Tuesday, August 20, 2013

Indian Rupee Collapses - Worst Day In 20 Years

Presented with little comment (over our earlier detail) but just to note that around the world there are significant events occurring (even as the US equity market slumbers). So much for the gold coin ban - gold now trades at 4 month highs in Rupee terms.

Today's 1.46 Rupee slump is the largest in absolute terms since 1993... (the largest single-day percentage depreciation since 9/22/2011)...

and the last 4 weeks' move is the largest since 1991...

And just for fun, since May 2nd, holders of paper Rupee have lost 18% of their purchasing power while those that held gold instead have seen their 'wealth' appreciate 13% in local purchasing power.

Charts: Bloomberg

This Could Trigger A Major Sell-Off For The Stock Market

Keith Fitz-Gerald: The esoteric – yet highly accurate – Hindenburg Omen we looked at Friday may suggest the probability of a market crash. But the number I’m watching this week could cause one.
As a standalone figure, of course, the yield on 10-year Treasuries is small. But the amount of money it impacts worldwide is flat-out staggering.
Out of the estimated $1.5 quadrillion dollars’ worth of derivatives on the planet right now, roughly $500 trillion is specifically related to interest rates.

So you can see why the 10-year gets so much attention. But right now, I’m watching it even more carefully… for one important reason.
When the Hindenburg was sounding the alarm last week, 10-year Treasury yields spiked at the same time, up to 2.8210% before relaxing a bit in early trading last Friday as of press time. That suggests to me the Fed is losing control over interest rates.
No doubt this is a frightening scenario, which is why it’s important to remember…
There’s plenty you can do about this now.
First, here’s why higher rates could have such a wide impact…
The 5 Side Effects of “No Control”
Many investors believe the Fed controls interest rates. That’s not true – they merely influence them.
As I have long written here in Money Morning, it’s the traders who have a death grip on our financial markets.
And if interest rates rise much further, the support the Fed is counting on in the bond markets may not be there. In fact, it may be running the opposite direction.
And here’s why that could trigger a selloff:
  • Foreign custody holdings of U.S. Treasuries continue to decline, which implies that our trading partners don’t trust our repayment ability. So they’re moving on to other assets.
  • Money managers are seeing extremely high levels of redemption requests and withdrawals from bonds. PIMCO, for example, experienced a $7.5 billion hit last month as money headed for the exits. The presumption is that the money is rotating into stocks, but the data suggests a solid portion is simply going back under the mattress. Somebody has to make up the gap; the only one big enough is the Fed. But if $85 billion a month isn’t good enough, you’ve got to wonder how much is. Bernanke’s replacement will have his or her hands full and the stakes couldn’t be higher.
  • Loan volumes have fallen sharply as America continues to deleverage. International data suggests the same is true, generally speaking, throughout Europe and in Asia as well. So banks don’t need to buy Treasuries as a means of supporting profits and corresponding balance sheet liabilities. Combine that with huge real estate mark-to-market losses that have yet to be taken, and there’s a hole the size of Bernanke’s printing press to dam… or damn, depending on your perspective.

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Bank of America to Dissolve Merrill Lynch


Over four years ago, the federal government forced Bank of America to acquire Merrill Lynch. Last week, Bank of America signaled it will dissolve Merrill Lynch.

In 2009, Bank of America chief Kenneth Lewis testified that the federal government threatened to strip Bank of America board members if the bank reneged on acquiring Merrill Lynch. "What gave me concern is that they gave that threat to a bank in good standing," said Lewis.
Emails between bank employees revealed that Federal Reserve Chairman Ben Bernanke warned that "management is gone" if Bank of America failed to go through with the deal and needed future financial assistance.
Bank of America went along with the Merrill Lynch deal and received $45 billion from TARP. 
Now, according to an August 2nd filing, Bank of America plans to dissolve the subsidiary while keeping the Merrill Lynch brand for its retail brokerage and investment bank.
As Bloomberg News reports, "Bank of America faced regulatory probes, investor lawsuits and criticism from lawmakers over claims it didn't warn shareholders about Merrill Lynch's mounting losses before they voted to buy the firm for $18.5 billion. Last year, Bank of America agreed to pay $2.43 billion to investors who suffered losses during the takeover."

Silver Prices Today Riding Higher on these Four Trends

After slipping nearly 40% this year by June, silver prices today have rebounded, and now trade near $23 an ounce. Silver ended the week up 14%.
This puts the precious metal at a level not seen since May.
There are several reasons for this move up in silver prices - reasons that will carry silver prices to $40 an ounce - and then $60 an ounce - by 2014.
With a lot of "crash talk" making the rounds - like the Hindenburg Omen - now's a good time to be taking gains in the white metal.
Here are four reasons today's silver price is the start of more double-digit weekly gains in 2013...

Silver Prices Today: Four Reasons for the Climb

Silver Price Catalyst #1: Short Covering
Many speculative hedge funds had gone short silver, expecting more downside to the sharp selloff that occurred in the precious metals space. The hedge fund community had the lowest amount of net-long positions in silver in about 10 years.
Some of those bets have now been covered, with the funds buying back silver futures contracts. But there may be more short covering to go.
Walter de Wet, head of commodities research at Standard Bank, told the Financial Times that U.S. Commodity Futures Trading Commission data showed the speculative market "has been building a large short position which is yet to unwind."
As silver moves higher, shorts will rush to cover, and give prices an even bigger boost.
Silver Price Catalyst #2: Physical Demand for Coins
Another factor at work here is similar to what's been happening in the gold market: strong physical demand for silver.
That can be seen in the coin market.
The latest numbers from the U.S. Mint show that there were 31 million ounces of silver coins sold so far this year. In 2012, there were only 33.7 million ounces of silver coins sold all year.
Other mints around the world are showing a similar pattern.
Take the Royal Canadian Mint, for example.
It said this week that demand for both gold and silver products remained "very strong." The Mint added that people seemed to be buying the coins on every dip in precious metals prices.
Sales of silver coins were particularly strong.
Chris Carkner, managing director of sales for bullion, refinery and exchange-traded products at the Royal Canadian Mint, told Kitco "Year-to-date, after the second quarter, we've had record volume for silver Maple Leafs, the greatest we've had in the over 25 years that we've produced them."
Silver Price Catalyst #3: This Country's Exploding Investor Interest
North American investors aren't alone in their attraction for physical silver.
So is another region of the globe we've touched on before, one that's key to the future of silver prices...

18 Signs That Global Financial Markets Are Entering A Horrifying Death Spiral

By Michael Snyder
The spiral staircase at the Lighthouse in Mitchell Lane, Glasgow - Photo by George Gastin
You can see it coming, can’t you?  The yield on 10 year U.S. Treasuries is skyrocketing, the S&P 500 has been down for 9 of the last 11 trading days and troubling economic news is pouring in from all over the planet.  The much anticipated “financial correction” is rapidly approaching, and investors are starting to race for the exits.  We have not seen so many financial trouble signs all come together at one time like this since just prior to the last major financial crisis.  It is almost as if a “perfect storm” is brewing, and a lot of the “smart money” has already gotten out of stocks and bonds.  Could it be possible that we are heading toward another nightmarish financial crisis?  Could we see a repeat of 2008 or potentially even something worse?  Of course a lot of people believe that we will never see another major financial crisis like we experienced in 2008 ever again.  A lot of people think that this type of “doom and gloom” talk is foolish.  It is those kinds of people that did not see the last financial crash coming and that arechoosing not to prepare for the next one even though the warning signs are exceedingly clear.  Let us hope for the best, but let us also prepare for the worst, and right now things do not look good at all.  The following are 18 signs that global financial markets are entering a horrifying death spiral…
#1 The yield on 10 year U.S. Treasuries has risen for 5 of the past 6 days, and it briefly touched the 2.90% level on Monday.
#2 Rapidly rising interest rates are spooking investors and causing them to pull money out of bonds at a very rapid pace
Investors have yanked nearly $20 billion from bond mutual funds and exchange traded funds so far in August. That’s the fourth highest pullback ever, according to TrimTabs data. In June, investors took out $69.1 billion — the highest on record.
#3 The sell-off of U.S. Treasuries is being led by foreigners.  In particular, China and Japan have been particularly aggressive in selling off bonds…
China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries.
The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed on Thursday.
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.
#4 Thanks to rapidly rising bond yields, some of the largest exchange-traded bond funds are getting absolutely hammered right now
• The $18 billion iShares iBoxx $ Investment Grade Corporate Bond fund (ticker: LQD) has fallen 7.94% since May 2, according to S&P Capital IQ. That’s including reinvested interest from the fund’s bond holdings.
• The 3.7 billion iShares Barclays 20+ Year Treasury Bond (TLT) has plunged 15.9% the same period. Longer-term bonds typically get hit harder when rates rise than shorter-term bonds. For example, the iShares Barclays 3-7 Year Treasury Bond fund (IEI) has fallen 3.2% since May 2.
• PowerShares Emerging Markets Sovereign Debt (PCY), which invests in government bonds issued in developing countries, has fallen 12.7%. The fund has $1.8 billion in assets.
#5 In recent weeks we have witnessed the largest cluster of Hindenburg Omens that we have seen since prior to the last financial crisis.
#6 George Soros has bet a tremendous amount of money that the S&P 500 is going to be heading down.
#7 At this point, the S&P 500 has fallen for 9 out of the last 11trading days.
#8 Margin debt has spiked to extremely dangerous levels.  This is a pattern that we also saw just before the last financial crash and just before the dotcom bubble burst…
The exuberant mood comes as margin debt on Wall Street hovers near $377bn, just below its all-time high and well above peaks before the dotcom crash and the Lehman crisis.
“Investors have rarely been more levered than today,” said Deutsche Bank, warning that the spike in margin debt is a “red flag” and should be watched closely.
#9 The growth rate of new commercial bank loans and leases is now the slowest that it has been since the end of the last financial crisis.
#10 According to a shocking new report, Fannie Mae and Freddie Mac are masking “billions of dollars” in losses.  Will they need to be bailed out again just like they were during the last financial crisis?
#11 Wal-Mart reported very disappointing sales numbers for the second quarter.  Sales at stores open at least a year were down 0.3%.  This is a continuation of a trend that has been building for years.
#12 U.S. consumer bankruptcies just experienced their largest quarterly increase in three years.
#13 The velocity of money in the United States has hit another stunning new low.
#14 The massive civil unrest in Egypt threatens to disrupt the steady flow of oil out of the Middle East…
After last week’s bloody crackdown by the Egyptian army, fears of a disruption of oil supplies to the West have boosted the oil price. Brent crude prices werepropelled to a four-month high of $111.23 on Thursday. If the turmoil gets worse – or unrest spreads to other countries – the risk premium currently factored into the price of crude is likely to increase further.
#15 European stocks just experienced their biggest decline in six weeks.
#16 The Japanese national debt recently crossed the quadrillion yen mark, and many are expecting the Japanese financial system to start melting down at any time.
#17 In Indonesia, the stock market is “cratering“.
#18 In India, the yield on their 10 year government bonds has skyrocketed from 7.1 percent in May to 9.25 percent now.
As the coming months unfold, keep a close eye on the “too big to fail” banks both in Europe and in the United States.  When the next great financial crisis strikes, they will play a starring role once again.  They have been incredibly reckless, and as James Rickards told Greg Hunterduring an interview the other day, we are in much worse shape to deal with a major banking crisis than we were back in 2008…
What’s going to cause the next crisis?  Rickards says,“The problem in 2008 was too-big-to-fail banks.  Well, those banks are now bigger.  Their derivative books are bigger.  In other words, everything that was wrong in 2008 is worse today.” Rickards goes on to warn, “The last time, in 2008 when the crisis started, the Fed’s balance sheet was $800 billion.  Today, the Fed’s balance sheet is $3.3 trillion and increasing at $1 trillion a year.”  Rickards contends, “You’re going to have a banking crisis worse than the last one because the banking system is bigger without the resources because the Fed is tapped out.”  As far as the Fed ending the money printing, Rickards predicts, “My view is they won’t.  The economy is fundamentally weak.  We have 50 million on food stamps, 24 million unemployed and 11 million on disability, and all these numbers are going up.”
We never even came close to recovering from the last financial crisis and the last recession.
Now the next major wave of the economic collapse is coming up quickly.
I hope that you are taking this time to prepare for the approaching storm, because it is going to be very painful.

Governments Know That The Economic System Cannot Be Sustained, They Are Strategically Positioning Themselves For The Economic Collapse

Governments know that the economic system cannot be sustained. Government and central bankers around the world are strategically positioning themselves and preparing themselves for the upcoming economic collapse. The war in Syria is moving forward, the US setup an underground base outside of Syria, the base is protected and impervious to missiles. Egypt is in turmoil and the middle east is rising up against the central bankers and the US government.
They Are Systematically Destroying Our Independence And Making Us All Serfs Of The State
The percentage of Americans that are economically independent has dropped to a stunningly low level.  In order to be economically independent, you have got to be able to take care of yourself without any assistance from anyone else.  Unless you are independently wealthy, that means that you either have your own business or you have a full-time job.  Unfortunately, as you will see below, the percentage of Americans that are self-employed is at an all-time record low and the percentage of Americans with a full-time job has declined to a level not seen in about 30 years.  As a result, more Americans than ever find themselves forced to turn to the government for assistance.  When you add it all up, about half of all Americans get money from the government each month these days.  And yes, there will always be poor people that cannot take care of themselves that need help, but when you have more than half of the population dependent on the government that is a major problem.  You see, the truth is that our independence is systematically being taken away from us and we are steadily being made serfs of the state.  And once you become a serf of the state, it is very hard to resist anything the government is doing in a meaningful way.  After all, the money that you are getting from the government is enabling you to survive.  In essence, your allegiance has been at least partially purchased and you may not even realize it.
Of course this is not how the United States was supposed to operate.  We were never intended to be a collectivist nation.  Rather, we were intended to be a country where liberty and freedom thrived and where most people would be able to independently take care of themselves.
Unfortunately, it is becoming increasingly difficult to be economically independent in America today.  One reason for this is that the environment for small businesses in this country is the most toxic that it has ever been before.  The federal government, our state governments and even our local governments are constantly coming up with new ways to oppress small business….
DHS Buys 3.5 Million .357SIG Rounds For the TSA!

Town Wants To Use Eminent Domain To Seize Homes Worth Less Than Mortgage

Unemployment rates rise in most US states in July

Unemployment rates rise in 28 states in July, unchanged in 14, as job gains slow

WASHINGTON (AP) -- Unemployment rates rose in more than half of U.S. states in July and fewer states added jobs, echoing national data that show the job market may have lost some momentum.
The Labor Department said Monday that unemployment rates increased in 28 states. They were unchanged in 14 and fell in eight states — the fewest to show a decline since January.
Hiring increased in 32 states in July compared with June, the fewest to report job gains in three months. Seventeen states reported job losses. California, Georgia and Florida reported the largest job gains, while New Jersey and Nevada lost the most.
Nationwide, hiring has been steady this year but slowed in July. Employers added 162,000 jobs, the fewest since March. The unemployment rate fell to 7.4 percent, a 4 ½ -year low, from 7.6 percent.
And while the job market has improved over the past 12 months, the gains appear to be benefiting southern and western states most of all.
Unemployment in the West fell to 7.9 percent in July. That's down from 9.3 percent a year earlier and the biggest decline of the four regions. In the South, unemployment fell to 7.3 percent, from 7.8 percent a year ago.
Unemployment has barely dipped in the Midwest, to 7.3 percent from 7.5 percent in the past year. In the Northeast, it dropped to 7.6 percent from 8.4 percent.
Steve Cochrane, an economist at Moody's Analytics, says southern and western states have seen steady growth in manufacturing jobs. And the South is also benefiting from lower taxes and cheaper labor.
"Some of the old, long-standing comparative advantages are re-emerging as drivers of growth," he added.
California has propelled much of the gains in the West, adding 38,100 jobs in July to lead all states. And California has added 236,000 jobs in the past year, second only to Texas's 293,000 jobs.
Unemployment in California has fallen to 8.7 percent in July from 10.6 percent 12 months ago — the biggest year-over-year drop of any state.
Another bright spot is Utah, which has gained the largest percentage of jobs in the past 12 months. Utah's gains were in information technology, manufacturing and construction.
In the South, Texas, Florida and Georgia have been driving job growth. Georgia added 30,900 jobs in July, the second most of any state. Much of the gains were in categories that include transportation, utilities, retail, hotels, restaurants and amusement parks.
Nevada reported the nation's highest unemployment rate in July, at 9.5 percent. It was followed by Illinois, 9.2 percent. North Dakota continues to have the nation's lowest unemployment at 3 percent. South Dakota is close behind at 3.9 percent.


US, Israel discussing surge in US military aid

US and Israeli officials are discussing a surge in the US military aid to Israel as the two sides are in negotiations over a new 10-year military aid package.
Under an existing aid agreement between Washington and Tel Aviv signed in 2007, $30 billion of American taxpayers’ money is currently flowing to Israel, reported Defense News.
However, Israelis are concerned with increasing US arms sales to countries in the region and are asking Washington for a surge in its advanced military aid.
According to Defense News the new package would extend through 2027 and would focus on “a full spectrum of Israeli concerns, including military modernization needs, new threats from regional instability and the erosion of Israel’s so-called qualitative military edge (QME) due to US arms sales in the Mideast.”
The US annual military aid to Israel has been elevated from $2.4 billion to $3.1 billion through 2017 under the existing agreement but the scope of the increase in the US Foreign Military Financing (FMF) levels demanded by Israel is not clear yet.
An unnamed US official has told Defense News that QME assessments, which have never been explicitly considered in long-term FMF agreements between Washington and Tel Aviv, would be applied to the 2018-27 aid package.
At a press conference during his visit to Israel in March, President Barack Obama said he had agreed to begin discussions with Israel over extending military aid to Tel Aviv.
“Our current agreement lasts through 2017, and we’ve directed our teams to start working on extending it for the years beyond,” Obama said.

Michigan researcher on extreme poverty: “We were staggered over what we found”

The World Socialist Web Site spoke to Luke Shaefer, assistant professor of social work at the University of Michigan, about his recently published study, “Rising Extreme Poverty in the United States and the Response of Federal Means-Tested Transfer Programs.” (See “Drastic growth in ‘extreme poverty’ in US”).
Mitch Marcus: How did you come to study the number of households earning less than $2 per person per day?
Luke Shaefer: This has been a collaboration with my colleague, Kathy Edin at Harvard. Kathy is a qualitative researcher and we were talking one day and she mentioned that she’s been going into the homes of poor families, particularly with children, for a couple decades now, and she just felt that she was going into more and more homes where there’s just nothing, just no cash. Her term was the “cashless poor” because in some cases they might have food stamps, they might have a housing subsidy, but there’s just no cash, which puts people in a bind. There’s something important about cash irrespective of these other programs.
So she said, “Boy, I wish there was a way that we could look at this, at the big data picture,” and I’ve been a long-time user of the SIPP [Survey of Income and Program Participation], which is Census Bureau data that’s particularly good at measuring the incomes of the poor. So we thought, “Well let’s look and see if there’s some trend in the number of families with kids over the last fifteen years or so that are surviving on some minimum number.” And so we started searching around for a minimum number and thought, “Well, there’s one out there.” The World Bank has these two markers of $1.25 and $2 and the increase over time looks the same for both and we just used the $2 mark and we were staggered, I think, as a lot of people were, over what we found.
MM: What brought Kathy into the homes? How do you conduct your work?
LS: Kathy is a long-term ethnographer. So while I use the big data sets, and tend to haul away in my office, she has for much longer than I focused her research on meeting families, really delving deep into what their life experiences are like, and she wrote a book called Making Ends Meet in the 1990s with Laura Lein that really is one of the landmark books in the study of poor families with children in the US in the modern era.
They did interviews with a couple hundred single mothers who had been on welfare at some point and showed in a very rich way that under the old system, Cash Assistance to Needy Families with Dependent Children (AFDC), there is just no way to balance the books without some work under the table or something. So the system was set up in a way that families had to break the rules to survive. She has continued on with that work and has a new book out called Doing the Best I Can. She had a book called Promises I Can Keep, which is about poor single mothers and how they think about being mothers. So Doing the Best I Can is the companion piece.
Really, I think our interests stemmed at the start from the 1996 Welfare Reform that got rid of this cash assistance entitlement program which, for all of its faults, was an entitlement program that if you fell below a certain income, you could rely on it. They replaced it with this program, Temporary Assistance for Needy Families (TANF), which has all these restrictions. It requires work, and as a result of that, our cash assistance caseloads plummeted in the US to the extent to which there’s only about 1.5 percent of the entire US that gets a cash check for being poor, which is I think far less than a lot of people think.
Now, we’ve actually expanded a lot of other benefits. We have the Earned Income Tax Credit (EITC), which is much larger than our cash assistance program ever was. We spend about $60 billion on it, but those benefits are actually targeted towards families who are working. So if you are just above the poverty line and have a minimum wage job, the federal government supplements your income to a greater extent than it ever did before. But if you are on really hard times, have ever been in a long period of unemployment, or you have multiple barriers to work like substance abuse problems or some sort of mental health problems, if you’re at the very bottom, the federal government actually does less for you in terms of cash support than ever before.
MM: Going back to 1996, what overall is the significance of the data in your study?
LS: What interests us is that the US had what I would really think of as a radical transformation in the way we provide aid to the poor, particularly poor families with children. We’ve really never done very much for working age adults without children. We do quite a bit for the elderly. We’ve always as a country put people into groups and given them different things.
Some people know about the Welfare Reform of 1996, but fewer people know about everything else that happened during the 1990s. These vast expansions of the EITC. We really liberalized access to public health insurance for children. So if you’re at 250 percent of the poverty line, you’re probably eligible for your state’s public health insurance program if you’re a kid. Some states it’s down to 200 percent, some up to 300 percent. That’s a great expansion. Then in the 2000s it was really the Bush administration that liberalized eligibility for food stamps.
We did all these things and we’ve never fully assessed it as a country. What are the holistic effects of these? One of the effects is if you are able to maintain a job, from the standpoint of government provision, you’re much better off than you ever were. You’ve got this EITC, which is a big benefit. You’re more likely to be on food stamps. Children are covered by public health insurance. But the primary components of that are built around a low-wage job, and if you lose that job, then you can’t really call it a safety net, because besides food stamps there’s just not much that you can get, particularly in an emergency. Our goal was to try to show that we have a problem at the very, very bottom and hopefully encourage the country to consider some sort of change that would fix that hole.
MM: Related to the significance of long-term unemployment, you mention that almost 5 million workers have been unemployed for over 38 weeks now.
LS: This has really been the hallmark of the Great Recession. We’ve had unemployment rates in the last 40 or so years that rival the unemployment rates we’ve had recently, but it hasn’t quite looked like this in that we’ve had a lot of long-term unemployment in the US. This is a problematic group. Our unemployment insurance program is time-limited, but we know that every additional month that someone remains unemployed, it gets more difficult for them to become re-employed because their skills atrophy. Employers might look at unemployment as a signal that there’s something wrong with this person. I expect that some of that bump-up in extreme poverty that we’re seeing in the Great Recession has to do with these very long spells. And that’s a group that’s going to stay with us. Families with primary earners who have had these long spells are going to feel these repercussions probably over their life course from now on.
MM: Was there anything new or surprising that you uncovered in the demographics?
LS: The thing I took away from the demographics is something I already knew, but that I think surprises people: a big chunk of these families are white, and also a substantial chunk are married couples with kids, so it’s not all single mothers of color.
MM: Is there anything else you’d like our readership to know about your research and work?
LS: The main point is that to us it looks like we’ve got a policy problem at the very bottom that people didn’t think existed. On the flip side of that, we are actually more generous to the poor a little bit further up the ladder. To us it’s not a completely clear story in terms of where we’ve gone as a country. There are things we’ve done in the last 15 years that I think are very good. And there are things we’ve done that I think have resulted in very bad outcomes. I think your readership may be interested in the growing connection between low-wage work and the primary benefits, but in all it’s just been a major transformation in the way we provide aid that I think people are not totally aware of. So if I get people that far I’ll feel like I did something worthwhile.
Republished from: World Socialist Web Site

NAFTA on Steroids: The TransPacific Partnership and Global Neoliberalism

Source: By Cliff DuRand, Truthout

A world without democracy, ruled by a technocratic elite serving the interests of US and global capital - protecting "investor rights" against national laws and regulations - is now being created in secret negotiations over free-trade treaties, one of which, the TransPacific Parnership (TPP), may be sewn up this fall. Can popular will stop it?
For four decades now, we have seen corporate-led neoliberal globalization transforming nation-states into globalized states that serve the interests of transnational capital above the interests of national populations. This tendency has been strong in states both of the global North and of the global South. Everywhere sovereignty is being compromised. The ideal political system most suitable for such globalized states is polyarchy, since it legitimates relatively autonomous elite rule. However, even in such a managed "democracy," there are moments when elites can be made accountable to national populations through the struggles of social movements. Occupy Wall Street was the beginning of such a social movement.
As philosopher Milton Fisk has argued in The State and Justice: An Essay in Political Theory, in the class-divided societies of capitalist countries, the function of the state is to maintain the social order. This means the political elite promotes the interests of the economically dominant class. This is due to what István Mészáros calls "the metabolic reproductive process" of capitalist society. However, to maintain governability, it is sometimes necessary to limit the benefits going to capital and to increase the benefits going to the popular classes. How far the elite moves in the direction of social justice depends on the level of the subject classes' political activity. The elite's default position is to favor the interests of capital, if only because the interests of the dominated classes depend on them.
A state is a democratic nation-state insofar as it represents the interests of the peoples it governs. That nation includes both the dominant class of capitalists and the dependent popular classes. The constellation of class forces within the nation at any given time directs the nation-state. The state mediates class relations, as, for instance, in constructing the class compromise of the capital-labor accord represented in the Fordist regime of production, a model of economic expansion named after Henry Ford.
Popular Sovereignty Gone with Globalization
However, with globalization, transnational corporate capital has leaped over the territorial and legal boundaries of the nation, and the state is following it. In so doing, the nation-state is morphing into a globalized state that serves the interests of transnational capital rather than any "own" national population. Contrary to what some have claimed, globalization has not weakened the state. In some respects, it has even strengthened it, particularly the executive branch. But globalization has weakened the state's connection with its own citizens as the state follows capital into a new global economic system.
Following William I. Robinson's seminal critique of US "democracy promotion" programs, Promoting Polyarchy: Globalization, US Intervention and Hegemony, we argue that polyarchy is the ideal political form for globalized states. Contested elections are an effective way to periodically renew the perceived legitimacy of elite rule. That is the genius of the US political system that has made it so stable. However, in times of extreme systemic crisis, as in the Great Depression of the 1930s, electoral politics was supplemented by the more genuine democracy of social movements. It was this popular pressure from outside the formal established political process that saved capitalism from itself by forcing the elite to accept changes otherwise resisted by capital. It was democracy that saved capitalism.
Normally, the state is able to function as a kind of Central Committee for the capitalist class, attending to the systemic needs of the capitalist system as a whole. This at least was the case during the era of national capitalism. The unrestrained individual interests of capitalists could destroy the system. States regulate and moderate in the interests of capital as a whole. Popular pressures often pushed states in this direction. Each capitalist, for example, seeks to pay low wages so as to increase profits and wishes his competitors will pay high wages so there will be consumers to buy his commodities. Popular pressure and state action are needed to sustain capitalism.
Karl Polanyi pointed out in his classic 1944 work, The Great Transformation, that "capitalism would be an unsustainable and chaotic social order if the state played the minimalist role specified in the libertarian fantasy." According to Eric Olin Wright in, Envisioning Real Utopias (p.124), it is just such a minimalist role that neoliberalism demands. Neoliberalism is the default position of capitalism in the absence of countervailing pressure on capital from popular forces pressing for greater social justice. That pressure usually acts through the instrumentality of the state as the rule-making body for society. As we have said, the function of the state is to maintain the social order, which means the capitalist relations, but it must sometimes modify these in the face of popular pressure to maintain governability. In those circumstances, a liberal sector of the political elite may modify neoliberalism in the direction of a social liberalism of the sort seen in the New Deal. Absent that, the state reverts to neoliberal policies that support the supremacy of capital.
The contradictions of unbridled neoliberalism are the contradictions of unrestrained capitalism. It is a system that tends toward self-destruction. Capitalism IS crisis, says David Harvey, The Enigma of Capital: and the Crises of Capitalism. To survive, it needs the restraining hand of the state, frequently brought into play by demands of the popular classes.
Capital Escapes Regulatory Reach of Nation-States
With the globalization of capital in its corporate form, capital is escaping the regulatory reach of nation-states. Transnational capital is constructing its own governance structure (World Trade Organization and multilateral free trade agreements) with the assistance of globalized states. Just as neoliberal structural adjustment programs required what the World Bank called "macroeconomic management by an insulated technocratic elite" for their implementation (World Development Report 1997: The State in a Changing World, p. 152.), now a global governance structure is being built on the same political principle, a corporate elite insulated from popular pressures, beholden to transnational corporations only. What is emerging is an unbridled neoliberal regime in which states are only the administrative agents that protect capital against the popular classes. As Renato Ruggiero, director-general of the WTO put it in 1995, "We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy."
This is what has been institutionalized in trade dispute adjudication panels established under the WTO and through free-trade treaties like NAFTA and the pending TransPacific Partnership (TPP). These are secret panels that protect "investor rights" against national laws and regulations that adversely affect corporate profits, no matter how democratically those laws and regulations may have been established. The rationale for investor rights is protection of capital against nationalization. This rationale has been extended to so-called "regulatory takings" as well, which are considered as tantamount to out and out expropriation even though what is usually "taken" is a hypothetical opportunity. Consequently, state actions that protect public health and the environment, such as the Quebec moratorium on fracking in the St. Lawrence River valley, are seen as a "taking" of profits due to the US-chartered corporation that holds a permit for this mining activity that has undetermined adverse effects on the environment. So the corporation is now suing the state for compensation. A NAFTA panel is now considering whether to award the corporation $250 million of taxpayer money to keep them from endangering the health of the people of Quebec.
Closed Courts Determine When "Rights" to Profit Violated
Such "investor-to-state" cases are litigated in special arbitration bodies of the World Bank and the United Nations, which are closed to public participation, observation and input. They have the power to award unlimited amounts of taxpayer dollars to corporations whose rights to make a profit they judge have been violated. By latest count, some 450 investor-to-state cases have been filed against 89 governments by transnational corporations, which have been awarded $700 million to date.
The protection of profits over people has become a standard feature of so-called free trade agreements. Actually, they are more about ensuring corporate profits than trade in any normal sense of the word. It is the protection of free movement of capital across borders more than the free movement of goods that is at stake. It was the Nixon administration that included investor rights in its trade negotiations under the fast track authorization it initiated. It has since become a standard feature of all trade agreements. The 11 countries in TPP already have free-trade agreements. So why this new one? It has the enhanced investor rights transnational corporations have long dreamed of. It is likely that this will also be the case with the new initiative with the European Union proposed by the Obama administration. At least that agreement is being advertised with a more honest name: Transatlantic Trade and Investment Partnership (TTIP). It is likely to privilege transnational corporations in the same way as TPP.
Since rejection of the Free Trade Agreement of the Americas at the hemispheric summit in 2005 by the countries of Latin America and the collapse of the Doha round of WTO negotiations in 2008, transnational capital has sought to embed protection of Trade Related Intellectual Property (TRIP) and other investor rights in new free trade agreements. TPP is the latest such power grab by transnational corporations. TPP has been described as "NAFTA on steroids" by those who have seen some of its leaked provisions. Negotiations began under the Bush administration and the Obama administration is continuing them in secret in hope of completing the agreement by this October. The discussions include trade representatives of the United States and Australia, Brunei, Canada, Chile, Mexico, New Zealand, Peru, Singapore, Malaysia and Vietnam. Japan has just joined. But the public, members of Congress, journalists, and civil society are excluded. Not even Congressional committees have been able to see the draft text, but 600 corporate advisors have. They are writing the rules for trade in their own interests without any democratic input from the people whose lives will be profoundly affected. If adopted, TPP will deny citizens their democratic rights to shape public policies on a host of domestic issues, conceding those decisions to the large corporations.
Some sections have been leaked. And what they reveal is "an agreement that actually formalizes the priority of corporate power over government," according to Lori Wallach of Public Citizen’s Global Trade Watch. Only 5 of the 29 chapters have to do with trade. Wallach says the rest of the draft:
"include[s] new rights for the big pharmaceutical companies to expand, to raise medical prices, expand monopoly patents; [there are] limits on Internet freedom, penalties for inadvertent noncommercial copying, [like] sending something to a friend. There are the same rules that promote off-shoring of jobs that were in NAFTA that are more robust [and] that literally give privileges and protections if you leave. There is a ban on "buy American" and "buy local" or "green" or sweat-free procurement. There are limits on domestic financial stability regulations. There are limits on imported food safety standards and product standards. There are limits on how we can regulate energy towards a more green future - all of these things are what they call "Behind the Borders" agenda. And the operating clause of TPP is: "Each country shall ensure the conformity of its domestic laws, regulations and administrative procedures with these agreements." That's to say, that we're told to conform all of our domestics laws - including all the important public interest laws fought for so hard by people around the country - for these corporate dictates, and it's strongly enforceable. If we do not conform our laws, another country can challenge us and impose trade sanctions until we do, but this one is even privately enforceable by the corporations themselves.
What is being constructed secretly, bit by bit, is a global governance structure in which corporations are the citizens and globalized states are the local administrative structures that enforce corporate dictates and maintain order. This is a world without popular sovereignty and without democracy. It is a world ruled by an insulated technocratic elite serving the interests of global capital.
What are progressives to do in the face of all of this? Those with a cosmopolitan consciousness may dream of a future democratic global governance structure. But that is a long-term project, and we are faced with a more immediate prospect of the consolidation of a very undemocratic global governance structure serving the interests of transnational corporations under a neoliberal regime that will roll back all of the hard-won progressive gains of the last century. Our immediate task is then to block this corporate end-run around domestic policy making processes.
Who can do this? In the United States, working class consciousness is very low, and unions are weak. The left is also weak. Nevertheless, there is a growing anticapitalist, or at least anticorporate, sentiment in the popular classes. Rather expansively, Occupy Wall Street called this the 99%. The challenge Occupy presented to itself was to mobilize a broad multiclass popular movement against the plutocracy. I view this as a call for a social movement based on shared national interests that have been betrayed by transnational capital and the political elite beholden to it.
In the final chapter of Recreating Democracy in a Globalized State, I argue that in a polyarchic political system like the United States', it takes social movements to bend the political elite away from its corporate-friendly agenda. With sufficient street heat, to maintain governability, it will need to adopt in some measure the form of justice demanded by the popular classes. This is our democratic moment.
We can defeat TPP. Polls show an overwhelming opposition to free trade.* In fact, across the political spectrum, from the left, to the Tea Party, and the John Birch Society on the Right and everywhere in between, the one thing there is agreement on in the current highly polarized political climate is opposition to free-trade treaties. That, combined with the partisan gridlock in Washington, tells me we can win this one.
This may be our last best chance to stop the consolidation of the corporate global governance structure. It makes crystal clear the contradiction between the national interest, i.e. the interest of the people of the nation, and the interest of global capital. There is no longer the convergence between the interests of capital and those of the popular classes that there was in the era of national capital. The divergence of interests that globalization has brought us enables us to build a broad social movement based on shared national interests, drawing on a national identity that can be a powerful motivator of collective action. We should follow Mao Zedong's strategic principle: Unite the many to defeat the few.
As I said at the beginning, capitalism has needed a guiding hand from the state to protect it from its own self-destructive tendencies. And it has been popular struggles that have often compelled the state in that direction. But now that capitalism has become a global system, there is no state able to do that. In fact, the global governance structure being constructed by transnational capital is dedicated to the very neoliberal ideology that now threatens to be its nemesis. If we can stop that, not only can we save ourselves and the possibility for democratic politics, as ironic as it may be, we might even save capitalism from itself.
* A major NBC News-Wall Street Journal poll from September of 2010 revealed that "the impact of trade and outsourcing is one of the only issues on which Americans of different classes, occupations and political persuasions agree, with 86 percent saying that outsourcing jobs by US companies to poor countries was "a top cause of our economic woes," and 69 percent thinking that "free-trade agreements between the United States and other countries cost the United States jobs." Only 17 percent of Americans in 2010 felt that "free-trade agreements" benefit the United States - compared to 28 percent in 2007.

Commodities: Egyptian bloodbath threatens crucial routes for oil and gas supplies

Egypt is a key bottleneck in the global oil industry. Should the current turmoil in the North African country get any worse, a potential oil spike could damage any nascent economic recovery.

Egyptian protesters throw rocks at security forces during the clearing of one of the two sit-ins near Rabaa Adawiya mosque, Cairo Egypt plays a vital role in international energy markets through the operation of the Suez Canal and the Suez-Mediterranean (Sumed) pipeline. These are vital pieces of infrastructure in the global oil market. 

After last week’s bloody crackdown by the Egyptian army, fears of a disruption of oil supplies to the West have boosted the oil price. Brent crude prices were propelled to a four-month high of $111.23 on Thursday. If the turmoil gets worse – or unrest spreads to other countries – the risk premium currently factored into the price of crude is likely to increase further.
Egypt is not a major energy exporter, producing a nominal amount of the world’s oil and gas. The North African country appears at number 54 on the list of the world’s largest oil exporters, producing about 0.9pc of the world’s oil and 1.8pc of global natural gas supply.
However, Egypt plays a vital role in international energy markets through the operation of the Suez Canal and the Suez-Mediterranean (Sumed) pipeline. These are vital pieces of infrastructure in the global oil market.
Last year, about 7pc of all seaborne traded oil and 13pc of liquefied natural gas (LNG) travelled through the Suez Canal, according to data collected by the US Energy Information Administration (EIA).
The Suez Canal, a 101-mile link between the Red Sea and the Mediterranean, and the 200-mile Sumed pipeline are strategic routes for Persian Gulf oil and gas shipments to Europe and North America.

Closure of these two routes would add an estimated 2,700 miles of transit from Saudi Arabia to the United States around the Cape of Good Hope, increasing costs and shipping time.
Hopes are high, however, that both the canal and pipeline will continue to operate as normal. Maritime insurers appear to be relaxed about the situation at the moment, but one, Skuld, has warned ships’ crews not to go ashore.
“Members are advised to ensure that ships and crew calling at Egyptian ports or transiting the Suez Canal remain on alert and take suitable precautions to ensure their safety,” Christian Ott, Skuld’s vice-president, head of claims, said. “Given the announcement of the state of emergency, and the continued situation on the ground, vessels and crew need to exercise particular caution if any crew step ashore – even for short periods of time.”
The rest of the country’s oil industry remains relatively unaffected. Despite the worrying headlines, most oil and gas production takes place offshore and is operating relatively undisturbed.
The largest player is BP, which produces about 15pc of the country’s oil and 30pc of its gas. “Operations and production are unaffected,” a BP spokesman told Reuters after more than 500 people were killed last week in a security crackdown. “We are monitoring the security situation in the areas where we have offices. All our people are safe and accounted for.”
Royal Dutch Shell is also a major producer in the country. “To ensure the safety and security of our staff, Shell offices in Egypt are closed for business today and into the weekend, and business travel into the country has been restricted. We will continue to monitor the situation in Egypt,” a Shell spokesman said on Friday.
However, perhaps the most exposed company to the country is BG Group. Egypt was the energy company’s largest producing country in 2012, delivering 20pc of the company’s total production.
BG’s production is also unaffected so far, but the group withdrew 100 expatriate staff and dependants last month. About half of the gas that Egypt produces is exported, with the rest servicing Egypt’s domestic market. This is one reason why sector watchers are hopeful that disruption will be minimal. Whoever holds political power will not want the lights to go off.
The Egyptian uncertainty will continue to boost the oil price, but the situation in neighbouring Libya is also a concern. Workers at ports in Libya have been on strike for a number of weeks, with the protests resulting in a drop in Libya’s oil exports.
“If the blockade of these oil terminals continues, the state will be obliged to use its power, and all the forces at its disposal, including the army,” the Libyan prime minister, Ali Zeidan, said on Friday.
“The situation in Libya is also threatening to escalate: the government appears to be running out of patience in view of the revenue losses due to strikes,” Commerzbank said last week. “After striking workers at the export terminals had announced that they planned to sell the oil themselves, the government threatened to deploy the army to prevent this from happening.”
Brent crude prices eased on Friday, following five straight days of gains. However, prices are likely to stay at or above $110 (£70) a barrel until there are signs of tensions easing. But if the situation in Egypt and Libya worsens, all bets could be off.

What is MONEY? How the BANKERS SCAMMED YOU - Jerry Robinson

Gas Prices Could Spike Due To Growing Turmoil In Egypt – Charles Paine!

Gas Prices Could Spike Due To Growing Turmoil In Egypt
Egypt Turmoil Threatens Crucial Routes For Oil

Not Too Big to Jail: Why Eliot Spitzer Is Wall Street’s Worst Nightmare

Before Eliot Spitzer’s infamous resignation as governor of New York in March 2008, he was one of our fiercest champions against Wall Street corruption, in a state that had some of the toughest legislation for controlling the banks. It may not be a coincidence that the revelation of his indiscretions with a high-priced call girl came less than a month after he published a bold editorial in the Washington Post titled “Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States from Stepping in to Help Consumers.”  The editorial exposed the collusion between the Treasury, the Federal Reserve and Wall Street in deregulating the banks in the guise of regulating them, by taking regulatory power away from the states. It was an issue of the federal government versus the states, with the Feds representing the banks and the states representing consumers.
Five years later, Spitzer has set out to take some of that local regulatory power back, in his run for New York City comptroller.  Mounting the attack against him, however, are not just Wall Street banks but women’s groups opposed to this apparent endorsement of the exploitation of women. On August 17ththe New York Post endorsed Spitzer’s opponent and ran a scathing cover story attempting to embarrass Spitzer based on the single issue of his personal life.
Lynn Parramore, who considers herself a feminist, countered in an August 8thHuffington Post article that it is likely to be in the best interests of the very women who are opposing him to forgive and move on.  His stand for women’s reproductive rights and other feminist issues is actually quite strong, and his role as Wall Street watchdog protected women from predatory financial practices. As New York Attorney General, he was known as the “Sheriff of Wall Street.” He is one of the few people with not only the insight and experience to expose Wall Street corruption but the courage to go after the perpetrators.
Targeted for Take-down
The February 2008 Washington Post article that preceded Spitzer’s political travails was written when the state attorneys general were being preempted by the Federal Reserve as watchdogs of the banks. Critics called it a case of the fox guarding the hen house. Spitzer wrote:
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. . . . These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. . . . [A]s New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. . . .
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye. . . . The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). . . . In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
Less than a month after publishing this editorial, Spitzer had been exposed, disgraced, and was out of office. Greg Palast pointed to the fact that Spitzer was the single politician standing in the way of a $200 billion windfall from the Federal Reserve, guaranteeing the toxic mortgage-backed securities of the same banking predators that were responsible for the subprime debacle. While the Federal Reserve was trying to bail them out, Spitzer was trying to regulate them, bringing suit on behalf of consumers.3 But he was quickly silenced, and any state attorneys general who might get similar ideas in the future would be blocked by the federal “oversight” then being imposed on state regulation.
A Rooster to Guard the Hen House
In a July 2013 article titled “Why Eliot Spitzer’s Return Terrifies Big Finance,” Thomas Ferguson, Professor of Political Science at the University of Massachusetts and a senior fellow at the Roosevelt Institute, wrote of Spitzer’s bid for comptroller:
Suddenly, the Masters of the Universe were staring at their worst nightmare: the prospect of a comeback by the only major politician in the U.S. whose deeds — and not simply words —prove that he does not think corporate titans are too big to jail.
Who, when the Justice Department, Congress, and the Securities and Exchange Commission all defaulted in the wake of a tidal wave of financial frauds, creatively used New York State’s Martin Act to go where they wouldn’t and subpoena emails and corporate records of the malefactors of great wealth, winning convictions and big settlements.
Who in 2005, as New York State Attorney General, actually sued AIG instead of thinking up ways to hand it billions of dollars of taxpayers’ money. . . .
And who in 2013 with business as usual once again the order of the day, is promising to review how the Comptroller’s Office, which controls New York City’s vast pension funds, does business with Wall Street and corporate America.
Yves Smith, writing on her blog Naked Capitalism on July 25thexpanded on this threat. She noted that private equity [PE] investment managers had persuaded their clients that their limited partnership agreements [LPAs] were a form of “trade secret,” and that nobody was looking closely at whether PE firms were complying with the fee and expense provisions of their agreements:
Public pension fund investors have almost universally acceded to the demands of PE firms to exempt the LPAs and cash flow reports from state FOIA laws, which keeps the eyes of the press and the public off the documents.
. . . However, the New York City Comptroller has access to this critical information. Hence the freakout at the prospect that Spitzer might get the job.
Hence also the $1.5 million ad campaign against Spitzer brought by a coalition of business leaders, labor unions and women’s groups.
The Issues that Matter to Women
On July 10th, the head of the local chapter of a national women’s advocacy groupasked a small gathering outside City Hall:
Do we want an elected official who has broken the law and who has participated in sustaining an industry that we all know has a long history of exploiting women and girls?
The speaker lumped Spitzer with Anthony Weiner, who is running for mayor after sending out sexually explicit tweets, and Vito Lopez, who is running for City Council after resigning from the Assembly over sexual harassment allegations. She asked whether these men would address the issues that matter to women, “or are they just going to see us as objects?”
Sexual exploitation is an issue that matters to women, but the best way to save women from the sort of desperation that leads to exploitation is to keep them out of ruinous debt. Wall Street fraud, corruption and abuse have caused millions of homeowners to lose their homes and have tipped cities toward bankruptcy; and Spitzer is one of the brave few who has exposed and attempted to prosecute those predatory practices. As comptroller, he could make more information available to the public concerning the companies in which public pension funds are invested, look out for exploitive fees, insist on plain English reporting of derivatives exposure, and take steps to ensure that nurses and teachers are not being financially exploited.  He can monitor contracts and business dealings and help protect the city from the kinds of rip-off schemes that deplete city funds for education, infrastructure, and the social safety nets that women, particularly, rely on.
In a December 2011 article in Slate titled “We Own Wall Street,” Spitzer argued that bad corporate behavior could be stopped by a political movement uniting shareholders, pension funds and mutual funds – the actual owners of the corporations – who could then take coordinated action demanding transparency and accountability.
This is the sort of creative thinking that will be needed if we the people are to take back our power from Wall Street and the corporatocracy. We need a mass movement, coordinated action, and leaders who can organize it; and Eliot Spitzer is one of the few people in a position to play that role who have the experience, vision and courage to carry it through.
Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her websites are http://WebofDebt.comhttp://PublicBankSolution.com, andhttp://PublicBankingInstitute.org.
…read more
Republished from: Global Research

President Obama's biggest failure

Source: AlJazeera
As President Obama announces a new housing initiative, he faces pressure from community activists to do more.

Obama's housing solutions is filled with doomed-to-fail private sector initiatives [AFP]
It was one of those steamy Saturday mornings in August, a time usually called "a dog day," because so little is happening. Yet on this day cars were packed into a parking lot in the back of a shopping center where the Meadowlands Exposition Hall is based. The vast center was housing a "Save The Dream" event for distressed homeowners facing foreclosure organized by one of America's most aggressive housing rights group, NACA (NACA.com) or the Neighborhood Assistance Corporation of America.
Don't let its benign name fool you. NACA and its CEO Bruce Marks, a former employee of the Federal Reserve Bank, is more than a service organization. With over 350 employees in 40 offices across the country, they call themselves "bank terrorists" because of the militant protests they mount against banks that engage in predatory practices and overcharge customers.
They offer counseling, budget preparation, and direct help in negotiating affordable deals. They also provide advice on how bank lending works, and how to work with banks without getting exploited.
Their direct action campaigns have won results, and now leading banks, perhaps in fear of becoming targets, have begun to work with NACA in processing loans, modifying mortgages and even cutting interest rates that offer better terms.
Founded in 1968, NACA operates in a highly business-like manner -- unlike most well-intentioned but poorly organized community activists while boasting of victories for their members:
"NACA's aggressive confrontation advocacy has yielded numerous victories against some of the country's largest and most power financial institutions," they claim on their website. "NACA was the worst nightmare for a number of huge institutions and powerful individuals."

Behind the website's take-no-prisoners advocacy is a proprietary online system for processing loan applications and tracking the cases of homeowners facing foreclosure.
NACA says they have over a hundred thousand members and their own mortgage sales program with over $10bn to offer. Their system does not rely on credit scores; charges no down-payment, and offers below market rates for   long-term mortgages. All their services are free, although the members have to pledge to take part in direct action to benefit
NACA was not what President Obama had in mind when he recently proposed yet another initiative to solve the protracted housing crisis that helped demolish the economy.
While the business sections of major newspapers report on the many lawsuits against illegal practices by banks and other lenders -- most leading to large cash settlements without any admissions of guilt -- the foreclosure crisis goes on with little relief.
Obama's greatest failure
Many see this as the Obama administration's greatest failure -- the foreclosure crisis continues to hurt the poor and struggling middle class.
Obama's solution consists of more private sector iniatives -- the very same polices that brought these crises in the first place. In a recent speech he made in Phoenix, Obama said:
"I believe that our housing system should operate where there's a limited government role and private lending should be the backbone of the housing market."
The New York Times  noted that "there is little sign of progress" in fixing the housing crisis.
NACA's Bruce Marks went further by telling me that Obama has betrayed most of his promises to homeowners, and has sided with the banks with subsidies and incentives. He also supports the need for government financing since the private sector only funds 13 percent of mortgages through lenders like Fannie Mae and Freddie Mac that Obama now wants to phase out.
Limiting government involvement will hurt the poorest Americans, he argues, even as he acknowledges the need for more efficiency, accountability, and transparency in private sector and public sector lending programs.
The Atlantic Monthly agrees that critiquing government support may play well with the right but distorts the larger truth.
"The US government and taxpayers did rescue these agencies in 2009 (to the tune of nearly $200bn) and, after injecting them with capital and essentially nationalizing them, these companies started to turn a profit as the housing market slowly recovered," writes Zachary Karabell.
"This month, they contributed more than $15bn to the US Treasury, and have been one factor in sharply reducing government deficits."
Black Americans hit hardest
A new book by Laura Gottesdiener, A Dream Foreclosed: Black America and the Fight for a Place to call Home,  offers deeper context in the socio-economic effects of the housing crash.
She shows how foreclosures have devastated America's black community while banks profit. Incredulously, nearly every African American has seen their income decrease -- all under the watch of our first black president.
She offers first-person reports on the trauma and tragedies of families who bought homes with deceptive loans offered by hustlers and conmen who knew they would not be able to afford their payments but sold the properties anyway. These are the people who made large fees from subprime loans even when borrowers qualified for lower interest loans.
Her reporting from the frontlines of this battle humanizes the issues and highlights the injustices that most of the business media glosses over.
Her insights conflict with the president's, most of the media and the banks. "We've already tried policies that benefit Wall Street and massive corporations, and all we've ended up with is more financial consolidation, speculation and criminal activity," she concludes.
"If we really want to benefit the majority of Americans, let's focus on proposals like implementing widespread principal reduction and creating structures of collective local ownership like Community Land Trusts."
Fortunately, as Gottesdiener documents, and Marks affirms, community groups are not waiting for the government to act, but are taking action to save homes and stop often illegal evictions.
When President Obama speaks at the 50-year anniversary of The March on Washington on August 24, I doubt he will do much boasting about how he helped black American families hold onto their greatest assets and dreams of home ownership.

News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See (more...)

The Atlantic Magazine Downplays America's Debt Burden

When the senior editor of The Atlantic, Derek Thompson, tried to explain away concerns over the massive unfunded liabilities facing the U.S. government repeatedly pointed out by experts, such as Peter Peterson (the former chairman of the Council on Foreign Relations), Boston University economics professor Laurence Kotlikoff, and James Hamilton of the University of California, he used a combination of false assumptions, simplistic reasoning, and frivolous complacency to do so.
It was Peterson’s incisive and persuasive book Gray Dawn, published in 1999, that first attempted to warn of the impending crisis. Without immediate and drastic changes to entitlement programs such as Medicare and Social Security, those programs would face bankruptcy, declared Peterson. Declining fertility rates and low tax revenues would exacerbate the problem, according to Peterson. In re-reading Gray Dawn in May 2013, professor Doug Erlandson said:
The problem has become worse since Peterson wrote his book. The predicted date of Social Security’s insolvency has been pushed up from 2040 (per Peterson’s projections) to the mid-2030s. The date that Medicare is projected to become bankrupt is even sooner.
Professor Kotlikoff presented his findings in a paper published by the International Monetary Fund in 2010 in which he stated: “The world’s largest economy faces a daunting combination of high and rising costs for health care and pension benefits and constrained sources of revenue that will put enormous pressure on its fiscal soundness.” One of Kotlikoff’s solutions was the immediate doubling of current income tax rates in order to make those two programs solvent. When such a draconian hike was simply ignored as fantasy, the reality of the government’s problems was reflected less than a year later when Standard and Poor’s downgraded America’s sovereign debt for the first time in history.
All of this was just a bit too much for Thompson, who decided to question these conclusions by doing some parsing of definitions. First of all, said Thompson, all that’s owed is “not our debt.” Part of what is owed is what the government has already spent using borrowed money. That’s “real” debt and must be paid back: “Failing to do so would be an illegal and disastrous default.”
On the other hand, the “unfunded liabilities” that Peterson and Kotlikoff are concerned about aren’t “as real” because “we can change them whenever we want.” Fixing Social Security would be easy, said Thompson: “For example, raising the taxable income ceiling and slowing down the growth of benefits could reduce the Social Security gap to zero tomorrow.”
The fact that making such changes would be a de facto default on Social Security’s promises was ignored by Thompson. And if it were that easy, why hasn’t Congress moved to do so, and make the whole problem go away? Thompson doesn’t say.
Thompson then said that using a 75-year projection to measure the size of the shortfall between expected revenues and promised benefits is “scary” and is “an awfully long time to count anything!” Besides, just think how large the U.S. economy will be in 75 years: “Our GDP will be $66 trillion in today’s dollars in 2087” which, Thompson implies, ought to be large enough to solve the problem.
And then Thompson questions the assumptions underlying these projections, holding that “1) circumstances change and 2) laws change.” He thinks it’s impossible for anyone to predict the costs of medical care once inventions and breakthroughs unknown today are factored in.
Thompson concludes that because those future promises aren’t really promises after all, and that 75 years is an awfully long time to try to measure anything, and besides a lot of things can happen by 2087, then analyses by Peterson and Kotlikoff are not worth worrying about. He concluded that, in any event, “we have 75 years” to fix any problems that might exist.
Just last month another economics professor, James Hamilton, from the University of California, San Diego, published his own conclusions about the size of these “unfunded liabilities” that Thompson denigrated. Hamilton estimated that U.S. unfunded liabilities are about to $70 trillion. Meanwhile, Kotlikoff estimated that the liabilities, counting all planned spending, are about $200 trillion. Even the Congressional Budget Office has come in with its an estimate: $38.5 trillion. But its report was laced with disclaimers, including “material weaknesses” and “significant uncertainties” about that estimate.
Thompson has essentially blown off the studies done by serious economists with international credibility and replaced their work with his frivolous and simplistic solutions to a problem that continues to accelerate with each passing day.
A graduate of Cornell University and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at www.LightFromTheRight.com, primarily on economics and politics. He can be reached at
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Republished from: The New American

« NYC Educator: Making Big $$ in Bloomberg’s NYC Before Detroit’s Fire Sale Begins, Call the Experts »

Enron may have gone bankrupt, and its employees may have lost their life savings, but it left some people very rich.
Here EduShyster tells the story of Texas billionaire John Arnold. He is one of the lucky few who managed to walk away from the Enron debacle with more than $3 billion. Some former Enron execs are doing time. Not Arnold. You know he must be smart because he got out before the roof fell in, and the bottom fell out.
And how does he spend his vast wealth?
He does what canny investors do: he pours millions into the struggle to privatize American public education. He has given millions to KIPP, StudentsFirst, and TFA. And he has a special interest in making sure that teachers don’t have pensions.
Billionaires have a hard time understanding why anyone needs a pension. They don’t need pensions. Why should teachers get them?

Germany recognizes Bitcoin as ‘private money’

Bitcoin has been recognized for legal and tax purposes in Germany, making it the first country to take an official stance on the status of using the online currency as money.
Berlin has acknowledged the virtual tender as a "currency unit" and "private money," according to German newspaper Die Welt.
The classification means that some commercial profits on Bitcoin related endeavors may be taxable, but personal use of the currency will remain tax-free, the paper reported.
The recognition was laid out in a Finance Ministry response to a query from Frank Schaeffler, a member of parliament’s Finance Committee.
"For the first time, the federal government recognizes Bitcoins as private money," said Schaeffler.
In July, the first trading platform for Bitcoins in Europe with direct cooperation with a bank regulated by the Financial Supervisory Authority was set in Germany. Bitcoin Deutschland GmbH agreed to convey Bitcoins on its platform as an intermediary through the German web 2.0 bank Fidor.
Bitcoin has been a popular form of payment around the globe since it was first introduced in 2009, as people became dissatisfied with the conventional banking system. Meanwhile, the currency’s viability has been questioned because Bitcoins are backed by neither a government nor a central bank.
At the beginning of August, a US federal judge in Texas ruled that Bitcoin is a legitimate currency. The decision came after Trendon Shavers, a 30-year-old businessman, was charged with running a Ponzi scheme, scamming customers out of roughly US$4.5 million worth of the crypto-currency through his online hedge fund.  He argued that Bitcoin is not real money and therefore is not subject to regulation by the US government. However, the court dismissed his claim. 
The ruling brought Bitcoin one step closer to being recognized as a real currency. However, the decision opened up the possibility for the virtual money to be regulated by governments, which oppose the original concept of Bitcoin – a peer-to-peer, relatively anonymous payment.
Supporters of the virtual currency argue that it helps protect the identities of users from theft and credit card fraud. Critics argue that the lack of regulatory oversight and alleged greater privacy makes the currency more attractive to scammers. In addition, skeptics question the currency’s volatile exchange rate, inflexible supply, high risk of loss, and minimal use in trade.
An overseer group called the Bitcoin Foundation standardizes, protects and promotes Bitcoin. The economic rules are enforced collectively by the Bitcoin network, which limits the total number of currency units to 21 million, according to the official Bitcoin website. Currently, the price of a unit is around $ 110 (82 euros), according to online currency conversion sites.

On the Phenomenon of Bullshit Jobs

On the Phenomenon of Bullshit Jobs by David Graeber.
In the year 1930, John Maynard Keynes predicted that, by century’s end, technology would have advanced sufficiently that countries like Great Britain or the United States would have achieved a 15-hour work week. There’s every reason to believe he was right. In technological terms, we are quite capable of this. And yet it didn’t happen. Instead, technology has been marshaled, if anything, to figure out ways to make us all work more. In order to achieve this, jobs have had to be created that are, effectively, pointless.