Wednesday, December 11, 2013

French, AFRICOM, UK deploying combat helicopters, MQ-9A Reapers and fighter jets to CAR

Source: Defence Web

France is deploying a sizeable number of aircraft, including transport and combat helicopters, to the Central African Republic (CAR) as part of its intervention force there, which aims to improve the fragile humanitarian situation in the country. Other nations, including the United States and United Kingdom, are also contributing aircraft to support CAR operations.
Seven French military helicopters have been deployed to the Central African Republic after French President Francois Hollande authorised Operation Sangaris to maintain order in the beleaguered country.
On Thursday the French military secured the airport in the capital Bangui in anticipation of incoming flights. Two French Army Aviation Corps SA 342 Gazelles were on Friday joined by three Army SA 330Ba Pumas that were originally stationed in Gabon, reports Air Forces Daily. These elements were bolstered by the arrival of two French Air Force AS555AN Fennecs, which arrived in Bangui aboard an An-124 on Sunday.
In addition, the French Air Force is using six Rafale fighter jets deployed to N’Djamena, Chad, for reconnaissance missions over the CAR using Reco NG pods. The jets have been spotted flying over Bangui and Bossangoa, reports Air Forces Daily. Some reports suggest two newly acquired General Atomics MQ-9A Reapers could be used over the CAR. They will most likely be based in Niger’s capital Niamey.

Under Obama, troops forced to rely on welfare, holiday charity to make ends meet

Jamie Boling and her husband, Joseph, know that providing for a military family can be trying — waiting for orders, often living on a single income, and, in especially tough cases, supporting a spouse wounded in the line of duty.
Around the holidays, the challenges — especially the financial ones — can tax families already struggling to make ends meet.

The Center on Budget and Policy Priorities, a nonprofit D.C.-based think tank, estimates that as many as 340,000 veterans rely on federal or state rental assistance. About 900,000 veterans live on food stamps, and an additional 5,000 active-duty service members are food stamp recipients.
The nonprofit groups Operation Homefront and Fisher House Foundation stepped in Monday to provide the Bolings and about 300 other military families in the D.C. area with grocery bags filled with the fixings for a holiday meal.
“My husband medically retired in October, and it’s a big transition to go from active duty to medical retirement,” said Mrs. Boling, 29, of Gaithersburg. “It gets hard around this time of year. My husband is making about 30 percent of what he used to be making. You have to start stretching dollars. This literally puts food on the table.”
Families received a bag of disposable plates, silverware, cups and napkins, as well as a bag of canned goods and a bag of dry goods, such as instant potatoes, pie crust and cornbread mix. They were also given Wal-Mart gift cards along with vouchers for turkeys and produce at the store.
“The No. 1 request we hear is for assistance with food and to ensure children have a Christmas to remember,” said Vivian Dietrich, executive director of the D.C. area branch of Operation Homefront. “Families want to ensure their children have pleasant holidays.”
Wal-Mart provided the $2 million to help fill the grocery bags. The donation is part of a pledge by the big-box retailer to donate $20 million to veterans and their families by 2015.
Ms. Dietrich explained that in an expensive city to live in like the District, military families often face the challenge of balancing a food bill with other necessities.
Jennifer Allred said her husband is in the Army and the two of them live in Alexandria with six children, ages 4 to 13.
“We can’t not get gas,” Mrs. Allred, 34, said. So when it comes to cutting back, “the first thing to go is the fresh stuff.”
An average month of grocery shopping can cost upward of $800, Mrs. Allred said, and around the holidays, she and her husband have to figure out how to balance doctor’s appointments and food bills with Christmas wish lists.
“Stuff like this helps to supplement,” she said. “It makes it much easier. Families like ours get lost between the cracks.”
While the Congressional Budget Office a decade ago estimated that the total benefits and pay compensation package earned by the average active-duty service member was $99,000, basic pay for a soldier starts at $18,194 annually — below the $23,550 federal poverty line for a family of four.
Political battles have made the situation even more unsettling.
Story Continues →
View Entire Story

The Economic Recovery is a “Statistical Illusion”: More Misleading Official Employment Figures

The payroll jobs report for November from the Bureau of Labor Statistics says that the US economy created 203,000 jobs in November. As it takes about 130,000 new jobs each month to keep up with population growth, if the payroll report is correct, then most of the new jobs would have been used up keeping the unemployment rate constant for the growth in the population of working age persons, and about 70,000 of the jobs would have slightly reduced the rate of unemployment. Yet, the unemployment rate (U3) fell from 7.3 to 7.0, which is too much for the job gain. It seems that the numbers and the news reports are not conveying correct information.
As the payroll jobs and unemployment rate reports are released together and are usually covered in the same press report, it is natural to assume that the reports come from the same data. However, the unemployment rate is calculated from the household survey, not from payroll jobs, so there is no statistical relationship between the number of new payroll jobs and the change in the rate of unemployment.
It is doubtful that the differences in the two data sets can be meaningfully resolved. Consider only the definitional differences. The payroll survey counts a person holding two jobs as if it were two employed persons, while the household survey counts a person holding two jobs as one job. Also the two surveys treated furloughed government workers during the shutdown differently. They were unemployed according to the household survey and employed according to the payroll survey.
To delve into the meaning of the numbers produced by the two surveys, keep in mind that payroll jobs can increase simply because the birth-death model used to estimate the numbers of unreported business shutdowns and startups can underestimate the former and overestimate the latter.
The unemployment rate can decline simply because the definition of the work force excludes discouraged workers. Thus, an increase in the number of discouraged workers can lower the measured rate of unemployment.
Before reviewing this, let’s first assume that the story of 203,000 new payroll jobs in November is correct. Where does the BLS say these jobs are? Are these the long-missing New Economy jobs that we were promised in exchange for giving China our well-paid manufacturing jobs and giving India our well-paid professional service jobs?
Unfortunately, no.
According to BLS, the jobs are mainly the same lowly-paid, part-time, nontradable domestic service jobs that I have been reporting for a decade or longer.
BLS reports that 17,000 jobs are in construction. On the surface this looks like some slight pickup in housing, but less than 5,000 of the jobs are in residential and nonresidential construction. The bulk of the claimed jobs are in “specialty trade contractors.” Specialty trade contractors are involved in repairs, alterations, and maintenance, but some of the work pertains to site preparation for new construction.
The BLS also claims 27,000 jobs in manufacturing. What precisely is being manufactured? Apparently, very little. The manufacturing jobs are spread over about 23 categories.
The manufacture of wood products gained 600 jobs. (Keep in mind that we are talking about a population over 300,000,000, and a participating work force of approximately 155,000,000.) Nonmetallic mineral products experienced, according to the BLS, 2,000 new jobs. Machinery gained 300 new jobs. Computer and electronic products gained 500 new jobs. Electrical equipment and appliances gained 600 jobs. Transportation equipment gained 4,900 jobs. Furniture manufacture gained 2,100 jobs (apparently to fill the foreclosed unoccupied houses). Food manufacturing gained 7,800 jobs. Petroleum and coal products gained 1,600 jobs, chemicals gained 2,200 jobs, and plastics and rubber products gained 1,300 jobs.You can review the remaining categories on the BLS site.
Most the rest of the 203,000 jobs–152,000–were in lowly paid domestic nontradable services (nontradable means that the jobs do not produce a service that can be exported), such as retail trade with 22,300 jobs, transportation and warehousing with 30,500 jobs, temporary help services with 16,400 jobs, ambulatory health care services with 26,300 jobs, home health care services with 11,800 jobs, and the old reliable waitresses and bartenders with 17,900 jobs.
This is the jobs profile of the American super economy. It is the profile of India 30 or 40 years ago.
Are even these lowly paid part-time domestic jobs really there? Perhaps not. According to statistician John Williams (, the government shutdown and reopening, the birth-death model, and concurrent-seasonal-adjustment problems can result in misstated jobs.
The unemployment rate is affected by not counting discouraged workers who cannot find employment. No discouraged unemployed worker and no person forced to work in a part-time job because he cannot find full-time employment is counted in the 7.0 unemployment rate (U3).
To be included in the U3 unemployment rate, an unemployed person has to have looked for a job in the past four weeks. Those who have looked for a job until they are blue in the face and have given up looking are not counted in the U3 rate. In November any unemployed workers, discouraged by the absence of jobs, who ceased to look for employment were dropped from the labor force that U3 considers to be the base for the measure of unemployment. Thus, if unemployed workers move into the discouraged category, the rate of unemployment falls even if not a single person finds a job.
The government has a second unemployment rate, U6, about which little is heard. This rate counts workers who have been discouraged for less than one year. This unemployment rate is 13.2 %, almost double the reported rate.
In other words, the U3 measure of unemployment can decline for two different reasons: the economy can create more employment opportunities or people become discouraged and stop looking for jobs. Discouraged workers move into the U6 category where they are counted as unemployed until they have been discouraged for more than one year when they are no longer officially considered to be part of the labor force. The U6 unemployment rate can rise as short-term discouraged workers are dropped out of the U3 measure and moved into the U6 measure, and the U6 rate can fall when the workers become long-term discouraged and are officially removed from the labor force.
Think about this for a minute. The BLS admits that the US unemployment rate that includes people who have been discouraged about finding a job for less than one year is 13.2%. The official line is that the US economy has been enjoying a recovery since June 2009. How is there a recovery when 13.2% of the population is unemployed?
This question becomes even more pointed when the long-term–more than one year–discouraged workers who cannot find a job are included in the measure of unemployment. The US government does not provide such a measure. However, John Williams ( does. His estimate produces a 23.2% rate of US unemployment. An increase in the number of long-term discouraged workers is consistent with the drop in the US labor force participation rate from 66% in December 2007 to 63% in November 2013.
There is no such thing as a recovery with 23.2% unemployment.
So, if there is no economic recovery, why are stock and bond prices so high, at all-time records? The answer is simple. The Federal Reserve is printing $1,000 billion new dollars annually and the newly created money is going into the bond and stock markets, driving them to high bubble levels.
So here sits the US economy with substantial unemployment, with massive trade and budget deficits that are taxing the US dollar’s credibility, with the labor force participation rate declining because there are no jobs to be found, and we are enjoying economic recovery with bond and stock prices at historic highs.
If this isn’t enough of a puzzle, consider the official second estimate of third quarter GDP growth. According to this estimate, the US economy expanded at a 3.6% rate in the third quarter; yet official U6 unemployment is 13.2%.
And if you believe the government, there is no inflation either. Yes, I know, your grocery bills go up each month.
Keep in mind that many of the new November payroll jobs could reflect seasonal hiring gearing up for the Christmas sales season. Remember, the payroll survey counts one person with two part-time jobs as two jobs.
Economic recovery requires a growth in real median family income and/or an increase in consumer debt, and, except for a rise in student loan debt, there is no sign of either.
US real median household income has declined from $56,189 in 2007 to $51,371 in 2012, a decline of $4,818 or 8.6%. [1]
US real per capita income has declined from $29,554 in 2007 to $27,319 in 2012, a drop of $2,235 or 7.5%.
How do consumers take on more debt in order to finance their consumption when their real incomes are falling? The growth in consumer credit outstanding is due to student loan growth.
I have not seen the establishment’s explanation of how recovery can occur without growth in real purchasing power either from rising real incomes or rising consumer indebtedness.
According to the Bureau of Labor Statistics, there are 1,277,000 fewer seasonally adjusted payroll jobs in November 2013 than in December 2007.
How it is possible for the economy to have been in recovery since June 2009 (according to the National Bureau of Economic Research) and there are 1,277,000 fewer jobs today than existed six years ago prior to the recession?
How has real Gross Domestic Product recovered when jobs and real consumer incomes have not?
These are among the many questions that go unasked and unanswered.
Statistician John Williams says that the economic recovery is a statistical illusion created by deflating nominal GDP with an understated measure of inflation.
Source: Global Research

Get ready, here it comes: A December taper

It's beginning to look a lot like taper
Tuesday, 10 Dec 2013 | 7:04 AM ET
The Federal Reserve could begin to taper its bond purchases as early as next week, reports CNBC's Steve Liesman.
It increasingly appears that tapering is coming at the Fed's meeting next week.
While forecasting the central bank's moves has been an uncertain proposition for most of the past several months—with the conventional wisdom having it wrong in June and September—several of the Fed's own financial tests for reducing its asset purchases look to have been met as it heads into the Dec. 17 meeting. Those include confidence in the outlook, an easing of fiscal drag and uncertainty, and what the Fed sees as more appropriate interest rates.
Getty Images
A trader works on the floor of the New York Stock Exchange.
To be sure, the Fed could decide to wait another month for even greater clarity, and practically, many Fed officials see little difference in a taper program that begins in December versus January.

But it looks as if the three tests for tapering have nearly been met.
(Read more: Global economy might be comeback story of 2014)

Confidence in the outlook: As of Friday's jobs reports, three-month average job growth is 193,000, up by 44,000 compared with what the Fed knew about payroll growth in September, when it surprised markets by failing to taper. Job growth in three of the past four months has been above 200,000. At 7 percent, the unemployment rate is two-tenths lower than in September.
Add to that an easing of tension in Europe and growing household wealth with stock and real estate values higher, and the Fed has ample reason to feel better about the economy and the outlook than it did in late summer.

(Read more: Why the path to higher rates is unlikely to be smooth)
Sorkin: Bernanke may taper by year-end
Andrew Ross Sorkin on a market reset, Bernanke's final moves and what's ahead for Janet Yellen.
End of fiscal uncertainty: Most Fed officials talk with increasing certainty about a pickup in growth next year. Part of that confidence is simple math. They see the effects of fiscal drag from government cutbacks easing next year and a waning impact from the January rise in tax rates. The Fed said explicitly in September that it was concerned about the negative effects of a looming government shutdown. Its political forecasting turned out to be on the mark (better, in fact, than its economic forecasting).
It now appears that congressional Democrats and Republicans are on the verge of a deal to put off another debilitating deficit debates for at least two years. That should give the Fed more confidence in the outlook even though fourth-quarter growth is expected to be in the 1 percent range.
(Read more: 'It is time to taper' says Fed's Fisher)

Interest rates: This is the one area that could yet sway the debate the other way, but on balance, it favors a tapering. The 10-year benchmark Treasury bond, at around 2.84, is pretty much where it was in September when the Fed said in its statement "tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market."
But there are some key differences. First, short rates have been far more well-behaved, indicating to Fed officials that markets embrace their notion that "tapering is not tightening,"—that is, reducing asset purchases should not bring forward the date when the market expects the Fed to hike interest rates. Indeed, the Fed Funds Futures contract for June 2015 traded as high as 92 basis points in September and 66 basis points the day before the September meeting. That same contract now trades at around 27 basis points.
Significantly, it did not move at all after Friday's surprisingly strong jobs report. The Fed takes this as the markets' belief in its pledge to keep rates "lower for longer" than would seem appropriate under normal economic conditions.
Second, the unemployment rate is lower, and third-quarter gross domestic product was revised up to 3.6 percent last week from the initial report of 2.8 percent. Fed officials are unlikely to fight hard against them if they perceive that they result from a better growth outlook.
Jeff Rosenberg, chief investment strategist for fixed income at BlackRock, said that the Fed's concern with higher long rates could keep a lid on their levels, with investors unwilling to bid up rates too high for fear that the Fed would act to tamp them down.
(Read more: Is Fed causing deflation? Some think so)

What's also clear is that several centrists on the rate-setting Federal Open Market Committee appear ready to discuss a taper, and some even have publicly called for a reduction. Notably, St. Louis Fed President Jim Bullard said Monday, "A small taper might recognize labor market improvement while still providing the committee the opportunity to carefully monitor inflation during the first half of 2014."
Atlanta Fed President Dennis Lockhart said last week that tapering should be discussed, and Jeff Lacker, president of the Richmond Fed, weighed in with similar comments Monday.
—By CNBC's Steve Liesman. Follow him on Twitter: @steveliesman

Detroit Bankruptcy Approved -Emergency Manager Threatens Pension Fund Takeover

Detroit Bankruptcy Approved

by Kerry Lutz,
As predicted many months, Detroit’s bankruptcy filing has been validated in a ruling by Bankruptcy Court Judge Steven Rhodes. He rejected numerous objections posed by unions, pension funds and retirees. They’re the big losers under any reorganization plan that scales back Detroit’s long-term liabilities.
As a Financial Survival Network listener you knew this day was coming. The decision, which will be appealed, will eventually allow the city to proceed with what is currently the largest public bankruptcy in U.S. history.
Rhodes said, “This once proud and prosperous city can’t pay its debts. It’s insolvent. It’s eligible for bankruptcy. At the same time, it also has an opportunity for a fresh start.” He said the bankruptcy should have been done years earlier.
Read More @

Detroit’s Emergency Manager Threatens Pension Fund Takeover; Blame the Unions

by Mike Shedlock, Global Economic Analysis:
Detroit’s emergency manager Kevyn Orr says a pension fund takeover is a “right, if not an obligation” after Orr learned of extra, unwarranted pension payments.
Please consider Emergency Manager Weighs Pension-Fund Takeover.

Kevyn Orr said in a recent interview that at the current pace, the city’s General Services System pension fund could lose its ability to pay pensions owed to current and future retirees within 12 years. A takeover is a “right, if not an obligation, that I have to consider under the statute, and we’re considering that right now,” he said.

Representatives of the pension board said Mr. Orr’s figures were faulty.

‘Lack of Genocidal Application’ Keeps Science From Exploring Thorium Energy

Source: Disinfo

Thor Donner Arthur Rackham Wagner Rhinegold Rheingold Ring Nibelungern Norse mythology myth German Germanic
How ‘Thor’ May Save the World:

Unbeknownst to most climatologists that decry nuclear energy for its environmental liability (in the form of radioactive waste and potential Chernobyl/Fukushima meltdown), there is a friendly and feasible cousin to the Uranium reactor that uses Thorium (yes named after the Norse god of thunder). Thorium is an element much more abundant than Uranium in the Earth’s crust (comparable in abundance to Lead), and is already produced industrially as a byproduct of rare-earth-metals mining.  Thorium reactor designs (using liquid Fluoride as coolant) consume atomic fuel far more efficiently than Uranium reactors using pressurized water as a coolant.  Furthermore, these reactors are ‘incapable of meltdown’ and produce hazardous radioactive materials lasting only 300 years as opposed to 10,000 years for Uranium, in relative quantities of 1 ton instead of 35 tons, respectively.  Unlike Uranium reactors, Thorium does not pose a proliferation risk because none of the products or reactants present viable materials for creating an atomic bomb.
Ironically, this is one of the primary (and only) reasons why atomic energy in the United States went the way of Uranium, because Kruschev was making ICBMs like SAUSAGES! and we needed plenty of fissile material to account for our perceived lag in the ability to end life on earth.
Thorium reactors are NOT new technology.  Research and development started in the early 1950s.  From 1965-69 scientists and engineers had successfully operated a working plant for 15,000 hours.  Glenn Seaborg (of Seaborgium fame) announced to the Atomic Energy Commission in 1968, “I think that some day the world will have commercial power reactors of both the uranium-plutonium and the thorium-uranium fuel cycle type.”  The future for Thorium seemed bright!  However in 1973 Alvin Weinberg, the foremost advocate for Thorium energy, lost his position as director at Oak Ridge National Laboratory, effectively because he was unwilling to throw Safe Energy under the bus of Mutually Assured Destruction.
Due to its lack of genocidal application, the obscurity of Thorium reactors persists to this dayMost people, including nuclear scientists, know little about it.  From Chemical and Engineering News:  “it’s possible to have a Ph.D. in nuclear reactor technology and not know about thorium energy.”  Nuclear physicist Victor J. Stenger first learned of it in 2012:  ” It came as a surprise to me to learn recently that such an alternative has been available to us since World War II, but not pursued because it lacked weapons applications.”
It seemed suspiciously as if Thorium had been erased from the books altogether.  I tried to surmise whether there is an ‘old-boy’ coalition of military generals, politicians, and Uranium miners keeping an impish hand in the face of Thorium advocates.  However it’s probably just mass incompetence again; the International Atomic Energy Association seems amenable to Thorium-based reactors, though pessimistically contradicting Dr Joe Bonometti with regards to the fuel’s abundance in the Earth’s crust, and the reactors’ cost of operation.  Watch Bonometti’s talk titled The Liquid Fluoride Thorium Reactor: What Fusion Wanted To Be or the short version (recommended).
Currently Thorium nuclear energy is finding a large niche in India, who has lots of Thorium-rich monzanite deposits and very little Uranium (and a huge number of people).  India has plans for 62 mostly-Thorium reactors to become operational by 2025.  Other players are China, and Norway (Thor Energy, how pagan!) and the US who is “quietly collaborating with China” on reactor designs, and has found some lofty advocates like Harry Reid and Orrin Hatch after 40 years of obscurity.
If this technology indeed has proven reserves capable of lasting (by one estimate) 1000 years at current energy consumption rates, and would  (by one account) be cheaper than coal, and significantly safer than Uranium fuel-rod reactors, what is to stop it from capping the climate crisis (right in the knee)?  Talk about it to your nuclear engineer and tree-hugger friends!

EPA says taking over private property will benefit the economy

Michael Bastasch
Can the EPA run your property better than you? The Environmental Protection Agency says that its proposal to extend its regulatory powers over wetlands and waterways would produce economic benefits.
Republican lawmakers warn that the agency is trying to extend its power to regulate private property.
The EPA’s rule would redefine the term “waters of the United States” to include all “tributaries, regardless of size and flow, and all lakes, ponds and wetlands within a floodplain” reports E&E News. Other bodies of water, “such as geographically isolated wetlands, would have to be shown on a case-by-case basis to have a significant chemical, physical or biological effect on larger waterways downstream — a major point of concern for environmental groups” E&E added.
Read more

How Far Will Stocks Fall This Time When The Fed Decides To Slow Down Quantitative Easing?

Bear Market - Photo by Appalachian Encounters
When QE1 ended there was a substantial stock market correction, and when QE2 ended there was a substantial stock market correction.  And if you will remember, the financial markets threw a massive hissy fit a few months ago when Federal Reserve Chairman Ben Bernanke suggested that the Fed may soon start tapering QE3.  Clearly Wall Street does not like it when their supply of monetary heroin is interrupted.  The Federal Reserve has tricked the American people into supporting quantitative easing by insisting that it is about “stimulating the economy”, but that has turned out to be a massive hoax.  In fact, I just wrote an article that contained 37 statistics that prove that things just keep getting even worse for ordinary Americans.  But quantitative easing has been exceptionally good for Wall Street.  During QE1, the S&P 500 rose by about 300 points.  During QE2, the S&P 500 rose by about 200 points.  And during QE3, the S&P 500 has risen by about 400 points.  The S&P 500 is now in unprecedented territory, and stock prices have become completely and totally divorced from reality.  In essence, we are in the midst of the largest financial bubble this nation has ever seen.  So what is going to happen when the Fed starts pulling back the monetary crack and the bubble bursts?
A lot of people out there are claiming that the Federal Reserve will never end this round of quantitative easing.  They are suggesting that the Fed may hint at tapering from time to time, but that when push comes to shove they will just keep printing more money.
There is just one big problem with that theory.
The rest of the world is watching, and they are very troubled by quantitative easing.  Therefore the Fed must end it at some point because they desperately need the rest of the world to keep playing our game.
Our current economic prosperity greatly depends upon the rest of the planet using our dollars as the reserve currency of the world and lending trillions of dollars to us at ultra-low interest rates.  If the rest of the world decides to stop going along with the program, the system would come crashing down very rapidly.
That is why it was so alarming when China recently announced that they are going to quit stockpiling more U.S. dollars.  For a long time China has been warning us to quit recklessly printing money, and now China is starting to make moves that will make them more independent of us financially.
If the Fed does not bring quantitative easing to an end soon, other nations may start doing the same thing.
So the Fed knows that they are on borrowed time.  Faith in the U.S. financial system is declining very fast.
But the Fed also knows that ending QE3 is going to be very tricky for the financial markets.  The other times that the Fed has ended quantitative easing, it has turned out to be very painful for Wall Street.
So this time, the Fed seems to be trying to do what it can to use the media to mentally prepare investors ahead of time.  For example, the following is what Jon Hilsenrath of the Wall Street Journal wrote just a few days ago
Markets are positioned more to the Fed’s liking today than they were in September, when it put off reducing, or “tapering,” the monthly bond purchases. Most notably, the Fed’s message is sinking in that a wind down of the program won’t mean it’s in a hurry to raise short-term interest rates. Futures markets place a very low probability on Fed rate increases before 2015, in contrast to September, when fed funds futures markets indicated rate increases were expected by the end of 2014. The Fed has been trying to drive home the idea that “tapering is not tightening” for months and is likely to feel comforted that investors believe it as a pullback gets serious consideration.
In case you missed the subtle messages contained in that paragraph, here is a rough translation…
“Don’t worry.  The Federal Reserve is your friend and they say that everything is going to be okay.  Investors believe what the Fed says and you should too.  Pay no attention to the man behind the curtain.  Tapering is not tightening, and when the Federal Reserve does decide to taper the financial markets are going to take it very calmly.”
The Fed (and their messengers) very much want to avoid a repeat of what has happened before.  As you can see from the chart posted below, every round of quantitative easing has driven the S&P 500 much higher.  And when each round has ended, there has been a substantial stock market correction.  The following chart was originally produced by
Chart By DayOnBay
And of course the chart above is incomplete.  As you can see below, the S&P 500 is now sitting at about 1,800…
S&P 500
So let’s recap.
From the time that QE1 was announced to the time that it ended, the S&P 500 rose from about 900 to about 1,200.
When QE1 ended, the S&P 500 fell back below 1,100.
In a panic, the Federal Reserve first hinted at QE2 and then finally formally announced it.  That round of QE drove the S&P 500 up to a bit above the 1,300 mark.
Once QE2 ended, there was another market correction.  The S&P 500 fell all the way down to 1,123 at one point.
In another panic, the Federal Reserve first announced “Operation Twist” and then later added QE3.  Since that time, the S&P 500 has been on an unprecedented tear.  At this point, the S&P is sitting at about 1,800.
And of course those massively inflated stock prices have absolutely no relation to what is going on in the U.S. economy as a whole.  In fact, the truth is that economic conditions for most of the country are steadily getting worse.  Just today we found out that for the week ending November 30th, U.S. rail traffic was down 16.3 percent from the same week one year earlier.  That is a hugely negative sign.  It means that the flow of goods is slowing down substantially.
So the Federal Reserve has created this massive financial bubble that is totally disconnected from reality.  The only way that the Federal Reserve can keep this bubble going is to keep printing lots more money, but they also know that they cannot do that indefinitely because the rest of the world is watching.
In essence, the Federal Reserve is caught between a rock and a hard place.
When the Fed does ultimately decide to taper (whether it be December, January, February, etc.), the consequences are likely to be quite dramatic for the financial markets.  The following is a brief excerpt from a recent article by Howard Kunstler
But even in a world of seemingly no consequence, things happen. One pretty sure thing is rising interest rates, especially when, at the same time as a head-fake taper, foreigners send a torrent of US Treasury paper back to the redemption window. This paper is what other nations, especially in Asia, have been trading to hose up hard assets, including gold and real estate, around the world, and the traders of last resort — the chumps who took US T bonds for boatloads of copper ore or cocoa pods — now have nowhere else to go. China alone announced very loudly last month that US Treasury debt paper was giving them a migraine and they were done buying anymore of it. Japan is in a financial psychotic delirium scarfing up its own debt paper to infinity. Who’s left out there? Burkina Faso and the Kyrgystan Cobblers’ Union Pension Fund?
The interest rate on the US 10-year bond is close to bumping up on the ominous 3.0 percent level again. Apart from the effect on car and house loans, readers have pointed out to dim-little-me that the real action will be around the interest rate swaps. Last time this happened, in late summer, the too-big-to-fail banks wobbled from their losses on these bets, providing a glimpse into the aperture of a black hole compressive deflation where cascading chains of unmet promises blow financial systems past the event horizon of universal default and paralysis where money stops moving anywhere and people must seriously reevaluate what money actually is.
What Kunstler is talking about is something that I have written about previously many times.  When QE3 slows down (or ends), that is likely going to cause the yield on 10 year U.S. Treasuries to rise substantially, and that would have a whole host of negative consequences for the U.S. economy.
Most notably, it would threaten to blow up the quadrillion dollar derivatives casino that Wall Street usually manages to keep so delicately balanced.
The truth is that we are going to have massive problems no matter what the Federal Reserve does now.
If the Federal Reserve keeps wildly printing money, our financial system will become a massive joke to the rest of the planet and other nations will stop using our dollars and will stop lending us money.
That would be absolutely disastrous.
If the Federal Reserve stops wildly printing money, the massive financial bubble that Wall Street is enjoying right now will burst and we could have a financial crisis even greater than what we experienced back in 2008.
That would also be absolutely disastrous.
So does anyone out there see an easy way out of this under the current system?  If you think that you have such a plan, please feel free to share it below…

Arizona man banned from Walmart for life over ad matching?

SAN TAN VALLEY, AZ - Walmart is speaking out after a Valley man said he found out the hard way just how to get banned from their stores for life.
Joe Cantrell loves to ad match.
He goes through circulars to find the biggest discounts, and then goes to Walmart.
According to the company's website, they match the lowest advertised price on identical products, but when Joe tried doing that last week, the unthinkable happened.
What started as a trip to a San Tan Valley Walmart to get ornaments for his family's Christmas tree, turned into the biggest nightmare of Joe's life.

"I was handcuffed, humiliated and embarrassed in front of everybody at Walmart," Joe remembers.

Walmart sent ABC15 the following statement Tuesday:

"We make every effort to make sure our customers have a good experience in our stores. As in previous situations, we attempted to work with this customer. However, in this situation, the associate felt unsafe and so we contacted local law enforcement. We are continuing to cooperate with law enforcement on their investigation."
NEW: Walmart says Joe was banned because he threatened an employee

But according to Joe, there's a chance he just may be the most loyal Walmart shopper you've ever met.
Joe told us he visits the mega-retailer at least twice a day -- once in the morning with his grandmother, and then again in the evening.
"I just love Walmart and that's why I go," he laughs.

Because to Joe, every little dollar counts.

"Sorry I get a little emotional about this because I'm disabled," he said. 

After eight years in the ring as a professional wrestler and lots of injuries, "I can't do what I used to do for a living anymore," he said.

So four months ago, he started ad matching. But last week when a Walmart employee told him it wasn't allowed, Joe complained to management.

"When I left, he turned around and called the Pinal County Sheriff's Office and said he felt intimidated and threatened. I was upset but never once did I say anything to the gentleman," Joe said of the incident.

He said when he went back to Walmart four days later, three deputies handcuffed him, gave him a court summons and a notice banning him from any Walmart in the world for life.

"I felt shamed. I felt like I was the bad guy. And I know I'm not a bad guy," he said. 

The deputies apparently agreed. Joe said when they realized the nature of the complaint, they let him go.

"They saw a grown man cry like a baby," Joe said. "Probably because I knew I would be able to go home to my family and finish that Christmas tree."

Joe wasn't arrested, but he said he's facing charges of threatening, intimidation and disorderly conduct. He has no attorney and he's still banned from Walmart for life.
Joe said he if knew ad matching was going to cause this, he just would have paid the extra money.
Copyright 2013 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

World’s Biggest Investor Issues Warning on Stocks


World's Biggest Investor Issues Warning on Stocks

BlackRock Says U.S. Rally Nearing Exhaustion

  • BlackRock has advised clients to be ready to pull out of global stock markets at any sign of serious trouble.
  • BlackRock, which manages funds worth $4.1 trillion, said the global system is still in the doldrums and far from achieving sustainable recovery.
  • “The eurozone, Japan and emerging markets are all trying to export their way out of trouble. Who is going to buy all this stuff? The math does not work. Not everybody’s currency can fall at once.”
  • The report said Wall Street is not in a bubble yet but BlackRock’s risk indicator – measuring “enterprise value” against earnings, adjusted for volatility – is almost as high as it was just before the dotcom bust.
  • Blackrock is advising its high net worth clients to stick to European and Japanese equities in 2014.
  • Read More @ Blackrock

Why Our Consumer-Debt Dependent Economy Is Doomed

If you understand the difference between the first pair of shoes and the 25th, you understand why America’s debt-dependent consumer economy is doomed.
Now that interest rates are near-zero and mortgage rates are rising from historic lows, there is no more juice to be squeezed from low rates.Asset bubbles always burst, destroying collateral and rendering borrowers and lenders alike insolvent.
Without organic demand from rising real income and new households with good-paying jobs and low levels of debt, the consumer-debt based economy stagnates. This has left the economy dependent on serial asset bubbles that create phantom collateral that can support new debt, albeit temporarily.
The other critical dynamic is the marginal utility of additional consumption in a debt-dependent consumer economy. In an economy in which 49% of all residents (156 million people out of a total population of 317 million) receive a direct transfer of cash or cash-equivalent benefit from the central government, and millions of these people also receive cash and/or benefits from state and local governments (49% of Americans Get Government Benefits), poverty is relative rather than absolute for the vast majority of Americans.
The American economy is highly dependent on consumption. Household consumption accounts for about 35% of developing economies’ activity–roughly half of America’s 70% consumption economy.
As noted yesterday, with the earned income of the lower 90% of wage earners stagnant for four decades, America has enabled consumption by leveraging income and collateral into ever-rising mountains of debt.
The problem with debt, of course, is that it accrues interest, and that paying interest reduces the amount of income left to spend on consumption.
In this way, depending on debt to finance consumption is akin to the snake eating its own tail: at some point, the cost of servicing the debt reduces the income available to be spent on additional consumption to zero. Additional consumption becomes impossible without asset bubbles to temporarily enrich the households that own assets or “helicopter drops” of interest-free cash into household checking accounts.
This is how we have reached the point that a majority of U.S. households live paycheck to paycheck, as earnings are eaten up by essential bills and debt service.
Given that the majority of Americans already enjoy a considerable array of consumer goods and services, the only way to fuel more consumption is to entice consumers into buying more of what they already own or buy a replacement for a perfectly usable good or service. Let’s illustrate the concept of marginal utility with shoes.
To those with no shoes at all (a common enough occurrence in the 1930s Great Depression), the utility of one pair of shoes is extremely high: the utility (i.e. the benefits) resulting from owning that one pair of shoes is enormous.
Now consider an aspirational-consumer (i.e. someone striving to look wealthier and more successful than they really are) of the upper-middle class: this consumer might own several dozen pairs of shoes, and his/her problem is finding space for more shoes.
The retailer attempting to persuade this consumer to buy a 25th pair of shoes must overcome the diminishing utility (i.e. marginal utility) of yet another pair of shoes. This is accomplished by offering a “deal you can’t pass up” or appealing to the always pressing need to jettison last year’s style in favor of this year’s “new thing.”
Here’s the critical point of this dynamic: to the consumer who already owns so much stuff that he has to rent a storage facility to store all the surplus goods, the utility of any additional purchase is low. In practical terms, the utility has declined to the thrill of the initial purchase and the initial wearing/use of the new item. Beyond that, it’s just another pair of shoes in the closet.
To the manufacturer/retailer/government dependent on more sales for survival, the value of the first pair of shoes sold and the 25th pair sold are the same. The manufacturer/retailer needs to sell more shoes just to stay in business, and the government living off sales and other consumption-generated taxes also needs more sales.
In an economy in which most people have the essentials of life–i.e. the first pair of shoes with the highest utility–all consumption beyond replacing a hopelessly broken essential is of marginal utility.
An additional $1 of debt adds the same burden to the household whether it is spent on the first pair of shoes or the 25th pair. Taking on debt might make sense for the first pair of shoes, or the first bicycle, but it makes increasingly less sense for each additional pair of shoes or replacement bicycle: the debt piles up but the utility derived from the purchase is increasingly marginal.
The $3,000 I could spend on a replacement bike for the perfectly serviceable bicycle I bought used 15 years ago for $150 is of marginal utility; the better-quality parts and lighter frame, etc.–all the benefits that would flow from spending $3,000 for a “better, more modern” bike are extremely marginal to me, even though I put well over 1,000 miles a year on my bike. All those improvements are too modest to matter. This is the essence of marginal utility.
If you understand the difference between the first pair of shoes and the 25th, and the increasing diversion of income to interest payments that results from debt-based consumption, then you understand why America’s debt-dependent consumer economy is doomed.


Why Last Month’s Employment Numbers Should Worry Investors

By Michael Lombardi, MBA for Profit Confidential
Official Unemployment Rate Only Half of Real UnemploymentFinally some good news in the U.S. jobs market?
The Bureau of Labor Statistics (BLS) reported Friday that, in November, 203,000 jobs were added to the U.S. jobs market. As a result, the unemployment rate went down to 7.0% from 7.3% in October. In addition to this, the BLS also revised the job numbers from October and September, saying 20,000 more jobs were created than previously reported. (Source: Bureau of Labor Statistics, December 6, 2013.)
Yes, the jobs market report for November is a step in the right direction. And, while I’m certain the politicians and the mainstream will have a field day with this news, the underlying statistics in the jobs market are not improving.
The underemployment rate, which includes people who have given up looking for work and those who have part-time jobs that want full-time jobs, still sits at 13.2%.
In addition, the number of long-term unemployed, those who are out of work for more than six months, made up 37.3% of all unemployed in November! There are 4.4 million long-term unemployed people in the U.S. and the longer they stay out of work, the harder it will be for them to get back into the market.
Finally, the majority of jobs created in the U.S. economy continue to be created in the low-wage-paying sectors.
The bottom line here is that the “official” unemployment numbers do not reflect what’s really going on in the jobs market. But the official rate is going in the right direction…and moving close to the point (6.5% unemployment) where the Federal Reserve said it would start pulling back on its money printing program.
As we all know, the stock market is terrified of the Fed pulling back on money printing. So an improving official unemployment rate has now become a bad thing for the stock market. A scary thought.
Michael’s Personal Notes:
On the surface, the recent U.S. GDP numbers looked great. I hear the U.S. economy grew at a revised annual pace of 3.6% in the third quarter of 2013—its fastest GDP growth rate since at least the financial crisis. (Source: Bureau of Economic Analysis, December 5, 2013.)
But when I look closer at the numbers released by the government, I discover the U.S. economy didn’t grow due to consumer spending, the most important factor of economic growth, but rather due to a lack of consumer spending!
Let me explain…
In the third quarter, real personal consumption expenditure (a measure of consumer spending) increased by only 1.4%. That’s down 30% from the second quarter!
So how did GDP rise so much in the third quarter while consumer spending pulled back?
U.S. GDP increased in the third quarter because businesses stockpiled more of their goods. In the third quarter, private inventories increased by $116.5 billion; in the second quarter, they increased by $56.6 billion; and, in the first quarter, they increased by $42.2 billion.
The way GDP is calculated, an increase in business inventories pushes up GDP growth! Now the kicker: almost 50% of the increase in U.S. GDP in the third quarter came from an increase in business inventories!
This worries me a lot.
Rapidly increasing business inventories is a major sign that consumer spending isn’t growing. Those who say there’s economic growth in the U.S. economy have to be very careful in their conclusion. Consumer spending is the backbone of U.S. economy. If it declines, we will have economic suffering across the board.
As some point, businesses will have to stop stockpiling the goods they produce and start laying off staff if those inventories are not taken down; they can’t just go on creating more and more inventory if that inventory isn’t moving.
The statistics I see and interpret tell me that consumer spending in the U.S. economy is in trouble. Obviously, this is not good for corporate earnings. But have no fear, dear reader. The stock market is continuing to rise, the “official” government statistics show that the unemployment picture is improving, and the U.S. GDP is improving. Now, if I could only believe those statistics…

Riots Breakout in Singapore – Wealth Gap, Ideological, and Ethnic Differences Boil Over – Coming to a Neighborhood Near You

Just yesterday, a 33-year old Indian man got hit by the proverbial bus in Singapore’s Little India . That was the catalyst. What transpired for the next several hours was a full blown riot… the first of its kind since 1969.
Several hundred rioters stormed the streets. They started off smashing the up the bus that was still on the corner of Hampshire Road and Race Course Road. Then they started throwing objects at the ambulance staff who were unsuccessful in extracting the man in time to save his life.
By the end of the evening, an angry mob had lit five police vehicles on fire, plus the ambulance, leaving the streets in a towering inferno.
Singapore Prime Minister Lee Hsien Loong today condoled the death of an Indian national who was killed in a road accident in the city-state’s Indian district.
Sakthivel Kumaravelu, 33, was fatally knocked down last night by a bus in Little India, a precinct of Indian-origin businesses, eateries and pubs where most of the South Asian workers take their Sunday break, triggering the country’s worst outbreak of violence in over 40 years.
See more at:

Sheltered banks do not trust broke American public: Too big to fail securely in place while business inventories surge to record levels.

Tracking consumer spending we find that industries subsidized by easy debt are growing at dramatic levels.  These include student debt and auto loans since most Americans simply do not have enough saved up.  Many have nothing to their name.  The student debt market has grown dramatically this year again largely due to the reality that this debt is fully backed by the government and ability to pay the debt back is fully ignored.  How else can someone get $30,000 or more a year to go to a for-profit paper mill?  Beyond this, we now hear that household net worth has risen to record levels.  However, since most Americans have no wealth in the stock market and are quickly losing home ownership in real estate, these gains are largely going to the top 10 percent in the nation that control roughly 75 percent of all wealth.  This is not based on speculation but on multiple points of data.  Banks do not trust the public because many are broke and do not have the funds to support massive debt growth.  Ironically, these banks would not be around without the big bailout check that was required from the public.

Business inventories are expanding at a record level:
business inventory
This can be seen as a good thing or that businesses are projecting too high of consumer spending in the months to come.  Whatever the case may be, businesses are betting on robust consumer spending.  However, looking at recent consumer spending habits we realize that many are simply doing the same song and dance by going into debt to purchase things they cannot afford.
Excess Reserves
We keep hearing about the record in the stock market and the so-called recovery yet banks are still reluctant to lend to Americans in spite of the recession ending officially in the summer of 2009:
excess reserves
These are funds available from banks to put into action.  Since debt equals money in our country, banks have the full power to create money out of thin air.  How so?  Walk into a bank and try to qualify for a personal loan.  This money does not currently exist.  The bank can bring it out of thin air simply by making the loan.  This applies to student debt, auto loans, mortgages, credit cards, and all other forms of debt.  However, banks are fully content with keeping their reserves high earning near zero interest instead of taking the risk of lending out to the public.  After all, once money is “created” it can be destroyed if someone cannot pay it back.
The Fed has succeeded in making the too big to fail even bigger without really fixing the underlying financialziation of our society.
Too Big to Fail
Too big to fail was largely a reason our system melted down so epically in 2007 and 2008.  Yet nothing has been done to fix this.  Instead, the too big to fail have gotten even bigger in fewer hands:
too big to fail
A few banks control most financial assets in the nation.  These banks are now funding and providing loans to the top percent of society to buy up real estate as investments driving up real estate value while US household incomes go stagnant.  Now that banks are as profitable as ever, they rather not lend to the US public.
Not working enough
Banks have a lifeline to the Fed and government.  The public does not.  This is why the middle class continues to shrink.  Just look at average hours worked:
average weekly hours worked
The trend has gone from nearly 40 hours a week worked back in the 1960s to closer to 34 hours today.  That is a big fall largely due to a massive surge in part-time work.  We also have many working in low wage service work.  The animal spirits are out again and many are simply trying to pretend they are middle class again by going into massive debt to spend on things they truly cannot afford.  Auto loans are one major industry that exposes this trend.  Yet these are not wealth building assets.  The wealth is aggregated in very few hands and the public feels this at some level but it is yet to be seen what will come from this.  We’ll see in the next election cycle if the status quo continues to roll along.

Up to 2.5m will take out a loan this Christmas just to heat their home –as families cancel their turkey to cut costs

  • 7m adults plan to take out a loan to cover extra costs this Christmas
  • Two-thirds will cut the cost of Christmas by saving on festive food, spending less on presents and socialising
  • One in ten will forego the turkey this year
By Rachel Rickard Straus

Millions of cash-strapped families across the UK will take out loans just to keep their homes heated over Christmas, a new survey claims.
As many as seven million adults plan to take over a loan over the festive period to cover the extra costs this Christmas.
More than a third of these will use loans just to pay their winter energy bills and around four million people (57 per cent) will borrow just to put festive food on the table.
Cutting costs: Millions are reining back their spending on Christmas presents this year
Cutting costs: Millions are reining back their spending on Christmas presents this year

The findings from affordable housing provider Circle Housing come as energy bill hikes start to kick in, hitting hard-pressed consumers who are already struggling to deal with rising food costs and stagnant wage growth.
Of those who plan to use a loan or credit this year, 83 per cent plan to use a credit card, 24 per cent plan to use a bank overdraft, nine per cent will look to friends or family for a loan, six per cent will look to a bank loan to cover costs and five per cent to a payday lender. Two per cent are planning to take a loan from an unofficial lender or loan shark.

Millions of households also plan to do without some of their usual Christmas treats this year, a second study reveals.
Two-thirds (65 per cent) of consumers will cut back on the cost of Christmas this year by making changes to their usual festive celebrations, according to uSwitch.
One in three (37 per cent) will reduce the number of people they give presents to, while one in ten (nine per cent) plan to give homemade rather than shop-bought gifts.
A quarter (27 per cent) plan to go without a real Christmas tree and one in ten (nine per cent) will forego their turkey to save money this year.
A fifth (18 per cent) will spend less on entertaining at home while over a quarter (28 per cent) will socialise less with their friends.
While the economy is starting to pick up, it could be a few more Christmases before families start to see more money in their pockets to spend over the festive season.
Robert Chote, head of the Office for Budget Responsibility, warned yesterday that workers are unlikely to see decent pay rises for some time to come.
He forecast that average pay will not start to rise faster than prices until 2015. Until wage growth starts to outstrip inflation again, families are only going to continue to feel poorer and poorer.
Meanwhile further strain could come from rising food prices, which are predicted to increase faster than incomes every year until 2018.
Rising bills: Millions of households plan to take out a loan to cover their energy bills this Christmas
Rising bills: Millions of households plan to take out a loan to cover their energy bills this Christmas

The cost of putting food on the table is forecast to rise by 3.8 per cent next year and still further in 2015, according to Prestige Purchasing, which supplies the restaurant trade.
It warned that poorest harvests as a result of volatile weather, and high demand for meat from the growing middle classes in countries such as China and India, have resulted in a ‘perfect storm’ to push up costs.
Matt Gaskin, group financial inclusion officer for Circle Housing said:  'Christmas is always a time of year that household budgets can get stretched and people start to feel the pinch. 

'However, with the recent rises in energy bills we are more worried than ever before that people will turn to payday lenders or loan sharks, particularly some of the most vulnerable sections of society.
'We urge anybody who is worried about managing their money to get help right away and deal with the debt quickly.'     
Michael Ossei, personal finance expert at, added: ‘The cost of Christmas is now so high and consumer budgets so tight, that a time of year traditionally full of joy and festive spirit is now clouded with worry and financial woe.
'While it’s easy to get carried away and spend more than necessary at this time of year, if funds are tight it makes sense to find a cost-effective way to spread the pain over the festive period.’

'A public safety disaster': Obamacare could force THOUSANDS of volunteer fire departments to close

  • The Affordable Care Act forces companies with more than 50 workers to buy them all health insurance or pay hefty fines
  • The IRS says volunteer firefighters are 'employees,' even though the Department of Labor says they're 'volunteers'
  • Out of more than 1 million fire departments in the U.S., 87 per cent are staffed entirely or mostly by life-saving volunteers
  • Members of Congress are weighing in, but the Obama administration hasn't taken any action yet to carve out a fire-fighting exception
Volunteer fire departments all across the U.S. could find themselves out of money and unable to operate unless Congress or the Obama Administration exempts them from the Affordable Care Act.
'I thought the kinks were worked out of Obamacare at the first of the month, Central Florida volunteer firefighter Carl Fabrizi told Sunshine State News.
'Man, oh, man, this could potentially destroy some real good companies in Florida.'
The U.S. Department of Labor takes the term 'volunteer' literally, but the IRS says volunteer firefighters are technically employees if they're on the job more than 30 hours per week, making them subject to Obamacare's employee-mandate rules.
more @

Swiss Clocks Ticking: Hidden US accounts soon to be revealed

China – Japan Island conflict. A good overview and War possible in JANUARY

The there is thisAs fear and nationalism rise in Japan (and Abe’s grip on the people founders amid falling approval ratings and underperforming economic indicators such as GDP tonight), so another party has joined the debacle in the East China Sea. As NHK World reports,South Korea has officially announced that it will expand its air defense identification zone, making it partially overlap those of Japan and China. The game of chicken over small islands (and submerged rocks!) in the middle of nowhere continues… Korea Unveils It’s Own Air Defense Zone, Overlapping China’s And Japan’sWW3 in the far east?War to break out in JanuaryFollowing China’s unveiling of its air defense identification zone (ADIZ) in the East China Sea, overlapping a large expanse of territory also claimed by Japan, the Japanese media has, as The Japan Times reports, had a dramatically visceral reaction on the various scenarios of a shooting war. Unit 

Gold and Silver Below Production Cost — Dr. Kirk Elliot

Icelanders Overthrow Government and Rewrite Constitution After Banking Fraud-No Word From US Media


Can you imagine participating in a protest outside the White House and forcing the entire U.S. government to resign? Can you imagine a group of randomly chosen private citizens rewriting the U.S. constitution to include measures banning corporate fraud? It seems incomprehensible in the U.S., but Icelanders did just that.  Icelanders forced their entire government to resign after a banking fraud scandal, overthrowing the ruling party and creating a citizen’s group tasked with writing a new constitution that offered a solution to prevent corporate greed from destroying the country. The constitution of Iceland was scrapped and is being rewritten by private citizens; using a crowd-sourcing technique via social media channels such as Facebook and Twitter. These events have been going on since 2008, yet there’s been no word from the U.S. mainstream media about any of them. In fact, all of the events that unfolded were recorded by international journalists, overseas news bureaus, citizen journalists and bloggers. This has created current accusations of an intentional cover up of the story by mainstream U.S. news sources.
An “iReport” on CNN, written by a private citizen in May 2012, has questioned the reasons why this revolution has not been widely covered in the U.S., suggesting that perhaps the mainstream media is controlled by large corporate interests and thus has been unwilling to report on Iceland’s activities. That report is currently making its way around social media. CNN today placed a statement on its website saying: “We’ve noticed this iReport is being shared widely on Facebook and Twitter. Please note that this article was posted in May 2012. CNN has not yet verified the claims and we’re working to track down the original writer.” It is interesting to note that CNN’s European version, CNN Europe, already covered the story of the protests and the government’s resignation, leading many to question why CNN would now need to “look into” the claims.
Besides CNN Europe’s own coverage of the scandal, the events in Iceland were widely covered by international media and are easily verified by a simple search on Google which leads to a variety of reputable international news sources that ran numerous stories on the Icelandic revolution. A whole documentary has been made on the governmental overthrow called Pots, Pans and Other Solutions, and now, the conversation is focused on whether or not the citizens’ actions actually worked to make Iceland a more equitable nation.
To understand the enormity of what happened in Iceland, it’s best to draw parallels between the initial banking fraud that caused Iceland’s economy to collapse and the banking fraud in the U.S. that caused the mortgage crisis six years ago. In Iceland, unscrupulous bankers had inflated the value of Iceland’s banks internationally which in turn caused the “bubble” to eventually burst in 2008 and saw most of Iceland’s banks going bankrupt.
A similar situation happened in the U.S. just one year before the collapse in Iceland, with the mortgage crisis of 2007. Mortgage lenders in the U.S. knowingly lent money to prospective homeowners who could not afford to purchase a home. This, in turn, led to falsely inflated home values and a vicious cycle of too much lending. Just as in Iceland, the bubble burst and many U.S. banks were about to declare bankruptcy. In Iceland, the citizens took to the streets by the thousands, banging pots and pans in what is known as the “pots and pans revolution,” leading to the arrest and prosecution of many unscrupulous bankers responsible for the economic collapse. Icelandic citizens also refused to pay for the sins of the bankers and rejected any measures of taxation to bail them out. In the U.S., the government bailed out the banks and arrested no one.
The pots and pans revolution in Iceland was not covered by mainstream U.S. media. In fact, any information about this revolution is found only on international newspapers, blogs and online documentaries, not on mainstream front-page articles as would be expected from news organizations covering a story of this magnitude. The New York Times published a small handful of piecemeal stories, blogs and opinion pieces, but mostly glossed over the main narrative by saying the 2008 financial collapse in Iceland caused “mayhem far beyond the country’s borders” rather than pointing out that Icelanders took to the streets with pots and pans and forced their entire government to resign.
As the saying goes, “there are two sides to every story,” but a more accurate articulation of this phrase would be “in any story, there are multiple sides, viewpoints, opinions and perspectives.” The story in Iceland is no exception. Socialist and Marxist blogs here in the U.S. say that there’s been a massive U.S. news conspiracy and cover up about the revolution in Iceland because the U.S. media is controlled by corporations, including banks, and the “powers that be” don’t want U.S. citizens getting any ideas to stage a revolution of their own. Some conservative Icelandic bloggers claim that while there was, indeed, a revolution, it did not lead to a successful or widely accepted new constitution. They say the situation in Iceland is worse than ever, and that international news reports of an effective democratic uprising leading to a better government are simply myths. Social media commenters are scratching their heads over why they were robbed of the story of Iceland’s pots and pans revolution.
As with most narratives, the truth may lie somewhere in the middle of all of these varying perspectives. One thing is clear, though: it’s nearly impossible to find one mainstream U.S. news report of the pots and pans revolution in Iceland, the resignation of Iceland’s entire government, and the jailing of the bankers responsible for the economic collapse there. Whether or not the revolution led to a more fair government or a workable and effective constitution is irrelevant to the fact that the U.S. media has essentially skipped over this story for the past five years.
Is it possible that mainstream media sources purposely covered up the Iceland story to appease their corporate sponsors? It doesn’t seem likely, and yet, what explanation could be given as to why this news never made it to the front pages of our most trusted media organizations here in the U.S.?
As Iceland struggles to regain its footing with a new government, U.S. citizens may or may not be able to look to Iceland as an example of perfect democracy in action. The real question, though, is why weren’t U.S. citizens given the information about the ousting of the Icelandic government and the jailing of the unscrupulous bankers? Are journalists in control of the mainstream media or is there some truth to accusations that big business may, in fact, be strong-arming reporters to keep quiet about world events that could inspire similar actions here in the U.S.?