fourteen private banks, mostly foreign banks providing services to the private sector inside Syria. For at least forty years, the state itself has maintained a total monopoly on the Syrian banking system. Even when that total monopoly was broken, it was not in the form of the privatization of the central bank, it was merely allowing private banks to operate commercially inside the country at all.

As CountryStudies.Us writes,
The primary legislation establishing a central bank and control of the banking system was passed in 1953, but the Central Bank was not formed until 1956. Its functions included issuing notes, controlling the money supply, acting as fiscal agent for the government, and controlling credit and commercial banks. It was also to act as the country's development bank until specialized banks were established for various sectors. The Central Bank had considerable discretionary powers over the banking system but was itself responsible to and under the control of the Council on Money and Credit, a policy group of high-ranking officials.
Country Studies continues by stating that “The general philosophy was that the banking system should be an agent of government economic policy.” No doubt such a concept is a novel idea in 2013, perhaps even more so than it was in 1953.

Nevertheless, the process of government control over banks began in 1958 when the Syrian government began to “Arabize the commercial banking system.” In 1961, that process morphed into “limited nationalization.”

By 1966, the Syrian government completed its nationalization of the bank by merging all of the existing commercial banks into one entity which came to be known as the Commercial Bank of Syria. The government then created subsidiary banks of the Commercial Bank of Syria for the purposes of economic development such as the Agricultural Cooperative Bank, Industrial Bank, the Real Estate Bank, and the Popular Credit Bank.

Not surprisingly, international bankers have been vocal enough among their own circles regarding their disdain for Syria’s government-owned central bank. In fact, in 2006, the IMF actually published its annual Article IV Consultation Report regarding Syria’s economic developments. Among the recommendations made by the IMF in the report were suggestions of changes to the Syrian banking system. The report reads:
Progress toward this medium-term goal should start by having the central bank gain full control of existing direct instruments. The central bank should have the right to decide on credit ceilings and credit policies of banks with a view to ensuring a pace of credit and monetary expansion consistent with maintaining price stability while fostering economic activity and employment. Banks have to abide by all prudential regulations. Beyond this, the role and responsibilities of the central bank and the ministry of finance in exercising oversight on the banks should be clearly defined. While the government could play a lead role in choosing the board and the management of public banks, the CBS should have the authority to evaluate and approve banks' policies, and procedures related to the credit and investment.
Clearly, if these are the responsibilities the IMF believes the Syrian Central Bank should have, then it logically follows that they are responsibilities it does not have currently. Thus, the Central Bank is at least kept in check by the refusal to allow it unbridled control over monetary policy as a private “independent” institution.

Thus, the Article IV Consultation Report and the suggestions contained therein provide a blueprint for turning Syria’s central bank from that of a government-owned entity which serves the government (and theoretically the people) into an entity which directs it.

If the CBS (Central Bank of Syria) is allowed to “have the authority to evaluate and approve banks' policies, and procedures related to the credit and investment,” even if the government is able to choose the board and management, the CBS then becomes the sole independent force responsible for the extension (or refusal) of credit, inflation/deflation, bailouts, and the inevitable implementation of austerity measures. In other words, if the CBS is privatized from its current state, it will become the equivalent of the Syrian version of the U.S. Federal Reserve, a fate no nation should ever willingly inflict upon itself.

Nevertheless, Syria has not existed free and clear of economic distress simply because of the existence of a government-owned central bank. Over the years, the Middle Eastern nation has had to battle with inflation and high unemployment. However, dependency on imports, rationing systems, political unrest, rebellions, natural disasters, and war have all contributed greatly to Syria’s economic difficulties.

Most notably, the ridiculous sanctions imposed upon Syria by the Western world have acted as a major obstacle to true economic growth. These sanctions, while imposed recently, have been levied against Syria for some time with the United States sanctioning the Central Bank as far back as 2001 under the liberty-shredding PATRIOT ACT which ironically turned America into nothing more than a paranoid police state, even as it criticizes other nations for their human rights records.

Although a more stable environment would have produced a much greater possibility of successful implementation of economic programs and better management of the central banking system would have undoubtedly produced better economic results, the fact remains that the Syrian banking system, Central and Commercial, belong to the government and (theoretically) the people of Syria. These institutions are independent of the Rothschild international banking cartel. Thus, one may add yet another reason Syria has come under the fiery eye of the Empire.

Although currently facing the brunt of Anglo-American operations, Syria is not the only country to find itself in the crosshairs of destabilization and direct military confrontation with Western powers where the presence of a government-owned central bank may stand as a significant deciding factor for invasion. Cuba, North Korea, and, notably, Iran all maintain such government banking systems. Coincidentally, all three of these nations, particularly Iran, have become major targets of Western imperialism as of late.

While one may be tempted to ignore the presence of government-owned central banks as a contributing factor toward the decision to destabilize and/or invade sovereign nations, it is interesting to note that Afghanistan, Iraq, Libya, and Sudan have all fallen victim to NATO-backed invasions, and/or destabilization campaigns ever since the push for the New American Century took off in 2001.

“Coincidentally,” these nations all held government-owned central banks prior to the intervention.

After the conflict had ended, or at least subsided, all of these nations were presented with a new banking system which was privately owned; another “strange coincidence” for those unwilling to acknowledge the existence of a pattern.

Thus it now appears that “Democracy” and “private central banking” stand as the only thing the West is capable of exporting.

[1] Griffin, David Ray. The New Pearl Harbor. Interlink Publishing Group. 2004.

Mass Carnage: Stocks, Bonds, Gold, Silver, Europe And Japan All Get Pummeled

Michael Snyder
Activist Post

Can you smell that?  It is the smell of panic in the air. As I have noted before, when financial markets catch up to economic reality they tend to do so very rapidly.  Normally we don't see virtually all asset classes get slammed at the same time, but the bucket of cold water that Federal Reserve Chairman Ben Bernanke threw on global financial markets on Wednesday has set off an epic temper tantrum.

On Thursday, U.S. stocks, European stocks, Asian stocks, gold, silver and government bonds all over the planet all got absolutely shredded. This is not normal market activity. Unfortunately, there is nothing "normal" about our financial markets anymore. Over the past several years they have been grossly twisted and distorted by the Federal Reserve and by the other major central banks around the globe. Did the central bankers really believe that there wouldn't be a great price to pay for messing with the markets?

The behavior that we have been watching this week is the kind of behavior that one would expect at the beginning of a financial panic. Dick Bove, the vice president of equity research at Rafferty Capital Markets, told CNBC that what we are witnessing right now "is not normal. It is not normal for all markets to move in the same direction at the same point in time due to the same development."  The overriding emotion in the financial world right now is fear. And fear can cause investors to do some crazy things. So will global financial markets continue to drop, or will things stabilize for now?

That is a very good question. But even if there is a respite for a while, it will only be temporary.  More carnage is coming at some point.

What we have witnessed this week very much has the feeling of a turning point.  The euphoria that drove the Dow well over the 15,000 mark is now gone, and investors all over the planet are going into crisis mode.  The following is a summary of the damage that was done on Thursday...

-U.S. stocks had their worst day of the year by a good margin.  The Dow fell 354 points, and that was the biggest one day drop that we have seen since November 2011.  Overall, the Dow has lost more than 550 points over the past two days.

-Thursday was the eighth trading day in a row that we have seen a triple digit move in the Dow either up or down.  That is the longest such streak since October 2011.

-The yield on 10 year U.S. Treasuries went as high as 2.47% before settling back to 2.42%.  That was a level that we have not seen since August 2011, and the 10 year yield is now a full point above the all-time low of 1.4% that we saw back in July 2012.

- The yield on 30 year U.S. Treasuries hit 3.53 percent on Thursday.  That was the first time it had been that high since September 2011.

-The CBOE Volatility Index jumped 28 percent on Thursday.  It hit 20.49, and this was the first time in 2013 that it has risen above 20.  When volatility rises, that means that the markets are getting stressed.

-European stocks got slammed too.  The Bloomberg Europe 500 index fell more than 3 percent on Thursday.  It was the worst day for European stocks in 20 months.

-In London, the FTSE fell about 3 percent.  In Germany, the DAX fell 3.3 percent.  In France, the CAC-40 fell 3.7 percent.

-Things continue to get even worse in Japan.  The Nikkei has fallen close to 17 percent over the past month.

-Brazilian stocks have fallen by about 15 percent over the past month.

-On Thursday the price of gold got absolutely hammered.  Gold was down nearly $100 an ounce.  As I am writing this, it is trading at $1273.60.

-Silver got slammed even more than gold did.  It fell more than 8 percent.  At the moment it is trading at $19.57.  That is ridiculously low.  I have a feeling that anyone that gets into silver now is going to be extremely happy in the long-term if they are able to handle the wild fluctuations in the short-term.

-Manufacturing activity in China is contracting at a rate that we haven't seen since the middle of the last recession.

-For the week ending June 15th, initial claims for unemployment benefits in the United States rose by about 18,000 from the previous week to 354,000.  This is a number that investors are going to be watching closely in the months ahead.

Needless to say, Thursday was the type of day that investors don't see too often.  The following is what one stock trader told CNBC...
"It's freaking, crazy now," said one stock trader during the 3 p.m. ET hour as the Dow sunk more than 350 points. "Even defensive sectors are getting smoked. The super broad-based sell off between commodities, bonds, equities - I wouldn't say it's panic, but we've seen aggressive selling on the lows."
Unfortunately, this may just be the beginning.

In fact, Mark J. Grant has suggested that we may see even more panic in the short-term...
Yesterday was the first day of the reversal. There will be more days to come.
What you are seeing, in the first instance, is leverage coming off the table. With short term interest rates right off of Kelvin's absolute Zero there was been massive leverage utilized in both the bond and equity markets. While it cannot be quantified I can tell you, dealing with so many institutional investors, that the amount of leverage on the books is giant and is now going to get covered. It will not be pretty and it will be a rush through the exit doors as the fire alarm has been pulled by the Fed and the alarms are ringing. There is also an additional problem here.
The Street is not what it was. There is not enough liquidity in the major Wall Street banks, any longer, to deal with the amount of securities that will be thrown at them and I expect the down cycle to get exacerbated by this very real issue. Bernanke is no longer at the gate and the Barbarians are going to be out in force.
If we see global interest rates start to shift in a major way, that is going to be huge.


Well, it is because there are literally hundreds of trillions of dollars worth of interest rate derivatives contracts sitting out there...
The interest rate derivatives market is the largest derivatives market in the world. The Bank for International Settlements estimates that the notional amount outstanding in June 2009 were US$437 trillion for OTC interest rate contracts, and US$342 trillion for OTC interest rate swaps. According to the International Swaps and Derivatives Association, 80% of the world's top 500 companies as of April 2003 used interest rate derivatives to control their cashflows. This compares with 75% for foreign exchange options, 25% for commodity options and 10% for stock options.
If interest rates begin to swing wildly, that could burst the derivatives bubble that I keep talking about.

And when that house of cards starts falling, we are going to see panic that is going to absolutely dwarf anything that we have seen this week.

So keep watching interest rates, and keep listening for any mention of a problem with "derivatives" in the mainstream media.

When the next great financial crash comes, global credit markets are going to freeze up just like they did in 2008.  That will cause economic activity to grind to a standstill and a period of deflation will be upon us.  Yes, the way that the Federal Reserve and the federal government respond to such a crisis will ultimately cause tremendous inflation, but as I have written about before, deflation will come first.

It would be wise to build up your emergency fund while you still can.  When the next great financial crisis fully erupts a lot of people are going to lose their jobs and for a while it will seem like hardly anyone has any extra money.  If you have stashed some cash away, you will be in better shape than most people.

This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

20 Items to Kick Start Your Food Storage Plan

Gaye Levy

Activist Post

No matter how many times I write about food, there is always something new to consider or a new and different way to present the same old information in a more useful manner. With that in mind, today I would like to share a method for getting started with your food storage program in an easy, step by step, and cost effective manner.

To be truthful, my initial goal with this article was to respond to readers who were just getting started and wanted a shopping list of things to buy for their food storage pantry. I also wanted to compile a checklist that more experienced preppers could use to compare what they had to what they needed. My goal can pretty much be summed up by saying that I wanted to write about getting started with food storage the easy way. No frills, no fluff – just a common sense list of food items to get you started.

With that goal in mind, let me say this: this is not a list of items intended for deep storage. Nor is it a list of items packaged so that they have a 25 year shelf life. (And in reality, do you really need your stored food to last that long?) I am also not going to list items that might be foreign to your palate, difficult to find, or too costly to absorb into your weekly shopping budget.

What you are going to get is a list of 20 items that can easily be purchased at your local grocery store, warehouse club and surprisingly, even online at Amazon. They can be purchased in one shot, all at once, or you can pick up one item from the list each week over a period of twenty weeks. The choice is yours. All I ask is that you consider getting each of the items on the list and that you also consider getting started sooner rather than later. I promise you that this will be easy.

I am going to include quantities that require no extra thought, no calculator and no formula for determining servings or overall quantities. Like I said. This is going to be EASY!


1. 20 pounds of Rice. As boring as it may sound, rice is one of the backbones of every food storage plan. It is filling, nutritious and with the use of varied seasonings and condiments, highly adaptable in a variety of tasty meals. The choice of white, brown or a combination of the two is up to you. White rice has a longer shelf life but brown rice has more nutritional benefits. In my own household, I like to combine the two along with some Jasmine, Basmati and Calrose sticky rice.

2. 20 pounds of Pinto Beans. Like rice, beans are the backbone to every food storage plan. You may substitute white, kidney or other types of dried beans but honestly, pintos are one of the least expensive dried beans and in my opinion, one of the tastiest. Need help cooking beans? when you are done here be sure to read Survival Woman Learns to Cook Dried Beans and you should too and Respect for the Lowly Pinto Bean.

3. 20 cans of Vegetables. Green beans, peas, corn and canned tomatoes are good choices. Let your taste and budget guide you. Buy what you currently eat and enjoy.

4. 20 cans of Fruit. Peaches, pears, pineapple, fruit cocktail – again, this is your choice. Fruits add a nice sweetness to life and these days we all could use more of that.

5. 20 cans of Meat. Chicken, tuna, shrimp, salmon, Vienna sausages, beef stew and yes, even the ubiquitous Spam will satisfy this requirement. Did you know that you can even purchase canned roast beef? Again, let your taste and budget guide you – there is lots to choose from.

6. 4 pounds Oats. Remember when you were little and Mom warmed your tummy with a nice comforting bowl of oatmeal? That is what we are talking about here. A bowl of oatmeal topped with canned fruit can be enjoyed for breakfast, lunch or dinner.

7. 2 large jars of Peanut Butter. Peanut butter is an excellent source of protein, with plenty of calories for energy and sustenance. Besides, who can resist the taste of a gooey spoonful of luscious peanut butter?

8. 2 large jars of Tang or other powdered drink mix. The only requirement here is get something you like and something fortified with Vitamin C. I am not going to preach and tell you to avoid artificial sweeteners. If Crystal Lite works for you in normal times, go for it.

9. 5 pounds of Powdered Milk. Milk is a great source of protein and other nutrients. In addition it is filling and can be used to top your oatmeal cereal or stirred into your coffee as a flavor enhancer.

10. 5 pounds of Salt. It goes without saying that salt is an essential for survival plus it has a lot of uses other than as an enhancement for food. That said, our bodies need salt to survive. Read more about salt in the article Reasons You Need Salt in the Prepper Pantry.

11. 10 pounds of Pancake Mix. An all in one pancake mix (such as Krusteaz) only requires the addition of water to make up a batch of batter. As with oatmeal, a big plate of pancakes, perhaps with some honey or jam, will make a satisfying meal that can be eaten for breakfast, lunch or dinner.

12. 2 pounds of Honey and 2 large jars of Jam. We all need some sweetness in our life, even with Mother Nature or life deals us a blow. I choose honey and jam over sugar but at the end of the day, you can make a substitution or simply mix and match.

13. 10 pounds of Pasta. Pasta is familiar and easy to fix. Pasta is a dense form of wheat but so much easier to deal with when you are first starting out. Besides, it is a fabulous comfort food.

14. 10 cans or jars of Spaghetti Sauce. Cheap yet satisfying, canned pasta sauce on a bed of pasta creates a satisfying meal that can be put together in minutes.

15. 20 cans of Soup or Broth. The beauty of canned soups and canned broth is that they are a budget friendly. Soups are an all-in-one meal solution. All you need is a can opener and a spoon and you have a meal ready to go. For an extra satisfying meal, try using a can of soup as part of the cooking water for your rice. Yummy!

16. One large jug of Oil. Choose olive oil, coconut oil or some other cooking oil, but definitely get some. Oil is essential for good health, fueling our energy stores and providing support for fat-soluble vitamins and nutrients as they work their way through our system. Not only that, but a bit of fat in your diet adds flavor and makes you feel satisfied when you are done eating.

17. Spices and Condiments. Adding some spices and condiments to your food storage pantry will allow you to vary the taste of your storage foods, thus mitigating some of the boredom that is likely to occur over time. The exact mix of spices and condiments is up to you but some suggestions include garlic, chili, Tabasco (hot sauce), salsa, oregano, thyme and black pepper.

18. 5 pounds of Coffee or 100 Tea Bags. There are those that will say that life without coffee is not life at all. Whole bean (assuming you have a hand grinder), ground or instant – take your choice. Or substitute tea. Green tea and many herbal teas are quite therapeutic so if you like tea, this may be a good way to go.

19. 2 large bags of Hard Candies. Hard candy can go a long way toward making an unpleasant situation bearable. Butterscotch drops, peppermints and even lemon drops are good. Have fun with this and pick up a couple of bags of your favorites!

20. Mini LED Flashlight and Extra Batteries. Okay, this is a cheater item. It is not food but it is all important and so it will not hurt to stash a miniature flashlight or two along with the edibles in your food storage pantry. My top pick of the moment in the Blocklite. This thing just goes and goes and goes plus, it does not take up any storage space.


So you noticed!

There are no wheat berries or other whole grains (other than oats/oatmeal) on this list and there is also no flour. While there is a place for these items in a long term storage plan, I consider them part of the second phase of food storage.

The truth is that many preppers would not have a clue as to what to do with wheat, so why push the envelope?

The same goes with flour. To make flour usable, you also need yeast and baking powder plus the skill and know-how to bake. Not only that, you most likely will need an outdoor oven of sorts – especially if the grid is down post disaster. That, and more, will come later, but for now, while covering the basics, it is much simpler and far more practical to stick with easy to cook foods that can be combined into interesting meals without the need for much experience other than opening a can or a package.


As you read though this list, I hope you can visualize the number and variety of meals that can be made by mixing and matching the items listed in the kick-start plan. How about some rice, salsa and canned chicken cooked into a casserole in your cast iron skillet? Or pancakes topped with canned peaches and honey? Then there are pinto beans, combined with rice and corn and topped with a bit of Tabasco for a fiesta-style meal.

Well okay, perhaps these are not gourmet delights but with the added condiments, they will taste good and be as healthy as you can expect food to be when fresh meats and produce or unavailable.

Is this a complete list of everything you will need to be fully prepared food-wise? Heck no. Are the quantities adequate to feed a family for a month, three months or longer? Perhaps a month but not much longer. Truthfully, for long term storage you need more food and more variety as well as some packaging methods (Mylar bags or buckets plus oxygen absorbers) to insure that your will food stay viable and pest free for years to come.

But for now we are more focused on either getting started our rounding out our basic survival pantry. And for that, these 20 items will do just fine.

Read other articles by Gaye Levy here.

Enjoy your next adventure through common sense and thoughtful preparation!

Gaye started Backdoor Survival to share her angst and concern about our deteriorating economy and its impact on ordinary, middle-class folks. She also wanted to become a prepper of the highest order and to share her knowledge as she learned it along the way. She considers her sharing of knowledge her way of giving back and as always, we at Activist Post are grateful for her contributions.

‘We were told to lie’ – Bank of America employees open up about foreclosure practices

Photo of Bank of America ATM Machine by Brian ...
 (Photo credit: Wikipedia)
Employees of Bank of America say they were encouraged to lie to customers and were even rewarded for foreclosing on homes, staffers of the financial giant claim in new court documents.
Sworn statements from several Bank of America employees contain a number of damning allegations, the latest claims entered as evidence in a multi-state class action lawsuit that challenges the bank’s history with foreclosures.
According to testimonies obtained by journalists at ProPublica, supervisors at various Bank of America branches across the United States encouraged employees to regularly deny loan modification applications with no reason. At times, they were told to make up excuses to customers who risked losing their homes.
In one of the sworn statements, an ex-bank staffer said he would be directed to deny upwards of 1,500 loan modification applications at a single time with no apparent reason.
“To justify the denials, employees produced fictitious reasons, for instance saying the homeowner had not sent in the required documents, when in actuality, they had,” William Wilson, Jr., a former underwriter for the bank, wrote in his statement.
Elsewhere in his testimony, Wilson wrote that he was instructed to deny any applications for the Obama administration-created Home Affordable Modification Program (HAMP) that were older than 60 days, even in instances in “which the homeowner had provided all required financial documents and fully complied with the terms of a Trial Period Plan.”
Simone Gordon, a senior collector at B of A from 2007 through 2012, said, “We were told to lie to customers and claim that Bank of America had not received documents it had requested.”
“We were told that admitting that the Bank received documents ‘would open a can of worms,’” Gordon said, since the bank was regularly understaffed with regards to the process of reviewing the applications.
An average underwriter at B of A could have 400 outstanding applications awaiting review at any time, Gordon said in her statement. She also said collectors “who placed ten or more accounts into foreclosure in a given month received a $500 bonus.”
“Bank of America also gave employees gift cards to retail stores like Target or Bed Bath and Beyond as rewards for placing accounts into foreclosure,” she said.
Gordon also said that site leaders regularly instructed employees to prolong the loan modification process for customers because the longer proceedings were delayed, “the more fees Bank of America would collect.”
The statements were filed in federal court in Boston, Massachusetts last week, and the bank has already responded by condemning the claims.
“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,” the bank said in an official 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.”
Even outside of the bank, though, others in the industry say they suspect these practices indeed occurred.
“I’ve seen all of those things that this lawsuit has mentioned. Yes I have,” Jason McGrath a foreclosure attorney in Charlotte, North Caroline, told WSOCTV News. “It’s one of those things that it’s great for folks like me because we experience this on a day-to-day basis and we are finally glad to see it see the light of day,” he continued. “Some of my clients say I’m so glad to hear you tell me other people are going through this and it’s not just me. It’s weird since they feel better that other people are going through this as well.”
Christy Romero, the special inspector general of the Troubled Asset Relief Program, told Bloomberg that “It goes without saying that this is an outright abuse of consumers and government mortgage-assistance programs.”
The statements are just some of the latest testimonies against the bank, certainly not the first. Last year, Bank of America was among five mortgage servicers that divvied out a $25 billion settlement to state and federal regulators after coming under fire for their foreclosing practices.

Peter Schiff: Fed Is Trying to Reflate a Phony Economy

The American prison system is so massive that its estimated turnover of $74 billion eclipses the GDP of 133 nations.

The American prison system is massive. So massive that its estimated turnover of $74 billion eclipses the GDP of 133 nations. What is perhaps most unsettling about this fun fact is that it is the American taxpayer who foots the bill, and is increasingly padding the pockets of publicly traded corporations like Corrections Corporation of America and GEO Group. Combined both companies generated over $2.53 billion in revenue in 2012, and represent more than half of the private prison business. So what exactly makes the business of incarcerating Americans so lucrative?
Most of it has to do with the way the American legal system works, and how it has changed over the last 40 years. In the 1970’s, lawmakers were dealing with a nationwide rash of drug-use and crime. By declaring a nation-wide war on drugs in 1971, President Richard Nixon set a precedent for hard-line policies towards drug-related crime. New York governor Nelson Rockefeller followed suit declaring “For drug pushing, life sentence, no parole, no probation.” His policies once put into action promised 15 years to life in prison for drug users and dealers. His policies catalyzed the growth of a colossal corrections system that currently houses an estimated 2.2 million inmates.
The runaway growth of US corrections did not come overnight, and did not come from the government alone. Since the 1970’s federal and state correction agencies have consistently struggled to meet the increased demands brought on by the US Department of Justice and strict drug laws. In 1982, three Texas businessmen, Tom Beasley, John Ferguson, and Don Hutto saw an opportunity in the shortcomings of the Texas corrections system’s inability to deal with this influx of incarcerations. They devised and executed a plan to secure the first government contract to design, build, and operate a corrections facility from the Immigration and Naturalization Service and the Texas Department of Justice.
Contract in hand, the trio was given 90 days to open a detention center for undocumented aliens. As their January 28 deadline neared, Hutto, Ferguson, and Beasley had no facility, no staff, and their experiment seemed doomed to fail. On New Year’s Eve, 1983, Beasley decided to get crafty, “Well, we’ll just go to Houston and find a place,” he told Ferguson. Incredulous, Ferguson replied, “Tom, you’re crazy. There’s no possible way. This is New Year’s Day. There is no possible way we can find a place today.” Beasley simply responded, “We have to.”
The three men immediately got on a plane and began their search. After a litany of rejections they came upon the Olympic Motel at 1am on New Year’s Day and immediately began negotiations that lasted for three days. After hiring motel owner’s family and promising to return the motel to its original condition, the group was in business. They then converted all of the motel rooms to secure cells, procured secure transportation and opened shop on January 28, 1983 when 87 inmates were brought in. Hutto, Ferguson and Beasley formed Corrrections Corporation of America, the largest prison private prison network in the United States.

Food, Guns, Gold: “The Record is Rather Clear On the Side of Commodity Money”

If you’ve been watching U.S. financial markets the last few weeks you may have come to the conclusion that something is amiss and that there exists a major disconnect between what’s happening on Wall Street and what average Americans are experiencing on Main Street.
While analysts and experts point to the stock market as a sign of economic stability, today’s massive downswing should make it clear that the system is anything but stable.
The economy, the financial markets, and the U.S. monetary system are in uncharted waters, and as was noted yesterday after the Fed’s FOMC announcement, there is no way out of this mess.
The Federal Reserve and the US Treasury have taken it upon themselves to save us, but their plan seems to be disintegrating right before our eyes.
According to former Congressman Ron Paul, it could get much worse with far reaching ramifications across the whole of the U.S. and global economies. At this rate, if we continue on our current trajectory of monetary expansion, it is only a matter of time before the US dollar buckles. And when it does, it’s going to create widespread disturbances in pricing and valuation models across the entire sphere of investments, goods and services.
The long-term is something you can get  a handle on.
The short-term… I was never very good on short-term, whether it’s the stock market or what government will do. It’s just all over the place.
I think if you look at the record of the value of the dollar since the Fed’s been in existence, we have about a 2 cent dollar. You know, gold used to be $20 an ounce, so I would say the record is rather clear on the side of commodity money.
History is on our side… 6,000 years of history shows that it maintains value and paper always self destructs.
I would say, long-term, as long as we have excessive spending and excessive computerized money, you’re going to see gold go up… and it [gold] could go to infinity because the dollar could collapse totally.
Video from The Daily Sheeple via Infowars:
To be clear, Ron Paul isn’t just talking about the price of gold going to infinity.
In the event of a collapse of the U.S. dollar we’re going to see the price of all commodities go to infinity. Any physical asset of actual value is going to go to ‘infinity’ as it relates to the US dollar. Zimbabwe is a recent example, where the price of a loaf of bread literally reached over a trillion ‘dollars,’ when just a few years before it cost a couple Zimbabwe bucks.
When the system collapses, commodities become money. It’s as simple as that.
This is why precious metals have been in such high demand lately. This is why emergency food distributors ran out of food recently. And this is why the price of ammunition and rifles has gone through the roof.
It is an issue of confidence.
Confidence in the fair functioning of financial markets. Confidence in our central bank’s directives to maintain a stable currency. Confidence that our political system will operate within the rule of law.
It should be obvious by recent market gyrations and panic buying of certain commodity goods that confidence among the American public is being lost.
Once it takes hold, and disruptions to our system of commerce become evident to the general public, we will witness a never before seen panic from sea to shining sea as Americans fight for anything worth something.
It’s coming, whether you believe it or not. And it’s better to be a year, month or day early, then a minute late.