Friday, September 6, 2013

Faster U.S. job gains expected, may spur Fed to cut stimulus

By Lucia Mutikani
WASHINGTON (Reuters) - U.S. job creation probably picked up in August, signaling a steady pace of economic growth that would give the Federal Reserve ammunition to start scaling back its massive monetary stimulus this month.
Employers are expected to have added 180,000 jobs to payrolls last month after creating 162,000 in July, according to a Reuters survey of economists. The unemployment rate is seen steady at a 4-1/2-year low of 7.4 percent.
The closely watched jobs report from the U.S. Labor Department on Friday will provide a crucial piece of evidence for the Fed as it debates the future of its $85 billion per month bond-buying program, and it will set the tone for global financial markets.
Policymakers from the U.S. central bank meet on September 17-18 and are widely expected to turn down the dial on the purchases they have been making to keep interest rates low and boost growth.
Fed officials have made clear that they would base their decision on the progress the labor market has made since they launched their third round of 'quantitative easing' a year ago. When they pulled the trigger, they were looking at a jobless rate that stood at 8.1 percent.
"You will have to have very poor employment data to really have the Fed delaying tapering. We think that anything above 140,000 will be sufficient for the Fed to taper ... We look not only for confirmation that they are going to taper but also the size of the tapering," said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.
If economists' forecasts are correct, the employment report would suggest the economy remained on a steady growth path despite stumbling early in the third quarter.
Weak July data on consumer spending, home building, new home sales, durable goods orders and industrial production had fanned fears about growth. But those concerns eased this week with reports of solid automobile sales in August, strong services sector growth and a steady expansion at the nation's factories.
"As long as we don't see a clunker, we can take comfort that the economy, while not generating as many jobs as we would like, is going in the right direction," said Robert Dye, chief economist at Comerica in Dallas.
The economy grew at a 2.5 percent annual pace in the April-June period, a pace that is usually considered sufficient to push down the unemployment rate slightly. Many economists expect an acceleration in momentum in the second half of the year.
A gauge of service sector employment released on Thursday hit a six-month high in August, suggesting the possibility of an upside surprise in Friday's report.
Signs of improvement in labor market conditions have also been evident in the decline in the number of Americans filing new applications for jobless benefits to near five-year lows.
That better outlook will probably make some people who had given up the hunt for work a bit more confident to rejoin the labor force, which would slow the pace at which the unemployment rate might drop.
Declines in the participation rate - the share of working-age Americans who either have a job or are looking for one - to 34-year lows have accounted for much of the decrease in the unemployment rate from a peak of 10 percent in October 2009.
Standard Chartered Bank's Costerg said he expected the participation rate to stabilize. "So, the unemployment rate would continue to trend down in the coming months, but probably at a slower rate," he said.
Other details of the employment report are expected to be fairly encouraging, with an anticipated bounce in average hourly earnings and the length of the average workweek, which both slipped in July.
Average hourly earnings are forecast to rise 0.2 percent after dipping 0.1 percent in July. That decline was largely dismissed as payback for a hefty increase in June.
The length of the workweek was expected to rise back to an average of 34.5 hours from a six-month low of 34.4 in July. The drop has been blamed on employers shifting some positions to part-time in an attempt to curb costs they might face under the Affordable Care Act.
"There is a lot of uncertainty around the Affordable Care Act," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. "There is no clear consensus on how that is impacting the numbers, but that's something to keep an eye on."
Last month, the private sector probably accounted for all the anticipated job gains, with government payrolls expected to be unchanged. Factory employment is expected to have increased for a second straight month but any gains will probably be small as employers instead increase hours for existing workers.
Construction payrolls likely fell again in August. Another month of strong job gains is expected in the retail sector, with leisure and hospitality employment also seen solid.
(Reporting by Lucia Mutikani; Editing by James Dalgleish)

Empire-USA is Crashing

Loss of Power Over Nations Abroad; Broke and Decadent at Home image source David Redick Activist Post Introduction History shows us that all empires fail. The essay in the previous link shows the three phases of all empires; One; Growth, Two; Maturation, and Three; Decline and Failure. It compares the same four characteristics for each Phase, and how they vary. The nature of the characteristics for Phase Three are: Land: Lose colonies, or control of other nations, by revolution or voluntary release (due to expense and unrest). Strength: No longer a world leader. Power declines by 50% or more, especially in foreign matters. Value of fake currency crashes in purchasing power by 50% or more. Default on debt (or pay off with low value paper money). Government: Becomes weak, more corrupt, and desperate. Leaders try to gain power (decrees, martial law, etc.) to survive citizen discontent. "Bread and Circuses" grow, now called grants, subsidies, stimulus, and entitlements. The army consists of mostly professional careerists, and volunteers, many of whom join because they can't find work elsewhere. Standards are lowered (criminal records, non-citizens, health issues) to aid recruiting for wars of empire (non-defense). Use of mercenaries and contractors grows toward 50% or more of total staff, and their loyalty is to their Generals (or Corporate officials), and original homeland, not the country that pays them. Ethics: Corruption and decadence are rampant in both citizen, business, and government conduct. Failure occurs as the parent nation of the empire either; 1) Survives, but at a reduced level of strength and standard of living (England, France, Italy, Spain, Mongolia, and Russia are examples, or 2) Ceases to exist due to takeover by other nations or groups. Sadly, the USA fits all of the above characteristics of a failing empire!
Current Problems Empire-USA has been sliding down in economic power since the 1960s and is now dropping faster as nations fear us less, and have less dependence on us. There is less kowtowing and subservience! Recent events that show serious indications of US weakness are; 1) Intervention in Syria (Obama’s retreat on bombing due to lack of international support, especially from England and France), and 2) Activity of the BRICS (Brazil, Russia, India, China, and South Africa) who just had their fifth annual meeting to plan avoiding use of the failing US Dollar (USD). These are on top of our self-imposed damage caused by; 1) Perpetuation of our in our excessive spending and massive debt, paid for by creating new money (which reduces the Dollar’s value; purchasing power), and 2) The ongoing murder, destruction, and hate of the USA caused by our invasion of nations for economic and political reasons even though they have done no threat or harm to us. This includes all of our wars and occupations since our 1776 Revolution, and recently Afghanistan, Iraq, and Libya, with Syria and Iran in our sights! While our presidents have put forth lies to justify these wars, oil and defense of Israel are the main hidden reasons for the recent ones. Defense of the USD was a factor in Iraq and Libya because they were selling oil for gold and other currencies (fake money, like the USD (‘fiat’, no redemption for gold), needs use by buyers to support its value; we call them ‘petrodollars’). Iran has been selling oil in gold and other currencies since 2004 and has its own trading exchange (a ‘bourse’). Most nations (even our ‘friends’ and ‘puppets’) are tired and angry about our predatory methods and are no doubt pleased to see us decline in economic power, with loss of expensive military might sure to follow. Thus, we can expect more incidents of nations ignoring our demands for control. Paul Craig Roberts defines our situation well in his strong Sep. 4, 2013 article The High Cost of Saving Face for Obama. The following excerpts are key points (his lower-case for obama and kerry!): The loss of Western credibility is a huge price to pay in order to rescue a discredited president whom no one believes, not even his supporters. Essentially obama is a cipher whose term of office is complete. The obama regime epitomizes the degeneration of the American state . . . Instead of voting on whether to allow obama to attack Syria, Congress should be voting to impeach obama and kerry. Their blatant lies, dictatorial claims, and arrogant inhumanity are powerful arguments for removing them from office . . . Foreign policy is the preserve of the Israel Lobby and the neoconservatives, every one of which is tightly tied to Israel. Americans have no voice, and no representation. Whatever America is, the government is not influenced by the voices of the American people . . . With the hubris, arrogance, and insanity of Washington an established fact, Russia and China perceive an enemy that intends their destruction. As neither country is going to accept their demise, Congress’ acquiescence to obama’s lies in order to save “america’s prestige” sets the stage for nuclear war . . . However, if Congress refuses to be committed to a war crime based on a lie, rejects obama’s bribes and intimidation, and vetoes the war criminal’s attack on Syria, it means, the end of the influence of the Israeli Lobby, the bloodthirsty neoconservatives, and war mongers John McCain and Lindsay Graham… As I write on Sep. 4, there is considerable support in Congress for Obama’s ‘military action’ concerning Syria’s purported ‘chemical weapons’. However, a tragic and preposterous issue is that no one is discussing the real cause of all the trouble in Syria, namely Assad’s opposition (since 2009) to Qatar building a pipeline to carry its gas through Syria and Turkey to supply Europe. This would compete with the near monopoly Assad’s friends at Russia’s Gazprom now have. Hence, those who favor the pipeline are attacking Assad. This includes the U.S. because we want to help Europe and hurt Russia! Michael Snyder’s Sep. 3 article tells the story well. The Original Rise of Empire-USA It is always useful to know the background on a subject. We can better understand the decline of Empire-USA if we know how it started and grew. The USA has a history of aggression and hubris in how it grew in size and world power. Although we don’t occupy other nations as a traditional ‘colony’, we control them with; 1) bribes of their leaders, 2) economic dependency called ‘foreign aid’, and 3) military dependency with treaties and ‘status of forces’ agreements. When we invade and occupy, it is for political and economic goals, not defense. The land that is now the 50 states of the USA, grew from the original 13 by adding; 1) the ‘Louisiana Purchase’ from Napoleon in 1806 (a swath from New Orleans to Montana), 2) the Northwest Ordinance (now OH, MI, IN, IL, and WI) by mutual agreement in 1787, 3) Florida, which Spain ceded to us in 1821, 4) the Oregon Treaty with Britain in 1846 (now WA, OR, ID), and 5) Alaska, which we bought from Russia in 1867. The rest of our land was added by invasion and annexation; 1) We used aggression to take the northern half of Mexico in the Mexican-American war from 1846 to 1848 (our settlers there started it by annexing Mexico’s Texana province in 1845) which added our entire Southwest (CA, AZ, NM, TX, NV), 2) On the false claim of bombing the USS Maine, we started the Spanish-American War’ in 1898, and invaded Cuba, Puerto Rico and the Philippines. We kept Puerto Rico, Spain ceded Guam, and we settled for a naval base in the Philippines (after murdering 200,000 ‘rebels’ who were defending their homes), and 3) then we ‘annexed’ (read ‘we now own you’) Hawaii in 1898. The ‘War of 1812’ was an attempt to acquire Canada, but it failed. Subsequent invasions and ‘deals’ did not involve adding land to the USA, but added to Empire-USA by economic and political control of other nations. Trade and military defense agreements were the preferred methods. According to the Dept. of Defense, we now have over 800 bases in 130 countries (and growing). An empire by any measure! Our latest plan to protect our turf is to surround Russia and China with missiles sites, and use our ‘National Endowment for Democracy’ (NED) to control or de-stabilize their neighbors (Georgia, etc.). The President, his cronies, and Congress fear there may be domestic anti-government riots as people become more desperate for jobs and benefits. When they are short of food there will be robbery of stores and neighbors! To protect themselves; 1) All local police have been equipped with military-style guns, body-armor, trucks, etc., 2) The Dept. of Homeland Security has created a ‘domestic army’ with tanks, trucks and a massive supply of guns and ammo (they bought ammo so much that it’s hard to get in local gun stores!), 3) FEMA has built ‘detention centers’ nationwide for ‘troublemakers’, and 4) Of course NSA has been spying on almost everybody worldwide to find ‘troublemakers’! Maybe Obama will start a war to stir up patriotism and support! The Decline of US Strength The USA has been the world’s undisputed economic superpower since 1920, but now China’s GDP is almost as big as ours! We came out of WW1 with the world’s biggest and strongest economy, and the USD was the de facto world’s primary reserve currency. The world always has a primary currency (and one or two lesser ones) used for international transactions (example; when Mexico buys coffee from Brazil they use USD). This means anyone will accept it for payment, and banks used it for their reserves; ‘good as gold’). The British pound and French franc had been reserve currencies but lost it because of excess money creation and inadequate gold ‘backing’ (debasement). The USA is now on the same path! Despite the downturn in the 1930s depression, we were even stronger after WW2, and had been set by the 1944 Bretton Woods Agreement as the official world reserve currency, with a fixed price of gold at $35 per troy ounce. It stated that nations (but not persons) could redeem paper dollars for gold at $35 per ounce. We had more gold by far (29,279 metric tonnes, of the 31,096 world total) than any other nation; followed by the UK with 2,543 tonnes, Switzerland 1,306, France 588, and Germany none! In the military and political realm, we created NATO to assure a role in managing the politics and economics of Europe, and the United Nations to wield our political power (we had veto power in the Security Council as one of the five permanent members; plus Britain, France, the Soviet Union, and China). Although the USD had by 1950 then lost about 65% of its purchasing power (compared to when the Federal Reserve System started in 1913) we were still the world’s top economic power and the USD accounted for over 80% of international transactions and bank reserves (‘good as gold’). Things looked glorious until Pres. Johnson started his huge welfare-warfare spending on Medicare and Vietnam. We were soon creating new money to pay our bills and other nations worried there was inadequate gold ‘backing’ for redemption. France and England redeemed large amounts and we were running low on gold, which led to Pres. Nixon ending the right to redeem on August 15, 1971. It wasn’t long before all other nations, except Switzerland, ended redemption. Despite the end of gold redemption, the USD remained the primary world reserve currency and thus we could still print new money to pay our bills. Charles De Gaulle called this our ‘exorbitant privilege’! Other nations, then and now, must engage in foreign exchange to get USDs to pay their international bills, so their creation of new money is limited by loss of exchange value. After 1971, our money supply (MO, M1, and M2) zoomed up by billions as we spent the newly created money. The recession of 1980-82, the dot-com crash of NASDAQ in 2000, and the crash of housing prices and business in 2008 can all be traced to excessive money lent on loose terms to flaky borrowers! Then the money supply zoomed up by trillions as Fed Chm. Bernanke started his Quantitative Easing series of ‘stimulus’ funding in 2008. All this creation of new ‘fiat’ money (worth whatever the government declares its’ face value is; backed by legal tender laws) has sped up the decline of USD value (purchasing power) which has dropped by over 95% since the Fed was created in 1913! Our high debt and spending have weakened the USA both economically and militarily. Our friends and opponents know we are now limited in how much we can afford to do, Conclusion The current problems with Syria are just part of our history of meddling in the affairs of other nations. We assume the role of judge and enforcer (with an open-ended plan of action), when by law situations like Syrian chemical weapons should be referred to the UN’s World Court in The Hague, Netherlands. We should work on our domestic problems instead. USA governments at all levels (city, county, state, federal) have grown in power since our founding, and are causing great social and economic harm with their regulations, spending, and abuses, most of which is unconstitutional. Our non-defense wars and invasions for empire have cost us trillions plus creation of enemies. The USA is at a tipping point where spending reductions and legal reforms must be made or we will have a more severe economic crash than we have experienced since 2008. A detailed plan is shown in my essay Save the USA by Restoring Government to its proper Role. We can avoid failure if we shut down our empire and non-defense wars, reduce spending, and return to the gold standard for a stable money monetary system that always results in more growth and prosperity. Let’s get started! David Redick (BS-Eng., MBA-Economics) is an activist for peace and prosperity via better (less) government and free markets. Read more from David Redick Here

Making the World Safe for Banksters: Syria In the Cross-hairs

By Ellen Brown, Web of Debt
This piece first appeared at Web of Debt.
“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.”  —Prof. Caroll Quigley, Georgetown University, Tragedy and Hope (1966)
In an August 2013 article titled “Larry Summers and the Secret ‘End-game’ Memo,” Greg Palast posted evidence of a secret late-1990s plan devised by Wall Street and U.S. Treasury officials to open banking to the lucrative derivatives business. To pull this off required the relaxation of banking regulations not just in the US but globally. The vehicle to be used was the Financial Services Agreement of the World Trade Organization.
The “end-game” would require not just coercing support among WTO members but taking down those countries refusing to join. Some key countries remained holdouts from the WTO, including Iraq, Libya, Iran and Syria. In these Islamic countries, banks are largely state-owned; and “usury” – charging rent for the “use” of money – is viewed as a sin, if not a crime. That puts them at odds with the Western model of rent extraction by private middlemen. Publicly-owned banks are also a threat to the mushrooming derivatives business, since governments with their own banks don’t need interest rate swaps, credit default swaps, or investment-grade ratings by private rating agencies in order to finance their operations.
Bank deregulation proceeded according to plan, and the government-sanctioned and -nurtured derivatives business mushroomed into a $700-plus trillion pyramid scheme. Highly leveraged,  completely unregulated, and dangerously unsustainable, it collapsed in 2008 when investment bank Lehman Brothers went bankrupt, taking a large segment of the global economy with it. The countries that managed to escape were those sustained by public banking models outside the international banking net.
These countries were not all Islamic. Forty percent of banks globally are publicly-owned. They are largely in the BRIC countries—Brazil, Russia, India and China—which house forty percent of the global population. They also escaped the 2008 credit crisis, but they at least made a show of conforming to Western banking rules. This was not true of the “rogue” Islamic nations, where usury was forbidden by Islamic teaching. To make the world safe for usury, these rogue states had to be silenced by other means. Having failed to succumb to economic coercion, they wound up in the crosshairs of the powerful US military.
Here is some data in support of that thesis.
The End-game Memo
In his August 22nd article, Greg Palast posted a screenshot of a 1997 memo from Timothy Geithner, then Assistant Secretary of International Affairs under Robert Rubin, to Larry Summers, then Deputy Secretary of the Treasury. Geithner referred in the memo to the “end-game of WTO financial services negotiations” and urged Summers to touch base with the CEOs of Goldman Sachs, Merrill Lynch, Bank of America, Citibank, and Chase Manhattan Bank, for whom private phone numbers were provided.
The game then in play was the deregulation of banks so that they could gamble in the lucrative new field of derivatives. To pull this off required, first, the repeal of Glass-Steagall, the 1933 Act that imposed a firewall between investment banking and depository banking in order to protect depositors’ funds from bank gambling. But the plan required more than just deregulating US banks. Banking controls had to be eliminated globally so that money would not flee to nations with safer banking laws. The “endgame” was to achieve this global deregulation through an obscure addendum to the international trade agreements policed by the World Trade Organization, called the Financial Services Agreement. Palast wrote:
Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas.  The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.
Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders.  The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”
And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.
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Asia stocks cautious, dollar strong as markets await U.S. jobs report

By Ian Chua and Dominic Lau
TOKYO/SYDNEY (Reuters) - Asian stocks were tentative and the dollar was in the driving seat on Friday, as investors waited with bated breath for a crucial U.S. jobs report that could cement the case for the Federal Reserve to begin scaling back its stimulus later this month.
Underlining expectations for an imminent turn in Fed policy, the euro held near a seven-week low on the back of dovish comments from the European Central Bank.
European shares were expected to open modestly lower, with Britain's FTSE 100 (.FTSE) seen down as much as 0.2 percent and Germany's DAX (.GDAXI) down 0.1 percent, according to financial bookmakers.
MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was steady after six days of gains - its longest winning streak since December. It was on track to end the week up more than 2 percent.
Tokyo's benchmark Nikkei (NIK:^9452) shed 1.4 percent as investors locked in profit after a sharp rally in real estate and construction firms on hopes the city will win its 2020 Olympic Games bid this weekend. The index was still up 3.5 percent this week, however.
The euro wallowed at $1.3131, having slid one U.S. cent to be 0.7 percent lower on the week.
Investors sold the common currency after the ECB said it stood ready to act if needed to bring money market rates down and help nurture a "very, very green" recovery.
ECB President Mario Draghi made those comments as global government bond yields have risen sharply, tracking U.S. Treasuries in expectations for the Fed to start withdrawing support.
Indeed, U.S. 10-year note yields hit 3 percent on Thursday for the first time since July 2011, having jumped from near 1.6 percent in four short months and providing a major support for the dollar in the process.
The dollar index (.DXY), measured against a basket of major currencies, steadied near a seven-week peak but the greenback dipped 0.3 percent to 99.77 yen after it popped above 100 yen overnight to levels not seen since late July.
Latest U.S. data showed a solid expansion in the services sector, while private employers added 176,000 jobs in August, suggesting that non-farm payrolls could be surprisingly strong.
"The combination of a strong non-farm payrolls with this week's stunning U.S. ISMs ahead of the first Fed taper could send the dollar index towards 85," Societe Generale wrote in a note.
Some analysts said payrolls in line with expectations of 180,000 new jobs would likely be enough for the Fed to start tapering its $85 billion-a-month stimulus at the Sept 17-18 meeting.
Worries about reduced central bank support have weighed on demand for gold, hovering near a two-week low, and riskier assets, with emerging markets in the firing line.
Indonesia has had to raise interest rates to support the collapsing rupiah currency, while India's new central bank boss this week impressed some with an unexpectedly detailed and wide-ranging plan that saw the rupee and stocks rally on Thursday.
"The Indian rupee can continue to stabilize following recent measures aimed at encouraging U.S. dollar inflows," Morgan Stanley wrote in a note.
"While both the Indian rupee and Turkish lira are vulnerable to possible oil price spikes related to Syria intervention risks, Turkey is likely to command more of a risk premium due to its proximity and potential involvement."
The Indian rupee slipped 0.1 percent to 66.06 per dollar. It hit a record low of 68.80 last week
Morgan Stanley recommended investors to short the Turkish lira versus the Indian rupee.
The top five emerging market powers: Brazil, Russia, India, China and South Africa (BRICS) have also pledged to set up a $100 billion fund to stabilize currency markets.
But it looked unlikely to be in place soon enough to temper the effects of an expected pullback of Fed stimulus.
The Group of 20 emerging and developed powers gathered in St. Petersburg for a summit struggled to find common ground over the turmoil faced by emerging markets.
Leaders at the summit also had to contend with the tough question of whether to support U.S. military strikes in Syria.
(Editing by Eric Meijer & Shri Navaratnam)

7 Reasons to Fight Obama on Picking Out-of-Touch Crony Capitalist Larry Summers as Fed Chair
The Fed chairman is the most powerful official Obama will pick— directly affecting each and every wallet in America. As much as anything, this appointment will shape our country’s future.

Obama appears to want Summers, and so do the most powerful people on Wall Street. But he is not the people's choice. Democrats who care about ordinary Americans, like Sen. Elizabeth Warren, do not want to see him controlling of one of the two most significant economic levers in the country.

In leaning toward Summers, Obama, still a relatively young man with many years ahead, seems to be more interested in his own future than our future. The big banks will reward him for backing Summers. But the American people will not forget such a betrayal.

The legacy of the next Fed chair will last long after the President leaves office. Remember Alan Greenspan? He acted as Fed chief for nearly two decades. The next chair could potentially guide America’s economy for a generation.

We can look back on Greenspan's tenure and see the origins of many of the ills we now face, from inequality to high unemployment. If, down the road, we turn into an unstable, third-rate nation where regular people have lost faith in financial and justice systems and the rich retreat behind barbed wire, we may well look back and see in Larry Summers the genesis of that picture.

With so much at stake, let’s take a look at why all signs say that Larry Summers would be a destructive Fed chair unable to serve the people — one whose image as a serial looter of the American public no amount of whitewashing can clean.

1. Summers serves Wall Street over Main Street.

The Fed is responsible for the oversight and regulation of the US banking system. Larry Summers has a terrible record on both.

Alan Greenspan’s dangerous philosophy, vigorously supported by Summers during the Clinton administration, called for taking regulatory cops off the Wall Street beat and letting banks regulate themselves, which led to a culture of wild speculation and criminal activity that helped bring on the financial meltdown of 2007-08. As a result, millions of our friends, neighbors, and fellow citizens were left without jobs, homes, and pensions. In the wake of this devastation, Summers acted quickly to force American taxpayers to bail out the very banks which had triggered the devastation. Some deal!

Today, big banks are even more powerful and dangerous than before the crisis — they’re are more concentrated, they’ve made record-breaking profits, and the news is a constant stream of scams and harmful activity ranging from money laundering to billion-dollar gambling losses to rigging international interest rates. U.S. Attorney General Eric Holder even admitted to the American people that the banks have become too big to be prosecuted without endangering the entire economy, a situation which not only makes a mockery of our justice system, but encourages banks to continue ripping off the public.

What has Larry Summers been doing since vacating his position as Obama’s top economic advisor? He’s been on what the New York Times called a “ money-making spree” of consulting jobs, six-figure speaking gigs, and corporate board positions, collecting large sums from too-big-to-fail banks like Citigroup, giant hedge funds, and Silicon Valley financial firms. (He was already rich off Wall Street money before joining Team Obama: between his tenure at the Treasury Department in the 1990s and his 2009 return to Washington, the Times reports that his personal wealth rocketed from $400,000 to $31 million).

Propaganda Alert: Peace with Syria Will Crash the U.S. Economy

Moronic Drivel from Clueless Warmonger

Former chief economist at the U.S. International Trade Commission – and now Kyocera copier salesman – Peter Morici argues that failure to attack Syria will destroy the American economy:
President Obama’s vacillation on Syria—first delaying military action and then booting the decision to Congress—poses grave threats to U.S. prosperity.
Imminent military action, especially in the Middle East, instigates fears of shortages and panic in oil markets. Two years ago, oil prices jumped to more than $110 in anticipation of the U.S. action in Libya but then subsided when the worst did not happen to oil supplies.
A prolonged debate in Congress could push gasoline above $4.00. That would dent Detroit’s resurgent auto sales, shelve investment decisions across manufacturing, and weigh on already flagging new home sales.
The president exacerbated near term fears by first vacillating after Syrian President Assad crossed his red line, and then asking Congress to vote the week of September 9.
The president faces formidable opposition among Congressional liberals and the Tea Party, who don’t grasp what is at stake for U.S. security and economic interests.
Since Roosevelt, the United States has carefully promoted a system of international law that prohibits aggression, protects human rights, and promotes freer markets for international trade and investment.
The liberals and Tea Party, who are very reluctant to support military force unless U.S. security is directly threatened, should consider the longer-term consequences of U.S. inaction on the economy and jobs.
If the liberals and Tea Party block U.S. military action, that vote will mark the end of the United States of America as a prosperous nation with the resolve to lead.
Outside of the fantasy world of the warmongers, things are a little different.
In reality, it is the threat of yet another unnecessary, counterproductive war in the Middle East – and not any delay in approving such a boondoggle – which is destabilizing the economy.
Moreover, far better-known and more impressive economists than Morici have shown that – contrary to long-standing myths – war is horrible for the economy.
Finally, a strong rule of law is the main driver of economic growth.  On the other hand, institutional lying and corruption is one of the main factors hurting our economy.
Attacking Syria would be a much more serious war crime than even a chemical weapons attack.  (And history shows that the U.S. is guilty of more serious chemical weapons attacks than anyone in Syria has committed).
Polls show that the American public – and the entire world -  believes that the American government is lying about its case for war … just as it did in Iraq.
As such, attacking Syria would further undermine the rule of law, further erode trust in the government … and therefore further damage our economy.

Chris Martenson: All Markets are Manipulated

In this 30 minute interview Jason Burack of Wall St for Main St interviews former Fortune 500 executive, economic expert, author and founder of the Crash Course and Peak Prosperity, Dr. Chris Martenson.
During the interview Jason asks Chris about market manipulation in gold, silver and other markets. Jason then asks Chris about whether he thinks the Federal Reserve can keep the real economy in a worsening stagflation via financial repression.
Finally, Jason asks Chris about the oil and energy markets and they discuss the potential war about to occur in Syria as well as shale oil and fracking and whether this is a panacea for the world’s cheap oil supply problems.

At 3.5% for U.S 10Y Yields, All Hell Will Break Loose In The Financial World

With 10 Year A Breath Away From 3.00%, Just 50bps Left Until The “Disorderly Rotation”
We are assured by the great and good of the status quo that 10Y rates bursting through the 3.00% barrier (its highest in 26 months) will not hinder the housing recovery (as affordability plunges), slow equity buybacks (via increased cost of capital), or crush bank earnings (via AFS losses and NIM compression as the curve flattens). Bond yields are rising as a ‘positive’ sign for the economy… must be right? But wasn’t it Steve Liesman just 2 weeks ago, amid his “best nailing it on CNBC in years”, that proclaimed 10Y would hit 2.65% before 3.00%? As we warned 3 weeks agoa move to 3.0% will create more meaningful outflows from retail and ETFs and 3.5% is the trigger for a “disorderly rotation,” from risk to cash.

10Y shifts rapidly towards 3.00% for the first time since July 2011…

oh and by the way, for those who are more concerned at the ‘pace’ of the move, as opposed to the level of rates – this is the fastest rise in mortgage rates in 5 years…
Cashin: 10-year Treasury yield could be a market ‘trip wire’
“Traders are concerned that the area between 2.95 and 3 percent might be a trip wire. It used to be closer to 2.91, but we’re inching up and I think we’re very close to it. If it hits, it’d be interesting to see if it causes the bids to disappear in equity,” Cashin told “Squawk on the Street” Thursday.
“Rising interest rates are a killer in an over-levered economy, and that’s exactly what we’ve been seeing in the United States.
This surge in interest rates may have already seriously destabilized the entire financial system, and that’s why there is this meeting taking place in the White House today. The fact is that the vast majority of derivatives in the global financial system are related to interest rates.
Now, the entire financial system may be on the precipice of some sort of catastrophic event unfolding
Embry just said: “I strongly believe that had the 10-Year bond roared through a 3% yield, that really would have unleashed chaos in the derivatives market. Once there is an explosion in the derivatives markets, it becomes a cascading series of blowups and it completely destabilizes the entire financial system. So there was clearly an intervention in bonds, and that has delayed the inevitable, at least in the short-term.
$17 Billion of ETF Outflows in August Were Largest in History
Most of that amount, $14 billion, was pulled from the SPDR S&P 500 ETF, as jittery investors worried about the stock market.
Investors Pull $7.7 Billion From Pimco Total Return Fund in August
Bill Gross’s Pimco Total Return Fund, the world’s largest bond fund, lost $41 billion of its assets in the past four months through withdrawals and price losses, according to data from Morningstar Inc on Wednesday.
Why Investors Are Fleeing Both the Bond and Stock Markets
Pimco’s Gross says global economy has become increasingly unstable
In his September letter to investors, Gross said that central banks’ easy money policies have become less effective in generating economic stability, and that zero-bound interest rates have threatened finance and investment in the “real economy.
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:
#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.
10Y 3.0% AND RISING!!!
Douche Bank having trouble…Again.
WSJ: Investors See 10-Year Treasury Yield Headed for 3 Percent
‘Bad idea’ if Fed wages war on higher bond yields
Unemployment Rate Surges To Highest Since 2011 – Gallup Polling
In a word: it is not pretty (which, again, is good for those who are hoping and praying St. Ben will keep the monetary Kool Aid running for a little bit longer): at 8.6% it is over 1% higher than the BLS’ reported print, and is the highest since the end of 2011.
The student loan bubble is starting to burst
China, Japan lead record outflow from Treasuries in June
Bond-based mutual funds are taking a beating:
From June 2013
U.S. Bond Funds Suffer Second-Most Redemptions Since 1992

Deutsche Bank sees great dangers for the world economy and a possible failure of Merkel-coalition in the German election

An escalation of the Syrian crisis could drive oil prices higher still. This threatens the world economy as well as a massive increase in interest rates, ailing state budgets and a failure of Merkel and FDP in the general election.
The German bank currently sees seven threats to the world economy, both in Europe and in the U.S. and emerging markets:
“The emerging markets may be more vulnerable,” said the German bank in a recent study. If the Fed printing money actually slow down the outflow of capital from emerging markets could increase further. Since 1 May, fell by 5.3 percent, the currencies of emerging countries. In Turkey, South Africa, Brazil and India, the devaluation was even in double digits.
Nor was the capital outflow from emerging countries, only a slowdown, not a collapse, the German bank. Investors flee from both bonds and stocks from these countries. Instead, they invest more strongly in developed countries.
A second problem for the world economy lies in the fact that central banks can not keep interest rates low for an extended period, the German bank. Rising interest rates could threaten the recovery because of the high interest costs for companies.
A third problem, which accounts for the German bank, are the risks to U.S. consumers. They may face higher gasoline prices and rising mortgage rates.The mortgage rates have recently risen sharply in the United States by a full percentage point. Recovery in the housing market could be prevented.

EPA Confiscating Gold In Alaska
Private central banks exercising de facto ownership using the EPA as cover for theft.
Where does it say they confiscated anything? Gold mines themselves seldom contain any usable gold. Any that's extracted is promptly moved offsite. What did they confiscate, dirt?
The hoohah seems to have been about the fact that the EPA was armed and came with an alphabet soup of other agencies.
The day the US government nationalizes productive US based gold mines is a very dark day indeed. Did that happen?
The Chicken AK site is a holiday camp, BTW, not a significant goldmine. Industrial open pit cyanide leeching type mines don't even begin operations without prior government and EPA approval, so what was this theatre about?

The student loan bubble is starting to burst

The largest bank in the United States will stop making student loans in a few weeks.
JPMorgan Chase has sent a memorandum to colleges notifying them that the bank will stop making new student loans in October, according to Reuters.

The official reason is quite bland.

"We just don't see this as a market that we can significantly grow," Thasunda Duckett tells Reuters. Duckett is the chief executive for auto and student loans at Chase, which means she's basically delivering the news that a large part of her business is getting closed down.

The move is eerily reminiscent of the subprime shutdown that happened in 2007. Each time a bank shuttered its subprime unit, the news was presented in much the same way that JPMorgan is spinning the end of its student lending.
"It's no longer sustainable and not the right place to allocate capital in the future," HSBC Holdings Group Chief Executive Michael Geoghegan said in a statement the day HSBC shut down its subprime unit in 2007.
"Lehman Brothers announced today that market conditions have necessitated a substantial reduction in its resources and capacity in the subprime space," the press release issued in August 2007 said.
There is over $1 trillion in outstanding student loans, making it the second largest source of household debt after mortgages. Just 10 years ago, student loans stood at $240 billion. About $150 billion of the total is comprised of private student loans made by banks and other financial institutions, according to a report issued by the Consumer Finance Protection Bureau last year.
(Read more: Why falling college enrollment could be good for markets.)
The CFPB reported that around $8 billion of private student loans were in default. That number is likely to go higher if interest rates rise because most private student loans, unlike federal loans, are variable rate loans linked to Libor or the prime rate.
JPMorgan's actually the second big private lender to step away from the business. Last year US Bancorp exited the business. That leaves Wells Fargo & Co., Discover Financial Services Inc., PNC Financial Services Group, SunTrust Banks Inc., and various credit unions as the largest private student lenders. Oh, and of course, Sallie Mae, which was privatized in 2004.
(Read more: The college tuition bubble may have burst.)
I won't be surprised if a few more of these lenders decide that they want out of the student loan racket.
Of course, the entity with the biggest exposure to student loan defaults is the U.S. government.
—By CNBC's John Carney. Follow me on Twitter @Carney

Food Insecurity, Hunger Plague US at Record Levels

Food insecurity in the United States remains at record levels for the 5th year in a row, with 17.6 million households having difficulty feeding their families, and 7 million of these suffering from “very low food security” that forced them to go hungry in 2012, a new report by the U.S. Department of Agriculture reveals.
A shocking 14.5 percent of all U.S. households—amounting to 49 million people—suffered food insecurity in 2012, with poor households, “households with children headed by single women or single men,” and African American and Hispanic households hardest hit.
“[W]hat we’re seeing are a lot of working families that are unable to make ends meet. We’re seeing a lot of seniors and we are definitely serving a lot more children,” Carey Miller, executive director of the Food Bank of Iowa in Des Moines that distributes products to pantries, soup kitchens and emergency shelters in nearly half the state, told USA Today.
While the report showed a slight improvement since 2011, the authors say that it is not statistically significant and that hunger rates have remained alarmingly high since the 2008 Great Recession. “The prevalence of food insecurity has been essentially unchanged since 2008,” the report reads.
The findings, based on survey data from the Census Bureau, come as congressional Republicans push for a $40 billion slash to the federal Supplemental Nutrition Assistance Program which provides food assistance to millions of low-income families in the US.
“Food insecurity remains a very real challenge for millions of Americans,” declared Agriculture Secretary Tom Vilsack. “Today’s report underscores the importance of programs such as the Supplemental Nutrition Assistance Program that have helped keep food insecurity from rising, even during the economic recession.”
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License
Republished from: Common Dreams

Maybe This Is Why We Now Have a Serial-Bubble Economy

by Charles Hugh-Smith
Who benefits from serial bubbles? The financial sector and the central government.
If there is any one strikingly obvious feature of the U.S. economy in the past 15 years, it’s the serial asset bubbles, one after another. Take a look at this chart:

Why did our economy become dependent on asset bubbles for “growth”? One way to find an answer is to ask: cui bono, to whose benefit? Correspondent Jeff W. has the answer: the financial sector and the central government.
Here is Jeff’s commentary.

We should always bear in mind how lucrative asset bubbles are for the banks, the government, and super-wealthy insiders. The banks make money by loaning to speculators because their collateral gets a boost. As collateral is boosted, they can make loans to borrowers who are poor credit risks (no job, no income liar loans). Government makes money by taking a cut of speculative profits through taxes. Clued-in insiders get to ride the bubbles up and down, getting advance signals of the turns.When Ben Bernanke says in effect of the housing bubble, “What bubble? We didn’t know there was any bubble. We don’t have any way to know if there is a bubble or not,” I am not impressed. The housing bubble of 1981-2006 gave rise to a huge expansion of the finance, insurance and real estate sectors; enriched government, which expanded greatly during those 25 years; and witnessed the emergence of super-wealthy who measure their wealth in the tens of billions.
To me, when Ben Bernanke says, “What bubble?” it is like a kid with chocolate all over his mouth, saying, “What cookies? I didn’t eat any cookies.”
Each asset bubble is a bonanza for the banks, government, and wealth insiders, and because those exact groups run this country, and because we have lived through serial bubbles since 1971, I say that if a person says there will be no more asset bubbles, the burden is on him to explain why. Why should the Powers That Be deny themselves a bonanza?

Those who managed the 2008 crisis (Bernanke, Paulson, and an assorted cast from Goldman Sachs), saw to it that the government and the Fed emerged unscathed. The Federal government is now much bigger than ever. They also saw to it that the TBTF banks emerged unscathed. They are now larger and more dominant than ever. Other super-wealthy such as Warren Buffett and George Soros also profited from the crisis.
Ben Bernanke is hailed as a genius for his masterful handling of the 2008 financial crisis. He may protest that he never saw the crisis coming, and that might even be true (though I doubt it), but he was well prepared to use the crisis to enrich the TBTF banks, the government, and super-wealthy insiders.
So in summary, because every asset bubble is a bonanza for the Powers That Be, I do not believe they blindly stumble into them. The work together as a team to engineer asset bubbles.
Thank you, Jeff. I would add that the serial-bubble economy has a pernicious appeal to debt-serfs and those with minimal financial capital, because each bubble holds out the promise that any debt-serf who manages to catch the ride up and exit at the top can vastly increase his/her wealth, just like the top 1/10th of 1%.
But timing the bubble is not necessarily easy (except in hindsight), and the state of mind required to sell when everyone else is buying must overcome powerful forces in human psychology: the herd instinct, greed, confirmation bias, etc.
Those enabling and extending the bubbles know very few participants will overcome greed and the herd instinct and sell near the top; rather, they will become bagholders of phantom assets that quickly lose value, leaving only the debt to service.
To escape the crushing burden of debt (except for student loans, which are fiendishly difficult to escape), the bagholders must sell out, losing whatever wealth they might have had. Those who sold early have cash to buy the assets on the cheap. If the assets no longer have value, that’s OK, too–the money has already been made originating and offloading the debt that was borrowed to buy the assets.
As the saying goes, rinse and repeat. No wonder the serial-bubble model is so attractive to the Powers That Be.

Map: Where You Don’t Want to Be When It Hits the Fan

When it hits the fan America’s population centers will explode in violence, looting, and total breakdown of law and order.
It’s a theory put forth by numerous survival and relocation specialists, and one that makes complete sense if you consider what happens in a truly serious collapse-like scenario.
Survival Blog founder James Rawles calls them the golden horde:
Because of the urbanization of the U.S. population, if the entire eastern or western power grid goes down for more than a week, the cities will rapidly become unlivable. I foresee that there will be an almost unstoppable chain of events:
Power -> water -> food distribution -> law and order -> arson fires -> full scale looting
In his recent documentary Strategic Relocation, retreat expert Joel Skousen echoes Rawles’ warnings:
The number one threat that I concentrate on. It’s not terrorism, it’s not natural disaster, it’s not even government or war.
The major threat is population density.
Because every crisis that threatens, even a local crisis, can turn exponential because of close proximity to people who cannot help themselves. Even good people panic in a crisis…
So, where should you be when it happens?
To find the answer, let’s consider where we shouldn’t be.
Recent U.S. census data indicates that out of the 3000 counties in the United States, fully 50% of the population lives in just 146.
If you want to have any chance of surviving a wide-spread catastrophic event by avoiding the hordes that will be searching for critical resources in its aftermath, then check out the following map to get a visual reference of the areas you want to stay away from.
(Click here for larger image)

(For a complete list of the counties highlighted on this map click here)
When considering your retreat locations or emergency evacuation routes, be familiar with the population densities of the area you’re headed to, as well as those counties in your immediate vicinity.
In his book Patriots, James Rawles specifically points out that Highway 80, running through California, will be one of the busiest evacuation routes in the country as millions of people pour out of major cities to flee disaster or in search of  food.
So, no matter where you are located, consider your proximity to high traffic thoroughfares going in and out of the city. During Hurricane Rita, which hit Houston several years ago, every major pipeline out of the city was jammed for hundreds of miles. Interstate 45 from Houston to Dallas was bumper to bumper traffic. Normally a 4 hour trip, those who didn’t evacuate in time were stuck on the highway without food, gas, sanitation, or potable water for upwards of 15 hours.
This is why Joel Skousen suggests that those looking for strategic retreat locations or homes outside of major cities consider highway proximity. Be at least 5 – 7 miles away from any major thoroughfare, which is generally outside the range people want to venture off familiar roads, and far enough away to make any ‘walkers’ too tired to attempt the trip without ample clean water and food.
If you have no choice but to be in a major metro area during a serious emergency situation, consider strategies that can help you remain sustainable in the city even in the midst of panic.
Hat tip Satori

Government Geting Revenge On Standard & Poor's For Downgrade - Judge Andrew Napolitano -Cavuto

Medieval peasants got a lot more vacation time than you: economist

Medieval peasants got a lot more vacation time than you: economist
Photo: Getty Images
Life for the medieval peasant was certainly no picnic. His life was shadowed by fear of famine, disease and bursts of warfare. His diet and personal hygiene left much to be desired. But despite his reputation as a miserable wretch, you might envy him one thing: his vacations.
Plowing and harvesting were backbreaking toil, but the peasant enjoyed anywhere from eight weeks to half the year off. The Church, mindful of how to keep a population from rebelling, enforced frequent mandatory holidays. Weddings, wakes and births might mean a week off quaffing ale to celebrate, and when wandering jugglers or sporting events came to town, the peasant expected time off for entertainment. There were labor-free Sundays, and when the plowing and harvesting seasons were over, the peasant got time to rest, too. In fact, economist Juliet Shor found that during periods of particularly high wages, such as 14th-century England, peasants might put in no more than 150 days a year.
As for the modern American worker? After a year on the job, she gets an average of eight vacation days annually.
It wasn’t supposed to turn out this way: John Maynard Keynes, one of the founders of modern economics, made a famous prediction that by 2030, advanced societies would be wealthy enough that leisure time, rather than work, would characterize national lifestyles. So far, that forecast is not looking good.
What happened? Some cite the victory of the modern eight-hour a day, 40-hour workweek over the punishing 70 or 80 hours a 19th century worker spent toiling as proof that we’re moving in the right direction. But Americans have long since kissed the 40-hour workweek goodbye, and Shor’s examination of work patterns reveals that the 19th century was an aberration in the history of human labor. When workers fought for the eight-hour workday, they weren’t trying to get something radical and new, but rather to restore what their ancestors had enjoyed before industrial capitalists and the electric lightbulb came on the scene. Go back 200, 300 or 400 years and you find that most people did not work very long hours at all. In addition to relaxing during long holidays, the medieval peasant took his sweet time eating meals, and the day often included time for an afternoon snooze. “The tempo of life was slow, even leisurely; the pace of work relaxed,” notes Shor. “Our ancestors may not have been rich, but they had an abundance of leisure.”
Fast-forward to the 21st century, and the U.S. is the only advanced country with no national vacation policy whatsoever. Many American workers must keep on working through public holidays, and vacation days often go unused. Even when we finally carve out a holiday, many of us answer emails and “check in” whether we’re camping with the kids or trying to kick back on the beach.
Some blame the American worker for not taking what is her due. But in a period of consistently high unemployment, job insecurity and weak labor unions, employees may feel no choice but to accept the conditions set by the culture and the individual employer. In a world of “at will” employment, where the work contract can be terminated at any time, it’s not easy to raise objections.
It’s true that the New Deal brought back some of the conditions that farm workers and artisans from the Middle Ages took for granted, but since the 1980s things have gone steadily downhill. With secure long-term employment slipping away, people jump from job to job, so seniority no longer offers the benefits of additional days off. The rising trend of hourly and part-time work, stoked by the Great Recession, means that for many, the idea of a guaranteed vacation is a dim memory.
Ironically, this cult of endless toil doesn’t really help the bottom line. Study after study shows that overworking reduces productivity. On the other hand, performance increases after a vacation, and workers come back with restored energy and focus. The longer the vacation, the more relaxed and energized people feel upon returning to the office.
Economic crises give austerity-minded politicians excuses to talk of decreasing time off, increasing the retirement age and cutting into social insurance programs and safety nets that were supposed to allow us a fate better than working until we drop. In Europe, where workers average 25 to 30 days off per year, politicians like French President Francois Hollande and Greek Prime Minister Antonis Samaras are sending signals that the culture of longer vacations is coming to an end. But the belief that shorter vacations bring economic gains doesn’t appear to add up. According to the Organisation for Economic Co-operation and Development (OECD) the Greeks, who face a horrible economy, work more hours than any other Europeans. In Germany, an economic powerhouse, workers rank second to last in number of hours worked. Despite more time off, German workers are the eighth most productive in Europe, while the long-toiling Greeks rank 24 out of 25 in productivity.
Beyond burnout, vanishing vacations make our relationships with families and friends suffer. Our health is deteriorating: depression and higher risk of death are among the outcomes for our no-vacation nation. Some forward-thinking people have tried to reverse this trend, like progressive economist Robert Reich, who has argued in favor of a mandatory three weeks off for all American workers. Congressman Alan Grayson proposed the Paid Vacation Act of 2009, but alas, the bill didn’t even make it to the floor of Congress.
Speaking of Congress, its members seem to be the only people in America getting as much down time as the medieval peasant. They get 239 days off this year.

Triple shocks threaten Europe's sickly and deformed recovery

Europe has not recovered. It has begun to stabilise, but only just, amid mass unemployment, with debt trajectories still spiralling out of control in Italy, Portugal, Spain and once again in Greece.

Closeup of the map of Europe seen  on the face of a 10 Euro Cent coin in Paris

The debt spiral cannot be checked until Euroland embarks on full-blown reflation

The complacency of those dictating Euroland's policies - though not its victims - is breathtaking.
"Europe, it seems, has become anaesthetised to bad news," says Simon Tilford from the Centre for European Reform. Tentative signs of life after six quarters of contraction are deemed a vindication of shock therapy, even as the underlying crisis gets worse in almost every key respect.
"The reality is that the Spanish and Italian economies will shrink by a further 2pc in 2013. Greece is on course to contract by an additional 5pc to 7pc and Portugal by 3pc to 4pc. Far from being on the mend, the economic crisis across the South is deepening. Real interest rates are increasing from already high levels," he said.
An end to the slump - hardly assured - is not enough to reverse a compound interest trap across Club Med as debt loads rise faster than nominal GDP, or enough to render Italy and Spain viable within EMU. Such is the "denominator effect".
Mr Tilford says the elephant in the room is the rise in the debts of Portugal and Spain by 15 percentage points (pp) of GDP over the past year, by 18pp in Ireland and by 24pp in Greece. Italy's ratio rose 7pp to 130pc of GDP, already at or near the point of no return.

This is the fruit of "naked" austerity, conducted without offsetting monetary stimulus. Debt ratios are rising even faster. The hairshirt strategy has been self-defeating, even on its own terms.
The debt spiral cannot be checked until Euroland embarks on full-blown reflation, yet EMU creditors shun such a course. The Club Med states in turn have yet to throw up a leader of stature, willing to forge a debtors' cartel, and bargain from strength. They let themselves be picked off one by one.
Much was made of a slight fall in Spain's registered unemployed in August. The more relevant detail is that a net 99,000 people left the workforce in a single month. Some are coming to Britain. We now know that 45,530 Spaniards signed up for UK National Insurance last year.
The EMU refugees are still arriving daily at Victoria Station, where the Telegraph is based. They make a bee-line for a currency shop nearby known for low fees. Three Andalucians in their 20s were in the queue ahead of me the other day, chatting about their prospects. Each changed a thick wad of euros into pounds, starting new lives in London.
Bienvenidos. They are Britain's gain; and Spain's loss. They no longer pay Spanish taxes or contribute to Spain's Social Security system, sliding towards bankruptcy as the reserve fund is depleted at an exponential pace. The ratio of workers to those receiving benefits has already fallen to 1:7 in Aragon.
Not that the exodus from Southern Europe has made a dent in youth unemployment rates: 62.9pc in Greece, 56.1pc in Spain, 39.5pc in Italy, 37.9pc in Cyprus and 37.4pc in Portugal. It is surely the greatest policy failure of modern times.

Unemployment over the past five years
Whether you think Europe's recovery is reaching "escape velocity" depends on what you look at. Optimists cite PMI manufacturing indices, punching back above the boom-bust line of 50, though these are the same PMI surveys that gave no forwarning of EMU disasters of 2012.
Money data are a different story. Growth of "broad" M3 money has stalled, slowing to a 1.5pc rate (annualised) over the past three months, a harbinger of economic stagnation over the winter. Credit to business fell at an accelerating rate of 1.9pc in July as banks continue to retrench too fast, compelled by overzealous pro-cyclical regulators. If that is the launch-pad for a new cycle of growth, I will eat my monetarist hat.
Euroland has been hit by three shocks, none life-threatening but serious when combined, which are likely to bite with a delay. The euro has risen 30pc against the Japanese yen over the past year, 25pc against the Indian rupee and 20pc against the Brazilian real. It is has even risen against the resurgent US dollar, an odd state of affairs for the world's slowest growing economic bloc.
To make matters worse, borrowing costs have jumped by 70 basis points across Europe since the US Federal Reserve began to talk tough in May, the difference between life and death for small firms in Spain, Italy and Portugal clinging on by their fingertips.
The ECB has not done much about this, beyond waffle on about "forward guidance". It has allowed imported tightening to run its course, while plans for direct lending to small businesses in the South have withered on the vine. The ECB's Mario Draghi pledged last year to do "whatever it takes" to save monetary union. He is not in fact doing so.
His masterplan to backstop Italy and Spain has averted an immediate chain of sovereign defaults, and kudos to him for that, but has not averted the slow slide towards insolvency. If the ECB targeted 5pc growth of M3, or even better 5pc growth of nominal GDP, this would lift Club Med off the reefs. It could do this easily. It chooses not to do so.
Europe will now have a third shock to contend with, and perhaps a fourth if the emerging market rout continues. Brent crude has jumped by $15 a barrel since June, nearing the economic inflexion point around $120 even before Tomahawk missiles rain on Damascus. This will tighten the deflationary vice yet further by draining spending power from the economy, like a tax.
It was a Princeton professor called Ben Bernanke who wrote the last word on this in "Systematic Monetary Policy and the Effects of oil Price Shocks". Central banks themselves cause most damage from oil shocks because they panic, over-reacting to short-term inflationary noise.
Yet the mystics at Bundesbank still seem to think that oil spikes are inflationary. They have largely succeeded in imposing their 1970s views on the ECB's Governing Council. They raised rates to counter the pre-Lehman oil shock in July 2008, even though half of Europe was already in recession, the worst monetary policy blunder since the Second World War. They repeated the mistake in 2011, causing Europe's double-dip. Third time lucky, perhaps?

Euro trade-weighted exchange rate
Even if eurozone growth does indeed gather speed, this will bring forward the day when Germany demands rate rises to head off overheating in its own misaligned economy. This will change the contours of the crisis, not solve it. The 20pc gap in labour competitiveness between North and South - the fundamental cancer of the EMU Project - will remain.
And no, the North-South current account chasm has not closed in any meaningful sense. It has been masked by crushing internal demand and investment in the Latin bloc. Germany's surplus actually grew to 7pc of GDP last year. The misalignment is so extreme that even a full depression in the South cannot bring intra-EMU trade into balance. Should they be even trying to hold the currency together given sheer scale of the task, you might ask.
How this gap in incompetitiveness was allowed to evolve over the first 15 years of the EMU experiment is by now ancient history. It no longer matters whether it was caused by Germany's beggar-thy-neighbour wage squeeze, or by Italy's "scala mobile" wage escalator, or by a flood of cheap foreign capital into Spain. The damage from this joint venture is now done. All EMU states are in it together.
Forcing all the burden of adjustment on the debtors repeats the cardinal sin of the Gold Standard. It cannot succeed since deflation poisons debt dynamics, and mass joblessness poisons democracy. There comes a point when leaders have a moral obligation to default.
Yet to stoke EMU-wide inflation deliberately to lift the South off the reefs would destroy political consent for monetary union in Germany. It would require statesmanship of the first order in Berlin to marshall civic support for such an imperative. No such statemanship is on offer. We have an impasse.

BUSTED: Elites Admit 'War for Oil'

States divert foreclosure prevention money to demolitions

Source: Market Place

The Treasury Department has changed the rules on the Hardest Hit Fund, a program meant to help people hit by the housing crisis stay in their homes, allowing states to use some money from the $7.6 billion foreclosure prevention program to demolish homes instead.

Michigan and Ohio have changed their contracts with the Treasury Department so they can use foreclosure prevention funds for home demolition. Michigan has diverted a $100 million into demolition. That’s a fifth of its money from the Hardest Hit program, part of the Troubled Asset Relief Program, or TARP. The money will be used to tear down 7,000 vacant homes.
“Here we were assisting homeowners to stay in their homes, but then, many of these communities had so many blighted properties that homeowners would throw their arms up and say, ‘I’m never gonna get value out of this house, why am I doing this?’” says Mary Townley, director of homeownership at the Michigan State Housing Development Authority.
Michigan officials say blight leads to abandonment. It invites crime and drives down property values in neighborhoods where the 13,000 homeowners they’ve already helped are trying to hold on. They say demolishing derelict homes isforeclosure prevention.


One In Seven American Families Faces Food Insecurity

Almost 18 million families in the United States couldn’t get sufficient food to live healthily in 2012 according to the Department of Agriculture’s (USDA) annual report on food insecurity.
The report, released Wednesday, shows that the pattern of elevated food insecurity since the financial crisis still continues. It found that 14.5 percent of U.S. families experienced food insecurity, which is defined as lacking “consistent, dependable access to enough food for active, healthy living.” An average of 11 percent of families were food insecure from 1998 to 2007, but in 2008 the rate spiked above 14 percent.
While critics of food aid point to the doubling of enrollment in SNAP (formerly known as food stamps) as evidence that government safety net spending on food is too generous, the USDA statistics show that those programs could not absorb the full economic force of the Great Recession. Just 59 percent of food-insecure families from the USDA survey reported participating in either SNAP or the other two largest food aid programs.
Still, congressional Republicans (with the help of a handful of Democrats) have pushed to make the programs even less responsive to the spikes in need that come with spikes in poverty. The initial, failed House farm bill included $20.5 billion in cuts to SNAP. GOP leaders then attempted to split the farm bill from food stamps, rendering the latter vulnerable. They now intend to cut SNAP by $40 billion over the next decade. The issue will have to be resolved by the end of September, when the current rules on farm subsidies, food aid, and myriad other agricultural matters expire.
While Wednesday’s report indicates food assistance programs are already too meager, there is little reason to think the statistics will change conservative minds. Conservatives in the media and in Congress continue to portray the program as dangerously broad and too expensive. Fox News has pushed that message during the summer Congressional recess through a special report called “The Great Food Stamp Binge.” Never mind that the program is more efficient and has less fraud than the aid to farm owners that the House managed to pass before its vacation.

BRICS agree to capitalize development bank at $100bn

Source: RT
(RIA Novosti/
Igor Russak) “At the final stage of realization - the initiative to create a BRICS forex reserve pool – the size of its capital has been agreed at $100 billion,” Russian President Vladimir Putin said while opening the G20 Summit in St. Petersburg.
Russia, Brazil and India will contribute $18 billion to the BRICS currency reserve pool, while China $41 billion and South Africa $5 billion, according to a press release issued by the BRICS on Thursday.
Earlier this week Russia’s Finance Minister Sergei Storchak said that there were still a lot of “difficult details” to sort out.
“These are systematic themes, complicated [and] negotiationsare difficult. We must assume the bank will not start functioning as fast as one could imagine. It will take months, maybe a year,” said Storchak.
In June Storchak said the project would be up and running by 2015. The scheme was approved in Durban South Africa at the BRICS summit in 2013.

The bank is designed to help finance infrastructure and development projects in the BRICS countries and will pool foreign currencies to fend off any future financial crisis.
Russian Foreign Minister Sergei Lavrov said the bank will “help avoid the negative impacts that fluctuations in currency markets may have on our economies.”
The creation of the reserves pool may help the BRICS nations in their drive to reform votes and quotas in the International Monetary Fund (IMF).
An IMF quota represents a countries contribution to the fund’s capital as well as its clout in the IMF’s decision making. It can also decide the size of any loan that country receives from the IMF. Currently the US has the highest quota of any country at 17.08%, allowing it to veto any decision as any initiative is only passed if it receives 85% of the vote.
The BRICS countries represent a considerable force in terms of the world’s finances. Trade within the group amounted to 16.8% of global commerce at $6.1 billion.
“The strength of the BRICS is amplified by the fact that BRICS countries account for 43% of the world’s population, around 18% of its GDP and 40% of its currency reserves, estimated at around a trillion US dollars,” said Jacob Zuma, the South African President, at the Durban summit.
Increased economic muscle among the BRICS has been matched by a louder voice across all areas of global affairs.
The Russian Foreign Ministry Ambassador Vadim Lukov said Thursday that the BRICS countries will have an informal meeting at the G20, “at which they will discuss interaction and coordination of the G20 positions.”
The BRICS are determined to create a full-scale mechanism of coordination on an increasingly broader range of political and economic issues, Lukov added

Hesitation on Syrian Strike Threatens Economic Recovery

By Peter Morici
President Obama’s vacillation on Syria—first delaying military action and then booting the decision to Congress—poses grave threats to U.S. prosperity.
Imminent military action, especially in the Middle East, instigates fears of shortages and panic in oil markets. Two years ago, oil prices jumped to more than $110 in anticipation of the U.S. action in Libya but then subsided when the worst did not happen to oil supplies.
With mounting evidence that Syria used chemical weapons, oil prices again jumped, and a prolonged debate in Congress could push gasoline above $4.00. That would dent Detroit’s resurgent auto sales, shelve investment decisions across manufacturing, and weigh on already flagging new home sales.
Should the Congress approve military force, Iran could attack Israel or cut back on oil production, permanently pushing up prices. However, once U.S. strikes begin, if those consequences don’t materialize, oil prices should fall back.
Extended uncertainty
The president exacerbated near term fears by first vacillating after Syrian President Assad crossed his red line, and then asking Congress to vote the week of September 9.
Had Obama acted quickly on his own authority, or at least called Congress back into session immediately, the period of uncertainty would have been cut from at least a month to one week.
Extended uncertainty can wreck havoc on investment and consumer spending, and potentially tank the economy.
The president faces formidable opposition among Congressional liberals and the Tea Party, who don’t grasp what is at stake for U.S. security and economic interests.
Since Roosevelt, the United States has carefully promoted a system of international law that prohibits aggression, protects human rights, and promotes freer markets for international trade and investment.
The Chemical Weapons Convention, which 188 nations have signed, clearly prohibits Assad’s egregious conduct. Sadly, the British Parliament has abdicated its responsibilities by voting against UK military action, and the Germans and Japanese are hardly supportive.
Russia and China, who abide only by international rules that suit their convenience, have blocked action at the Security Council.
U.S. stands alone
Among nations with significant military power, or at least the financial resources to back it, America, France and perhaps a few others stand alone.
The liberals and Tea Party, who are very reluctant to support military force unless U.S. security is directly threatened, should consider the longer-term consequences of U.S. inaction on the economy and jobs.
With the United States, China, Japan and Germany account for about half the global economy and the latter already view the United States as a weak and fading power. By history and design, none has much use for the rules of commerce established by the WTO and similar institutions, and have acted with considerable impunity.
For example, Japanese Prime Minister Shinzo Abe’s economic recovery program hinges on purposefully undervaluing the yen to pump up exports and steal jobs in the U.S. automotive sector and elsewhere in U.S. manufacturing.
Chinese and German commercial policies victimize smaller nations—consider what Angela Merkel’s austerity policies are doing to Greece and Portugal to keep Germany’s export machine going—and destroy American jobs—China’s undervalued yuan and naked protectionism stole the solar panel industry from U.S. manufacturers.
They behave so badly, despite U.S. protestations, because from Obama is viewed as weak and naïve. By leading from behind internationally and failing to act forcefully against protectionism that harms American workers, he has emboldened those nations’ to give lip service to international rules and then do whatever they please.
Meanwhile, the U.S. recovery drags along at a paltry 2 percent, while China grows at 7.5 percent, and Japan and Germany recover.
If the liberals and Tea Party block U.S. military action, that vote will mark the end of the United States of America as a prosperous nation with the resolve to lead.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist.