Mur's Wall of Whine

[lkwalker]

Oldie but goodie

06-29-2008 11:14 AM #6
boycotteverything



Re: Economic Meltdown

In the past few weeks fear has come back in full force complete with blown out credit spreads and crashing financial sector stocks. However, this time around the Fed does not have the fire power nor the market confidence behind them because every measure they have taken thus far has only drained their reserves, delayed the inevitable, caused other problems elsewhere for the US and global economies and has not fixed the problem.
The Fed and the usual gang of 'experts' will always spend their meager energy on the analysis of the economic cogs and gears rather than the state of the deus ex machina itself. The fact is that the world is experiencing the greatest transfer of wealth since the beginning of recorded history. Pax Americana is in decline and fall. Nothing can slow the decent and the chaotic consequences for human continuance per se. Behold a pale horse. The ultimate discontinuity is at hand and the results will not be pretty- interesting, but not pretty.

The Empire won't go quietly- not with a whimper but a bang. Perhaps that is why the Johannine prophecies seem so apt. This movie played out before in a much smaller theatre. It doesn't require a prophet to see the future anymore- just a bit of tweaking on the fine tune knobs. The future has never had such a compelling immediacy.

The world is being strangled by the Malthusian garrote. Desperate populations are about to become engaged in a war for remaining resources. That is what the Iraq war is all about. Self preservation will finally wring out the last dampness of altruism. It has happened before to a lesser degree and the remedy that it spawned- Christianity- will find itself finally eclipsed by it's opposite principles. This is the larger picture. All that's left are the tedious details, the footnotes- the various methods of mayhem and the hydra-headed fools, the walk-ons of history, that permit their use.

So what sound and fury do we see in the immediate future? The crash of the markets, unlimited war, local transfers of wealth and property- evictions, repossessions, the calling of social margin. Families squatting in the dross of their own foreclosed homes- the new huddled masses, their utilities disconnected, while the successors of the failed banks are unable to force them out. Transportation at a stand-still. Empty grocery stores. Gunshots in the night. And the foreign wars of our addled emperor coming home. The attack on Iran will result in the sinking of aircraft carriers in the Persian Gulf. Saudi Arabia will be over-run by the gangs of it prodigal son. There will be no more oil shipped by those greedy sheiks. The ayatollahs will loose their missiles on Israel and taste the fruits of Samson's nukes. Persia will be no more. Israel will be no more. And then it all comes home. The scatterings of the Middle Eastern desperadoes will appear on our own streets, in our own buildings- and bring with them endless nine elevens. Of course there is more- much more- this is just a selective foretaste of the impending chaos. Let your imagination run wild to see the entire movie. Whatever disaster that you have the temerity to envision will come to pass. Shortly.

The billions that have gone before us, upon whose shoulders we stand, are here and now- new flesh on their bones- to witness the denouement of history. It could have been otherwise. The greatest fear shall now become- not death, but the inability to die. Perhaps John had it right after-all.

[lkwalker]

02-17-2010 10:23 AM #1
GeneralStriker
GeneralStriker is offline
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Repudiation and the Fall of the House of Cards

Libertarian, Von Mises analysis may not be your cup of tea (you might not even have a clue to what it is...) But this article by Gary North explains the problem without ever even deferring to the term. It's about Greece and other debt-ridden European countries whose accounts are so out of balance that repudiation may be their only recourse- unless they are bailed out by the heavy hitter governments at the cost of sinking the Euro- since the debt is owed to an already teetering European banking system. Start the presses? It's a dilemma without obvious solution and the final, near-term outcome will be the fall of the world's economic house of cards- Wiemars everywhere. In this essay from LewRockwell.com North issues a warning- a little peek at the future- but alarmingly offers no hope that this coming destruction of wealth can be mittigated by any imagined economic intervention either public or private. So- for your reading pleasure- General Striker gives you Mr. Gary North.

Bankrolling the Incontinent Subcontinent

by Gary North
by Gary North
Recently by Gary North: Washington's Snowfall Yesterday Was Nothing Compared to Bernanke's On-Line Snow Job

The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth (Psalm 37:21).
The question arises: How wise is it to lend to wicked people? Not very. What about lending to national governments, whose representatives were elected in order to show mercy to certain voting blocs with taxpayers' money? Not very. Yet this is what has been done on a massive scale.
The European Central Bank now faces its moment of truth: how to finance the European Union's rumored bailout of Greece.
Why was the bailout agreed to – assuming that the details can be worked out? Because of the threat to the commercial banks of Northern Europe. A default would have busted some big banks all over Europe.
The issue did not turn on the issue of whether to help the national treasuries of the profligate PIIGS: Portugal, Italy, Ireland, Greece, and Spain. The European Central Bank does not answer to, or have any concern for, the elected governments of the PIIG nations. It answers to, and has a great deal of concern for, the large commercial banks of Northern Europe. That is to say, it is a central bank. It feathers the nests of large commercial banks under its jurisdiction.
Whenever we hear "bailout," we should follow the money. Where does the money wind up? Who is the final beneficiary?
The Federal Reserve System and the Treasury bailed out AIG in 2008. Who were the beneficiaries? AIG was helped; this kept it from a well-deserved bankruptcy. But AIG did not keep most of the money. Who got the money? The banks that were owed billions of dollars by AIG because of AIG's issuing of derivatives. The bailout money was pure profit for the recipient banks, which were paid off at face value for their preposterously high-risk leveraged investments. The losers are the rest of us.
The EU and ECB have decided to fund the spendthrift nations that ran up debts to European banks. The threat of default still hangs over the banks that made the stupid, supposedly low-risk loans to the PIIGs.
The money on the line is huge: trillions of euros in a wave of defaults in a worst-case scenario. The euro is the common currency unit in Europe, although not for the United Kingdom and Switzerland.
Speaking of the UK and Switzerland, their banks are holding lots of IOUs from the PIIGs. According to one estimate, the money owed to British banks is the equivalent of 16% of the UK's entire gross domestic product. British financial columnist Edmund Conway has estimated Great Britain's exposure as close to $350 billion in euros. Not to be outdone, Swiss banks are holding the bag for 21% of Switzerland's GDP.
These are big numbers. They are not limited to just two nations. Loans to PIIGs are in the range of 30% of France's GDP. Germany's banks: 19%. Netherlands: 29%. Then there are the PIIG nations themselves. Their banks are also holding bags. Portugal's banks: 24%. Ireland's banks: 34%. For a table on which nation's banks are holding the bag for what percentage of its nation's entire GDP, click here.
THE CARRY TRADE
The carry trade is a variation of "buy low and sell high." It is "borrow low and lend high." This is possible because of a specific central bank policy: to stimulate the economy with low short-term rates. Borrowers can then lend long: buy high-rate bonds. They borrow short and lend long.
How did these banks get themselves into such trouble? Simple: the ECB funded it.
The spendthrift nations ran up large debts. They borrowed more money than lenders – banks – thought was reasonable at low interest rates. So, the lenders demanded higher rates. In the case of Greece, rates were as much as three percentage points above German bonds of the same maturity.
The banks bought these bonds and then used them as collateral to get ECB loans. They paid the ECB 1% per annum. That rate point spread is worth billions of euros in profits.
Now economic reality is breaking through. Greece may default. The risk factor is high. The commercial bankers assumed that there would never be a default. They assumed that the spread between Greek bond rates and German bond rates was there for no good reason other than to make them richer. They assumed that the ECB would never allow the Greek government to default. After all, if the ECB really was convinced that Greek debt was too risky, the ECB would not have accepted the Greek bonds as collateral for its 1% loans.
This is the carry trade in action. It always comes to this: a day of reckoning, when the debt-ridden borrower cannot pay its debts. No one ever expects any government to pay off all of its debts. They do expect it to meet its interest payments in full and on time.
The risk of default is real. While governments never pay off their debts, they can walk away from them at any time. No one can prosecute them. This is what economists call an asymmetric relationship: in this case, between sovereign national borrowers and fractionally reserved lenders. Lots of leverage means that a single national default can take down a lot of banks.
The ECB, having funded this inverted pyramid of debt, now must take action to see that a default does not take down any large banks. It will have to intervene to save the big banks. It wants to avoid this.
The fractionally reserved dominoes could easily have toppled. The ECB knows this. It subsidized these high-risk loans at low rates in order to save the European economy from the recession, but now the policy has backfired. The banks gorged themselves with IOU's from PIIG governments. Now what?
In an economic sense, the ECB has been bailing out the PIIG governments all along. It allowed their bonds to be used as collateral. Now the inverted debt pyramid is larger than when the bailout process began. If it topples, the devastation will be must worse.
MORAL HAZARD
In 1802, a free market economic theorist and successful banker, Henry Thornton, described what the ECB is facing today. A central bank will be called upon to provide emergency loans to bail out insolvent banks, in order to avoid a wave of defaults and busted banks. Two generations later, Walter Bagehot named this phenomenon: moral hazard.
It is a shame that Thornton did not come up with this phrase, for it was Thornton, more than any banker in history, who was most closely associated with morals. He was William Wilberforce's cousin and a founder of the Clapham Sect of evangelical Protestants, which promoted moral reform and the abolition of slavery. He was a gold standard advocate.
Until this year, the moral hazard argument had been confined to a discussion of government and central bank bailouts of profit-seeking banks and brokerage firms. Now, however, there has been a quantum leap. The moral hazard argument has been extended to nations – indeed, to a subcontinent: southern Europe. It has been called Club Med, because of its club-like spending habits and the nations' location on the Mediterranean or close to it (Portugal). Ireland is included, leading some wag to call it Club O'Med.
The amount of money at stake is astronomical. Europe's entire experiment in the European Union and the common currency is now facing destruction. Salaried bureaucrats must now make decisions that could saddle taxpayers with new debts for a generation. The central bankers must decide how much fiat money will be required to paper over (digit-over) the crisis.
This crisis goes far beyond domestic politics and monetary policy. Beginning with Jean Monnet before World War I, there has been a messianic push for a United Europe. This goal has been a big part of the modern push toward centralization and micro-management by governments. The proponents of European union were relentless in their efforts to move from a free trade zone (the matador's red cape) to the creation of a new nation state (the sword under the cape). As of December 1, 2009, they had fulfilled their goal through the Lisbon Treaty. This had to be substituted for a Constitution, which did not get ratified by the voters of all the nations. There is now a new Europe.
Then, without warning, the financial crisis has hit this year. It is now apparent to everyone that the recession has undermined the supposed guidelines for bank capital and fiscal policy. No agency is enforcing high bank capital requirements set by the Basel Accord I (1992). No one is enforcing the less restrictive Basel II guidelines (2004). No one is enforcing the low percentage requirements set for national deficits in relation to GDP.
The only common agency of the New Europe that has the authority to impose sanctions on the treasury departments of the independent nations is the ECB. The central bank is officially in control over monetary policy. It can legally decide which banks and governments receive or do not receive assistance in the form of newly created digital money. It must back up any decisions made by the EU. It holds the purse strings.
The ECB still faces the threat of governments defaulting on their debt. This was considered inconceivable as recently as three months ago. The risk factor has risen, as reflected in rising insurance rates against default.
Any default could create a crisis for the commercial banks in each nation. The major European nations are under the ECB. Only Great Britain and Switzerland are outside the euro zone, meaning outside the authority of the ECB. So, a threat to any nation's commercial banks becomes a threat to the euro zone as a whole. This means that the ECB will have to take action, country by country to deal with any domino effect of one or more national defaults. The ECB must act on behalf of Europe as a whole, yet it has no civil authority over the domestic policies of individual member nations. It has only the power over the monetary base that affects all of them. It holds the money bag. Meanwhile, large commercial banks are holding bags full of IOU's from struggling national governments.
The ECB must now use money as the only sanction available within the euro zone that is a serious threat to member national governments. There is no way that NATO will be used to take over bankrupt member states. There is no agency with police power that can enforce a decision by any court to require member states to honor their IOU's.

If you like this site, please help keep it going and growing.
An agency without any guns has become the agency with the only available sanction: butter. It can intervene and work out an arrangement by which technically bankrupt O'Med national governments can preserve the legal façade that they are solvent. The game of deceiving investors can continue.
The investors are the best and the brightest bankers in Europe. They decided that there can be no default by a member nation. What were they thinking of?
Maybe they thought that nations cannot default. That was the standard textbook account in the good old days. But, way back in the good old days (pre-2000), each European nation had its own central bank. Not today.
Maybe they thought that the ECB would intervene in order to prevent any default. A default could topple very large banks all over Europe. That would force the ECB to put the pieces back together. The ECB now has to face this threat. Commercial bankers concluded that, in a showdown between the ECB and a national treasury department, the ECB would blink first and provide the government with newly created funds.
THE SHORT-TERM WAGES OF SIN
Let us review: "The wicked borroweth, and payeth not again."
Professor Philipp Bagus has written an enlightening article on the threat to the euro. He identified the origins of the euro carry-trade. He also identified the political incentive to sin.

The incentives for irresponsible behavior for these and other countries are clear. Why pay for your expenditures by raising unpopular taxes? Why not issue bonds that will be purchased by the creation of new money, even if it finally increases prices in the whole eurozone? Why not externalize the costs of the government expenditures that are so vital to securing political power?

When the New Europe's new central bank subsidized this behavior, thereby providing huge profits to commercial banks, sin increased. Economics teaches this: "When the price falls, more is demanded." The price of fiscal profligacy fell because of the policies of the ECB.
Greece got away with this. It will now get bailed out by the ECB. This will send a message to voters and politicians across Europe: "Gravy train!"

For the member states in the eurozone, the costs of reckless fiscal behavior can also, to some extent, be externalized. Any government whose bonds are accepted as collateral by the ECB can use this printing press to finance its expenditures. The costs of this strategy are partly externalized to other countries when the newly created money bids up prices throughout the monetary union. Each government has an incentive to accumulate higher deficits than the rest of the eurozone, because its costs can be externalized. Consequently, in the Eurosystem there is a built-in tendency toward continual losses in purchasing power. This overexploitation may finally result in the collapse of the euro.

To prevent such behavior, there must be negative sanctions. There have been none. There have been guidelines. But without negative sanctions, the guidelines are enforced by a plea to act responsibly. This has been about as effective as sex education in the tax-funded schools.

Such a regulation was installed for the European Monetary Union. It is called the Stability and Growth Pact, and it requires that each country's annual budget deficit is below 3% and its gross public debt not higher than 60% of its GDP. Sanctions were defined to enforce these rules. Yet the sanctions have never been enacted and the pact is generally ignored. For 2010, all but one member state is expected to have a budget deficit higher than 3%; the general European debt ratio is 88%. Germany, the main country that urged these requirements, was among the first to refuse to fulfill them.

CONCLUSION
The ECB did not decide to let the Greek government go without aid of any kind. That would have sent a message: "No more Mr. Nice Guy." But the Greek government might have defaulted. Greek voters would not have risen up to demand that the government raise taxes and cut spending to be able to pay foreign bankers.
If any other debt-laden government defaults, some large commercial banks all over Europe will suffer huge losses. Then the ECB will have to bail them out. So will their own national governments.
For the first time in my lifetime, politicians in Europe are having to consider the costs and benefits of national default. The theology of the messianic welfare state is being reconsidered. "A government need not default" has always meant, "a government can stiff lenders with fiat money." Today, that traditional avenue of concealed default has been cut off in Western Europe. The threat of real default has reappeared.
If the euro dies, the New Europe also dies.
That will be a funeral I hope to attend.

"If someone starts a serious thread about the Congo there is no need for a dick joke in it." MissA 2010


"it's all nothing more than a (slightly menacing) electron cloud floating in the ethers after all." BE

[lkwalker]

Force Majeure. Originally posted by the AmkonMurnut almost three years ago. I'm sure not may Koids actually took the time to read it, let alone consider the issues Al Martin raised. Maybe it'll be treated differently by the Fish Cabal. Read and weep, fellow dolphins...

06-29-2008 06:31 PM #25
mur
mur is offline
Terminated

Re: Economic Meltdown

PROTOCOLS FOR ECONOMIC COLLAPSE IN AMERICA
by
Al Martin


And this is how the U.S. Treasury would handle an economic collapse.
It's called the 6900 series of protocols. It would start with
declaring a force majeure, which would immediately be interpreted by
the marketplaces as a de facto repudiation of debt. Then the SEC and
the various regulatory exchanges would anticipate the market's
decline, hour by hour -- when Japan's markets opened the next day,
what would happen when the European markets, and all the inter-
linkages of the global markets. On the second day, US Special Forces
would be dropped in by parachute in the cities where the twelve
Federal Reserve district banks are located.


The origin of these protocols comes from the Department of Defense.
This is contingency planning for a variety of post-collapse scenarios.
Those scenarios would include, obviously, military collapse, World War
III, in other words, and its aftermath. What we're talking about now
is aftermath -- how the aftermath would be handled.


One does not necessarily know how the events would transpire that
would cause the collapse, whether it's military collapse or economic
collapse. In World War III, it would become obvious -- when the
mushroom cloud started to appear over cities.


Economic collapse scenarios were always premised on the basis of a US
declaration of force majeure on debt service. It's a very extensive
scenario. The scenarios are all together, i.e., military, economic,
political and social complete destabilization leading to collapse.
Then they break down individual scenarios. In the economic collapse
scenario, the starting point would be the United States Treasury
declaring a force majeure on debt service, which is de facto
repudiation, and that's how it would be interpreted by the world's
capital marketplaces. Then the scenario goes on from there. The US
Treasury would obviously declare a force majeure sometime after the
European markets had settled down. In other words, they had gone out
on the day, which means 11:38 a.m. EDT, our time. They'd wait until
the European markets closed, and the US markets had been open for a
couple of hours. That's when they'd determine how to begin the process
of unwinding or controlling the collapse to the best extent possible,
mainly because they know that the greatest hedge pressure would be
people seeking to use other markets to hedge their long exposure in
the United States and that the US would be the biggest seller in all
the rest of the world's markets. Therefore you would want to declare
the force majeure when the rest of the world's markets closed. The
declaration of force majeure would be precipitated by the declaration
that the United States is no longer able to service its debt. That's
pretty simple. Who makes that decision? The Treasury Department. The
President does not make that decision. The Secretary of the Treasury
does. He has that authority.
You might ask -- wouldn't he have his arm twisted not to do that?


The answer is that if there isn't any money left to service the debt,
it doesn't make any difference what the current regime might want to
do.


The day of reckoning is now coming. What has happened in the interim,
from 2001 to present, is dynamic, global economic deterioration. The
economic deterioration visited upon the United States by Bushonomics
is not a localized event. It is, in fact, global. We have a planet now
that is sinking into a sea of red ink.


The United States is consuming 80% of the planet's savings rate to
finance its debt. The central banks of Germany, Japan and Saudi Arabia
are no longer the powerhouses they used to be. Their reserves have now
been substantially depleted. They can, therefore, no longer hide the
fact that they own a certain number, likely in the trillions of
dollars, of U.S. Treasury debt that isn't being serviced, because they
can't hide it through bookkeeping tricks anymore because their
reserves are so depleted.


Therefore somebody has covertly been putting demands on the Bush-
Cheney regime for payment. Why do you think 2900 metric tons of gold
is depleted from U.S. inventory since March of `01?


Why do you think that $2 billion in currency seized from Iraq last May
is now unaccounted for?


Someone is putting demands on the Bush-Cheney regime. Someone is
saying to the Bushonian Cabal that -- You've got to start servicing
this debt because we, foreign central banks, are in nations - European
and Asian - whose reserves are now nearly exhausted.


Who could be putting that kind of pressure on them?


It has to be coming from whoever is organizing this thing at the very
top, which I would tend to think has got to be most likely a cabal of
people that would involve Henry Kissinger, James Baker, George
Schultz, possibly William Simon. It would be somebody at the very top
that is familiar with how to do this. It would have to be someone
familiar with finances.


So would this be one faction of a cabal blackmailing or forcing
another faction? No, it's not really blackmailing. It's being done out
of desperation. The German, Japanese and Saudi central banks are
saying to the Bushonian cabal, You've got to start servicing this debt
because we don't have the reserves to cover you anymore. We can no
longer make it appear that the debt is being serviced because our own
reserves are so substantively depleted. Therefore you must begin to
cover this debt. If you don't, then, at some point, we will have to
publicly admit in order to save our own necks -- that we were the end
buyers of a lot of stealth debt, a lot of debt that your Treasury
issued illegally and has never serviced. That would then expose the
whole cabal.


The Kissinger-Baker faction are at the top of how this was done on the
economic side of the equation. They were not the original insiders so
much, but the managers of the conspiracy from the U.S. Treasury, to
wit, the U.S. Treasury and Federal Reserve role-play the part.


Take Henry Kissinger. It may not have occurred to anyone why in the
last 3 years Henry Kissinger has been back in Washington more than he
has in the last 30 years. And why are all these quiet meetings in
Washington with alleged senior Bush-Cheney regime officials, as
foreign news services endlessly put it. It's because Kissinger is the
point man. He's the one that is telling them the disposition of other
foreign central banks.


Kissinger would probably also be involved in transfer or hypothecation
of any assets from the cabal. In other words, they're being stolen
from the American people by the Bush-Cheney regime and the Bushonian
Cabal, and they are being used to hypothecate, transfer, service, or
otherwise carry this debt held by certain foreign central banks.


The process of unraveling has already begun because of ever-spiraling
Bushonian budget deficits. The Bush-Cheney regime, even in its overt
policies (now they're overt political, economic, social and military
policies) is generating $600-billion-plus deficit per year, which is
consuming 80% of the planet's net savings rate.


It doesn't have the slack. In other words, it can't refinance stealth
debt by issuing more stealth debt anymore. Nor can they bleed money
out of the system like they could in the 1980s by hiding it when the
overt policies of the Bush-Cheney regime are already producing a
budget deficit of 6% of Gross Domestic Product. There is no other
mechanism that they could use anymore to hide expansion of debt that
could be used to service said stealth debt, and they are, frankly,
running out of assets that they can steal from the American people.


So the proverbial day of reckoning is coming. The Bush-Cheney regime
(and I give them credit for this) are telling the American people
what's coming, knowing the American people are too stupid to
understand. They are telling the American people about the re-
institution of the Gold Confiscation Act and the sudden scrapping of
the Treasury's emergency post-collapse gold note scheme to maintain
domestic liquidity.


David Walker, US Comptroller General and chief of the GAO has said
that should the Bush-Cheney regime be re-ensconced into power and,
hence, the scourge of Bushonomics persist, that the United States
could no longer service its debt beyond 2009. They're not hiding it
from anybody anymore. They are telling you what's happening. Now, what
does that mean? The key is in what Walker is saying when he says the
debt can no longer be serviced. I've been asked this on the radio
shows. People have noticed what Walker said because he's out in the
news more often than he used to be. It's unusual for the Comptroller
General of the United States, which is a rather arcane position, to be
out in the news so much.


It simply means that when he says the United States will no longer be
able to sustain Bushonian budget deficits, he means that by 2009, if
Bush-Cheney have a second term in office, the United States will be
consuming 100% of the planet's savings rate to finance Bushonian
budget deficits.


Therefore, if the planet can no longer generate any more liquidity to
lend to the United States, one of three things have to happen: A)
There has to be a sudden and dramatic reduction in federal spending.
There are only two places that can come from. There would have to be
an immediate $100-billion cut in defense spending, which would end any
hopes the Republicans had of getting into office for years to come
because it would destroy any confidence the NFWCs (Naïve Flag Waving
Crowd) had in them. Or you would have to scrap the multi-trillion-
dollar Bushonian tax cuts for the Republican rich, something that's
equally unpalatable.


The other option, B, as Paul O'Neill mentioned, is a dramatic increase
in the rate of federal income taxation from the current nominal rate
of 28% to 65%, which is what the Treasury Department estimated would
be required post-2009 to provide the U.S. Treasury with sufficient
revenues to continue to service debt.


The third option, or C, becomes the declaration of a force majeure on
credit service of U.S. Treasury debt by the United States Treasury,
which is tantamount and would be accurately construed as de facto debt
repudiation by the United States of America.


There are other signs to look for. They're not going to happen now,
but if Bush-Cheney is re-elected, you'll begin to see more signs that
the end is coming. I know a lot of people may disagree, but you wait
and see. If Bush-Cheney has a second term, see if they do not
institute some currency expatriation control. See if that doesn't come
in the way Nixon tried it in May-June of 1971.


In the second term, there will be some sort of currency expatriation
control in the United States, but there will also be loopholes that
will allow the large money to escape. The restrictions will apply to
the 10- and 20-thousand-dollar people. It ain't going to apply to the
10- and 20-million-dollar people. It would be self-defeating to do
that.


When that day comes, in other words, when the U.S. Treasury declares a
force majeure on debt, it wouldn't be broad-cast on mainstream media.
There's no sense because the American people don't even understand
what it means. But the announcement would actually be put on the
Federal Reserve wire system, which would, of course, immediately be
picked up by all media outlets anyway.


The U.S. Treasury would declare a force majeure on debt after the
Asian and European markets closed, probably at 12:30 p.m. EDT. The
reason why that hour was always selected is because Asian and European
markets close. It's also the lunch hour for the markets. It's when
you're going to have the fewest people on the floor of the exchanges.
That would be the ideal time to make such an announcement.


A few seconds after that announcement was made, all United States
markets, both equities debt and commodities i.e., stock, bonds,
commodities, that have trading collars or permissible daily limits
would all be limit-offered with pools. Limit-offered means that there
are more sellers at the limit i.e., limit down, than there are buyers.


So-called 'pools' would immediately begin to form, probably a thousand
contracts every few minutes. 'Limit-offered with pools' - this is
trader language. Pools to sell 2,000 lots, 3,000 lots. That means, the
number of sellers over and above the available buyers at the limit-
offered price. That would begin to build.


By 1:00, the news would begin to sink in because it would take awhile
before panic selling would arise from the public. This news is being
released at lunch hour.


A lot of the American people initially would not even understand the
temerity of the news. You would see professional selling first, and as
that professional selling intensified over the afternoon, the SEC, the
CFTC, NASDAQ, and various market regulatory authorities would begin to
institute certain emergency market protocols. This would be the
installation of the so-called 'declaration of fast market conditions,'
for instance; the declaration of 'no more stop orders,' the
declaration of 'fill at any price,' etc. in a desperate bid to
maintain liquidity.


That first day, the Dow Jones Industrial Average and related indices
on a percentage basis would lose about 20% of their value by the close
of business that day. The real impact would come overnight when the
American people found out what this was all about and when it was
explained to them.


At 7:30 a.m. EDT, the Tokyo markets would open, and no price would be
affixed for probably three or four hours into the session due to the
avalanche of selling. Once prices were established, the government of
Japan would close all of its financial markets. Europe would not even
open. All European governments would close all capital exchanges the
next day.

The United States would, in order to accommodate global electronic
trading, attempt to open the market on the second day, which they
would do, regardless of price, just to maintain some liquidity. At the
end of Day Two, the Dow Jones and related indices, would have lost two
thirds of their value, and prices would be set accordingly.


On Day Three, the New York Stock Exchange, the SEC and other related
agencies would recommend to the United States Treasury and the Federal
Reserve that all markets be closed. That would be on the morning of
Day Three. Eleven a.m., the Federal Reserve would then order all
domestic banks closed. All of the twelve Federal Reserve district
banks would (30 minutes later) have special U.S. forces parachuted in
and around them to secure whatever gold bullion reserves they had
left.


Day Three, 9:00 p.m., the President of the United States would declare
a state of martial law. All financial transactions would come to an
end. The Treasury would act to formally de-monetize the U.S. dollar
and declare it worthless.


This would be totally unprecedented. In the past, collapses have been
temporary and have been brought back up. But what we're talking about
now is the end.


These protocols that I'm referring to aren't even all that secret.
They were publicly available all through the Clinton era. These are
Treasury protocols that were instituted mostly in the late 1970s when
the Treasury and Federal Reserve began to feel that it was important
to have an emergency-collapse protocol in place.


What precipitated the timing of this was the inflationary spiral of
the late 1970s. The U.S. Treasury and the Federal Reserve were both
concerned that this inflationary spiral, which was occurring not only
domestically but globally, might lead to a global, uncontrollable
hyper-inflation that the Federal Reserve or major central banks could
not stop by traditional means, i.e., by raising interest rates and
contracting money supply.


There was also the recognition, of course, that global central reserve
bank bullion inventories had been so depleted over the previous 30
years that any re-institution of a species currency, even on a
temporary basis, and even within a regional or individual nation-state
basis, was no longer possible.


This is an analogy. In a military scenario, it's like the President of
the United States pushing the final red button -- the commit button.
The Treasury Secretary of the United States has a similar mechanism.
It's called the yellow button, the commit button. The Secretary of
Defense has the same system. This is what happens. Computer program
starts to institute these protocols. Imagine the complexity of trying
the manage all this. I think it's going to happen all simultaneously.
There are hundreds of different agencies involved, both domestically
and internationally. In order to maintain liquidity for as long as
possible, it has to be extremely well-coordinated, and there must be
existing collapse protocols that can be used.


The reason I was familiar with them was because I used to see the U.S.
Treasury 6900 Series Collapse Protocol, 6903, 6904 there'll be A, B,
and so on which keyed in to the Department of Defense to be
incorporated within the Department of Defense's own World War III
scenario and various types of military/ political/ social instability/
war/ pestilence, chaos, etc. scenarios.


All federal agencies had individual collapse protocols that ultimately
got coordinated through the Department of Defense. Obviously, the
Department of Defense would be the ultimate coordinator because it
would need to have special forces available, on a stand-by basis,
ready, that could quickly parachute into areas all over the country,
into the cities particularly, to secure federal properties and assets.


And that's literally how it would begin. By the end of the third day,
it would be all over -- a state of martial law. We're not talking
about war, now; this is just economic collapse.


There's no military implication here, no political, no social
implication or policy directive thereunto. This is strictly economic
collapse. By the end of Day Three, effectively, all banks in the world
will be shut down, all paper currencies will become valueless. Martial
law would be declared. There would be no continuing transactions, at
least for a period of time, of commodities. All providers of fuels and
foods would be shut down automatically.


They have this in great detail too. U.S. Department of Defense Special
117th Assault Unit would parachute in to seize control of the cattle
yards in Oklahoma City. This is how well it's planned. In other words,
economic collapse would automatically involve expansive military
action and control.


By the end of the third day, when you no longer have a domestic medium
of exchange, you have to have secured food and fuel stocks. You've got
to have troops that have secured distribution points where there is
food and fuel stocks, warehouses, tanks, etc. Otherwise people are
just going to go get them, and the people have to know that if they
try to go break into that store and steal that loaf of bread, they're
going to be shot.


Protocols for environmental disasters are called 'scaling-circle
scenarios.' 'Scaling circles' is a Department of Defense euphemism.
It's also used in FEMA, OEM and other emergency management services.
In environmental catastrophes, which are going to become national or
global, it's got to start someplace. It's going to start in one very
small, specific area. Therefore what happens is that the immediate
force containment is the greatest in the first circle, to try to
contain the spread of the disaster and keep it within that circle.


The environmental problem, to whatever extent it's possible, before it
spreads, will be neutralized or mitigated, in order to keep that
catastrophe within that circle, or, if it is likely that it is to
escape that circle, to attack whatever it is in such a fashion as to
mitigate its strength and its ability to contaminate or otherwise
affect other areas.


In the case of earthquakes, for instance, affecting the west coast,
beginning at Mt. Rainier and moving southward -- that's a different
type of scenario. That does not include as much Department of Defense
involvement. It includes separate protocols, wherein mostly FEMA and
OEM act as the senior coordinating agencies between municipal, county
and state disaster and containment, which is called Disaster and
Containment Units. Federal troops would only be brought in for the
purposes of maintaining control.


In a military or economic collapse situation, National Guard units
would provide any spare help they could in combating whatever the
problem is. Federal troops would be used in order to have the specific
authority simply to shoot anyone. There are plans for all sorts of
scenarios. The economic-disaster scenario is the one I always found
the most intriguing because it is the one that is least understood by
the American people.


Military control would be necessary when lines begin to form at the
banks, people trying to access their money. But that wasn't even
anticipated as a big problem. Lines would form at the banks, but it
was not even envisioned until sometime on Day Three because the
American people wouldn't get it. It would be announced that the stock
markets are down 2000 or 3000 points, and since we've always been
taught they'll come back, the people would still be buying stocks.


You could count on everybody remaining in ignorance all the way down
because the American people have never been taught Economics 101. The
American people wouldn't realize the full extent of it until the
markets were closed on the third day, or until the time when they went
down to cash a check and the bank was closed with soldiers out in
front. Then they would go down and see the gas station's closed. They
see the local supermarket has been shuttered, and there's federal
troops in front of it. Then they might begin to catch on. And remember
-- it's not just federal troops. In emergency-collapse protocols, even
before the declaration of a formal state of emergency or a state of
martial law, the local military authorities within any given county or
jurisdiction have the ability to essentially militarize anyone, that
is, any civilian. This would be more than just deputizing civilians.
It's federal. In other words, they would have the ability to
militarize and give military authority to a civilian force. This would
include not only police and the sheriffs and state police, but all
local law enforcement that exists below the state level would be
immediately militarized. They wouldn't take just anybody like they did
in Iraq. It would be like the military when they call for volunteers.
Then they'd have everybody and their brother-in-law volunteering,
waving around the American flag and so on.


You've got a lot of pickup-driving guys in this country with the gun
racks in the back and the Confederate flag flying. So you start waving
the American flag in front of their face and say, Hey, you're going to
get your chance you always wanted -- to fit your potbelly inside an
army uniform and carry a gun and shoot people. How appealing would
that be?


And besides, if you do this, then you're going to get to eat.


In other words, this is how it would unfold over three days, but, in
fact, very few Americans would know what to do about it or how to take
any precautions. They wouldn't have a clue because they don't
understand enough about economics to know what is happening. So that's
what it is -- Economic Armageddon. If the Bush-Cheney regime is re-
installed into power, that is effectively what Comptroller General
David Walker is saying.


In conclusion, since there is very little the people of the United
States can do to protect themselves. We're not going to make any
suggestions of how to protect yourselves because there's very little
you can do.


We could tell you to go out and buy gold coins and bury them in the
coffee can in the back yard and go to your nearest survivalist store,
but, frankly, that's useless. In the last analysis, it's a lot of
hype. There is very little the average US citizen could do.


The only thing that can prevent this, as the Comptroller alluded to
when he was asked by Barbara Walters, How do we prevent reaching the
problem by 2009? He said simply, "A change of regimes."


So how do you prevent it? Don't vote for Bush and Cheney -- and hope
that Bush does not use his emergency powers to cancel or postpone the
election by edict, powers which you, the flag-waving citizens, have
given him.


All flag-waving citizens, be warned. If you want to vote for Bush-
Cheney again, make sure you got plenty of Spam on hand.


Here's an interesting and humorous aside. A couple of days ago, Hormel
Foods, which makes Spam, announced that in the last six months there
have been record sales of Spam in the United States the survivalists'
food of choice. After all, they pride themselves on the fact, as the
spokesman for Hormel said, "It is the only food product you can buy
with an expiration that's 50 years."


When everything goes to hell, when all that man has created has turned
to dust again, the final legacy is going to be Spam. It will be the
last surviving item -- when the anthropologists of 20 thousand years
from now are digging sites and they see these enormous mountains of
unopened cans of Spam They'll have monuments to the past out of Spam.


So if Bush-Cheney has a second term in office, there will be some sort
of currency restriction, like Nixon did in 1971. On April 13, 2004,
Deputy Assistant Treasury Secretary John Boine talked about potential
currency restrictions. He used the word that's going to fuel the
flames of the survivalist and gloom-and-doom collapse people.


It's very, very telling that the U.S. Treasury may institute a
restriction on the amount of U.S. dollars that can be converted into
gold.


Furthermore, he intimated (and I suspected that this was coming,
although this wouldn't actually become law until Bush-Cheney was in
office for second term one way or another) that the Bush-Cheney regime
determines that the Gold Confiscation Act gives to Treasury the power
for so-called forced disclosure of gold holdings.


I'm not quite sure of the language of the Gold Confiscation Act from
1933. It just says, "compelled", as in citizens are lawfully compelled
to redeem gold for script. I don't think there was any such provision,
which he was inferring that there is. That was FDR's "Raw Deal" of
1934, when people were coerced into giving up their gold. But nowhere
in this act does it specifically authorize the Treasury to mandate
citizens to report their gold holdings. So if this gets any press at
all, particularly within the circles of gold bugs and so on, watch
out.


Furthermore, on Washington Journal they were talking about how FEMA
has recommended to the Office of Homeland Security to have increased
restrictions regarding citizen hoarding of long-term food and fuel
supplies. That's pretty sinister too.


What they're talking about is the purchase of long-term so-called
stores of survival food. FEMA was talking about some sort of
restriction preventing people from accumulating food stores; putting
it simply, that's what it means. The second point was to increase
restrictions that already exist.


FEMA was recommending even tighter restrictions on citizens building
their own private property underground storage tanks for the purposes
of long-term storage of fuel. The real intent of this is is threefold:
a) to restrict citizens' ability to hoard food; b) restrict citizens'
ability to hoard long-term storage of fuel; c) the forced
identification of citizens to reveal food and fuel stocks they may be
hoarding.


And that, in my opinion, is the real essence. The Bush-Cheney regime
was scared of having the FEMA angle put into the equation because they
knew what it means and how people would interpret it.


They have tried to use environmental legislation to restrict people's
ability to build fuel storage facilities on their own property -- to
get around what the true intent of that was.


But the bigger picture is that if you start to limit citizens' ability
to hoard fuel and food and shake them up by potential forced
identification of gold holdings or forced redemption.


In other words, what you don't want is citizens who have the ability
to store a lot of food and fuel and to own gold because they would be
able to resist state control in the future.


You've got to have every citizen on a rationing card to control the
civilian population. You can't have citizens out there hoarding food
and fuel because then people can say to government,"I ain't taking a
rationing card, baby, with my national ID card. I don't have to. You
can't control me through food and fuel and ever-worthless paper
currency."


I used to make fun of these people. But now, things have come full
circle on this debate. The Bush-Cheney regime is making it
increasingly clear through their small changes in policy. Not a lot of
people monitor these decisions, but I do. And the pattern is becoming
increasingly clear.


In fact, I would believe that those of the survivalist mentality (the
food, fuel, the gold coins in the coffee can in the back yard) people
who think that way will be ultimately vindicated - if George Bush has
a second term in office.


People should quit making fun of them because they would be vindicated
- even though they were all burned out, twenty-dollared to death,
buying books and tapes, and discredited by mainstream media. It may
sound like a hollow victory, but it won't be a hollow victory for them
- them that's got the Spam...

[Mur]

We are still in the extend and pretend phase....as long as the Fed can continue to create money out of thin air.....extend and pretend has a while to go.

Think about this.....We are paying our debts with money created out of thin air....we are the only nation doing this.

Ponzi schemes can only last so long

[lkwalker]

Yes. America is slowly- or maybe not so slowly- drifting towards irrelevance. The nation's credibility has now devolved to the last stand of all empires: military force. The next step is the dust bin of history. The world is in for the ultimate joy ride. Stay tooned. hahaha

[Egg]

We are still in the extend and pretend phase....as long as the Fed can continue to create money out of thin air.....extend and pretend has a while to go.

Think about this.....We are paying our debts with money created out of thin air....we are the only nation doing this.

Ponzi schemes can only last so long

It's been a ponzi scheme for a looooong time. People are just catching on.

[Mur]

[Mur]

In a System Based On Lies Why Would You Believe the Numbers?


Posted by: Phoenix Capital Research
Post date: 04/09/2011 - 17:22


If you want a clear picture of how the US works today, all you need to do is look at the latest budget “showdown.”

We have Congress debating over $30+ billion in spending at a time when the Federal Reserve is printing $100 billion per month or so to buy US debt.

Let’s think about this for a minute. We have a debt problem. And according to our elected leaders, the way to address that debt problem is to fight over some $30 billion in spending at the exact same time that unelected leaders (the Fed) are printing three times that amount (at least that we know of) to buy MORE US debt.

It’s bizarre, but it reveals the real power structure in the US’s “democracy.” To anyone who focuses on the numbers, not the noise, it’s obvious that Congress is just a grand distraction from the folks who really decide things AKA the Fed/ Banks.

How else can you explain that EVERYTHING the Fed says to us (and Congress) is an outright lie and yet no one does anything about it?

Inflation’s contained?



Not so much.

QE keeps interest rates low?



The economy is recovering?



No comment.

At this point, how on earth any of the “experts” have credibility is beyond me. Bernanke has definitely committed perjury at least once. He also clearly has no understanding or finance or economics… or he’s a pathological liar.

Fed President Dudley seems to think that an iPad has the same value to humanity as food. And somehow we’re meant to believe that his ties to Goldman Sachs were full severed when he became a public servant.

On top of this, the Financial Reform bill was penned by two of the most corrupt members of Congress in history. Even the former head of TARP has admitted that the whole program was nothing more than a backdoor handout to Wall Street. And our President who ran on a platform of “Change” has proven to be an even more aggressive version of the leader he replaced.

In this environment, the entire system is based on lies and illusions. What are the odds that the stock market, corporate earnings, and other financial entities are also based on lies?


Snip sales pitch


Best Regards,

Graham Summers

http://www.zerohedge.com/article/system ... ve-numbers

[Pigeon]

What are the odds that the stock market, corporate earnings, and other financial entities are also based on lies?

About 98%.

I have been saying the market is BS for years. The ups and down that average investors are told to ignore is the machine getting it's money. How to you reel in a fish. Pull on the line, slack it off, pull again. They have to let the average investor make a bit of money over time to keep the scheme in operation.

Corporate America has proven over the years it is full of lies when it comes to reporting on money.

[lkwalker]

The stock market is nothing more than a sophisticated casino. For that matter- all of capitalism is a pernicious game rigged in favor of the house. And it will continue only as long as there are willing players.