Fleckenstein – Gold: and A U. S. Collapse That Will Rival Greece

07/31/2013

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/31_Fleckenstein_-_Gold_%26_A_U.S._Collapse_That_Will_Rival_Greece.html

 By Eric King

KingWorldNews.com

Today Bill Fleckenstein warned King World News that we may see a “brutal” collapse in the United States that will be similar to the carnage and suffering which has taken place in Greece.  Fleckenstein also discussed gold backwardation as well as the bullish dynamics of the gold market.  Below is what Fleckenstein, who is President of Fleckenstein Capital, had to say in this powerful interview.

Eric King:  “It sounds like there is going to be hell to pay (for the irrational policies of central planners).  Is there something nasty in front of us that may be equivalent to the Great Depression, or is that too much (doom)?”

Fleckenstein:  “We would have had the functional equivalent of a depression after the 2008 crisis.  That’s where we were headed.  The difference was right there in 2008/2009, had they not done what they had done the banking system might literally have collapsed.

I think perhaps a lot of banks are in better shape (today than they were then) … But what we don’t know is, are the derivatives books going to have serious problems when the bond market starts to tank?….

Other markets have had big moves, whether it’s in the currency markets or the stock markets, and derivatives have been a talking point on banks’ books.  But we really haven’t seen bonds in a bear market.  So the banks could get in a lot of trouble because of that.

The crisis will be the government debt and additional interest costs which will add a couple of hundred billion dollars, on top of what’s already there, to the government debt as rates rise … I don’t know that the financial system will come close to collapse again, so the next crisis will be different than 2008.  But could we have something akin to a depression?  Yes.

It would be unlikely to be as bad as the depression of the 1930s because we have so many stabilizers in terms of the people on food stamps, welfare and all of that stuff.  But having said that, it will be plenty brutal.  Ask the Greeks how they are doing.  It will be some variation of that.  It’s going to be brutal.”

Here is a small portion of what Fleckenstein had to say regarding gold:  “The world believes in Goldilocks, and when the world believes in Goldilocks they don’t feel they need gold.  But the dynamics of the gold market are kind of extraordinary in that we’ve had this near-term backwardation for 17 straight business days as you and I speak, and so there is real tightness in the short end of the market.  

There still continues to be plenty of shorts (in gold).  I think a lot of guys got out of the market, so I think the next leg of the bull market could be pretty wild once it actually starts to respond to news in a positive way.”

IMPORTANT – This was one of Bill Fleckenstein’s best audio interviews ever.  The above section was just a small portion of what Fleckenstein had to say as he discussed the coming financial chaos and gold and silver.  The extraordinary audio interview with Bill Fleckenstein is available now and you can listen to it by CLICKING HERE.

 The audio interviews with Eric Sprott, Egon von Greyerz, David Stockman, Gerald Celente, Andrew Maguire,John Mauldin, Dr. Paul Craig Roberts, Art Cashin, William Kaye, Marc Faber and Dr. Benn Steil are available now.  Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.

King World News – Blog http://kingworldnews.com/kingworldnews/KWN_DailyWeb/KWN_DailyWeb.html

 Clear Your Cookies/Cache To Update Most Recent Articles

 The Price Of Silver Is Setting Up For A Historic Run

July 31, 2013

With gold and silver pulling back ahead of the FOMC activity, today acclaimed money manager Stephen Leeb spoke with King World News about what is really taking place behind the scenes in the gold and silver markets. Leeb believes that the price of silver is setting up for a historic move to the…

Read more…

Fleckenstein – Gold & A U.S. Collapse That Will Rival Greece

July 31, 2013

Today Bill Fleckenstein warned King World News that we may see a “brutal” collapse in the United States that will be similar to the carnage and suffering which has taken place in Greece. Fleckenstein also discussed gold backwardation as well as the bullish dynamics of the gold market. Below is…

Read more…

Gold Market To See Largest Short Squeeze In Modern History

July 30, 2013

Today one of the savviest and well connected hedge fund managers in the world told King World News that the gold market is getting very close to seeing a massive and unprecedented short squeeze that will eclipse anything in seen in modern financial history. Outspoken Hong Kong hedge fund manager…

Read more…


Fleckenstein – Why Stocks May Collapse 25% In Just 3 Days

July 30, 2013

Today Bill Fleckenstein stunned King World News when he warned that the stock market may be setting up to collapse 25% in a 3-day period when turmoil erupts. Below is what Fleckenstein, who is President of Fleckenstein Capital, had to say in this extraordinary and exclusive interview.

Read more…

Richard Russell – Gold, Stocks, Bull Markets & “Big Money”

July 30, 2013

On the heels of continued volatility in key global markets, the Godfather of newsletter writers, Richard Russell, asks the all-important question, “How do we know when a bull market is topping out?” Russell included a fascinating gold chart and predicted that gold will break out to the upside….

Read more…


Rick Rule – What To Expect From Gold, Silver & Mining Shares

July 29, 2013

With gold and silver continuing to consolidate, today King World News spoke with Rick Rule, one of the wealthiest people in the financial world, about the state of the gold and silver markets, as well as the mining shares. Rick Rule, who is business partners with billionaire Eric Sprott, also…

Read more…


We Are Staring At Global Collapse & A Gold & Silver Explosion

July 29, 2013

With weakness in stocks, and gold and silver consolidating, today John Embry told King World News that the we are about to witness a global global collapse that will create an explosion higher in gold and silver prices. Below is what Embry had to say in one his most powerful interviews ever.

Read more…

Wild Speculation, The Fed & What This Means For Gold & Silver

July 28, 2013

On the heels of another volatile week of trading in global markets, today one of the top economists in the world sent King World News an exclusive piece warning about speculation going on in a major market, and what this all means for gold and silver. Michael Pento, founder of Pento Portfolio…

Read more…

Is Something Catastrophic About To Occur?

July 27, 2013

On the heels of major movements in key global markets, today 40-year veteran, Robert Fitzwilson, put together another tremendous piece.  Fitzwilson, who is founder of The Portola Group, discusses the fear, confusion, and chaos that rules the investing world today. Below is Fitzwilson’s outstanding…

Read more…

Sprott – We Are Seeing Unprecedented Events In Gold & Silver

July 26, 2013

On the heels of J.P. Morgan announcing its desire to exit the physical commodity business, they also clearly indicated they were staying in the gold and silver business. From J.P. Morgan’s release: “J.P. Morgan has also reaffirmed that it will remain fully committed to its traditional banking…

Read more…

Gold Shortage Creating Massive Problems For Bullion Banks

July 26, 2013

With most key markets around the world trading lower, today Egon von Greyerz warned King World News that there are enormous shortages of physical gold and this has created a situation where the bullion banks are in real trouble here because of the supply problems. Below is what Greyerz, who is…

Read more…


Eric Sprott – Physical Gold Shortage Now Reaching Extremes

July 26, 2013

With the paper price of gold pulling back, today billionaire Eric Sprott told King World News that the shortage of physical gold is now reaching extremes. Sprott also discussed the implications of this, as well as Western central planner desperation. This is the first in a series of interviews…

Read more…

10 13 11 flagbar


Rockefeller and Ruckelshaus New Economy Rising

07/29/2013

http://www.activistpost.com/2013/07/rockefeller-and-ruckelshaus-new-economy.html

 Julie Beal

Activist Post

Putting a price tag on the services provided by nature, and human beings, was first proposed by ecological economists some 40 years ago, as a way to protect biodiversity, and to give a truer figure for the GDP of a nation. This is done by monitoring all resources (natural capital), and the well-being of the people, and the services they provide ‘for free’, such as caring for elderly relatives. The GDP would then reflect the ‘true wealth’ of the country – essential knowledge for globalist investors.

The idea fleshed out and evolved amidst a hyped-up media panic about the future of the earth –funded by those in power, and with much to gain from using the excuse of ‘environmentalism’. Now, a global market for ecosystem service credits is being steadily established, which would one day affect us all profoundly. The global commons is being sold off! Some peoples are already being charged ‘user fees’ for using the services that nature provides, such as water, whilst fortunes for many of the power elite have been secured with the purchase of carbon credits, with many more ecosystem ‘credits’ to come. These credits, and the community currencies also being promoted by the elite, signify the endlessly ‘renewable’ stock of assets supplied by natural, and human/social, capital. As our current system collapses, a New Economy is rising.

The key turning point was the launch of Agenda 21 at the Earth Summit in 1992; however, there were decades of events pre-dating this launch[1].  Suffice it to say, understanding that future prosperity lay in controlling natural resources, key global elites had established conservation and preservation initiatives throughout the 19th and 20th Centuries, such as the founding of the Society for the Preservation of the Wild Fauna of the Empire (‘the Fauna’) in 1903, under the patronage of the Royal Crown, and the creation of the Society for the Promotion of Nature Reserves, by Charles Rothschild in 1912. (Source)

The concept of ecology was increasingly popularised throughout the start of the century, with a notable change in the public mindset by the 1960s. James S. Bowman, (The Environmental Movement: An Assessment of Ecological Politics, 1976) attributed this to a succession of significant events, such as the threat of nuclear fallout from a distance, the vision of earth from above, and campaigns such as the Sierra Club’s plea to save the Grand Canyon from being dammed and flooded. Edward Bernays would have approved of the media fanfare for Earth Day in 1970.
Changing the public mindset readied the world for the political pantomime that began in earnest in the 1980s, when ‘Environmentalism’ became the property of the rich. Replacing the flower-power generation, and their profligate hedonism, the new environmentalists were politicians and profiteers, claiming to care as much as the hippies before them, but in a ‘rational’, mainstream, way. One of the first key moves was the formation of the World Resources Institute (WRI) in 1982, with a $15 million donation from the MacArthur Foundation. Another key event was the Fourth World Wilderness Congress in Colorado, U.S.A. in 1988, when onto the stage stepped Mr Rockefeller, and Mr Ruckelshaus. They were introduced by James Gustav Speth (co-founder of the WRI), as, respectively, ‘Mr Development’ and ‘Mr Environment’.

Extended version herehttp://www.youtube.com/watch?v=JUdgiehz9dU

The Congress, which was also attended by Baron Edmund de Rothschild, and the U.S. Treasury Secretary James Baker, was opened by Maurice Strong, with the remark, “We are having a great convergence today – not a Harmonic Convergence – but a global convergence.” As George Hunt identified, the meeting marked the creation of a new political ideology to end all politics: the communitarian synthesis, the final solution, which accords us all the responsibility to protect the earth, and to value the well-being of others. To do as we’re told. Also unveiled at the Congress was “the ‘World Wilderness Inventory’, prepared by the Sierra Club at the behest of the Fourth World Wilderness Congress. ‘Only areas of at least 400 square kilometers (1 million acres) were inventoried, because the constraints of this particular study did not allow identification of smaller wilderness areas, though they, too, are of interest.'”

Attorney and business mogul,  William D. Ruckelshaus was at the Congress to proclaim concern about the environment, and stress the global nature of the ‘crisis.’ Ruckelshaus was the first (and the fifth) U.S. Environmental Protection Agency administrator and was the man who, controversially, overturned the court ruling on the safety of DDT, leading to it being banned. Several million people are said to have died of malaria as a result. Ruckelshaus is also said by many to have had connections with the Audubon Society and the Environmental Defense Fund.

George Hunt described how Ruckelshaus was, at that time,

the CEO and Chairman of the Board for BFI, Browning-Ferris Industries, one of the largest private environment companies in the world. The hypocrisy is that Ruckelshaus as EPA chief, made the very laws by which his waste company, BFI, is becoming rich. Hypocrisy number two is that Ruckelshaus and Maurice Strong were key investors in American Water Development, a company which tried to circumvent Colorado water laws and gain control of one of the largest underground reservoirs of water in the world….

Representing ‘Mr Development’ at the Congress, Rockefeller launched the concept of business ‘ethics’, paving the way for the green face presented by corporate social responsibility programs today. One of the richest men in the world telling businesses not to put profit first! As if!!! He even had the gall to blame the poorest people in the world for environmental degradation, but the overall idea was to say, ‘We’re all in this together’.

Hunt documented many of the events and issues around Agenda 21, as they were happening; hesaw right through the phony rhetoric of these powerful globalists, and the way our core values, and our natural resources, are being exploited by those with the most vested interest in managing those resources. The conversation about our core values is being controlled by those who do not exhibit these values, and are in positions of great power. It is but an ideological charade: when they want to influence development, such as to create smart cities, and reserve land for biofuel crops, they’ll say ‘it’s got to be sustainable’; and when they want to extract, pollute, grow, develop, and pump us full of pharmaceuticals, GMOs, and vaccines, they’ll say it’s for the sake of our well-being.

Gustav Speth, former head of the Council on Environmental Quality, spearheaded the Global 2000 Report for the Carter Administration, (well worth reading about here) which led to the formation of the World Resources Institute (WRI). Much of this was documented by Stephen Moore, who wrote, in 1985,

Global 2000 was the intellectual rationale for WRI; it was formed to, “provide a global perspective on resource, population, and environmental issues”.

So far, the consensus is that WRI has had surprisingly little influence on policy and academic thought. Harvey Alder, Manager of the Resource Policy Office of the U.S. Chamber of Commerce, speculates that WRI may amount to “no more than a defense of Global 2000”. In fact, one of WRI’s major projects is an annual world resources report to improve global resource data collection, which is right in line with a Global 2000 recommendation. With a $4 million budget WRI could wield vast future influence.”

Speth remains a central figure at the WRI, along with Al Gore, and Ruckelshaus, who has also served on the Board of Directors of Monsanto and numerous other firms. The EPA partnered with the WRI in 2008 to advance the ecosystem services marketplace. The WRI is now headed byAndrew Steer, who has worked, “at the World Bank as Director of the Environmental Department, where he oversaw a major expansion of the Bank’s environmental program, and a number of important innovations, including natural capital accounting and the introduction of carbon trading at the World Bank.” Steer was also the chief author of the World Development Report on Environment and Development, presented at the 1992 Rio Earth Summit by World Bank.

After co-founding the WRI, Speth went on to serve “as Administrator of the United Nations Sustainable Development Program (UNDP) from 1993 to 2000. He was the highest-ranking American in the UN system: ‘in effect the No. 2 job at the U.N. next to the secretary general.'” (Source)

At a conference in 1997, he said, “Global governance is here, here to stay, and, driven by economic and environmental globalization, global governance will inevitably expand.” (Source)

According to their website, in 1988 the WRI took over, “the North American branch of a London-based nonprofit, the Institute for International Environment and Development (IIED), a major contractor for the U.S. Agency for International Development (USAID). In absorbing the Washington office and its staff, WRI became an aid contractor with a portfolio of environmental and development projects around the world.” The institute then went on to work with Maurice Strong to implement Agenda 21 and the Convention on Biological Diversity, at the UN’s Rio summit, which the WRI claims, “drew heavily on principles that WRI had outlined in an earlier report written in collaboration with the U.N. Environment Program and the World Conservation Union”.

Throughout the ’80s and ’90s, the WRI collaborated with the UN and World Bank to disseminate the policy of a ‘green GNP’, based upon research conducted at WRI by Robert Repetto, whereby monetary values are given to ‘ecosystem services’ to act as a guide to sustainable development. These ideas were also endorsed in a report by the Rockefeller Brothers Fund in 1976 (‘The Unfinished Agenda’see chapter 9). The report was edited by Gerald O. Barney, who was also the Director of the Global 2000 Study.

As documented by Vicky Davis, the proposal to link the environment to the economy was advocated by Atari Democrats such as Al Gore, and Tim Wirth, who believed, “market forces can be harnessed to protect the environment and work better than “command and control regulations.” The upsurge in activity by political and commercial interests in environmentalism led the Fresno Bee(1989) to wonder why, “during the past 12 months — environmental politics has gone from virtual international obscurity to center stage”, and to conclude, “… the environment provides an almost perfect arena for East-West cooperation.” (Source)

In the same year, the Atlanta Journal reported, “Global climate is starting to figure into investment decisions.” Twenty-four years later, it is becoming standard practice for transnational corporations to report on their use of natural and human capital to meet their corporate social responsibility requirements. Investors increasingly expect them to prove they can satisfy all three criteria of Agenda 21 – care of the environment, equity, and the economy must all be factored in to the company’s accounts. To do this, companies can convert the goods and the bads they do into their monetary equivalents, such as carbon credits, and Payments for Ecosystem Services.

Natural capital is understood as the “flows of goods and services such as water, medicines and food”, provided by nature and people, and which benefit human well being. Nature and human beings have been re-defined as an endlessly renewable stock of assets. We are all biomass, transforming energy. The Natural Capital Declaration was signed last year by numerous financial institutions, and supported by several global organisations, including UNDP and WWF. Their 2013 ‘roadmap’ helps define what the corporations’ concept of ‘externalities’ includes:

Natural capital is not only relevant from an economic and financial perspective but equally from a cultural and social perspective – based on, for example, the work of the World Intellectual Property Organisation (WIPO) on indigenous community knowledge as a key facilitator of our understanding of natural capital, such as unlocking medicines for pharmaceutical production. However, the Natural Capital Declaration does not intend to quantify human capital depletion/degradation such as that associated with the loss of livelihoods.

Repetto’s work on ecosystem services (green accounting) was pushed forward by the WRI, leading to the UN Millennium Ecosystem Assessment in 2005, which was a “global audit of ecosystem services”. This audit confirmed there were trillions of dollars worth of such services to be had, and now forms the backbone of the various green accounting methodologies, such as World Bank’s System of Environmental-Economic Accounting (SEEA) was adopted as the international standard for statistical analysis of natural capital by the United Nations Statistical Commission (UNSC) at its forty-third session in 2012. The World Bank’s Wealth Accounting and the Valuation of Ecosystem Services (WAVES) Partnership is helping countries to start doing natural capital accounting, partnered with several UN agencies.

Robert Costanza also co-authored the now seminal piece of research which involved providing the net monetary benefits which nature could provide. Along with several of his colleagues, it seems Costanza may now be having some doubts about pricing nature; in a post entitled ‘Conventional markets are the wrong institutions for managing ecosystem services’, he belatedly criticised the financial behemoth being created, and proposed instead that the commons should still belong to the people, and should be managed by an ‘ecosystem trust’. (Source) However, the process which will privatize the commons is in full swing. There are numerous projects on the go, there is full backing amongst all those with power, and steps are being taken by nations to bring their laws in line with the scheme, guided by GLOBE International. This is a supra-national organisation made up of legislators from around the world, all of them committed to implementing natural capital accounting in their respective countries.

The corporate world is also very actively supporting the ES marketplace, with the TEEB for Business Coalition, the Corporate Eco Forum, and the World Business Council for Sustainable Development (WBCSD) playing major roles.

The public face of the ecosystem services marketplace is now being popularised by the media. The values being espoused are noble, but their solutions are not. Even the airlines magnate, Richard Branson, now claims to believe in the Gaia hypothesis. His non-profit foundation, Virgin Unite, claims to be super-green, such as by investing in ‘green energy’; like other billionaires Branson also advocates natural capital accounting, and was involved in setting up the Carbon War Room, making Virgin, it would seem, what passes for a sustainable airline!

Bono and U2 are also aboard the eco-bandwagon – Bono has been hanging out at Davos, and with the likes of Al Gore, whilst the band claimed to have offset the carbon from their 3600 tour (the most un-eco-friendly tour ever). (Source)

Methinks that, “…intellects vast and cool and unsympathetic, regarded this earth with envious eyes, and slowly and surely drew their plans against us” (H. G. Wells)

Thousands of rousing speeches since have united folk across the globe, not just for a common cause, but for a common solution. Just like the people who have debated the theory of anthropogenic climate change, those who speak out against the ES marketplace are scorned as ‘anti-environmentalists’, or ‘flat earthers’. Nonetheless, many minds are now open to new possibilities, so once people understand that the solution being offered has already been decided on by the very globalist banks and corporations we have come to despise, a critical mass could arise, focused on finding alternatives to valuing nature, and planned obsolescence.

Our biggest hope is the science of complex adaptive systems –the theory of climate change rests upon computer models of earth, but complexity science reveals how very complex and interwoven all of the earth’s components are, and we are an infinite distance from being able to truly model its workings upon a computer. The best we can hope for is a crude approximation, and even then, it has been shown that complex adaptive systems are self-regulating. If the ecological economists, and complexity scientists, could see the bigger picture of future natural capital accountancy . . .

  • the plans for large monocultures of genetically modified biomass crops, for biofuel, and thousands of household products
  • the increasing inclusion of nuclear energy in the definition of sustainability (as arenewable)
  • the effects of patented GMO crops, and schemes such as REDD and carbon credits, upon local communities
  • the effects of geo-engineering and nano-technology
  • the rise in surveillance that monitoring of natural and human capital entails

. . . I think they would agree that the trade in ecosystem service credits is A VERY BAD IDEA, and has little to do with caring for the earth, or its people. Once fully established, the ES marketplace could make our current fiat system redundant. The future is biomimicry, and the economy is set to by circular – modeled on what we have and who we are, it will be used for simulations, to make predictions. This is the golden nugget for the powers that be. One we shall deny them.

Notes:

[1] such as computer simulations claiming to model the earth’s climate in the 1960s, and theReport from Iron Mountain – and a great many other things that will have to wait for another article!

Julie Beal is a UK-based independent researcher who has been studying the globalist agenda for more than 20 years. Please visit her website, Get Mind Smart, for a wide range of information about Agenda 21, Communitarianism, Ethics, Bioscience, and much more.

10 13 11 flagbar


UK Internet Porn Censor to Also Block Conspiracy Theorie

07/29/2013

http://www.activistpost.com/2013/07/uk-internet-porn-censor-to-also-block.html

 Big Brother Weds the Nanny Who’s Pregnant with Internet Censorship.

 Eric Blair

Activist Post

The totalitarian tip-toe is tap dancing to tyranny with the proposed Internet censorship bill in the United Kingdom. In the name of keeping children safe from porn, the UK law will impose Internet filters on far more than just porn.

According to Wired:

As well as pornography, users may automatically be opted in to blocks on “violent material”, “extremist related content”, “anorexia and eating disorder websites” and “suicide related websites”, “alcohol” and “smoking”. But the list doesn’t stop there. It even extends to blocking “web forums” and “esoteric material“, whatever that is. “Web blocking circumvention tools” is also included, of course.

The definition of “esoteric” makes clear that censorship of broad topics is the goal of this so-called ISP filter:

es·o·ter·ic [es-uh-ter-ik] adjective
1. understood by or meant for only the select few who have special knowledge or interest;
2. belonging to the select few.
3. private; secret; confidential.
Translation: anything outside the acceptable mainstream narrative will be filtered. In short, the free flow of information is under assault with this law.

The organization Open Rights Group refers to this totalitarian tip-toe as “sleepwalking into censorship“:

What’s clear here is that David Cameron wants people to sleepwalk into censorship. We know that people stick with defaults: this is part of the idea behind ‘nudge theory‘ and ‘choice architecture’ that is popular with Cameron.

The implication is that filtering is good, or at least harmless, for anyone, whether adult or child. Of course, this is not true; there’s not just the question of false positives for web users, but the affect on a network economy of excluding a proportion of a legitimate website’s audience.

Open Rights also says the law could be used to play economic favorites, thus undermining the free market on the Internet:

There comes a point that it is simply better to place your sales through Amazon and ebay, and circulate your news and promotions exclusively through Facebook and Twitter, as you know none of these will ever be filtered.

It seems Western government’s voracity for Internet censorship has increased many fold since the Snowden revelations about digital spying.

Direct Internet censorship was imposed on millions of U.S. government computers blocking them from viewing any material related to the Snowden leak, which at the time of the leak and even now represents a large percentage of all political and technical news stories.

And as John Naughton of the Guardian points out today, the real story about the Snowden leak that everyone is ignoring are the implications on Internet freedom, which he lists as the following:

The first is that the days of the internet as a truly global network are numbered. It was always a possibility that the system would eventually be Balkanised, ie divided into a number of geographical or jurisdiction-determined subnets as societies such as China, Russia, Iran and other Islamic states decided that they needed to control how their citizens communicated. Now, Balkanisation is a certainty.

Second, the issue of internet governance is about to become very contentious. Given what we now know about how the US and its satraps have been abusing their privileged position in the global infrastructure, the idea that the western powers can be allowed to continue to control it has become untenable.

Third, as Evgeny Morozov has pointed out, the Obama administration’s “internet freedom agenda” has been exposed as patronising cant. “Today,” he writes, “the rhetoric of the ‘internet freedom agenda’ looks as trustworthy as George Bush’s ‘freedom agenda’ after Abu Ghraib.”

As a final note, porn filters already exist for parents in the private marketplace if they choose to use them.  So, there is no need for governments to make them mandatory, which indicates that the real agenda behind these new proposed laws is much more about censorship than protecting children.

10 13 11 flagbar


Insuring Deposits Ensuring Insolvency

07/24/2013

http://mises.org/daily/6487/Insuring-Deposits-Ensuring-Insolvency

 by Frank Hollenbeck

The US government is trying to implement the 21st century version of the Glass-Steagall Act of 1933. The proposed bill would separate traditional banks (which are backed by the FDIC) from riskier financial institutions that include companies focused on investment banking, private equity and more. This is to give the impression that governments are taking actions against the financial sector whose actions nearly brought the entire world economy to its knees back in 2008. The implicit assumption is: if this legislation is passed, the banking sector will never again be a source of financial panics. Nothing could be further from the truth.

First, the housing bubble would still have existed without investment banking. The liar loans and no-money-down loans were all commercial banking activities. If these mortgage loans had never existed, investment banks could not have repackaged and sold then to mutual and pension funds, and insurance companies. By setting rates too low for too long, the central bank created an environment for bubbles. Glass-Steagall would have been a bump in the road. If a child goes into a candy store and “pigs out”, do you blame the child (the bankers), or the parents (the central bank) for putting him in the candy store in the first place?

Second, the US experienced several severe financial crises during the 19th century: the panics of 1819, 1837, 1857, 1873, 1893 among others. At the time, most investment banking activities did not even exist. The banking sector’s ability to create money out of thin air allowed the excessive credit growth, unjustified by the resources liberated by real savings, which spurred economic activity during the boom phase of the business cycle. This growth could not have occurred without fractional reserve banking. End that, and you end most boom and bust cycles.

The Glass-Steagall act was completely repealed in 1999 with the Gramm-Leach-Bliley act, allowing commercial banks to easily enter investment banking activities. In other words, fractional reserve banking and deposit insurance allowed banks to take on risky gambles, and now they were being allowed to engage in even riskier gambles. The recent legislation such as Dodd-Frank, the Vickers report in the UK and the liikanen report in Continental Europe all try to limit commercial bank activity into investment banking. The essential idea behind some of these new rules is each gamble would be assigned a risk weighting. A commercial bank could then only take on so many bets before being required to split off these risky activities into a separate entity.

No one, of course, is asking the critical question: why are banks allowed to take these risky gambles with deposits in the first place? They shouldn’t be.

Deposit insurance is one of the two factors which allows banks to take such risky gambles. Created in 1933, it is a perfect example of government policy that ultimately will be determined to have done more harm than good. It was supposed to reduce risks, but has done just the opposite. When governments provide flood insurance the private sector would never consider, people then build homes in areas prone to suffer from severe flooding.

Prior to deposit insurance, people were careful about where they deposited their money to pay rent or food bills. If a bank ran into trouble by undertaking poor lending practices, people would quickly try to pull their money out of the bank. Bank runs were a good thing because runs served to force banks to be extremely careful about their lending practices. The threat of a bank run maintained sound incentives.

Deposit insurance is a perfect example of Frederick Bastiat’s parable of the broken window: what is seen, and what is not seen. For about 70 years, bank runs have been eliminated; giving depositors what some would say is the illusion of protection. That is what is seen. What is not seen is, without insurance, banks would have been taking much less risks with deposits, and governments would have been less able to finance spending through bank purchases of their bonds.

Europe, today, is a perfect example of the disastrous effects of deposit insurance. Had it not existed, the 2008 crisis might have never occurred, or been much milder or occurred much earlier, and the debt situation of governments worldwide would be completely different. It is surprising how many free market economists defend deposit insurance although it is a product that the free market, prior to 1933, never considered worth undertaking.

Why was Ireland forced to bail out its banks? Why don’t governments treat banks like any other business? If Nokia was unable to sell phones competitively, it should go bankrupt. The government should not be bailing out private businesses. Again, it is the fault of deposit insurance. Although a bank may no longer exist, the government is still liable for the banks’ liabilities, its deposits, because of deposit insurance.

Today, many Italian or Spanish banks have used deposits to buy large percentages of their government’s debt. If either Spain or Italy is closed out of the financial markets, which is getting more and more likely, the value of their debt will drop significantly as Greek debt did back in 2010. These banks will go bankrupt instantly, and the Italian or Spanish governments will be on the hook for the deposits that served as funds to purchase their bonds since these deposits are insured!

These governments will then have to print their way out of the problem. However, this would go against the ECB’s mandate and would probably face a German veto. A breakup of the Euro would then be inevitable. An official rate would then be set between Euros and liras or pesetas. This rate, however, would have nothing to do with the market rate. Depositors holding less than 100,000 euros would get their money back in liras or pesetas. However, this new currency would not be able to buy much. Deposit insurance guarantees the nominal value of deposits, not its real value: hence, the illusion of protection.

The economic consequences of the hyperinflation inevitable in Spain or Italy will have worldwide repercussion. None of this would have happened without fractional reserve banking. Deposit insurance would then have been unnecessary.

We need to end this constant race between banks and regulators. We already have more compliance officers than loan officers. All this new banking legislation will probably make the situation even worse. Banks will always be able to use new technologies and new financial instruments to stay one step ahead of the regulators. We continue to put bandages on a system that is rotten to the core. Banking in its current form is not capitalism. It is fraud and crony capitalism, kept afloat by ever-more desperate government interventions. It should be dismantled. 

10 13 11 flagbar


The Biggest Oil Discovery In 50 Years?

07/24/2013

http://www.activistpost.com/2013/07/the-biggest-oil-discovery-in-50-years.html

By Michael Snyder

In a virtually uninhabitable section of South Australia, a discovery has been made which could rock the world.  Some are calling it the biggest discovery of oil in 50 years.  Earlier this year, a company called Linc Energy announced that tests had revealed that there was a minimum of 3.5 billion barrels of oil equivalent sitting under more than 65,000 square kilometres of land that it owns in the Arckaringa Basin.

But that is the minimum number. It has been projected that there could ultimately be up to 233 billion barrels of recoverable oil in the area.  If that turns out to be accurate, the oil sitting under that land is worth approximately 20 trillion dollars, and it would be roughly equivalent to the total amount of oil sitting under the sands of Saudi Arabia.  In essence, it would be a massive game changer.

If the 233 billion barrel figure is accurate (and some have even suggested that the true number could actually be 400 billion barrels), that would make it nearly 10 times larger than the Bakken formation, 17 times larger than the Marcellus discovery and 80 times larger than the Eagle Ford deposit down in Texas.

It would also mean that Australia now has more “black gold” than the nations of Iran, Iraq, Canada and Venezuela.
The closest town to this oil discovery, Coober Pedy, is in the process of being totally transformed.  It normally only has about 1,700 inhabitants, but news of this discovery has drawn in 20,000 additional people already and real estate prices in the town are absolutely skyrocketing.

So does all of this mean that gas prices will go down soon?

Well, unfortunately that is not likely to be the case.

First of all, the oil in this formation in Australia is going to be quite expensive to extract.  It has been estimated that it is going to cost up to 300 million dollars just to get this site ready for production.

In addition, many of our politicians are absolutely determined to greatly punish the use of oil because they believe that it is the primary cause of global warming.  So they continue to raise taxes on gasoline consumption.

Today, motorists in the United States pay an average of 49.5 centsof taxes per gallon of gasoline, and in the state of California motorists pay an average of 71.9 cents of taxes per gallon of gasoline.

Hopefully the price of gasoline will come down a bit over the next few years, but even if it does I would not expect it to come down too much.

But what we can be sure of is that the world is not going to run out of oil any time soon.  Those that have been predicting that we are are on the verge of an “energy doomsday” can take a rest for a while.

Sometimes it is funny to look back and remember some of the ridiculous things that our politicians were saying about oil in the old days.  For example, U.S. President Jimmy Carter made the following statement back in 1977….

Unless profound changes are made to lower oil consumption, we now believe that early in the 1980s the world will be demanding more oil than it can produce.

That prediction didn’t exactly work out for him did it?

It is time that the American people were told the truth about our energy situation, and the truth is that we have plenty of energy resources.  The following stats have been updated from one of myprevious articles

#1 Back in 1995, the U.S. Geological Survey told the American people that the Bakken Shale formation in western North Dakota and eastern Montana only held 151 million barrels of oil.  Today, government officials are admitting that it holds 7.4 billion barrels of recoverable oil, and some analysts believe that the actual number could be closer to 24 billion barrels of oil.

#2 It is estimated that there are 19 billion barrels of recoverable oil in the tar sands of Utah.

#3 It is estimated that there are 86 billion barrels of recoverable oil in the Outer Continental Shelf.

#4 It is believed that there are 800 billion barrels of recoverable oil in the Green River formation in Wyoming.

#5 Overall, the United States is sitting on approximately1.442 trillion barrels of recoverable oil.

#6 According to the Institute of Energy Research, the United States has an 88 year supply of natural gas.

#7 According to the Institute of Energy Research, the United States has a 169 year supply of oil.

#8 According to the Institute of Energy Research, the United States has a 465 year supply of coal.

#9 Goldman Sachs is predicting that the United States will be the number one oil producing country in the world by the year 2017.

So the bottom line is that we have plenty of energy resources.  We do not need to be importing oil from OPEC or anyone else.

But just because we are not going to run out of oil, natural gas or coal any time soon does not mean that we should not be developing alternative energy resources.  We should definitely be seeking ways to produce energy more cheaply, more cleanly and more efficiently.

If America does not end up leading the world in developing new forms of energy, we should be ashamed of ourselves.  And right now, the Chinese appear to be way ahead of us as far as thorium energy is concerned, and Italian scientists appear to be ahead of our own scientists in developing “cold fusion” technology.

So yes, let’s be glad that we are not going to be facing a crippling energy crisis in this generation, but let’s also not be complacent.  There are lots of new technologies out there just waiting to be developed, and the rewards are going to go to those that are able to develop them first.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

10 13 11 flagbar


Ten Benefits of Expatriation

07/24/2013

http://www.caseyresearch.com/crpmkt/AmEx.php?ppref=ATP068BN0810A

 Published by Casey Research

The following is an excerpt from the free 29-page American Expatriation Guide, written by a former U.S. citizen who wants to remain anonymous. Read what he has to say – from a “been there, done that” perspective – and maybe take your own first steps to move to greener pastures.

Everybody has their own personal reasons for expatriating, but here are some of the benefits:

1) Freedom from the global U.S. tax net. Taxing you no matter where you breathe on this earth is wanton American exceptionalism. What other nations don‘t dare do to their citizens, the U.S. government doesn‘t think twice about. Once you renounce, it‘s your choice either to live the rest of your life free of any tax net, or to pick a place you want to be year-round and opt into the tax system (assuming it’s not a tax-free jurisdiction). If you do, you‘ll at least know you have the freedom to walk away from it by simply moving elsewhere.

Taxes in the U.S. are already high, and rates are set to increase across the board. To gain some perspective, it’s clarifying to calculate the number of months per year you work for the government. How many months did it take to pay all the federal, state, and local income taxes, capital gains taxes, FICA taxes, property taxes, and AMT – plus the raft of permitting, licensing and accounting costs you incur over the course of a year? Add corporate taxes if you’re a business owner. And don’t forget the new 3.8% health care surcharge tax on all investment income, including dividends. Be honest and add it all up. You’ll then have a decent idea of how much it costs you in time and money to be a U.S. citizen every year. That cost will rise dramatically going forward.

Here’s the take-away: The biggest guaranteed return on your capital that you’ll ever have is investing your money free of taxes. Do some long-run compounding calculations with and without taxes to see what I mean. I’ll wager John Templeton did.

2) Freedom from the death taxIts political label is the “estate tax,” but the fact is the tax is based solely on your demise. I used to think the death tax only applied to gains on assets that had not been taxed already. How naïve I was! It grabs half of all your assets, regardless of the fact that you‘ve paid taxes on them.

If you have over a few million dollars net worth, your heirs will be writing a heart-stopping check to the IRS. They also may be forced to liquidate your assets to raise cash. This has happened to countless small businesses and family farms. And if you’re a young, talented entrepreneur who goes on to earn substantial wealth over the course of your life, the death tax has you in its crosshairs too.

The death tax is 45% now and is scheduled to jump to 55% in 2011. Either way, the amount is staggering. Expatriation lifts the death tax burden from your children and other heirs.

3) Freedom from the U.S. government’s War on Solvency. Washington‘s crazed debt addiction is uncontrollable and endemic. U.S. politicians have strapped an inconceivably large debt burden on the backs of their subjects. It pays to spend some time on http://www.usdebtclock.org. The multi-trillion dollar debt avalanche roars on, headed straight towards economic hell. After “Debt Per Taxpayer” and “Liability Per Citizen,” check out “U.S. Unfunded Liabilities” to see a number that’s suited to astronomical calculations – not economics.

Don‘t be tricked into thinking this is a partisan issue. It‘s sobering to review the debt records of both Democratic and Republican administrations… to behold what politicians do when given trillions of dollars of other people‘s money. They spend it all – and then borrow trillions more! Of course, the burden of servicing that debt is on you, not them. Their six-figure salaries are guaranteed, along with their uber-perks and fully funded pension plans.

While often described as “the richest nation in the world,” the reality is that the U.S. is the most indebted nation, by a country mile. No other government comes close to matching the debt burden that has been dumped onto every taxpayer. The U.S. government is rampantly incurring debt in your name, and you have no way to stop it or slow it down. Standing in free speech zones with protest signs didn‘t work when it came to war and crony bailouts, and it won‘t work for the debt burden either.

Besides, it‘s already too late. The interest alone on the debt is trillions of dollars. Trillions…as in thousands upon thousands of billions. Google “interest due on U.S. debt” if you think I‘ve veered into the realm of fiction. Once you’ve returned, I think you‘ll agree: The one truly meaningful act you can take as an individual is to opt out. Unload the government’s debt burden off your back. Don’t let yourself or your family be a casualty of the government’s War on Solvency.

4) Freedom from being treated like a “toxic citizen.” When traveling abroad, being a U.S. passport holder used to be a positive thing. Now it‘s an albatross. The New York Times article I cited earlier explains it plainly: Americans abroad are being treated like “toxic citizens.” They’re cut off from banking and other business and investing opportunities solely because of their U.S. citizenship.

Typical currency controls don‘t permit you to take money out of a country. The U.S. doesn‘t have that (yet). Instead, and this is quite clever, the government enacts laws and regulations that function as indirect currency controls. There are so many Patriot Act and other costly impositions forced on foreign banks that handle U.S. customers that they’re simply refusing to put up with the harassment. Here’s the upshot: Your money isn’t fenced in; it’s fenced out.

If you seek firsthand evidence, visit a major banking center outside the U.S. and try to open a bank account. Odds are you’ll be turned away when the bank finds out you‘re a U.S. citizen. Reports abound of U.S. citizens’ long-held accounts at foreign banks being summarily terminated. The U.S. government has made its subjects, along with their money, persona non grata.

I‘ve read that some foreign banks are now setting up, in essence, holding pens designed to handle U.S. citizens who want to bank offshore. But, really, what‘s the point? You‘re burdened with having to file extra IRS paperwork, along with FBAR forms to the Treasury Department. And even if you don‘t file all the extra papers (not a smart move), new laws force foreign banks who accept U.S. customers to report on you anyway. They are pressured to sign “information reporting agreements” to have U.S. citizens as customers. Google “FATCA” and “qualified intermediary agreements” if you want details.

Now for the most extreme instance of liability. Being a U.S. passport holder can mean life or death in the context of a terrorist attack. The U.S. government‘s never-ending War on Terror makes the world more dangerous for Americans. After so many years of bombing and military occupation in the Middle East, how can the hundreds of thousands of civilians who’ve been maimed and killed by the U.S. government NOT be the source of enduring resentment and blowback? Needless to say, the U.S. passport is on the short list of ones you least want to have if somebody sticks a gun in your face and says, “Passport.” Unfortunately, this has happened on more than one occasion, and it would be unreasonable to assume it won’t happen in the future.

5) Freedom from the paperwork prison. Millions of Americans are plagued every year by days, sometimes weeks, of preparing tax documents and paying thousands of dollars to accountants to decipher the IRS tax code. There are, literally, hundreds of different IRS forms. The tornado of rules and regulations in the tax code fills roughly 70,000 pages. And then you have to save boxes and boxes of papers for years in fear of someday being audited and not being able to produce the demanded documents. If you‘re unfamiliar with audits, here‘s how they work: You‘re guilty of whatever the IRS claims, unless you prove yourself innocent. If that sounds preposterous, I encourage you to ask a tax lawyer. “Innocent until proven guilty” does not apply. Freedom from spending days of tedium on mind-numbing paperwork and thousands on accounting fees has been an absolute joy. Highly recommended.

6) Freedom to invest without tax distortions that encourage capital misallocation. The U.S. tax system encourages misallocation of your investment capital. It obscures the act of buying and selling securities based on a rational assessment of their value. For instance, you end up not selling a security you otherwise would simply because you don’t want to trigger taxes yet. Or you hold on longer than you might otherwise to get long-term capital gains treatment. Or you sell securities you normally would keep – for “tax loss harvesting.”

Moreover, you‘re incented to give an artificial value premium to municipal bonds simply because they aren‘t taxed, despite their negative real return after inflation. And your assessment of real estate’s value is warped too, by mortgage interest deductions and capital gains exemptions. The phrase “letting the tax tail wag the dog” encapsulates these distortions. Expatriation instantly liberates you from them.

7) Freedom from being crushed by the fiat currency landslide. If you pay attention to the world‘s major currencies, you‘ll notice they fluctuate, often dramatically, against each other. In a year‘s time, the price of an item can increase or decrease 20%, 30% – sometimes more – solely based on which currency you use to pay for it. The same item! The reasons for this are beyond the scope of this guide. Suffice to say, it has to do with government central banks manipulating their currencies by price-fixing interest rates and continually printing money.

Regardless of the reason for the volatile swings in the value of currencies, there it is. Reality. So what‘s the risk for you? For one thing, you can have all your money in one currency, earn a positive investment return on paper (that you’re taxed on), but actually lose purchasing power. Think about it this way. The U.S. imports goods from all over the world. When the U.S. dollar drops in value, it takes more of them to buy those goods. That makes you functionally poorer, no matter what your account statement says. It‘s that simple.

Every time the dollar drops, you get the short end of the stick. The value of your savings erodes. Your money is like ice cubes. The longer you wait to use them, the more they melt. According to the government’s official “inflation calculator,” the dollar has lost 95% of its purchasing power since 1913. See for yourself here: www.bls.gov/data/inflation_calculator.htm

When you’re out of the global U.S. tax net, you can freely diversify the currencies you own to protect your purchasing power from being diluted. If you do this as a U.S. citizen and the dollar drops, you’re taxed on the paper gains from those other currencies. In other words, you’re taxed for simply preserving your purchasing power. And if you choose the monetary metal, gold, as a fiat currency hedge, you’re taxed even more heavily. No matter what you do to try and preserve the purchasing power of your dollars, one way or another you’re slowly being bled. That ends on the day you expatriate.

8) Freedom from the accountability for how the U.S. government spends your money. I sleep much better knowing I no longer fund the military-industrial-banking complex. Anybody can get mugged, but every U.S. taxpayer is a constant patsy for the political establishment. The rip-offs are so unthinkably big and endemic, there‘s nothing an individual can do to stop them.

If you step back and take an honest look, you’ll see that the unfortunate state of affairs in America has resulted from the reign of both political parties. Don’t fall for the divide and conquer strategy that politicians use to corral people into “red” and “blue” sports teams. Donkeys and elephants are sold as team mascots pretending to be in mortal conflict. In reality both parties work together to advance their agendas in lockstep…logrolling…and when necessary, one side “takes the hit” whenever the illusion of accountability is needed. The system depends on the delusion that people can “vote the bums out.”

Meanwhile, every government failure becomes the pretext for more government growth. If you don’t get distracted by the spectacle, it’s impossible not to notice the pattern: Every political solution to any problem involves more regulation of your life and more taking of your money.

What are the consequences of this vicious cycle of growth through failure? Most Americans are familiar with the oft-chanted phrase, “We‘re #1!” Humor me for a minute and try this exercise. Mentally separate yourself from the government you‘re paying trillions of dollars to fund. Then, consider that the U.S. is:  #1 in government debt and deficits  #1 in unfunded liabilities, most importantly Medicare and Social Security #1 in building and maintaining the biggestWMD stockpile in the world  #1 in weapon sales to foreign governments  #1 in bombs dropped and missiles fired on other nations  #1 in causing civilian casualties and property destruction  #1 in “defense” spending – about as much as all other countries combined  #1 in lawyers per capita, with over 1.1 million total  #1 in law suits filed – millions and millions every year  #1 in political lobbyists, special interest groups and campaign donations  #1 in taxpayer bailouts of the politically connected “too big to fail” corporations  #1 in people imprisoned – “The United States has 4% of the world‘s population and 25% of the world‘s incarcerated population.” -Wikipedia

I‘ve avoided citing sources for these claims (save the last one) because I‘m hoping you‘ll be moved to verify them for yourself. The process is eye-opening. If you fall for the political fallacy that “the government is the people,” you end up with the faulty conclusion that America must be overrun by war-crazed, lawsuit-happy, debt-addicted criminals. How could anybody buy this after even a moment of clear thought? There’s certainly no resemblance to the American people I know. These problems stem from the military-industrial-banking complex, the dark heart of the U.S. political machine. Why continue being the stooge that supplies the money to run it?

Looking at the world with fresh, open eyes isn‘t easy. One of the great benefits of liberating yourself from the grip of the U.S. political system is that the world becomes your oyster. You’re free to embrace places that welcome individuals who seek to live peaceful and prosperous lives.

9) Freedom to radically increase your charitable giving. Individual liberty sparks our charitable instincts. If you care deeply about philanthropy, expatriation frees up vastly more of your capital to give away. Also, your philanthropic impulses are no longer distorted by the IRS. You can give to any charitable cause worldwide without being penalized if it‘s not anointed as a tax-deductible entity.

The human impulse to help another in need is older than any government. Your judgment about how to contribute your capital to best help others will forever be superior to that of bureaucrats. Expatriation opens up new possibilities for you to reach out and help others in need.

10) Freedom from the risk of getting trapped. Politicians don‘t like it when the people who pay their salaries, fund their pensions, and fuel their jets close their wallets and walk away. As the number of renunciations continues to rise, it inevitably will turn into a political hot-button. The media will set the stage for politicians to denounce renunciation, paving the way to make exercising the right more difficult and costly. Wealthy people who renounce will be called greedy and unpatriotic. “Turning their backs on their fellow Americans” will be the sound bite wielded by politicians to conjure up the demand to “do something.” When that happens, I expect the exit tax to become dramatically worse. Instead of taxing unrealized gains at their regular rates, it may function more like the death tax. Add up everything you own – then cough up half. Otherwise sit down and shut up.

The other timing consideration is that getting a second passport is becoming more difficult, more lengthy and more costly. You need a second passport to expatriate, and countries are increasing the number of years it takes to gain citizenship. There are only two countries left in the world that have an economic citizenship program, which is by far the fastest way to get a second passport. If these two programs are pressured to fold, escaping the U.S. political combine will take most people five or more years, instead of less than one. You can bet on this: No matter what happens, it won’t get any easier.

[The full 29-page FREE report American Expatriation Guide – How to Divorce the U.S. Government is a virtual treasure trove of information for anyone thinking of leaving the US… including in-depth, practical advice, and links to useful websites and forms you’ll need for expatriation. Fill out your email bellow and download it now. ] Go here first http://www.caseyresearch.com/crpmkt/AmEx.php?ppref=ATP068BN0810A

10 13 11 flagbar


The Coming Retirement Crisis That Will Shake America To The Core

07/24/2013

http://www.activistpost.com/2013/07/the-tip-of-iceberg-of-coming-retirement.html

 By Michael Snyder

The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core.  Right now, more than 10,000 Baby Boomers are hitting the age of 65 every single day, and this will continue to happen every single day until the year 2030.  As a society, we have made trillions of dollars of financial promises to these Baby Boomers, and there is no way that we are going to be able to keep those promises.  The money simply is not there.
Yes, I suppose that we could eventually see a “super devaluation” of the U.S. dollar and keep our promises to the Baby Boomers using currency that is not worth much more than Monopoly money, but as it stands right now we simply do not have the resources to do what we said that we were going to do.  The number of senior citizens in the United States is projected to more than double by the middle of the century, and it would have been nearly impossible to support them all even if we weren’t in the midst of a long-term economic decline.  Tens of millions of Americans that are eagerly looking forward to retirement are going to be in for a very rude awakening in the years ahead.  There is going to be a lot of heartache and a lot of broken promises.

What is going on in Detroit right now is a perfect example of what will soon be happening all over the nation.  Many city workers stuck with their jobs for decades because of the promise of a nice pension at the end of the rainbow.  But now those promises are going up in smoke.  There has even been talk that retirees will only end up getting about 10 cents for every dollar that they were promised.

Needless to say, many pensioners are extremely angry that the promises that were made to them are not going to be kept.  The following is from a recent article in the New York Times

Many retirees see the plan to cut their pensions as a betrayal, saying that they kept their end of a deal but that the city is now reneging. Retired city workers, police officers and 911 operators said in interviews that the promise of reliable retirement income had helped draw them to work for the City of Detroit in the first place, even if they sometimes had to accept smaller salaries or work nights or weekends.

“Does Detroit have a problem?” asked William Shine, 76, a retired police sergeant.

“Absolutely. Did I create it? I don’t think so. They made me some promises, and I made them some promises. I kept my promises. They’re not going to keep theirs.”
But Detroit is far from an isolated case.  As Detroit Mayor Dave Bing said the other day, many other cities are heading down the exact same path…

We may be one of the first. We are the largest. But we absolutely will not be the last.

Yes, Detroit’s financial problems are immense.  But other major U.S. cities are facing unfunded pension liabilities that are even worse.

For example, here are the unfunded pension liabilities for four financially-troubled large U.S. cities

Detroit: $3.5 billion
Baltimore: $680 million
Los Angeles: $9.4 billion
Chicago: $19 billion

When you break it down on a per citizen basis, Detroit is actually in better shape than the others…

Detroit: $7,145
Baltimore: $7,247
Los Angeles: $8,437
Chicago: $13,355

And many state governments are in similar shape.  Right now, the state of Illinois has unfunded pension liabilities that total approximately $100 billion.

There are some financial “journalists” out there that are attempting to downplay this problem, but sticking our heads in the sand is not going to make any of this go away.

According to Northwestern University Professor John Rauh, the total amount of unfunded pension and healthcare obligations for retirees that state and local governments across the United States have accumulated is 4.4 trillion dollars.

So where are they going to get that money?

They are going to raise your taxes of course.

Just check out what is happening right now in Scranton, Pennsylvania

Scranton taxpayers could face a 117 percent increase in taxes next year as the city’s finances continue to spiral out of control.

A new analysis by the Pennsylvania Economy League projects an $18 million deficit for 2014, an amount so massive it outpaces the approximate $17 million the struggling city collects annually

A 117 percent tax increase?

What would Dwight Schrute think of that?

Perhaps you are reading this and you are assuming that your retirement is secure because you work in the private sector.

Well, just remember what happened to your 401k during the financial crisis of 2008.  During the next major stock market crash, your 401k will likely get absolutely shredded.  Many Americans will probably see the value of their 401k accounts go down by 50 percent or more.

And if you have stashed your retirement funds with the wrong firm, you could end up losing everything.  Just ask anyone that had their nest eggs invested with MF Global.

But of course most Americans are woefully behind on saving for retirement anyway.  A study conducted by Boston College’s Center for Retirement Research found that American workers are $6.6 trillion short of what they need to retire comfortably.

That certainly isn’t good news.

On top of everything else, the federal government has been recklessly irresponsible as far as planning for the retirement of the Baby Boomers is concerned.

As I noted yesterday, the U.S. government is facing a total of 222 trillion dollars in unfunded liabilities.  Social Security and Medicare make up the bulk of that.

At this point, the number of Americans on Medicare is projected to grow from a little bit more than 50 million today to 73.2 million in 2025.

The number of Americans collecting Social Security benefits is projected to grow from about 56 million today to 91 million in 2035.

How is a society with a steadily declining economy going to care for them all adequately?
Yes, we truly are careening toward disaster.

If you are not convinced yet, here are some more numbers.  The following stats are from one of my previous articles entitled “Do You Want To Scare A Baby Boomer?“…

1. Right now, there are somewhere around 40 million senior citizens in the United States.  By 2050 that number is projected to skyrocket to 89 million.

2. According to one recent poll, 25 percent of all Americans in the 46 to 64-year-old age bracket have no retirement savings at all.

3. 26 percent of all Americans in the 46 to 64-year-old age bracket have no personal savings whatsoever.

4. One survey that covered all American workers found that 46 percent of them have less than $10,000 saved for retirement.

5. According to a survey conducted by the Employee Benefit Research Institute, “60 percent of American workers said the total value of their savings and investments is less than $25,000”.

6. A Pew Research survey found that half of all Baby Boomers say that their household financial situations have deteriorated over the past year.

7. 67 percent of all American workers believe that they “are a little or a lot behind schedule on saving for retirement”.

8. Today, one out of every six elderly Americans lives below the federal poverty line.

9. More elderly Americans than ever are finding that they must continue working once they reach their retirement years.  Between 1985 and 2010, the percentage of Americans in the 65 to 69-year-old age bracket that were still working increased from 18 percent to 32 percent.

10. Back in 1991, half of all American workers planned to retire before they reached the age of 65.  Today, that number has declined to 23 percent.

11. According to one recent survey, 70 percent of all American workers expect to continue working once they are “retired”.

12. According to a poll conducted by AARP, 40 percent of all Baby Boomers plan to work “until they drop”.

13. A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.

14. Elderly Americans tend to carry much higher balances on their credit cards than younger Americans do.  The following is from a recent CNBC article

New research from the AARP also shows that those ages 50 and over are carrying higher balances on their credit cards — $8,278 in 2012 compared to $6,258 for the under-50 population.

15. A study by a law professor at the University of Michigan found that Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States.  Back in 2001, they only accounted for 12 percent of all bankruptcies.

16. Between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.

17. What is causing most of these bankruptcies among the elderly?  The number one cause is medical bills.  According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.  Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.

18. In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

19. Millions of elderly Americans these days are finding it very difficult to survive on just a Social Security check.  The truth is that most Social Security checks simply are not that large.  The following comes directly from the Social Security Administration website

The average monthly Social Security benefit for a retired worker was about $1,230 at the beginning of 2012. This amount changes monthly based upon the total amount of all benefits paid and the total number of people receiving benefits.

You can view the rest of the statistics right here.

Sadly, most Americans are not aware of these things.

The mainstream media keeps most of the population entertained with distractions.  This week it is the birth of the royal baby, and next week it will be something else.

Meanwhile, our problems just continue to get worse and worse.

There is no way in the world that we are going to be able to keep all of the financial promises that we have made to the Baby Boomers.  A lot of them are going to end up bitterly disappointed.

All of this could have been avoided if we would have planned ahead as a society.

But that did not happen, and now we are all going to pay the price for it.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

10 13 11 flagbar