The political press has been abuzz over the much anticipated signing of the NDAA by Barack Obama on Saturday: this move was not surprising because Obama had already made it clear he would go ahead and enact the law, even though he added some ‘stern’ language that is supposed to legitimize what some say is a precursor to the establishment of martial law in the US. To wit: “The fact that I support this bill as a whole does not mean I agree with everything in it. In particular, I have signed this bill despite having serious reservations with certain provisions that regulate the detention, interrogation, and prosecution of suspected terrorists.” And yet he signed it (full text of Obama’s statement on the NDAA, sent while on vacation in Hawaii, can be found here). Perhaps the reason for that unpopular move were some of the more nuanced contents of the Bill, among which is the decision to fully boycott not only Iran, but any bank, including central bank, and other financial institution found to deal with Iran. Which incidentally means most of Russia and China, and probably half of Europe, as all petrodollars generated by the country’s petroleum export industry first have to make their way via the international financial community back into the country. The history buffs out there will realize that this form of couched antagonism is nothing short of the US approach to Japan during World War II, which was essentially provoked into attacking Pearl Harbor – read the details of the October 7, 1940 McCollum Memo here, and especially bullet point 10. And unfortunately, it appears that within 24 hours or so, Iran may have already taken the bait. As Reuters and BBC report, Iran has both test-fired a medium-range SAM during the ongoing wargames exercise previously discussed here, as well as made a formal announcement it has made and tested domestically made nuclear fuel rods: precisely the event that the Israel or US-borne Stuxnet was designed to prevent. So as the tennis match of escalation keeps on growing the ball is now once again in the US’ court.

Here are some details on the wholesale Iranian financial boycott via Reuters.

U.S. President Barack Obama signed into law on Saturday a defense funding bill that imposes sanctions on financial institutions dealing with Iran’s central bank, while allowing for exemptions to avoid upsetting energy markets. The sanctions target both private and government-controlled banks – including central banks – and would take hold after a two- to six-month warning period, depending on the transactions, a senior Obama administration official said.

Under the law, the president can move to exempt institutions in a country that has significantly reduced its dealings with Iran and in situations where a waiver is in the U.S. national security interest or otherwise necessary for energy market stability. He would need to notify Congress and waivers would be temporary, but could be extended.

Sanctioned institutions would be frozen out of U.S. financial markets.

“Our intent is to implement this law in a timed and phased approach so that we avoid repercussions to the oil market and ensure that this damages Iran and not the rest of the world,” the senior U.S. official told Reuters.

Iran’s central bank is the main conduit for Tehran’s oil revenues.

Obama signed the bill during his vacation in Hawaii, just hours after Tehran said it had delayed planned long-range missile tests in the Gulf and signaled it was ready for fresh talks on its disputed nuclear program.

Senior U.S. officials said Washington was consulting with its foreign partners to ensure the new sanctions can work without harming global energy markets. They stressed the U.S. strategy of both isolating and remaining open to engagement with Iran was unchanged.

Ah yes, the precious energy markets. We can’t have some unprecedented volatility there, not now when it is now officially an election year. What however we can have, is control over the supply of one of the world’s biggest oil exporters. Kind of what happened in Iraq a few years back to stunning success…

So what was Iran’s response?

Iran has successfully produced and tested fuel rods for use in its nuclear power plants, state television reported on Sunday, in a snub to international demands that it halt sensitive nuclear work.

The rods, which contain natural uranium, were made in Iran and have been inserted into the core of Tehran’s research nuclear reactor, the television reported.

Nuclear fuel rods contain small pellets of fuel, usually low-enriched uranium, patterned to give out heat produced by nuclear reaction without melting down.

“This great achievement will perplex the West, because the Western countries had counted on a possible failure of Iran to produce nuclear fuel plates,” the Tehran Times newspaper said.

The development was announced at a time of growing tension between Western powers and Iran after the U.N. nuclear agency reported in November that Tehran appeared to have worked on designing a nuclear weapon. Secret research to that end may be continuing, it said.

The United States and its European allies have increased the sanctions pressure on Iran, one of the world’s largest oil producers, to push Tehran to halt the enrichment.

U.S. President Barack Obama signed more sanctions against Iran into law on Saturday, shortly after Iran signalled it was ready for new talks with the West on its nuclear programme and said it had delayed long-range missile tests in the Gulf.

But wait, there’s more. From the BBC:

Iran has successfully test-fired a medium-range surface-to-air missile during military exercises in the Gulf, the official Irna news agency reports.

Iranian naval commander, Mahmoud Mousavi, was quoted as saying the missile was equipped with the “latest technology” and “intelligent systems”.

The test comes a day after he denied earlier state media reports that Iran had test-fired long-range missiles.

He said on Saturday missile launches would take place “in the coming days”.

Iran’s 10 days of naval exercises began last week and are taking place in international waters to the east of the strategic Strait of Hormuz.

They come at a time of increased tensions between the West and Iran over its nuclear ambitions.

Tehran reacted angrily last week to reports that Western nations were planning to impose further sanctions targeting Iran’s oil and financial sectors.

So little by little the US will escalate pressure on Iran to commit increasingly more glaring acts of outright ‘insanity’, until finally it does the one thing that according to the US media, which will likely be needed to wash-rinse-spin cycle the newsflow, will push the  American people, who are just not going to take such ‘vile’ proocations any more, over the edge. At least according to Santorum’s Meet the Press interview from this morning which made precisely that point all too clear.

Source.

Banks around the world are preparing for the possible collapse of the euro as fears of the European debt crisis increase.

Several banks are even installing systems capable of coping with trading in old European currencies.

Meanwhile finance firms, corporations, and different governments have also turned to plans that aim at preparing them for harsh times.

Regulators have asked banks in the US and UK to provide updates on readiness levels in case of a possible euro collapse.

Some corporate firms have also started transferring their cash on a daily basis out of European countries, including debt-ridden Greece instead of once every two weeks.

Europe has for months grappled with an economic and financial crisis. Insolvency now threatens in-debt countries such as Greece, Portugal, Italy, Ireland and Spain.

Since its formation, the European Union had been a haven for those seeking refuge from war, persecution and poverty in other parts of the world.

The worsening debt crisis, however, has forced European governments to adopt harsh austerity measures and tough economic reforms. Tens of thousands of Europeans are migrating from their homelands as a result of these difficulties.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also much of the rest of the Western world back into recession.

Source.

Analysts are doing a lot of worrying lately about all the bad things that could happen in the global economy, despite positive economic data and occasional market rallies.

Looking ahead to 2012, Deutsche Bank analysts Tom Joyce and Ram Nayak lay out 10 of the biggest worries investors have to look out for in the coming year in a massive investor note about what we should be looking forward to in the coming 12 months. What’s more, they tell you how to hedge for the worst case scenario.

Ironically enough, analysts remains so bearish that one of the biggest risks is that the economy does well.

#1 A Greek exit rom the euro

Image: real democracy

Probability: A Greek euro exit and return to the Drachma is not DB’s base case, but then again it’s not inconceivable.

What would happen: Big haircuts on private sector assets, capital controls, collapse of Greek banking system, run on peripheral European banks

Hedges: Switch from European assets to gold or U.S. Treasuries, long yen or sterling, and long volatility indices

#2 Funding crises in Italy and Spain

Image: Alberto Pizzoli / AFP / Getty

What to watch: In Spain, the private sector and banking system. In Italy, politics and growth.

What would happen: A crisis of confidence would prohibit both countries from accessing cash and threaten both the euro and the global financial system.  The European Central Bank would need to “respond aggressively,” to save the global economy from collapse.

Hedges: Short French and British banks, short Eastern European currencies, long options on CDX.IG

#3 The U.S. gets hit with a downgrade or double-dip recession

Image: bthomso via Flickr

Catalysts: Risks #1 or #2 materialize, fiscal cuts disappoint, or growth underperforms

What would happen: The U.S. bank sector could also be downgraded. Timing is everything to measure the impact.

Hedges: Issuers can win out by pre-funding, investors should be overweight on non-financials and highly rated non-cyclicals.

#4 A hard landing in China

Image: Daniel Goodman / Business Insider.com

How it happens: 5-6% growth, which would feel like a recession

What would happen: Global capital markets would be affected by sharp declines in commodity prices, but China’s large Forex reserves it could probably stop the fall and stimulate growth.

Hedges: 6-month put option on commodities baskets

#5 France loses its AAA rating

Image: MJC Rodez on Flickr

Probability: “Quite possible,” given lack of progress on austerity measures

What would happen: French-German bond spreads may indicate that this risk is already priced in, but this would have negative implications for the European Financial Stability Facility and already mounting funding pressures.

Hedges: Buy French CDS, “buy best-of-put options”—a put over the equity index that performs best on the period (because equity markets generally go down simultaneously with a macro shock)

#6 Aggressive and sustained deleveraging of European banks

Image: eyeSPIVE on Flickr

Probability: Deleveraging is definite. The only question is by how much.

What would happen: Deleveraging will probably total up to $2 trillion in 18 months, but this could be exacerbated by crisis.

Hedges: Investment in cyclical industries, lower-rated credits and financials, long volatility indices.

#7 Commodity trade finance faces a liquidity crunch

Probability: High, particularly if aggressive bank deleveraging (risk #6) materializes.

What would happen: The European banks that provide financing for the big Swiss-based commodity trading houses could cut funding, and commodities prices would fall.

Hedges: European borrowers should seek funding from the U.S., one-year USD puts on Brent

#8 Safe haven assets disappear

Signs for caution: Traditional safe-haven assets like gold, the Swiss franc, and the yen have all been volatile/

Worse still: U.S. Treasuries and bunds have been go-to investments recently, but high debt levels in the U.S. and Germany could change that.

Hedges: Other AAA-rated investments like supranational bonds and gilts.

#9 U.S. pension fund deficits continue to balloon

Image: Flickr Vertigogen

How it happens: Both public and private sector funding gaps for pensions are out of control, and this could get worse. Rock bottom interest rates are making this worse.

What would happen: Rating agency downgrades, declines in corporate profitability, and funding crises.

Hedges: Puts on equity indices where premium is only paid out when rates rise (the idea is that they don’t).

#10 BETTER than expected economic growth

Image: Aepoc, CC.

How this is a problem: Betting against the market always carries the risk of being surprised.

What would happen: Europe stabilizes, the global economy grows, and risk asset prices exceed expectations.

Hedges: “10y/20y euro rates payer spreads; long non-conforming mezzanine debt; Short AUD v Long MXP”

Source.

The US along with Britain and Canada have announced new financial and energy sanctions against Iran to halt its suspected nuclear weapons program.

According to a US official, who spoke to AP on condition of anonymity, new sanctions will likely be announced later Monday by Secretary of State Hillary Clinton.

The financial and energy sanctions will target Iranian companies, the hardline Revolutionary Guard force and Iran’s petrochemicals sector.

The sanctions were put in action at 15:00 GMT on Monday with all UK credit and financial institutions to cease all transactions with banks, including the Central Bank of Iran.Britain’s Treasury chief George Osborne has said that this is the first time the British government has cut an entire country’s banking sector off from the UK’s financial sector, using powers created by the Counter-Terrorism Act of 2008.

“We’re doing this because of international evidence that Iran’s banks are involved in the development of Iran’s weaponized military nuclear weapon program. We’re doing this to improve the security not just of the whole world, but the national security of the United Kingdom,” he said.

This follows the International Atomic Energy Agency’s report, published last week, on Iran allegedly pursuing nuclear weapons.The IAEA watchdog has said that they have evidence that Iran does possess the technology to make a nuclear weapon and is already trying to do so.

The US, Canada, South Korea, Australia, Britain and France have all imposed sanctions on Iran in the last few years, but they have not had much affect.

Last year the US imposed sanctions on Iran’s banking and energy sectors. Back then the main target was Iran’s ability to refine crude oil into petroleum products.The UN has imposed sanctions on Iran four times, but since China and Russia are reluctant to support them the result has so far been poor.

Both countries are arguing that the United Kingdom, France and the United States will use sanctions as an“instrument for regime change in Iran.” The report, they say, shows nothing new and therefore there  are no reasons to impose fresh sanctions.

In the meantime, Iran remains firm in insisting that its nuclear program is purely civilian and is aimed at scientific research.

“Sanctions are a lose-lose game in which both sides make a loss. If they don’t invest in our oil projects, they will lose an appealing market,” Iran’s Minister of Industry, Mines and Commerce Mehdi Ghazanfari said, speaking to the press before the sanctions were officially announced.

We’ve all heard about the “Occupy Wall Street” protests and anyone who knows even the slightest amount of information about the New World Order has racked their brains about what to do to combat it. It’s our basic desire to want to eradicate the world of evil and to cultivate good. We all want to do something but most of us just don’t know what to do. Well I have an idea and as usual it’s a little off the wall.

Why not fight the New World Order using their own tools..MONEY. You know, in the old days when an army wanted to decimate an area they would use a scorched earth policy. The elite are feeding off of us economically; we are being used as slave labor! We can stop this right now if we have the will. Now, we all might not be in the position to go completely bankrupt. But we can do things on a smaller scale and possibly work our way up to becoming totally self-sufficient.

We need to realize that we can fight the New World Order…not with guns (especially since we are out-gunned) but with our purchasing power. We have the ability because of our numbers to stop the New World Order by de-funding them. We can do this in many ways. Here are just a few:

1. Quit buying things that are sold in other countries. Oftentimes the reason the price is so low is because they use inmate, child or slave labor!
2. Quit buying GMO junk and/or anything that is backed by a giant corporation. Not only is it not good for you you are also giving companies like Monsanto profits to continue spreading their toxic waste. Avoid any products produced by companies sold on the stock market.
3. Quit buying anything at all if you can. Look at your spending habits and spend your money in places that support mom and pop stores, American values and/or for just your very basic needs.
4. Barter instead of using money.
5. Keep your income low as to avoid paying taxes of any kind. This will deprive them of funds.
6. Quit paying your credit cards. These are the very banks that are bankrupting this country, don’t support them. Quit paying them, cut them up and never use them again.
7. Grow your own food and if you can’t grow your own food buy from someone who does. Buy locally and responsibly.
8. Do not get a mortgage, build your own home from Cob or Straw or buy it with cash.
9. Quit using your car that is run with gasoline. If you have to use something use an electric car, a bike or at the very least carpool so as to reduce our dependence on foreign oil.
10. Take your money out of the BANKS! Use a credit union if you have to use anything at all. Do not borrow money from a bank.
11. Pay with CASH or Barter.
12. Only vote for candidates that will wrest the power away from the Corporate/Government New World Order power and give it back to the people.
13. Exchange worthless fiat money into gold and silver.

We must realize that we have the power to crush these people simply by buying items that support us, the people and by not buying their products. Every time we buy something we should be thinking about the question “Does this support a corporation that is working against you/us?” We have the numbers, we can do this. Protesting (while I admire the people who do it) doesn’t work. Violence simply plays into their hands as they want to make those of us who know what they are doing out to be violent anarchist terrorists. But, using our purchasing power will work. It has in the past. Boycotts have been very effective in the past and they can work again if enough people participate.

Not only will these ideas help you and your family personally regardless of the current political and economic mess we are in but they will also starve the New World Order. Please consider these methods and let’s see if we can make a difference!

Source.

by Ellen Brown
The Web of Debt

Countries everywhere are facing debt crises today, precipitated by the credit collapse of 2008.  Public services are being slashed and public assets are being sold off, in a futile attempt to balance budgets that can’t be balanced because the money supply itself has shrunk.  Governments usually get the blame for excessive spending, but governments did not initiate the crisis.  The collapse was in the banking system, and in the credit that it is responsible for creating and sustaining.

Contrary to popular belief, most of our money today is not created by governments.  It is created by private banks as loans.  The private system of money creation has grown so powerful over the centuries that it has come to dominate governments globally.  The system, however, contains the seeds of its own destruction.  The source of its power is also a fatal design flaw.

The flaw is that banks advance “bank credit” that must be paid back with interest, while having no obligation to spend the interest they collect so that borrowers can earn it again and again, as they must in order to retire the debt.  Instead, this money is invested in various casinos beyond the borrowers’ reach. This leads to a continual systemic need for more new bank credit money, more debt with more interest attached, to prevent widespread defaults and deflationary collapse.

Today this problem is particularly evident in the EU.  The Euro is a fixed currency system that does not allow for expansion to meet the demands of the private lending casino.  The result is that EU member nations collectively are being crippled by debt.

There are more sustainable ways to run a banking and credit system, as will be shown.

How Banks Create Money
The process by which banks create money was explained by the Chicago Federal Reserve in a booklet called “Modern Money Mechanics.”  It states:
“The actual process of money creation takes place primarily in banks.” [p3]
“[Banks] do not really pay out loans from the money they receive as deposits.  If they did this, no additional money would be created.  What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts.  Loans (assets) and deposits (liabilities) both rise [by the same amount].” [p6]

“With a uniform 10 percent reserve requirement, a $1 increase in reserves would support $10 of additional transaction accounts.”  [p49]

A $100 deposit supports a $90 loan, which becomes a $90 deposit in another bank, which supports an $81 loan, etc.
That’s the conventional model, but banks actually create the loans FIRST.  (Picture how a credit card works.)  Banks need deposits to clear their outgoing checks, but they find the deposits later.  Banks create money as loans, which become checks, which go into other banks.  Then, if needed to clear the checks, they borrow the money back from the other banks.  In effect, they borrow back the money they just created, pocketing the spread between the interest rates as their profit.  The rate at which banks can borrow from each other in the U.S. today (the Fed funds rate) is an extremely low 0.2%.

How the System Evolved
The current system of privately-issued money is traced in “Modern Money Mechanics” to the 17^th century goldsmiths.  People who left gold with the goldsmiths for safekeeping would be issued paper receipts for it called “banknotes.”  Other people who wanted to borrow money were also happy to accept paper banknotes in place of gold, since the notes were safer and more convenient to carry around.  The sleight of hand came in when the goldsmiths discovered that people would come for their gold only about 10% of the time.  That meant that up to ten times as many notes could be printed and lent as the goldsmiths had gold.  Ninety percent of the notes were basically counterfeited.
This system was called “fractional reserve” banking and was institutionalized when the Bank of England was founded in 1694.  The bank was allowed to lend its own banknotes to the government, forming the national money supply. Only the interest on the loans had to be paid. The debt was rolled over indefinitely.

That is still true today. The U.S. federal debt is never paid off but just continues to grow, forming the basis of the U.S. money supply.

The Public Banking Alternative
There are other ways to create a banking system, ways that would eliminate its ponzi-scheme elements and make the system sustainable.  One solution is to make the loans interest-free; but for Western economies today, that transition could be difficult.
Another alternative is for banks to be publicly-owned.  If the people collectively own the bank, the interest and profits go back to the government and the people, who benefit from decreased taxes, increased public services, and cheaper public infrastructure.  Cutting out interest has been shown to reduce the cost of public projects by 30-50%.
In the United States, this system of publicly-owned banks goes back to the American colonists.  The best of the colonial models was in Benjamin Franklin’s colony of Pennsylvania, where the government operated a “land bank.”  Money was printed and lent into the community.  It recycled back to the government and could be lent and relent.  The system was mathematically sound because the interest and profits were returned to the government, which then spent the money back into the economy in place of taxes.  Private banks, by contrast, generally lend their profits back into the economy, or invest in private money-making ventures in which more is always expected back than was originally invested.
During the period that the Pennsylvania system was in place, the colonists paid no taxes except excise taxes, prices did not inflate, and there was no government debt.

How Private Banknotes Became the National U.S. Currency
The Pennsylvania system was sustainable, but some early American colonial governments just printed and spent, inflating the money supply and devaluing the currency.  The British merchants complained, prompting King George II to forbid the colonists to issue their own money.  Taxes had to be paid to England in gold.  That meant going into debt to the English bankers.  The result was a massive depression.  The colonists finally rebelled and went back to issuing their own money, precipitating the American Revolution.
In an international first, the colonists funded a war against a major power with mere paper receipts, and won.  But the British counterattacked by waging a currency war.  They massively counterfeited the colonists’ paper money, at a time when this was easy to do.  By the end of the war, the paper scrip was virtually worthless.  After it lost its value, the colonists were so disillusioned with paper money that they left the power to issue it out of the U.S. Constitution.
Meanwhile, Alexander Hamilton, the first U.S. Treasury Secretary, was faced with huge war debts, and he had no money to pay them.  He therefore resorted to the ruse used in England known as fractional reserve banking.  In 1791, Hamilton set up the First U.S. Bank, a largely private bank that would print banknotes “backed” by gold and lend them to the government.

The ruse worked: the paper banknotes expanded the money supply, the debts were paid, and the economy thrived.  But it was the beginning of a system of government funded by debt to private bankers, who lent banknotes only nominally backed by gold.
During the American Civil War, President Lincoln avoided a crippling war debt by returning to the system of government-issued money of the American colonists.  He issued U.S. Notes from the Treasury called “Greenbacks” rather than borrowing at usurious interest rates.  But Lincoln was assassinated, and Greenback issuance was halted.
In 1913, the privately-owned Federal Reserve was authorized to issue its own Federal Reserve Notes as the national currency. These notes were then lent to the government, eliminating the government’s own power to issue money (except for coins).  The Federal Reserve was set up to prevent bank runs, but twenty years later we had the Great Depression, the greatest bank run in history.  Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, wrote in 1934:
“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit.  If the Banks create ample synthetic money we are prosperous; if not, we starve.”
For the bankers, however, it was a good system.  It put them in control.

Setting the Global Debt Trap
Prof. Carroll Quigley was an insider groomed by the international bankers.  He wrote in Tragedy and Hope in 1966:

“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

“The apex of the system was to be the Bank for International Settlements [BIS] in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.  Each central bank… sought to dominate its government by its ability to control Treasury loans….”
The debt trap was set in stages.  In 1971, the dollar went off the gold standard internationally. Currencies were unpegged from gold and allowed to “float” in currency markets, competing with other currencies, making them vulnerable to speculation and manipulation.
In 1973, a secret agreement was entered into in which the OPEC countries would sell oil only in dollars, and the price of oil would be dramatically increased.  By 1974, oil prices had increased by 400% from 1971 levels.  Countries lacking oil had to borrow dollars from U.S. banks.
In 1981, the Fed funds rate was raised to 20%.  At 20% compound interest, debt doubles in under four years.  As a result, most of the world became crippled by debt.  By 2001, developing nations had repaid the principal originally owed on their debts six times over; but their total debt had quadrupled because of interest payments.
When debtor nations could not pay the banks, the International Monetary Fund stepped in with loans — with strings attached.  The debtors had to agree to “austerity measures,” including:

• cutting social services
• privatizing banks and public utilities
• opening markets to foreign investors
• letting currencies “float.”

Today, austerity measures are being imposed not just in developing countries but in the European Union and on U.S. States.

The BIS: Apex of the Private Central Banking Pyramid
What Professor Quigley foretold about the Bank for International Settlements (BIS) has also come to pass.  The BIS now has 55 member nations and heads the global financial pyramid.
The power of the BIS was seen in 1988, when it raised the capital requirement of its member banks from 6% to 8% in an accord called Basel I.  The result was to cripple the Japanese banks, which until then were the world’s largest creditors. Japan entered a recession from which it has not yet recovered.

U.S. banks managed to escape by dodging the capital requirement.  They did this by moving loans off their books, bundling them up as “securities,” and selling them to investors.
To persuade the investors to buy them, these mortgage-backed securities were protected against default with “derivatives,” which were basically just bets.  The “protection seller” collected a premium for agreeing to pay in the event of default.  The “protection buyer” bought the premium. Owning the asset was not required.  Like gamblers at a horse race, derivative players could bet without owning a horse.
Derivatives became a very popular form of gambling.  The result was the mother of all bubbles, exceeding $500 trillion by the end of 2007.
Because of securitization and derivatives, credit mushroomed.  Virtually anyone who walked in the door could get a loan.
The tipping point came in August 2007, with the collapse of two hedge funds.  When the derivatives scheme was exposed, the market for derivative-protected securities suddenly dried up.  But the U.S. stock market did not collapse until November 2007, when new accounting rules were imposed. The rules grew out of the Basel II Accords initiated by the BIS in 2004.  “Mark to market” accounting required banks to value their assets according to market demand that day.  Many U.S. banks, like those in Japan in the 1990s, suddenly had insufficient capital to make new loans. The result was a credit crisis from which the U.S. has not yet recovered.
The BIS has now become global regulator, just as Quigley foresaw.  In April 2009, the G20 nations agreed to be regulated by a Financial Stability Board based in the BIS, and to comply with “standards and codes” set by the Board.  The codes are only guidelines, but countries that fail to comply risk downgrades in their credit ratings, something so costly that the guidelines have effectively become laws.
An article on the BIS website states that central banks in the Central Bank Governance Network should have as their single or primary objective “to preserve price stability.”  That means governments should not devalue the national currency by inflating the money supply; and that means not “printing money” or borrowing credit created by their own central banks.  Like the American colonies after King George took away their power to issue their own money, governments must fund their deficits by borrowing from private banks.  The bankers’ global control over currency issuance has become virtually complete.
The effects of this policy are particularly evident in the European Union, where EU rules allow deficits of only 3% of government budgets and prevent member countries from either issuing their own money or borrowing credit advanced by their own central banks.  Member nations must borrow instead from the European Central Bank, private international banks, or the IMF.  The result has been forced austerity measures, as seen in Greece andIreland.  The system is so unsustainable that commentators are predicting that the EU may break up.

The Way Out: Return the Money Power to Public Control

To escape the debt trap of the global bankers, the power to create the national money supply needs to be restored to national governments. Alternatives include:

·         Legal tender issued directly by national treasuries and spent on national budgets.

• Publicly-owned central banks empowered to advance the nation’s credit and lend it to the government interest-free.
• Nationalization of bankrupt banks considered “too big to fail” (after expunging or writing down bad debts on inflated bubble assets).  These banks could then issue credit to the public and serve the public’s banking needs, with the profits recycling back to the government, defraying the tax burden on the people.
• Publicly-owned local banks (state, provincial, or municipal).

Publicly-owned banks have been successfully established and operated in many countries, including Australia, New Zealand, Canada, Germany,Switzerland, India, China, Japan, Korea, and Malaysia.

In the United States there is currently only one state-owned bank, the Bank of North Dakota.  The model, however, has proven to be highly successful.  North Dakota is the only U.S. state to have escaped the credit crisis unscathed.  In 2009, while other states floundered, North Dakota had its largest budget surplus ever.  In 2008, the Bank of North Dakota (BND) had a return on equity of 25%.  North Dakota has the lowest unemployment rate in the country and the lowest default rate on loans.  It also has the most local banks per capita.
North Dakota has had its own bank since 1919, when  farmers were losing their farms to the Wall Street bankers.  They organized, won an election, and passed legislation.  The state is required by law to deposit all its revenues in the BND.  Like with the sustainable model of the bank of colonialPennsylvania, interest and profits are returned to the government and to the local economy.
A growing movement is afoot in the United States to copy this public banking model in other states.  Fourteen U.S. state legislatures have now initiated bills for state-owned banks.
The model could also be replicated in other countries.  In Ireland, for example, where the major banks are insolvent and are already nationalized or soon will be, the government could deposit its revenues in its own publicly-owned banks, add sufficient capital to meet capital requirements, and leverage these funds to create interest-free credit for its own local needs.  That is exactly what Alexander Hamilton did when faced with government debts that were impossible to repay: he put the government’s existing funds in a bank, then borrowed the money back several times over, employing the accepted “fractional reserve” model.

Japan’s solution is also a variant of what Alexander Hamilton proposed two centuries earlier.  Japan retains its status as the third largest economy in the world although it has a debt to GDP ratio of 226%.  Japan has “monetized” the national debt, turning it into the national money supply.  The government-owned Bank of Japan holds Japanese government debt equal to 100% of the nation’s GDP; and because the government owns the bank, this loan is interest-free and can be rolled over indefinitely.  An interest-free loan rolled over indefinitely is the equivalent of issuing money.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.  In Web of Debt, her latest of eleven books, she shows how the power to create money has been usurped from the people, and how we can get it back.  Her websites are http://webofdebt.com and http://ellenbrown.com.

Global Economic Analysis – Courtesy of Google translate please consider They lifted 1.5 billion Thursday and Friday from banks

Only a few steps separating from Friday to yesterday’s mass panic! From early morning to counter the banks there is serious pressure for withdrawals of deposits, especially small amounts. The pressure on banks began last Wednesday, culminating in yesterday’s day.

It is significant that Thursday and Friday, banking sources estimate that rose around 1.5 billion euros in total! According to the same month in May estimated the outflow estimated at least 4 billion from 2 billion in April.

The majority of depositors rushed to withdraw for pensioners and small savers and amounts ranging from 2-3000 lifted until 10 -15 000 euros. Motivation in most cases it was the fear that led the country into bankruptcy, deposits frozen even temporarily left without cash, or even lose their savings.

Politicians do not seem to fully understand the risks posed by a widespread panic, not only for the stability of the banking system but for the economy and the country.

EU Requests Severe Bail-Out Conditions Including International Tax Collection

The Financial Times reports Greece set for severe bail-out conditions

European leaders are negotiating a deal that would lead to unprecedented outside intervention in the Greek economy, including international involvement in tax collection and privatisation of state assets, in exchange for new bail-out loans for Athens.

People involved in the talks said the package would also include incentives for private holders of Greek debt voluntarily to extend Athens’ repayment schedule, as well as another round of austerity measures.

Officials warned, however, that almost every element of the new package faced significant opposition from at least one of the governments and institutions involved in the current negotiations and a deal could still unravel.

In the latest setback, the Greek government failed on Friday to win cross-party agreement on the new austerity measures, which European Union lenders have insisted is a prerequisite to another bail-out.

Officials think Greece will be unable to return to the financial markets to raise money on its own in March – as originally planned in the current €110bn package – meaning that the IMF is now forbidden from distributing any additional cash. Without the IMF funds, eurozone governments would either be forced to fill the gap or Athens could default.

30,000 Protest in Greece

Courtesy of Google Translate More than 30,000 Greeks in Athens take center inspired by the protests of Spain

Some 30,000 people, police said, more as protesters have gone to the streets Sunday in Athens to protest the Greek political class. The demonstration has been called through social networks, as well as in Spain, and the participants cited the movement as a reference 15M.

“We’ve had enough. The politicians are laughing at us. If things continue like this, our future will be very hard,” said one of demonstrators gathered outside the headquarters of the Greek Parliament in Syntagma Square, while his teammates chanted “Thieves, thieves!”.

This is the fifth day of protests in Syntagma Square and this time they have been joined by a Spanish group who wanted to express solidarity with the merger.

“People were outraged, but needed motivation to express themselves. The Spanish have given us that motivation,” said Argyrou Iphigenia, an insurance agent, told Reuters. “We’re not asleep. We are awake. The IMF must go. There are solutions without them,” he argued.

Is it any wonder people are yanking money out of Greek banks? How long before a bank freeze?

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

“What for a poor man is a crust, for a rich man is a securitized asset class.”
–Futures trader Ann Berg, quoted in the UK Guardian

Feburary 05, 2011 “Information Clearing House” – –  Underlying the sudden, volatile uprising in Egypt and Tunisia is a growing global crisis sparked by soaring food prices and unemployment. The Associated Press reports that roughly 40 percent of Egyptians struggle along at the World Bank-set poverty level of under $2 per day. Analysts estimate that food price inflation in Egypt is currently at an unsustainable 17 percent yearly. In poorer countries, as much as 60 to 80 percent of people’s incomes go for food, compared to just 10 to 20 percent in industrial countries. An increase of a dollar or so in the cost of a gallon of milk or a loaf of bread for Americans can mean starvation for people in Egypt and other poor countries.

Follow the Money

The cause of the recent jump in global food prices remains a matter of debate. Some analysts blame the Federal Reserve’s “quantitative easing” program (increasing the money supply with credit created with accounting entries), which they warn is sparking hyperinflation. Too much money chasing too few goods is the classic explanation for rising prices.

The problem with that theory is that the global money supply has actually shrunk since 2006, when food prices began their dramatic rise. Virtually all money today is created on the books of banks as “credit” or “debt,” and overall lending has shrunk. This has occurred in an accelerating process of deleveraging (paying down or writing off loans and not making new ones), as the subprime housing market has collapsed and bank capital requirements have been raised. Although it seems counterintuitive, the more debt there is, the more money there is in the system. As debt shrinks, the money supply shrinks in tandem.

That is why government debt today is not actually the bugaboo it is being made out to be by the deficit terrorists. The flipside of debt is credit, and businesses run on it. When credit collapses, trade collapses. When private debt shrinks, public debt must therefore step in to replace it. The “good” credit or debt is the kind used for building infrastructure and other productive capacity, increasing the Gross Domestic Product and wages; and this is the kind governments are in a position to employ. The parasitic forms of credit or debt are the gamblers’ money-making-money schemes, which add nothing to GDP.

Prices have been driven up by too much money chasing too few goods, but the money is chasing only certain selected goods. Food and fuel prices are up, but housing prices are down. The net result is that overall price inflation remains low.

While quantitative easing may not be the culprit, Fed action has driven the rush into commodities. In response to the banking crisis of 2008, the Federal Reserve dropped the Fed funds rate (the rate at which banks borrow from each other) nearly to zero. This has allowed banks and their customers to borrow in the U.S. at very low rates and invest abroad for higher returns, creating a dollar “carry trade.”

Meanwhile, interest rates on federal securities were also driven to very low levels, leaving investors without that safe, stable option for funding their retirements. “Hot money” – investment seeking higher returns – fled from the collapsed housing market into anything but the dollar, which generally meant fleeing into commodities.

New Meaning to the Old Adage “Don’t Play with Your Food”

At one time food was considered a poor speculative investment, because it was too perishable to be stored until market conditions were right for resale. But that changed with the development of ETFs (exchange-traded funds) and other financial innovations.

As first devised, speculation in food futures was fairly innocuous, since when the contract expired, somebody actually had to buy the product at the “spot” or cash price. This forced the fanciful futures price and the more realistic spot price into alignment. But that changed in 1991. In a revealing July 2010 report in Harper’s Magazine titled “The Food Bubble: How Wall Street Starved Millions and Got Away with It,” Frederick Kaufman wrote:

The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That was the year Goldman Sachs decided our daily bread might make an excellent investment. . . .

Robber barons, gold bugs, and financiers of every stripe had long dreamed of controlling all of something everybody needed or desired, then holding back the supply as demand drove up prices.

As Kaufman explained this financial innovation in a July 16 interview on Democracy Now:

Goldman . . . came up with this idea of the commodity index fund, which really was a way for them to accumulate huge piles of cash for themselves. . . . Instead of a buy-and-sell order, like everybody does in these markets, they just started buying. It’s called “going long.” They started going long on wheat futures. . . . And every time one of these contracts came due, they would do something called “rolling it over” into the next contract. . . . And they kept on buying and buying and buying and buying and accumulating this historically unprecedented pile of long-only wheat futures. And this accumulation created a very odd phenomenon in the market. It’s called a “demand shock.” Usually prices go up because supply is low . . . . In this case, Goldman and the other banks had introduced this completely unnatural and artificial demand to buy wheat, and that then set the price up. . . . [H]ard red wheat generally trades between $3 and $6 per sixty-pound bushel. It went up to $12, then $15, then $18. Then it broke $20. And on February 25th, 2008, hard red spring futures settled at $25 per bushel. . . . [T]he irony here is that in 2008, it was the greatest wheat-producing year in world history.

. . . [T]he other outrage . . . is that at the time that Goldman and these other banks are completely messing up the structure of this market, they’ve protected themselves outside the market, through this really almost diabolical idea called “replication” . . . . Let’s say, . . . you want me to invest for you in the wheat market. You give me a hundred bucks . . . . [W]hat I should be doing is putting a hundred bucks in the wheat markets. But I don’t have to do that. All I have to do is put $5 in. . . . And with that $5, I can hold your hundred-dollar position. Well, now I’ve got ninety-five of your dollars. . . . [W]hat Goldman did with hundreds of billions of dollars, and what all these banks did with hundreds of billions of dollars, is they put them in the most conservative investments conceivable. They put it in T-bills. . . . [N]ow that you have hundreds of billions of dollars in T-bills, you can leverage that into trillions of dollars. . . . And then they take that trillion dollars, they give it to their day traders, and they say, “Go at it, guys. Do whatever is most lucrative today.” And so, as billions of people starve, they use that money to make billions of dollars for themselves.

Other researchers have concurred in this explanation of the food crisis. In a July 2010 article called “How Goldman Sachs Gambled on Starving the World’s Poor – And Won,” journalist Johann Hari observed:

Beginning in late 2006, world food prices began rising. A year later, wheat price had gone up 80 percent, maize by 90 percent and rice by 320 percent. Food riots broke out in more than 30 countries, and 200 million people faced malnutrition and starvation. Suddenly, in the spring of 2008, food prices fell to previous levels, as if by magic. Jean Ziegler, the UN Special Rapporteur on the Right to Food, has called this “a silent mass murder”, entirely due to “man-made actions.”

Some economists said the hikes were caused by increased demand by Chinese and Indian middle class population booms and the growing use of corn for ethanol. But according to Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi, demand from those countries actually fell by 3 percent over the period; and the International Grain Council stated that global production of wheat had increased during the price spike.

According to a study by the now-defunct Lehman Brothers, index fund speculation jumped from $13 billion to $260 billion from 2003 to 2008. Not surprisingly, food prices rose in tandem, beginning in 2003. Hedge fund manager Michael Masters estimated that on the regulated exchanges in the U.S., 64 percent of all wheat contracts were held by speculators with no interest whatever in real wheat. They owned it solely in anticipation of price inflation and resale. George Soros said it was “just like secretly hoarding food during a hunger crisis in order to make profits from increasing prices.”

An August 2009 paper by Jayati Ghosh, professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University in New Dehli, compared food staples traded on futures markets with staples that were not. She found that the price of food staples not traded on futures markets, such as millet, cassava and potatoes, rose only a fraction as much as staples subject to speculation, such as wheat.

Nomi Prins, writing in Mother Jones in 2008, also blamed the price hikes on speculation. She observed that agricultural futures and energy futures were being packaged and sold just like CDOs (collateralized debt obligations), but in this case they were called CCOs (collateralized commodity obligations). The higher the price of food, the more CCO investors profited. She warned:

[W]ithout strong regulation of electronic exchanges and the derivatives products that enable speculators to move huge proportions of the futures markets underlying commodities, putting a bit of regulation into the London-based exchanges will not alleviate anything. Unless that’s addressed, this bubble is going to take more than homes with it. It’s going to take lives.

What Can Be Done?

According to Kaufman, the food bubble has now increased the ranks of the world’s hungry by 250 million. On July 21, 2010, President Obama signed a Wall Street reform bill that would close many of the regulatory loopholes allowing big financial institutions to play in agriculture commodity futures markets, but Kaufman says the bill’s solutions are not likely to work. Wall Street innovators can devise new ways to speculate that easily dance around cumbersome, slow-to-pass legislation. Attempts to ban all food speculation are also unlikely to work, he says, since firms can pick up the phone and do their trades through London, or arrange over-the-counter (private) swaps.

As an alternative, Kaufman suggests a worldwide or national grain reserve, so that regulators can bring wheat into the market when needed to stabilize prices. He notes that we actually kept a large grain reserve in the Clinton era, before the mania for deregulation. President Franklin Roosevelt pledged to maintain a large grain reserve in his second Agricultural Adjustment Act in 1938.

Chris Cook, former director of a global energy exchange, maintains:

The only long term solution is to completely re-architect markets. Firstly, cutting out middlemen — which is a process already under way. Secondly, a new settlement between producer and consumer nations — a Bretton Woods II.

Speculative markets today are driven more by fear, says Cook, than by greed. Investors are looking for something safe that will give them an adequate return, which means something they can live on in retirement. They need these investments because their employers and the government do not provide an adequate safety net.

At one time, federal securities were a safe and adequate investment for retirees. Then federal interest rates plunged, and investors moved into municipal bonds. Now that market too is collapsing, due to threats of bankruptcy among bond issuers. Cities, counties and states floundering from the credit crisis have been denied access to the quantitative easing tools used to bail out the banks — although it was the banks, not local governments, that caused the crisis. See “The Fed Has Spoken: No Bailout for Main Street.”

Meanwhile, pensions are being slashed and social security is under attack. Arguably, along with the grain reserves institutionalized under Franklin Roosevelt, we need an Economic Bill of Rights of the sort he envisioned, one that would guarantee citizens at least a bare minimum standard of living. This could be done through job guarantees when people were able to work and social security when they were not. The program could be funded with government-created credit or government-bank-created credit, and this could be done without causing hyperinflation. To support that contention would take more space than is left here, but the subject has been tackled in my book Web of Debt. In the meantime, the credit needed to get local economies up and running again can be furnished through publicly-owned banks. For more on that possibility, see http://PublicBankingInstitute.org.

Niko Kyriakou contributed to this article.

Ellen Brown is an attorney and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are http://WebOfDebt.com, http://EllenBrown.com and http://PublicBankingInstitute.org.

In a shocking new interview, Donald Trump has gone farther than he ever has before in discussing a potential economic collapse in America.  Using phrases such as “you’re going to pay $25 for a loaf of bread pretty soon” and “we could end up being another Egypt”, Trump explained to Newsmax that he is incredibly concerned about the direction our economy is headed.  Whatever you may think of Donald Trump on a personal level, it is undeniable that he has been extremely successful in business.  As one of the most prominent businessmen in America, he is absolutely horrified about what is happening to this nation.  In fact, he is so disturbed about the direction that this country is heading that he is seriously considering running for president in 2012.  But whether he decides to run in 2012 or not, what Trump is now saying about the U.S. economy should be a huge wake up call for all of us.

Trump says that the U.S. government is broke, that all of our jobs are being shipped overseas, that other nations are heavily taking advantage of us and that the value of the U.S. dollar is being destroyed.  The following interview with Trump was originally posted on Newsmax and it is really worth watching….

Now, you may or may not think much of Donald Trump as a politician, but when a businessman of his caliber starts using apocalyptic language to describe where the U.S. economy is headed perhaps we should all pay attention.

The following are 12 key quotes that were pulled out of Trump’s new interview along with some facts and statistics that show that what Trump is saying is really happening.

#1 “If oil prices are allowed to inflate and keep inflating, if the dollar keeps going down in value, I think there’s a very distinct possibility that things could get worse.”

Donald Trump is exactly right – we are headed for big trouble if we continue to allow the Federal Reserve to pump hundreds of billions of new dollars into the system.  As I have written about previously, all of this new money will give us the illusion of short-term economic growth and it will pump up the stock market, but in the end all of the inflation the new money is gong to cause is going to be very painful.  Just look at how rapidly M1 has been skyrocketing over the last couple of years.  Is there any way that we are going to be able to avoid paying a very serious price for all of this reckless money printing?….

Already all of this money printing has had a very serious affect on world financial markets.  The price of agricultural commodities is skyrocketing and the price of oil has almost reached $100 a barrel once again.  The last time that the price of oil soared above $100 a barrel was in the early part of 2008, and we all remember the horrific financial collapse that followed in the fall of 2008.

#2 “….you’re going to pay $25 for a loaf of bread pretty soon. Look at what’s happening with our food prices. They’re going through the roof. We could end up being another Egypt. You could have riots in our streets also.”

The price of corn has risen 88 percent over the past year and the price of wheat has soared a whopping 114 percent over the past year.  Let’s hope that we don’t have to pay $25 for a loaf of bread in the United States any time soon, but in some areas of the world that is what it now feels like.

Approximately 3 billion people in the world today live on the equivalent of $2 a day or less, and most of that money ends up getting spent on food.  When food prices go up 10 or 20 percent in deeply impoverished areas of the globe, suddenly the lives of millions are threatened.  The riots that we have seen in Egypt, Algeria, Tunisia and other nations recently were not entirely caused by rising food prices, but they were certainly a big factor.

#3 “I think gold will go up as long as people don’t have confidence in our president and our country. And they don’t have confidence in our president.”

Investors run to gold and other precious metals when they don’t feel secure.  We saw that happen a lot in 2010.  As confidence in the paper currencies and the financial systems of the world has rapidly diminished, precious metals have become increasingly attractive.

In fact, the price of gold has doubled since the beginning of the economic downturn in 2007.  As the global financial situation continues to become more unstable, the demand for precious metals is likely only going to become more intense.

#4 “The banks have really let us down. Number one, they did some bad things and caused some bad problems. Number two, if you have something that you want to buy, like a house, they’re generally not there for you.”

Banks were given massive bailouts with the understanding that they would open up the vaults and start lending money to average Americans again.

Well, that has not happened.

In particular, it has become much, much harder to get a mortgage in the United States today.  Not that the big banks didn’t need to make changes to their lending practices, but things have gotten so tight now that it is choking the real estate market to death.

#5 “I see $3.50 for a gallon of gas for cars, and cars are lined up trying to get it and it’s $3.50. It’s a shame, a ridiculous shame.”

Our lack of a cohesive energy policy is a national disgrace.  There is no way in the world that a gallon of gas should be $3.50 a gallon.

The U.S. has massive reserves of oil and natural gas that it should be using.  In addition, the lack of progress on developing alternative energy sources in light of our sickening dependence on foreign oil is very puzzling.  We should be very far along towards solving our energy problems by this point.

Meanwhile, we keep pouring billions into the pockets of foreign oil barons every single month.  Unfortunately, Trump was exactly correct in the interview – if something is not done the price of gas is going to keep going higher.

#6 “I think the biggest threat is that our jobs are being stolen by other countries. We’re not going to have any jobs here pretty soon.”

Donal Trump is one of the few prominent leaders that is openly speaking the truth about the predatory economic practices of some of our “trading partners”.  Most of our politicians have just kept endlessly promising us that free trade is “good for us” even as tens of thousands of factories and millions upon millions of jobs have been shipped overseas.

Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

Yes, computers and robots have replaced a lot of manual labor today, but technology does not account for most of the decline we have seen in manufacturing.

n 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent.  Meanwhile, manufacturing in the “developing world” has absolutely exploded.

#7 “We’re like a whipping post for other countries. We are standing there and just being beaten by South Korea, by Mexico, by China, by India.”

Most Americans have absolutely no idea how lopsided many of our “trade agreements” actually are.  Other nations openly manipulate their currencies in order to keep their exports dirt cheap and we allow it.  Other nations openly subsidize their domestic industries that are directly competing with businesses in the United States and we don’t complain.  Other nations make it incredibly difficult for American companies to do business in their countries while we allow foreign corporations to come on in and do pretty much whatever they want here.

Then there are certain nations (such as China) that brazenly rip off trade secrets from foreign corporations time after time after time and never get penalized for it.

Meanwhile, our economy continues to bleed jobs at a staggering pace.  The number of net jobs gained by the U.S. economy during this past decade was smaller than during any other decade since World War 2.

Fortunately, more Americans than ever seem to be waking up and are realizing that globalism is causing many of these problems.  A NBC News/Wall Street Journal poll conducted last year discovered that 69 percent of Americans now believe that free trade agreements have cost America jobs.

#8 “All of our jobs are going to China. We’re rebuilding China and other places.”

China is doing great.  China is now the number one producer in the world of wind and solar power.  They now possess the fastest supercomputeron the entire globe.  China also now has the world’s fastest train and the world’s biggest high-speed rail network.

Most Americans don’t realize that China is literally kicking the crap out of us.

Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

Every single month we buy about 4 times as much stuff from them as they buy from us.  Our trade deficit with China has ballooned to enormous proportions.  In fact, the U.S. trade deficit with China during this past August was more than 4,600 times larger than the U.S. trade deficit with China was for the entire year of 1985.

So when Donald Trump says that we are rebuilding China he is not joking around.

Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

Yes, that is how serious things have become.

#9 “We are a laughingstock throughout the world.”

Donald Trump has said on several occasions that his friends and business partners in China just laugh and laugh at us.  They can’t even believe what they are getting away with.

We have become an incompetent giant that is the butt of all the jokes.

According to Stanford University economics professor Ed Lazear, if the U.S. economy and the Chinese economy continue to grow at current rates, the average Chinese citizen will be wealthier than the average American citizen in just 30 years.

Our formerly great industrial cities are slowly becoming ghost towns.  The number of long-term unemployed Americans is at an all-time high.  Tens of millions of Americans can’t even survive without government assistance anymore.  The number of Americans on food stamps set a new all-time record every single month during 2010, and now well over 43 million Americans are enrolled in the program.

We really have become a joke.

#10 “The federal government has no money.”

Unfortunately, our federal government has continued to borrow and spend like there is no tomorrow.

According to the Congressional Budget Office, the U.S. government will have the biggest budget deficit ever recorded (approximately 1.5 trillion dollars) this year.

So much for fiscal discipline, eh?

It is being projected that the U.S. national debt will increase by $150,000 per U.S. household between 2009 and 2021.

Do you have an extra $150,000 to contribute for your share?

By 2015 our national debt will be somewhere in the neighborhood of 20 trillion dollars.

It is the biggest mountain of debt in the history of the world by far, and it is the gift that we are going to pass down to future generations of Americans.

If there are any future generations of Americans.

#11 “I hate what is happening to this country.”

We should all hate what is happening to this country.  Our economic guts are being ripped out, we are being abused by the rest of the world, America’s infrastructure is being sold off piece by piece, our federal government is drowning in debt, our state governments are drowning in debt and our local governments are drowning in debt.

The only way we can even keep going is to run around to the rest of the world and beg them to keep lending us more money.

The mainstream media keeps proclaiming that we are the greatest economy on earth, but the truth is that we are being transformed into a pathetic loser and our politicians are just standing there with their hands in their pockets letting it happen.

All red-blooded Americans should be horrified by what is happening to this nation.  We have been betrayed by corrupt and incompetent leaders.  As a nation, we have become fat, lazy and stupid.

Hopefully what Donald Trump and others are saying about a coming economic collapse will serve as a huge wake up call and the sleeping giant will arise once again.

If the sleeping giant does not arise, we are in a massive amount of trouble, because right now the road we are on is leading to the biggest economic collapse the world has ever seen.