Tag Archives: wall street

Where is Neo When We Need Him — Paul Craig Roberts

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By Paul Craig Roberts

Source: PaulCraigRoberts.org

In The Matrix in which Americans live, nothing is ever their fault. For example, the current decline in the US stock market is not because years of excessive liquidity supplied by the Federal Reserve have created a bubble so overblown that a mere six stocks, some of which have no earnings commiserate with their price, accounted for more than all of the gain in market capitalization in the S&P 500 prior to the current disruption.

In our Matrix existence, the stock market decline is not due to corporations using their profits, and even taking out loans, to repurchase their shares, thus creating an artificial demand for their equity shares.

The decline is not due to the latest monthly reporting of durable goods orders falling on a year-to-year basis for the sixth consecutive month.

The stock market decline is not due to a week economy in which after a decade of alleged economy recovery, new and existing home sales are still down by 63% and 23% from the peak in July 2005.

The stock market decline is not due to the collapse in real median family income and, thereby, consumer demand, resulting from two decades of offshoring middle class jobs and partially replacing them with minimum wage part-time Walmart jobs without benefits that do not provide sufficient income to form a household.

No, none of these facts can be blamed. The decline in the US stock market is the fault of China.

What did China do? China is accused of devaluing by a small amount its currency.

Why would a slight adjustment in the yuan’s exchange value to the dollar cause the US and European stock markets to decline?

It wouldn’t. But facts don’t matter to the presstitute media. They lie for a living.

Moreover, it was not a devaluation.

When China began the transition from communism to capitalism, China pegged its currency to the US dollar in order to demonstrate that its currency was as good as the world’s reserve currency. Over time China has allowed its currency to appreciate relative to the dollar. For example, in 2006 one US dollar was worth 8.1 Chinese yuan. Recently, prior to the alleged “devaluation” one US dollar was worth 6.1 or 6.2 yuan. After China’s adjustment to its floating peg, one US dollar is worth 6.4 yuan. Clearly, a change in the value of the yuan from 6.1 or 6.2 to the dollar to 6.4 to the dollar did not collapse the US and European stock markets.

Furthermore, the change in the range of the floating peg to the US dollar did not devalue China’s currency with regard to its non-US trading partners. What had happened, and what China corrected, is that as a result of the QE money printing policies currently underway by the Japanese and European central banks, the dollar appreciated against other currencies. As China’s yuan is pegged to the dollar, China’s currency appreciated with regard to its Asian and European trading partners. The appreciation of China’s currency (due to its peg to the US dollar) is not a good thing for Chinese exports during a time of struggling economies. China merely altered its peg to the dollar in order to eliminate the appreciation of its currency against its other trading partners.

Why did not the financial press tell us this? Is the Western financial press so incompetent that they do not know this? Yes.

Or is it simply that America itself cannot possibly be responsible for anything that goes wrong. That’s it. Who, us?! We are innocent! It was those damn Chinese!

Look, for example, at the hordes of refugees from America’s invasions and bombings of seven countries who are currently overrunning Europe. The huge inflows of peoples from America’s massive slaughter of populations in seven countries, enabled by the Europeans themselves, is causing political consternation in Europe and the revival of far-right political parties. Today, for example, neo-nazis shouted down German Chancellor Merkel, who tried to make a speech asking for compassion for refugees.

But, of course, Merkel herself is responsible for the refugee problem that is destabilizing Europe. Without Germany as Washington’s two-bit punk puppet state, a non-entity devoid of sovereignty, a non-country, a mere vassal, an outpost of the Empire, ruled from Washington, America could not be conducting the illegal wars that are producing the hordes of refugees that are over-taxing Europe’s ability to accept refugees and encouraging neo-nazi parties.

The corrupt European and American press present the refugee problem as if it has nothing whatsoever to do with America’s war crimes against seven countries. I mean, really, why should peoples flee countries when America is bringing them “freedom and democracy?”

Nowhere in the Western media other than a few alternative media websites is there an ounce of integrity. The Western media is a Ministry of Truth that operates full-time in support of the artificial existence that Westerners live inside The Matrix where Westerners exist without thought. Considering their inaptitude and inaction, Western peoples might as well not exist.

More is going to collapse on the brainwashed Western fools than mere stock values.

Wall Street Panic

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By Mike Whitney

Source: Counterpunch

“Not only is the equity market at the second most overvalued point in U.S. history, it is also more leveraged against probable long-term corporate cash flows than at any previous point in history.”

— John P. Hussman, Ph.D. “Debt-Financed Buybacks Have Quietly Placed Investors On Margin“, Hussman Funds

“This year feels like the last days of Pompeii: everyone is wondering when the volcano will erupt.”

— Senior banker commenting to the Financial Times

Last Friday’s stock market bloodbath was the worst one-day crash since 2008. The Dow Jones dropped 531 points, while the S&P 500 fell 64, and the tech-heavy Nasdaq slid 171. The Dow lost more than 1,000 points on the week dipping back into the red for the year. At the same time, commodities continued to get hammered with oil prices briefly dropping below the critical $40 per barrel mark. More tellingly, the market’s so called “fear gauge” (VIX) skyrocketed to a 2015 high indicating more volatility to come.  The VIX has remained at unusually low levels for a number of years as investors have grown more complacent figuring the Fed will intervene whenever stocks fall too far. But last week’s massacre cast doubts on  the Central Bank’s intentions. Will the Fed ride to the rescue again or not? To the vast majority of institutional investors, who now base their buying decisions on Fed policy rather than market fundamentals, that is the crucial question.

Ostensibly, last week’s selloff  was triggered by China’s unexpected decision to devalue its currency, the juan.   The announcement confirmed that the world’s second biggest economy is rapidly cooling off increasing the likelihood of a global slowdown. Over the last decade, China has accounted  “for a third of the expansion in the global economy,… almost double the contribution of the US and more than triple the impacts of Europe and Japan.” Fears of a slowdown were greatly intensified on Friday when a survey showed that manufacturing in China shrank at the fastest pace since the recession in 2009. That’s all it took to put the global markets into a nosedive. According to the World Socialist Web Site:

“The deceleration of growth in China, reflected in figures on production, exports and imports, business investment and producer prices, is fueling a near-collapse in so-called “emerging market” economies that depend on the Chinese market for exports of raw materials. The past week saw a further plunge in stock prices and currency rates in Russia, Turkey, Brazil, South Africa and other countries. These economies are being hit by a massive outflow of capital, placing in doubt their ability to meet debt obligations.”

(“Panic sell-off on world financial markets”, World Socialist Web Site)

While a correction was not entirely unexpected following a 6-year long bull market, the sudden drop in equities does have analysts rethinking the effectiveness of the Fed’s monetary policies which have had little impact on personal consumption, retail spending, wages, productivity, household income, or economic growth all of which remain weaker than they have been following any recession in the post war era.  For all intents and purposes, the plan to inflate asset prices by dropping rates to zero and injecting trillions in liquidity into the financial system has been an abject failure.   GDP continues to hover at an abysmal 1.5% while  signs of a strong, self sustaining recovery are nowhere to be seen. At the same time, government and corporate debt continue to balloon at a near-record pace draining capital  away from productive investments that could lay the groundwork for higher employment and stronger growth.

What’s so odd about last week’s market action is that the bad news on China put shares into a tailspin instead of sending them into the stratosphere which has been the pattern for the last four years. In fact, the reason volatility has stayed so low and investors have grown so complacent is because every announcement of bad economic data has been followed by cheery promises from the Fed to keep the easy-money sluicegates open until the storm passes.  That hasn’t been the case this time, in fact, Fed chair Janet Yellen hasn’t even scrapped the idea of jacking up rates some time in September which is almost unthinkable given last week’s market ructions.

Why? What’s changed?   Surely, Yellen isn’t going to sit back and let six years of stock market gains be wiped out in a few sessions, is she?  Or is there something we’re missing here that is beyond the Fed’s powers to change? Is that it?

My own feeling is that China is not the real issue. Yes, it is the catalyst for the selloff, but the real problem is in the credit markets where the spreads on high yield bonds continue to widen relative to US Treasuries.

What does that mean?

It means the price of capital is going up, and when the price of capital goes up, it costs more for businesses to borrow. And when it costs more for businesses to borrow, they reduce their borrowing, which decreases the demand for credit. And when the demand for credit decreases in a credit-based system, then there’s a corresponding slowdown in business investment which impacts stock prices and growth. And that is particularly significant now, since the bulk of corporate investment is being diverted into stock buybacks. Check out this excerpt from a post at Wall Street on Parade:

“According to data from Bloomberg, corporations have issued a stunning $9.3 trillion in bonds since the beginning of 2009. The major beneficiary of this debt binge has been the stock market rather than investment in modernizing the plant, equipment or new hires to make the company more competitive for the future. Bond proceeds frequently ended up buying back shares or boosting dividends, thus elevating the stock market on the back of heavier debt levels on corporate balance sheets.

Now, with commodity prices resuming their plunge and currency wars spreading, concerns of financial contagion are back in the markets and spreads on corporate bonds versus safer, more liquid instruments like U.S. Treasury notes, are widening in a fashion similar to the warning signs heading into the 2008 crash. The $2.2 trillion junk bond market (high-yield) as well as the investment grade market have seen spreads widen as outflows from Exchange Traded Funds (ETFs) and bond funds pick up steam.” (“Keep Your Eye on Junk Bonds: They’re Starting to Behave Like ‘08 “, Wall Street on Parade)

As you can see, the nation’s corporations don’t borrow at zero rates from the Fed. They borrow at market rates in the bond market, and those rates are gradually inching up. And while that hasn’t slowed the stock buyback craze so far,  the clock is quickly running out. We are fast approaching the point where debt servicing, shrinking revenues, too much leverage, and higher rates will no longer make stock repurchases a sensible option, at which point stocks are going to fall off a cliff. Here’s more from Andrew Ross Sorkin at the New York Times:

“Since 2004, companies have spent nearly $7 trillion purchasing their own stock — often at inflated prices, according to data from Mustafa Erdem Sakinc of the Academic-Industry Research Network. That amounts to about 54 percent of all profits from Standard & Poor’s 500-stock index companies between 2003 and 2012, according to William Lazonick, a professor of economics at the University of Massachusetts Lowell.”

You can see the game that’s being played here. Mom and Pop investors are getting fleeced again. They’ve been lending trillions of dollars to corporate CEOs (via bond purchases) who’ve taken the money, split it up among themselves and their wealthy shareholder buddies, (through buybacks and dividends neither of which add a thing to a company’s productive capacity) and made out like bandits.  This, in essence, is how stock buybacks work. Ordinary working people stick their life savings into bonds (because they were told “Stocks are risky, but bonds are safe”.) that offer a slightly better return than ultra-safe, low-yield government debt (US Treasuries) and, in doing so, provide lavish rewards for scheming executives who use it to shower themselves and their cutthroat shareholders with windfall profits that will never be repaid. When analysts talk about “liquidity issues” in the bond market, what they really mean is that they’ve already divvied up the money between themselves and you’ll be lucky if you ever see a dime of it back. Sound familiar?

Of course, it does. The same thing happened before the Crash of ’08. Now we are reaching the end of the credit cycle which could produce the same result. According to one analyst:

“There’s been worrying deterioration in the overall global demand picture with the continuation of EM (Emerging Markets) FX (Currency Markets) onslaught, deterioration in credit metrics with rising leverage in the US as well as outflows in credit funds in conjunction with significant widening in credit spreads…..The goldilocks period of “low rates volatility-stable carry trade environment of the last couple of years is likely coming to an end.”

(“Credit: Magical Thinking“, Macronomics)

In other words, the good times are behind us while hard times are just ahead. And while the end of the credit cycle doesn’t always signal a stock market crash, the massive buildup of leverage in unproductive financial assets like buybacks suggest that equities are in line for a serious whooping. Here’s more from Bloomberg:

“Credit traders have an uncanny knack for sounding alarm bells well before stocks realize there’s a problem. This time may be no different. Investors yanked $1.1 billion from U.S. investment-grade bond funds last week, the biggest withdrawal since 2013, according to data compiled by Wells Fargo & Co…..

“Credit is the warning signal that everyone’s been looking for,” said Jim Bianco, founder of Bianco Research LLC in Chicago. “That is something that’s been a very good leading indicator for the past 15 years.”

Bond buyers are less interested in piling into notes that yield a historically low 3.4 percent at a time when companies are increasingly using the proceeds for acquisitions, share buybacks and dividend payments. Also, the Federal Reserve is moving to raise interest rates for the first time since 2006, possibly as soon as next month, ending an era of unprecedented easy-money policies that have suppressed borrowing costs….

“Unlike the credit market, the equity market well into 2008 was very complacent about the subprime crisis that led to a full blown financial crisis,” the analysts wrote…..

So if you’re very excited about buying stocks right now, just beware of the credit traders out there who are sending some pretty big warning signs.”  (“U.S. Credit Traders Send Warning Signal to Rest of World Markets”, Bloomberg)

It’s worth noting that the above article was written on August 14, a week before the stock market blew up. But credit was “flashing red” long before stock traders ever took notice.

But that’s beside the point. Whether the troubles started with China or the credit markets, probably doesn’t matter. What matters is that the system about to be put-to-the-test once again because the appropriate safeguards haven’t been put in place, because bubbles are unwinding, and because the policymakers who were supposed to monitor and regulate the system decided that they were more interested in shifting  wealth to their voracious colleagues on Wall Street than building a strong foundation for a healthy economy. That’s why a simple correction could turn into something much worse.

NOTE: As of posting time, Sunday night, the Nikkei Index is down 710, Shanghai down 296, HSI down 1,031. US equity futures are all deep in the red

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

American Politics: A House of Mirrors

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By Ulson Gunnar

Source: Land Destroyer

A house of mirrors is an immersive, highly distorted and intentionally confusing version of reality. Those walking its corridors are sometimes amused and sometimes frightened by the disorienting experience, but luckily for them, it is only temporary. There is an exit, and they will walk through it, back to reality.

But what if one existed their entire lives in such a distorted reality and knew of no exits? Would they convince themselves that these distorted images reflected back at them were in fact reality no matter how unnatural they appeared? Could they convince themselves to enjoy and even embrace this distorted reality?

One ponders such questions when looking from the outside-in on American politics. It too is a house of mirrors reflecting back a reality entirely distorted. Also like a house of mirrors, American politics have been intentionally constructed this way, to confuse, disorient and even frighten the American people when necessary to exercise mass persuasion over them. The final result is perpetual impunity granted to the powers that truly be, hiding behind the powers that allegedly were “elected,” and powers whose authority only exists in this house of mirrors and no further.

New Leaders, Old Wars 

Consider US President George Bush Sr. He launched the inaugural war of what he himself called a “New World Order.” Operation Desert Storm included multiple nations comprising of nearly a million soldiers who swept from the map one of the largest conventional armies (4th largest) in the world. Bush Sr., however, paused just ahead of sweeping the Iraqi leader Saddam Hussein from power. His successor, US President William Jefferson Clinton would keep Iraq subdued with periodic bombing campaigns and the imposition of both crippling sanctions and no-fly zones in the north and south of Iraq.

Clinton would serve 8 years in office and lock horns with Russia in Serbia in a proto-Ukraine-style conflict. In 2000, we should remember that George Bush Jr. ran on a platform opposed to global interventionism. For those trapped in the house of mirrors, this distortion of reality seemed very convincing. For those who understood the hegemonic mission of America’s special interests, those that transcend elections and political parties, they knew Bush Sr.’s desires for a “New World” endured and would manifest themselves in a yet revealed, muscular foreign policy that only needed the right impetus to be justified in the eyes of the American people.

Conveniently, the events of September 11, 2001 delivered just that. So began the 8 year “War on Terror.” So sick of wars were Americans at the end of those 8 years, that anyone promising to end them would likely win the 2008 elections. And so Barack Obama did and thus became “US President.” However, not only did the wars not end, and not only were they in fact expanded, new wars were begun. In fact, these new wars were all the planned wars Bush Sr., Clinton and Bush Jr. never got around to fighting.

Yet, no matter how unnatural this distorted reflection appeared in the American politics house of mirrors, those trapped perpetually within its mirrored walls found it perfectly acceptable for a Democratic president to continue Republican wars and start new wars the Republicans could only have dreamed of starting but couldn’t because of left-wing anti-war movements now silent because “their guy” was in office.

Hillary = Obama = Bush Jr. = Clinton = Bush Sr.  

With Hillary Clinton’s announcement that she is running for office in 2016 with President Obama’s full endorsement, those infected with neo-liberalism and wandering the corridors of this house of mirrors see yet another distorted, ghoulish image staring back, but one they are yet again ready to embrace.

Here is a woman who as US Secretary of State laughed and mocked the Libyan people upon hearing their leader had been murdered by terrorists in what constituted by all accounts a war crime. Before that, she played an active role in selling the war upon Libya in 2011 to the American left (as the American right had already desired such a war for years and needed no convincing). By 2016 we may have yet another Clinton in office, and a Clinton fully dedicated to carrying on the wars of both the Democrats and Republicans that came before her.

To say this is continuity of agenda is a bit of an understatement. American foreign policy has been so singular in purpose and focus for the past several decades that it is clear that behind the distortions of this house of mirrors, something singular and very nasty has been there the entire time. Who or what could it be?

The Real President of the United States Lives on Wall Street, not Pennsylvania Avenue 

How about we look at the people who pay for the political campaigns to put these various spokesmen and women-in-chiefs into office in the first place? Or the immense interests driving lobbying efforts that target and control both sides of the political aisle in American politics? A single Fortune 100 corporation has enough money to buy out every relevant politician on Capital Hill and still finish up the fiscal year bloated with billions in profits. And what happens when these interests converge across various think-tanks they themselves have set up and created to generate the singular foreign and domestic policies we see carried forward from presidency to presidency, from congressional session to session?

We see complete control exerted over American politics as well as across the media, allegedly charged to serve as watchdogs and a check and balance, but instead turned into an echo chamber and instrument of mass persuasion by those who have clearly consolidated the summation of American politics in their pockets.

While policy might be debated over by these special interests, and groups moved in one direction or another to exert influence against competing special interests among this exclusive club, one thing is for sure, the American voter is the last voice considered in this process.

Since the American voter is incapable of seeing that they are in fact in a house of mirrors to begin with, and think they are “outside” in reality making real decisions, their decisions are completely irrelevant to those who really do live outside in reality and are actually making real decisions.

We must understand that for special interests that collectively control trillions of dollars in assets, profits and infrastructure all over the planet, the last thing they are willing to do is allow for the existence of a system that might actually put into power a form of authority above their own, that would set policy predicated upon the interests of the people, rather than their own. They have the money, the power and the ability to ensure policy is set to suit them, and them alone, and they clearly have done just that.

This is why US troops are still in Afghanistan and Iraq, wars are still being waged either directly or indirectly against Libya, Syria, Yemen, Iran and Russia and destabilization targeting China and other targets of Washington and Wall Street’s special interests continues unabated, albeit distorted within the house of mirrors, regardless of who is president.

So Americans may think they are voting for Hillary Clinton in 2016, and those infected with neo-liberalism the world over may think another enlightened champion of their progressive cause has taken the reins of the free world, but they might as well have voted for another Bush. The reality is, that as along as Americans and those who look to America from abroad for leadership dwell in this house of mirrors, the special interests that intentionally built this carnival called “democracy” will have their way back in actual reality.

Instead of fumbling through another four years trapped inside this carnival attraction, let’s find the exits. Let’s leave this house of mirrors and breathe a breath of fresh air. Are we really going to listen to another round of campaign promises, holding our breath hoping that this time they mean it? Or will we begin divesting from this system and building our own, one that might actually truly represent us this time, far from the mirrored walls that held us for so long?

U.S. Wealth-Concentration: The Most-Accurate Current Estimates

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By Eric Zuesse

Source: Washington’s Blog

CURRENT REALITIES:

Wealthiest Tenth (10%) of Americans Own 75% of America; They Draw 40% of All U.S. Income.

Wealthiest Hundredth (1%) of Americans Own 43% of America; They Draw 20% of All U.S. Income.

Wealthiest Thousandth (0.1%) of Americans Own 22% of America; They Draw 8% of All U.S. Income.

Wealthiest Ten-Thousandth (0.01%) Own 11.2% of America; They Draw 5% of All U.S. Income.

Wealthiest 0.0025% (Forbes 400) Own 2.75% (of all trackable privately-held wealth, not including ‘non-profits’ that are controlled by them).

That last (2.75%) is this $2.29 trillion divided by this $83,296 billion (representing all of the privately owned wealth in the U.S.), in the final quarter of 2014.

Incidentally, the wealthiest tenth are worth over $1 million and draw incomes above $200,000; so: they’re all “millionaires” in common parlance; all of the “top 10%” are.

Following will be mirror-images of the above-cited breakdowns:

Poorest 90% of Americans Own 25% of America; They Draw 60% of All U.S. Income.

Poorest 99% of Americans Own 57% of America; They Draw 80% of All U.S. Income.

Poorest 99.9% of Americans Own 78% of America; They Draw 92% of All U.S. Income.

Poorest 99.99% of Americans Own Less Than 88.8% of America; They Draw Less Than 95% of All U.S. Income.

Poorer 50%: Comprehensive figures for the wealthier and poorer 50% of Americans haven’t been published as recently. However, for the year 2010, the wealthier 50% of Americans owned 98.9% of America, and the poorer 50% of Americans owned 1.1% of America. That was the year after the crash had supposedly ended in 2009. The last prior year in that same study was 2007, the economic peak, and it showed the wealthier half owning 97.5% of America, and the poorer half owning 2.5% of it. In other words: the losses from the Wall Street economic crash went overwhelmingly to the poorer half of the U.S. population (their wealth going down from 2.5% to only 1.1% of America’s total), because of the bailouts to Wall Street. Wall Street complains about “welfare programs,” as if it’s the poor who get bailed out; but those complaints are merely part of Wall Street’s — and their billionaires’ — scams that are targeted to sway fools. The figures show the exact opposite to be the actual truth. America is overwhelmingly a kleptocracy by the top against everybody else; not a “welfare state for the poor.” That’s just aristocrats’ scam, pumped by the economists they hire, and by the ‘news’ media which are controlled by aristocrats, and believed by suckers they fool.

HERE ARE THE TRENDS:

Right before the crash, in 2006 and 2007, the top 1% owned 33.8% of America; they drew 21.4% of all U.S. income.

A Congressional Research Service study, “An Analysis of the Distribution of Wealth Across Households, 1989-2010,” found that between the economic peak in 2007, and the end of the opening phase of the Wall Street bailouts in 2010, wealth-inequality in America soared, rising even faster than it had been rising during the George W. Bush years. As a consequence, whereas in 2007, the top 1% owned 33.8% of America, by 2010 this figure had risen to 34.5% — and the latest figure is 43%; so, this soaring is continuing (it wasn’t occurring only at the start of Obama’s Administration). What was bad under Bush has thus become lots worse under Obama, despite all of Obama’s rhetoric against wealth-inequality. And yet the Wall Street bailouts continue (under the guise of “QE”), as if the trickle-down policies of Obama and the Republicans had “ended” the “recession” for Americans generally, instead of only for the top 1% — which latter was the reality, and which reality makes a mockery of economists, who say that the “recession ended in 2009.” “Ended,” for whom? The policy is to bail out the megabanksters who made trillions from the MBS scams that brought the economy down — those people were bailed out when they were deep in the hole — while not bailing out their homeowners and cheated investors, who never recovered; statistics show they continue to suffer from those crimes. As a consequence, under Obama, wealth has risen only for the wealthiest of Americans.

However, incomes have been rising slightly for everyone else. For example, the “Bottom 99% Incomes Real Growth” during “2009-2014” was only 4.3% — less than 1% per year — while for the “Top 1%” it was 58% during that 5-year time-expanse. But that — bad as it is — is nonetheless an improvement, on income.

Throughout Obama’s first term, 2009-2012, the “Bottom 99% Incomes Real Growth” had been only 0.4% — less than 1% throughout that entire four-year period. The “Top 1%” received 95% of the “Incomes Real Growth” then. And yet, even though even the incomes of the bottom 99% of the U.S. population were stagnant throughout that four-year period ending in 2012 (all of Obama’s first term), economists still say that the “recession ended in 2009.” And the reality was even worse than this incomes-picture shows, because, in terms of wealth, which is even more important than income, there hasn’t yet  been a “recovery,” in the U.S., for the bottom 99% of Americans. What there has been, instead, is continuing scams, misinforming the public, about what’s actually happening, and what happened, and what caused it to happen. It’s just a racket.

THE DEEPER MEANING:

Under Presidents G.W. Bush and Barack Obama, economic inequality in America has been more extreme, for more years, than under any Presidents in all of the previous U.S. history. But, at least, Bush didn’t pretend to care about it. Obama does. He pretended to a concern for justice which he never really had; he was always merely faking liberalism. It was thus entirely true-to-form that President Obama had his Solicitor General present an argument to the U.S. Supreme Court that lying in politics is Constitutionally protected “free speech.”

But what, then, is really left of ‘democracy’ in the U.S.? After all, even before Obama, democracy in America was already dying, if not yet dead. And what meaningful democracy can even possibly exist in a nation where lying in politics is constitutionally protected ‘free speech,’ which no state may penalize, under any conditions? How may “the people” even conceivably rule in a republic where politicians can reasonably be expected to win only lying-contests, because not to lie in such a nation is not to be politically competitive there at all? Can democracy really consist of contests in deception? Is such a political race-to-the-bottom consistent with democracy?

Or, is it instead the case that such extreme wealth-disparities as exist in the U.S. are the natural result of decades of politics being (perhaps increasingly within recent times) little more than lying-contests? Is that the deeper truth, behind the deplorable figures here?

Is this extreme inequality the result of state-imposed reduction of ‘democracy’ to being basically contests in deceiving the public? Is that what it’s really all about — a racket, basically, against the public, for and on behalf of the aristocracy?

Is this extreme inequality the intended result, or is it merely the result of the stupidity of those who just happen to win high national office in the United States?

Do the farm animals just happen to end up as burger-meat? Or is that what they are there for? We know. Do they?

Never Mind FIFA, How about a Crackdown on the Banksters?

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By Finian Cunningham

Source: Strategic Culture Foundation

FIFA boss Sepp Blatter’s sudden resignation this week only days after being re-elected shows that the US campaign to bust the football federation over alleged financial corruption is probably going to intensify during the weeks and months ahead.

Blatter had been re-elected for the fifth time last Friday as the federation’s president. He had earlier brushed off calls for his resignation from the American and British governments, amid a storm of media allegations over corruption at the World Cup organising body. Now only four days after being re-elected, the FIFA chief executive is quitting, saying somewhat cryptically that he does not have a sufficient mandate in the world of football to continue at the helm of the organisation.

The dramatic bust in a Zurich hotel last week of FIFA executives is «just the beginning», top US law enforcement officials have warned. British authorities have also jumped on the bandwagon with their own announced probe into financial irregularities at the World Cup organiser.

With seven FIFA officials arrested so far and seven more indicted, and the US authorities vowing to pursue others in the footballing federation over alleged financial corruption, it can be anticipated that this scandal will run and run into interminable extra-time.

An ulterior political agenda behind the apparent American-led crackdown on the international footballing federation could very well be the desire by US and British governments to scupper the 2018 World Cup venue in Russia. Both the Americans and the British lost out when Russia won the bid back in 2010 to host the forthcoming quadrennial tournament, following last year’s event in Brazil. A re-run of the selection process would give the US and Britain a second chance to pitch their bids, and with a generated cloud hanging over Russia due to the FIFA scandal, they both stand a better chance of winning if it comes to a re-selection.

The sporting event is highly coveted, being the most popularly watched on the planet – even exceeding the Olympics. Billions of dollars are at stake for corporations, from construction, hospitality, sportswear and media. There is also the immense national prestige that comes with hosting the global spectacle.

A second, more important, political objective for Washington and its British ally is to augment their ongoing campaign to isolate Moscow over the Ukraine crisis. The West accuses Vladimir Putin’s government of annexing Crimea last year and they have mounted a barrage of economic sanctions on Russia seemingly in retribution. Washington and London have been most gung-ho among Western countries in pushing the anti-Russian agenda over Ukraine.

President Putin has shown no sign of weakening under this relentless Western pressure. Moscow denies any impropriety over Ukraine. Indeed, it accuses the West of fomenting an illegal coup in that country and of trying to use the resulting conflict as a way to destabilise Russia. Moscow has retaliated to Western sanctions by imposing its own bans on European trade exports and, in recent days, imposing travel restrictions on 89 European Union parliamentarians.

So, very plausibly, the Americans and their trusty British ally are using the issue of alleged corruption in World Cup organising body, FIFA, as a stalking horse to further get at Russia over the geopolitical tensions in Ukraine.

US law enforcement officials at the highest level – including attorney-general Loretta Lynch and FBI chief James Comey – say their investigation into FIFA will continue until all suspicions of corruption in the organisation are uncovered. This high-level US involvement in targeting FIFA strongly suggests a political direction being given by the Obama administration.

The concerted nature of the American corruption onslaught against FIFA also points to a top-level decision to go after the Swiss-based federation. The British government, from prime minister David Cameron to his foreign secretary Philip Hammond, quickly stepped into the FIFA scandal following the American lead, making highly unusual public calls for the federation’s president Sepp Blatter to resign.

Both the timing of the US-launched corruption probe – in the week of FIFA’s annual conference and leadership election – plus the way that senior American and British officials, not to mention the publicity of Western news media, have weighed-in to rebuke FIFA suggests that it is all part of a coordinated political campaign authored at the highest level of government. That, in turn, suggests that there is an ulterior political agenda behind the supposed criminal crackdown on FIFA, and that the ulterior agenda is the Western objective to undermine Russia.

Another measure for assessing the credibility of the US-led corruption campaign against FIFA is to put the alleged wrongdoing in perspective with other known spheres of financial corruption. Few people believe that FIFA is free from sleaze and dodgy kickbacks. With so much corporate advertising at stake and broadcasting rights for global media audiences, it would be naive to assume that large wads of money have not crossed palms with a wink and a nod.

The US authorities are throwing a book of charges at the organisation, ranging from bribery to commercial fixing, racketeering to tax evasion. It is claimed by the Americans that the corruption at FIFA amounts to $150 million.

That sounds like a lot of sleazy money, but this figure pales in significance to the amount of corruption and criminality attributable to Wall Street banks and other Western financial institutions. For example, British bank HSBC alone has been caught running tax evasion, money-laundering for drug cartels and other illicit schemes that is estimated at $180 billion – or more than a thousand-fold the scale of criminality alleged at FIFA.

Wall Street banks, including JP Morgan, are accused of massive, systematic rigging of gold price markets all in a shady bid to shield the US dollar value. That criminality, affecting the price of basic commodities and livelihoods for billions of people worldwide, is estimated to be in the order of trillions of dollars – or a thousand, thousand-fold the FIFA debacle.

Moreover, these same banks, along with a slew of other global names – Citibank, Bank of America, Goldman Sachs, Barclays, Deutsche Bank, Credit Agricole among many others – were all directly responsible for the explosion in toxic financial derivatives that made their executives multimillionaires but which led to the global financial and economic meltdown in 2008.

That meltdown – which persists seven years on from its inception – has resulted in millions of lives ruined from unemployment and the collapse of pensions and savings funds. Added to that are the myriad social hardships and crippled lives from the ensuing austerity imposed on the general Western public to pay for the financial catastrophe – a catastrophe that was deliberately and recklessly engineered by the major banks, hedge funds and other capitalist investment agencies.

As Michel Chossudovsky writes in his co-authored book, The Global Economic Crisis: «The meltdown of financial markets in 2008-2009 was the result of institutionalised fraud and financial manipulation. The ‘bank bailouts’ were implemented on the instruction of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an unsurmountable public debt».

It is probable that generations of children to come will be forced to pay for the trillions of dollars of debt that was created by American and European banks, which have now been offloaded on to the public by governments in so-called «bail-outs». Make no mistake, thousands of people have already died from the austerity that Western governments have imposed on their public in order to pay for the corporate fraud, tax evasion, fixing and embezzlement that has taken place in front of our eyes on a massive scale in the order of trillions of dollars.

Yet in the face of this gargantuan, genocidal criminality not one board member or executive from the major banks involved in precipitating the global crash has been charged, let alone prosecuted or imprisoned. In fact, the Wall Street banking elite and their counterparts in the City of London are among the main political donors that helped to re-elect Barack Obama and David Cameron.

The belated focus of American and British authorities on the alleged wrongdoings at FIFA can thus be readily seen as both ludicrous and laughable when we compare that with the absolute dearth of interest by these same authorities in applying law enforcement where it ought to be applied – on the Wall Street and City of London banksters.

Obviously, then, the self-righteous campaign to «root out fraud at FIFA is just so much pious nonsense. The astounding hypocrisy of US and British authorities leaves one with the unmistakable conclusion that the whole media-driven campaign against FIFA is nothing but a self-serving and cynical political agenda. And top of that agenda is to score geopolitical points against Russia.

Until Washington and London governments go after priority financial crime in their midst, then anything they say about FIFA can be taken as very wide off the mark.

9 Ominous Signals Coming From The Financial Markets That We Have Not Seen In Years

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By Michael Snyder

Source: The Economic Collapse

Is the stock market about to crash?  Hopefully not, and there definitely have been quite a few “false alarms” over the past few years.  But without a doubt we have been living through one of the greatest financial bubbles in U.S. history, and the markets are absolutely primed for a full-blown crash.  That doesn’t mean that one will happen now, but we are starting to see some ominous things happen in the financial world that we have not seen happen in a very long time.  So many of the same patterns that we witnessed just prior to the bursting of the dotcom bubble and just prior to the 2008 financial crisis are repeating themselves again.  Hopefully we still have at least a little bit more time before stocks completely crash, because when this market does implode it is going to be a doozy.

The following are 9 ominous signals coming from the financial markets that we have not seen in years…

#1 By the time the markets closed on Monday, we had witnessed the biggest three day decline for U.S. stocks since 2011.

#2 On Monday, the S&P 500 moved below its 200 day moving average for the first time in about two years.  The last time this happened after such an extended streak of success, the S&P 500 ended up declining by a total of 22 percent.

#3 This week the put-call ratio actually moved higher than it was at any point during the collapse of Lehman Brothers in 2008.  This is an indication that there is a tremendous amount of fear on Wall Street right now.

#4 Everybody is watching the VIX at the moment.  According to the Economic Policy Journal, the VIX has now risen to the highest level that it has been since the heart of the European debt crisis.  This is another indicator that there is extraordinary fear on Wall Street…

US stock market volatility has jumped to the highest since the eurozone debt crisis, according to a closely watched index, the the CBOE Vix index of implied US share price volatility.

It jumped to 24.6 late on Monday and is up again this morning. On Thursday, it was as low as 15.

That’s a very strong move, but things have been much worse. At height of the recent financial crisis – the Vix index peaked at 80.1 in November 2008.

Could we get there again? Yeah.

#5 The price of oil is crashing.  This also happened in 2008 just before the financial crisis erupted.  At this point, the price of oil is now the lowest that it has been in more than two years.

#6 As Chris Kimble has pointed out, the chart for the Dow has formed a “Doji Star topping pattern”.  We also saw this happen in 2007.  Could this be an indication that we are on the verge of another stock market crash similar to what happened in 2008?

#7 Canadian stocks are actually doing even worse than U.S. stocks.  At this point, Canadian stocks have already dropped more than 10 percent from the peak of the market.

#8 European stocks have also had a very rough month.  For example, German stocks have already dropped about 10 percent since July, and there are growing concerns about the overall health of the German economy.

#9 The wealthy are hoarding cash and precious metals right now.  In fact, one British news report stated that sales of gold bars to wealthy customers are up 243 percent so far this year.

So what comes next?

Some experts are saying that this is the perfect time to buy stocks at value prices.  For example, USA Today published a story with the following headline on Tuesday: “Time to ‘buy’ the fear? One Wall Street pro says yes“.

Other experts, however, believe that this could represent a major turning point for the financial markets.

Just consider what Abigail Doolittle recently told CNBC…

Technical strategist Abigail Doolittle is holding tight to her prediction of market doom ahead, asserting that a recent move in Wall Street’s fear gauge is signaling the way.

Doolittle, founder of Peak Theories Research, has made headlines lately suggesting a market correction worse than anyone thinks is ahead. The long-term possibility, she has said, is a 60 percent collapse for the S&P 500.

In early August, Doolittle was warning both of a looming “super spike” in the CBOE Volatility Index as well as a “death cross” in the 10-year Treasury note. The former referenced a sharp move higher in the “VIX,” while the latter used Wall Street lingo for an event that already occurred in which the fixed income benchmark saw its 50-day moving average cross below its 200-day trend line.

Both, she said, served as indicators for trouble ahead.

It’s Not Just the Stock Market That’s Rigged: the Entire Status Quo Is Rigged

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By Charles Hugh-Smith

Source: InvestmentWatch

One has to wonder why we are dodging this truth about what we’ve become: a nation that turns a blind eye to skimmers, scammers and legal looting.

As in the story of the Emperor’s new clothes, the onlooker who declares the obvious– in this case, that the stock market is rigged–shatters the consensus lie. In the current saga, author Michael Lewis plays the role of the truth-telling boy, and everyone who went along with the fiction that the Emperor’s high-frequency trading finery was resplendent is revealed as credulous, complicit or worse.

Lewis’ new book is Flash Boys: A Wall Street Revolt.

The high-frequency trading (HFT) scam is old news, and a number of fine books have addressed the mechanics of the skim, for example Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System by Scott Patterson.

Many in the alternative financial media have written about HFT for years. Here are two of my own entries on the topic:

The Stock Market Is an “Attractive Nuisance” and Should Be Closed (August 22, 2012)

We Need a New Stock Market (September 14, 2012)

Interestingly, Mr. Patterson outlined the solution that the heroes of Lewis’ book ended up pursuing. Here is a Q&A I conducted with Patterson in September 2012:

CHS: While there are various regulatory “tweaks” that could be put in place, I wonder if we don’t need a more fundamental “re-set” that asks what role the market should play in finance and the economy inhabited by everyday investors.Scott: I think there are a lot of people in the industry wondering about whether there needs to be a massive overhaul. But it’s probably not a good idea for that to be imposed on the market by the SEC. The uncertainty would be potentially destabilizing. And I just don’t see it happening.

I think the change needs to come from within the market and needs to be imposed by its most important users–I mean, not the high-frequency traders, who are running the show at the exchanges in many ways–but the institutions, the giant mutual fund companies, the pension funds, the long-short hedge funds. They need to exert pressure on the exchanges to stop giving advantages to high-frequency firms.

If we pull back from the media frenzy about HFT, we find the market is rigged in many other ways. The Federal Reserve’s policies, stripped of Orwellian mumbo-jumbo, are all about rigging the market to go in one direction–up.

Consider this chart, courtesy of long-time contributor Harun I., of the Dow Jones Industrial Average: I call it the tale of Two Dows. In the Great Bull Market of 1982 – 2000, a market fueled by an extraordinary economic expansion, the DJIA gained an average of 610 points a year.

In the anemic “recovery” of 2009 – 2013, the DJIA gained an average of 2,500 points per year. While the Fed rigged the 1990s Bull Market with low interest rates and other policies, it pulled out all the stops in the last five years:

The stock market is only the tip of the iceberg of what’s being rigged. For a taste of what’s rigged, ask yourself this question: if Mr. Elite Insider perpetrates a scam, and Mr. John Q. Citizen breaks similar laws, is there any difference between the treatment each receives?

Let’s go even deeper and ask: why is looting legal, even though it is obviously crooked? Why is high-frequency trading legal? Why is it legal for the Fed to offer money at 0% to its buddies but not to Mr. John Q. Citizen?

Why is it legal to issue student loans to future debt-serfs that is unlike all other debt in that it cannot be discharged in bankruptcy?

Since the legal looting continues unabated regardless of what party or toady is in office, then what actual difference is there between the Demopublicans and Republicrats?

It’s not just the stock market that’s rigged–the entire Status Quo is rigged. There are two sets of laws and two sets of opportunities: one for those holding the concentrated wealth and power, and the other for the rest of us debt-serfs.

If the system isn’t rigged, then why are insolvent banks and bankers protected from the creative destruction of capitalism that befalls John Q. Citizen when his risky bets go bad? Why do we as a nation keep insisting the Emperor’s new clothes are splendid when he is in fact parading around buck-naked?

One has to wonder why we are dodging this truth about what we’ve become: a nation that turns a blind eye to skimmers, scammers and legal looting. Perhaps, in Joseph Conrad’s phrase, we hope to escape the grim shadow of self-knowledge. Here is the passage from Chapter 7 of Lord Jim:

I gave no sign of dissent. I had no intention, for the sake of barren truth, to rob him of the smallest particle of any saving grace that would come in his way. I didn’t know how much of it he believed himself. I didn’t know what he was playing up to–if he was playing up to anything at all–and I suspect he did not know either; for it is my belief no man ever understands quite his own artful dodges to escape from the grim shadow of self-knowledge.

This Is The Reality Of It: “We Are Factually In A Recession. Period.”

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By Max Slavo

Originally posted at SHTFplan.com

We can cite scores of statistics and financials that prove without a shadow of a doubt that the U.S. economy is in a tail spin and won’t be recovering any time soon. Abysmal home sales, continued degradation in the national employment numbers, sky rocketing national debt, and ever rising consumer prices all point to serious problems.

But one number in particular pretty much sums it all up. It depicts not just the worsening state of our economy, but puts the lies and machinations of the U.S. government on full display for the world to see.

You’ll often hear the media cite the U.S. Growth Domestic Product (GDP) as a measure of economic growth. It measures the rate at which our economy grows.

In 2013, for example, our GDP was $17.08 trillion, up from the previous year’s $16.42 trillion. So, all of the goods and services sold throughout the United States (essentially, all of the money spent by Americans) rose about $661 billion dollars year-over-year.

Most people might look at the number, see 4% growth, and say it’s a no-brainer. How can the economy not be growing if the GDP rose?

The answer is simple. And when you look at it from the perspective Karl Denninger of the Market Ticker outlines below, you can’t help but realize that you’ve been purposely duped into believing that things are getting better. Just the opposite is true.

When looking at GDP you absolutely must account for the manufactured credit infused into the system during this same time period. When you do you’ll see just why the economy is not growing in any way, shape or form.

It is, in fact, contracting.

However, The Federal Reserve added $1.112 trillion in credit (unbacked by anything) during the same period of time; that’s a debasement of the units in which GDP is reported of 6.51%.

So the real change in the economy is in fact negative 2.51%.

We are factually in a recession.

Period.

There can be no progress economically or politically until the lies are stopped.  These are not mistakes; both the hosts and guest are fully-aware of The Fed’s balance sheet.

That extra trillion dollars slammed into the system by The Fed pretty much wipes out any growth noted by the Federal government’s statistics, because we never actually earned that money. It’s debt. Not growth!

Incidentally, the other oft cited measure of economic health is the Dow Jones Industrial Average, which currently sits around record all-time highs of 16,000 points, is likewise benefiting from this illusion. Guess where that stock market “growth” came from? Yes, the very same credit being used to prop up the economy (that $85 billion or so in Fed Treasury purchases every month) is also keeping stocks at record highs.

Back on Main Street, where most Americans live, we’re feeling the effects. Do we need to mention that the Patient Affordable Care Act has just forced working Americans to spend up to quadruple on their monthly premiums? Or that millions of Americans who are unemployed and no longer counted in the official statistics have absolutely no income whatsoever because their unemployment insurance has run out? Or that the price of everything from food and energy to rent and clothing is rising?

That kind of thing tends to happen when you debase your currency.

Last week famed contrarian economist John Williams noted that the economy gave a powerful recessionary signal in January that had not been seen since right before the market crash in 2007. Furthermore, one of the leading economic indicators of a recessionary environment is the price of copper because it is so closely associated with global growth. It has dropped significantly in recent months and it could well be signaling a coming crash in stocks just as it did in 2008.

When, not if, this thing buckles again we’re going to be in for an unprecedented period in U.S. history.

The system was on the brink of total collapse in 2008, as evidenced by Representative Brad Sherman on the House floor:

Many of us were told in private conversations that if we voted against this bill on Monday, that the sky would fall, the market would drop two or three thousands points the first day, another couple thousand the second day, and a few members were even told that there would be martial law in America if we voted no.

House Representative Brad Sherman (D-California)
Debate on the House Floor, October 2, 2008


They’ve used up all of the tricks in their magic hat. One misstep here and we’re going down. Any number of domestic or geo-political events could trigger a meltdown in U.S. stock markets and send the broader economy crashing.