Category: Economy

ROMNEY TWICE AS RICH AS THE LAST 8 PRESIDENTS COMBINED

The last 8 presidents of the United States were wealthy men. If you added up all their wealth, it still pales in comparison to Mittens Romney’s vast wealth. This is the guy we want as President of the United States. Do you really think he will be looking out for the interests of the average American that makes $25,000? This guy breaks out in hives when he has to mingle with the little people. He is a representative of the .06%. He doesn’t care about you. He doesn’t care about your interests. He cares about protecting the interests of the ruling elite. He is a leader of the ruling elite. They know what is best for America – what is best for them and their cronies. Here is George Carlin describing Mitt Romney and his ilk.

How rich is Mitt Romney? Add up the wealth of the last 8 presidents…then DOUBLE that number

WASHINGTON (AP) – Just how rich is Mitt Romney? Add up the wealth of the last eight presidents, from Richard Nixon to Barack Obama. Then double that number. Now you’re in Romney territory.

Republican presidential candidate and former Massachusetts Governor Mitt Romney campaigns at the Fish House in Pensacola, Fla., on Saturday.

Republican presidential candidate and former Massachusetts Governor Mitt Romney campaigns at the Fish House in Pensacola, Fla., on Saturday.

He would be among the richest presidents in American history if elected — probably in the top four.

He couldn’t top George Washington who, with nearly 60,000 acres and more than 300 slaves, is considered the big daddy of presidential wealth. After that, it gets complicated, depending how you rate Thomas Jefferson‘s plantation, Herbert Hoover‘s millions from mining or John F. Kennedy‘s share of the vast family fortune, as well as the finer points of factors like inflation adjustment.

But it’s safe to say the Roosevelts had nothing on Romney, and the Bushes are nowhere close.

The former Massachusetts governor has disclosed only the broad outlines of his wealth, putting it somewhere from $190 million to $250 million. That easily could make him 50 times richer than Obama, who falls in the still-impressive-to-most-of-us range of $2.2 million to $7.5 million.

“I think it’s almost hard to conceptualize what $250 million means,” said Shamus Khan, a Columbia University sociologist who studies the wealthy. “People say Romney made $50,000 a day while not working last year. What do you do with all that money? I can’t even imagine spending it. Well, maybe …”

Of course, an unbelievable boatload of bucks is just one way to think of Romney’s net worth, and the 44 U.S. presidents make up a pretty small pond for him to swim in. Put alongside America’s 400 or so billionaires, Romney wouldn’t make a ripple.

So here’s a look where Romney’s riches rank — among the most flush Americans, the White House contenders, and the rest of us:

—Within the 1 percent:

“Romney is small potatoes compared with the ultra-wealthy,” said Jeffrey Winters, a political scientist at Northwestern University who studies the nation’s elites.

After all, even in the rarefied world of the top 1 percent, there’s a big difference between life at the top and at the bottom.

A household needs to bring in roughly $400,000 per year to make the cut. Romney and his wife, Ann, have been making 50 times that — more than $20 million a year. In 2009, only 8,274 federal tax filers had income above $10 million. Romney is solidly within that elite 0.006 percent of all U.S. taxpayers.

Congress is flush with millionaires. Only a few are in the Romney realm, including Rep. Darrell Issa, R-Calif., and Massachusetts Sen. John Kerry, who was the Democratic presidential nominee in 2004. Kerry’s ranking would climb much higher if the fortune of his wife, Teresa Heinz, were counted. She is the widow of Sen. John Heinz, heir to the Heinz ketchup fortune.

Further up the ladder, top hedge fund managers can pocket $1 billion or more in a single year.

At the top of the wealth pile sits Bill Gates, worth $59 billion, according to Forbes magazine’s estimates.

—As a potential president:

Romney clearly stands out here. America’s super rich generally don’t jockey to live in the White House. A few have toyed with the idea, most notably New York Mayor Michael Bloomberg, whom Forbes ranks as the 12th richest American, worth $19.5 billion. A lesser billionaire, Ross Perot, bankrolled his own third-party campaigns in 1992 and 1996.

Many presidents weren’t particularly well-off, especially 19th century leaders such as Abraham Lincoln, James Buchanan and Ulysses S. Grant. Nor was the 33rd president, Harry Truman.

“These things ebb and flow,” said sociologist Khan. “It’s not the case that all presidents were always rich.”

A few former chief executives died in debt, including Thomas Jefferson, ranked in a Forbes study as the third-wealthiest president.

Comparing the landlocked wealth of early Americans such as Washington, Jefferson and James Madison, with today’s millionaires is tricky, even setting aside the lack of documentation and economic changes over two centuries.

Research by 24/7 Wall St., a news and analysis website, estimated Washington’s wealth at the equivalent of $525 million in 2010 dollars.

Yet Washington had to borrow money to pay for his trip to New York for his inauguration in 1789, according to Dennis Pogue, vice president for preservation at Mount Vernon, Washington’s Virginia estate. His money was tied up in land, reaping only a modest cash income after farm expenses.

“He was a wealthy guy, there’s no doubt about it,” Pogue said, and probably among the dozen richest Virginians of his time. But, “the wealthiest person in America then was nothing in comparison to what these folks are today.”

—How does Romney stand next to a regular Joe?

He’s roughly 1,800 times richer.

The typical U.S. household was worth $120,300 in 2007, according to the Census Bureau‘s most recent data, although that number is sure to have dropped since the recession. A typical family’s income is $50,000.

Calculations from 24/7 Wall St. of the peak lifetime wealth (or peak so far) of Nixon, Gerald Ford, Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush and Obama add up to a total $128 million — while Romney reports assets of up to $250 million.

If you consider only those presidents’ assets while in office, without millions earned later from speeches and books, their combined total would be substantially lower, and Romney’s riches would leave the pack even further behind.

Money in America, Part Four

 

Previously,we saw the holy Grail of banking reform was actually a hidden agenda of politics, banking, and big business.The seeds were planted in Indianapolis and now, the game is surely afoot.

 

The National Monetary Commission in 1908

Informing the public via a predetermined public relation campaign, with surveys and solutions of a predetermined outcome worked well. Keeping the scheme going for a decade took time, effort, and investment.

With the passage of the Aldrich-Vreeland Act in 1908 contained two important but little-known provisions: the emergency currency potential and the establishment of the NMC. The former provision would have expired in 1914 but curiously, was used for the one and only time that year.

However, Aldrich had packed his commission in June of 1908 with senators and representatives but, more significantly, powerful banking leaders.

This junket headed for Europe in the fall, studying and gather information with heads of private European banks and central banks. They concluded European banking was more efficient and the European currencies had more gravitas compared to the dollar. By December,, back in the U.S., Aldrich added Paul Warburg and others to the inner circle. Charles A. Conant was chosen for ‘research and public relations’. Warburg consulted with many academic economists at top-tier universities.

The American Bankers Association recommended a U.S. Central bank along the lines of the German Reichsbank. Hesitant heads of national banks were assured the business model would not be adversely affected by the origin of a U.S. Central bank.

Regional banking districts in the country, under control of a central board, was a recommentation in November, 1909. Throughout this whole era, the Morgan and Rockefeller banking interests had agreed to agree on a central bank. Yes.

Incidentally, William Howard Taft was elected president, a friend of Aldrich and others since 1900. On September 14, 1909, President Taft spoke in Boston and gave a big boost to the notion of a central bank. Wow. And a week later, The Wall Street Journal gave space to various op-eds, unsigned, praising that great idea of ‘elastic currency’ and other benefits. Actually, these letters were crafted by Charles Conant. He also recommended the regulation of interest rates by the central bank as a useful tool. The Washington Bureau of the Associate Press was also co-opted.

Another significant speech by Paul Warburg in New York on March 23, 1910 impressed the Merchants’ Association of New York. They had printed 30,000 copies of the transcript and distributed these far and wide.

For public consumption, a monetary conference in New York in November 1910 presented a specific recommendations for a central bank and an appeal for all part of the country to support the Bill that Alrich would soon craft.
The Private Railroad Car

G. Edward Griffin [1] sets the scene at a New Jersey railroad station like the opening of a thriller movie: it’s 10 p.m. on November 22, 1910 as a handful of important men board a private car. Unlike the numbered cars of the rest of this train, this one has no number, only a small plaque with the inscription “Aldrich”.

The senator greets his guests by first name only – and this rule is adhered throughout the trip and the week at Jekyll Island, Georgia. The private club on the island is part-owned by J.P. Morgan.

The personnel lineup:

  • Senator Nelson P.Aldrich
  • Paul Warburg, various banking connections
  • Abraham Andrew, Assistant Secretary of the U.S. Treasury
  • Henry P. Davison, senior partner, J.P. Morgan Co.
  • Frank A. Vanderlip, president, National City Bank of New York
  • Charles D. Norton, president, First National Bank of New York
  • Benjamin Strong, head of Bankers Trust Co.

(The last two are questionable due to differing accounts in the ‘historical record’ but both were in the Morgan camp. Aldrich, incidentally, was a financial partner of J.P. Morgan, and also father-in-law of John D. Rockefeller, Jr.)

If Strong wasn’t there, he surely knew about it – we will hear more of him.

The public did indeed hear something of this secret meeting, but it was in 1935. The Saturday Evening Post carried an article by Vanderlip and the key takeaway was:

If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have had no chance whatever of passage by Congress.

Warburg led the argument for a regional structure, presumably cognizant of public mistrust of too much power located in one area. Aldrich wanted an overt central bank with no political meddling. The compromise that was reached became the Aldrich Plan, introduced in Congress in 1912 and 1913.

(On November 5–6, 2010, Ben Bernanke stayed on Jekyll Island to commemorate the 100-year anniversary of the original meeting.)

Alas, the Democrats won the 1912 elections resoundingly. The Republican Aldrich Plan seemed to fall by the wayside.

Shiny new President Woodrow summoned a special session of Congress in April 1913. To seal the importance, he appeared in person, the first president since John Adams to do so. Wilson’s address outlined various approaches to economic policies, banking and currency reform, tariffs, and the income tax.

The 16th Amendment had been ratified on February 3, 1913. Wilson needed that tax to support lower tariffs. A little bit of patronage pressure, and the Revenue Act of 1913 was passed by the House on May 8, 1913; finally it went through the Senate on September 9, 1913.

Meanwhile, the Aldrich Plan was not dead, though that hated Republican name vanished. Representative Carter Glass, chairman of the House Banking and Currency Committee, and Senator Robert Owen, chairman of the Senate’s did a little tinkering here and there. Wilson mandated a central Federal reserve board be appointed by the president – with the consent of the Senate.

There was one thorn in Wilson’s side, his Secretary of State, William Jennings Bryan. The “Cross of Gold” person was still a power in the Democratic Party. The sop to Bryan was that Federal Reserve currency would be a liability of the government – and also, provision for federal loans to farmers.

All this horse trading took time, though, and Wilson had other fish to fry during 1913.

The 17th Amendment (Direct Election of U.S. Senators), ratified and declared, became part of the Constitution on May 31, 1913..

Finally, months in the making, what started as the Glass-Owen bill became the Federal Reserve Act of 1913. It passed the House on December 13 and the Senate, after an all nighter, on December 23. Wilson signed it that morning.

A great year for the Populists, remember they wanted:

  • a graduated income tax, direct election of senators

and before long, they got women’s suffrage (19th Amendment), the eight-hour work day, and restricted immigration.
The Federal Reserve System, 1914 and Beyond

Aldrich had convened the Jekyll Island cabal but Warburg was the only expert on the European central bank model. Galbraith asserted that “Warburg has, with some justice, been called the father of the system.”

In the end, everybody won something. Aldrich’s ‘decentralization’ became the regional banks and avoidance of the term ‘bank’ itself inevitably led to the Federal Reserve System nomenclature. And having the Federal Reserve Board in Washington, D.C. implied ‘government’. Smoke & mirrors.

A decade later, the little Orphan Annie comic strip appeared. Did anyone recognize Daddy Warbucks, the self-made billionaire doing good works with his wealth as an avatar of Paul Warburg? Anyway …

Back in the day, the public story was that the Federal Reserve System would stabilize the economy. We’ll see how that worked out.

The real power of the System was – and is – the Federal Reserve Bank of New York. And who was offered the post of governor there? Benjamin Strong. Whether or not he was at Jekyll Island, there is no doubt he had influence, having been the personal auditor for J. P. Morgan, Sr. during the Panic of 1907, and also a long-time friend of Henry Davidson.

Paul Warburg became one of the seven members of the Federal Reserve Board in Washington.

History has a droll way of throwing some unexpected crises – who would have imagined the assassination of an obscure archduke would lead to a worldwide conflagration? Well, that’s the myth, anyhow. That the British mercantilist system might have been under threat from a foreign export power is unthinkiable as a cause for war. Isn’t it?

The outbreak of World War One had one immediate financial side effect: the New York Stock Market closed. Public anxiety was dispelled by the Secretary of the Treasury, using that dormant part of the Aldrich-Vreeland Act. Emergency currency was available, by October 23, 1914, $368,616,990.

In November, the 12 regional banks of the Federal Reserve System had opened and the emergency currency was withdrawn. The FRS was open for business!

England and various European countries had been preparing for war for years. Armies were trained, alliances arranged. But when war occurred, England found itself fiscally bereft. John Pierpoint “Jack” Morgan, Jr. ruled the House of Morgan, his father having died in March, 1913. Jack became the sales representative of British bonds and also the procurement officer for their needed war material. Nice profit on money going and coming!

In 1915, President Wilson removed the ban on private bank lending to foreign allies. The House of Morgan immediately loaned $12,000,000 to Russia and $50,000,000 to France. Meanwhile, the first $12,000,000 British contract arrived, the first of many. The final total would be $3,000,000,000.

Author John Moody, writing in 1919 summed it up:

Not only did Britain and France pay for their supplies with money furnished by Wall Street, but they made their purchases through the same medium … Inevitably the House of Morgan was selected for this important task. Thus the war had given Wall Street an entirely new role. Hitherto it had been exclusively the headquarters of finance; now it became the greatest industrial mart the world had ever known. In addition to selling stock and bonds, financing railroads, and performing other tasks of a great banking centre, Wall Street began to deal in shells, cannon, submarines, blankets, clothing, shoes, canned meats, wheat, and the thousands of other articles needed for the prosecution of a great war.

Large profits and small. A commission for selling $2 billion of Allied stock holdings to buy munitions. The sale of 4,400,000 rifles for $194,000,000. The House of Morgan was both buyer and seller, and no surprise that many of the purchase contracts went to businesses where Morgan was a shareholder.

A reputation as war profiteer does attract some resentment. On July 3, 1915 an intruder stole into Jack’s Long Island mansion and shot him twice in the groin. Jack, however, survived.

Great Britain, having burned through the Australian gold, from the 19th century gold rush there, found itself short of money to fund a war. It did the thing that is obvious to every politician: achieve fiat money by golng off the gold standard. Every other country in Europe did also. America maintained a gold standard but not redemption for foreign held dollars.

By the end of the war, every country had inflated its money supply; Germany went eight times the pre-war amount. This explains much of things to come.

 

The Cunard Lines had turned over their record-breaking Lusitania over to the Admiralty. The speedy ocean lined proved inadvisable to refit into an auxiliary cruiser due to operational expense (910 tons of coal a day!), so it was ordered to continue passenger (and mail) service. On April, 22 1915, the German embassy ordered advertisements in 50 U.S. newspapers, advising prospective passengers that an Atlantic crossing went through a war zone, the seas around the British Isles.. Many of these advertisements were never published …

On May 1, 1915, the Lusitania set out on its final voyage to Liverpool, England. Little did the passengers know there was a hidden cargo of munitions and other material for the British war effort.

At this point in time, the German navy followed the code of limited submarine warfare. Neutral vessels were off limits.

At 1420 hours on May 6, the commander of the U-20, Walther Schwieger, fires one torpedo at a target:

Torpedo hits starboard side right behind the bridge. An unusually heavy detonation takes place with a very strong explosive cloud. The explosion of the torpedo must have been followed by a second one [boiler or coal or powder?]… The ship stops immediately and heels over to starboard very quickly, immersing simultaneously at the bow… the name Lusitania becomes visible in golden letters.

U20 log

The Lusitania sank in only 18 minutes. Few lifeboats were properly launched due to the extreme starboard list.

Of 1,959 passengers and crew, 1,195 perish, including 128 Americans.

Several official inquiries were convened that created enough obfuscation to keep tinfoil hat manufacturers busy to this very day. Prevented testimony, state secrets, crew statements in identical handwriting with similar phrasing; definitely one, no, two, or was it three torpedos. Some closed hearings, other open with no access to some evidence. Two sets of Admiralty papers, depending on the type of hearing. Perjury.

At any rate, Wilson’s immediate response was three diplomatic notes to Germany: strong, stronger, ultimatum. After the second, Secretary of State William Jennings Bryan resigned in protest.

Nonetheless, the American public had been fired up, just not enough for war.

The British were already hinting that, should they lose the war, they would never be able to repay their debt to America. In early 1916, President Wilson sent his personal adviser, “Colonel” Edward Mandell House to London. And why not – House was the shadow power that had arranged Wilson’s nomination for president. House even had two rooms at the White House. And while Wilson sought re-election on the slogan “he kept American out of war”, his adviser consulted with British foreign office officials, notably Sir Edward Grey. Secretary of State William Jennings Bryan had not be told of this unofficial arrangement, nonetheless, he was not stupid.

Mary Baird Bryan, co-author, The Memoris of William Jennings Bryan:

While Secretary Bryan was bearing the heavy responsibility of the Department of State, there arose the curious conditions surrounding Mr. E.M.House’s unofficial connection with the President and his voyages abroad on affairs of State, which were not communicated to Secretary Bryan … The President was unofficially dealing with foreign powers.

U.S. Ambassador Walter Hines Page:

House arrived … [with] the idea of American intervention … a minimum programme of peace – the least the Allies would accept, which, he assumed, would be unacceptable to the Germans …we should plunge into the War, not on the merits of the cause, but by a carefully sprung trick.

(memorandum, February 9, 1916)

On March 9, 1916, President Wilson sanctioned the secret agreement with England and France for the United States of intervene on behalf of the Allies. It seems Wilson and House believed the worthy end, of world peace and a world government, lay through the means of war. They had help: Assistant Secretary of the Navy Roosevelt (the Franklin Delano) urged arming merchant ships in violation of neutrality.

And time passed with America on the sidelines and the Allies accusing Wilson of dragging his feet. Maybe they didn’t understand the U.S. election cycle. The attitude of the British public toward America was “too proud or too scared” and they termed unexploded shells on the front line as “wilsons”.

Both British and German propaganda served to inflame the American public over the next months.

Wilson was narrowly re-elected in 1916. A tipping point happened when Germany attempted to enlist Mexico as an ally, following their new policy. Of unrestricted submaine warfare. This threated American commercial shipping.

On April 2, 1917 in his message to Congress, Wilson spoke of armed neutrality no longer working, “enemies against us at our very doors … unsuspecting communities … and offices of government with spies … criminal intrigues” … and a warning: disloyalty “will be dealt with a firm hand of repression.” And finally, the world must again be safe for democracy.

With fifty representatives and six senators opposted, a declaration of war was passed by Congress on April 4, 1917 and signed by Wilson the April 6.

Behind the scenes during this period, the Federal Reserve went into full operation in 1915. They played a significant role in financial Allied and U.S. War efforts (with some help.)

Wilson furthered Democratic values with the agricultural Smith-Lever Act of 1914 and the Federal Farm Loan Act of 1916. He also thwarted a national transportation shutdown by guiding the Adamson Act through Congress which instituted the eight-hour day.

Then there was the Espionage Act of 1917 and the Sedition Act of 1918. A firm hand, yes. Anarchists, Wobblies, communists, anti-war activists, and even newspaper editors were grist for the DoJ mill. Deportation of recent immigrants who opposed the war came with the Immigration Act of 1918. Then there was Wilson’s Committee of Public information, the first official propaganda office.

Wilson’s League of Nations concept came via a speech on January 8, 1918, his Fourteen Points.

 

Liberty Bonds

We have a war! And on April 24, the 1917 Emergency Loan Act initiated the first of four bond issues. Buy Liberty Bonds! It’s a patriotic duty. A limit of $5 billion was set; $2 billion were sold.

The second, third and forth issues appeared in, respectively, October 1,1917, April 5, 1918, and September 28, 1918.

A poor response to the bonds was met by the Treasury with a sales campaign promoted by Hollywood stars, Boy Scouts, and even a special Army Air Corps elite group that travelled the country. Buy a bond and get to ride in a JN-4 airplane!

Incidentally, that 1917 act is the tool by which U.S. Treasury bonds are issued to this very day.

We will re-visit the fourth Liberty Bond issue in fifteen years.

The active “war to end war” ended on November 11, 1918 with a cease fire. The Treaty of Versailles was signed on June 28, 1919.

 

In our next exciting episode, we will see the Federal Reserve assistance to restoring the gold standard for the world. Only it wasn’t …

HOW TO GET RICH IN PHILADELPHIA

Michael Nutter, the mayor of Philadelphia, signed a tough new anti-gun law in 2008. He severely restricted a citizen’s ability to buy a gun. It seems he now has a bit of a problem. Philadelphia is averaging a murder per day so far in 2012. People are getting gunned down like it’s a PS3 game. So he’s got a brilliant solution. Philadelphia is offering $20,000 to anyone who turns in a murderer. What an opportunity. Driving through West Philly every day gives me ample opportunity to generate some extra cash. At the current rate of murders, I’m bound to witness two or three in the next year. Sounds like easy money.

These are the solutions that come from Democratic politicians that have ruined every urban area in the country. Let’s assess the brilliance of the Democratic rule of Philadelphia since 1950. You start to dish out entitlements to the poor voters, like welfare and low income housing. You raise taxes on the workers and the businesses to pay for the entitlements. The workers and businesses leave the city for the suburbs, leaving only the poor people. You double the entitlements so you can continue to get their votes. You raise taxes even more on the productive people. More productive people flea the city. All that remain are the poor, ignorant and criminal. As the pie continues to shrink, the scum start killing each other. What’s left of the good people scramble to get out of the city before it’s too late. You ban the sale of hand guns to law abiding citizens so that only the criminals are armed. You now have chaos and wholesale slaughter on a daily basis. Nutter’s solution will be to hire more police and throw more money at the “problem”. The next Phila budget will require more taxes to pay for his new solution. Do you think it’ll work?

Here is a chart showing gun sales in the U.S. since 2002. Do you see a trend?   

This chart is from the FBI. Do you see a trend?

This figure is a line graph that presents trends in the estimated number of violent crimes for the Nation from 2006 through 2010. In 2006, there were 1,435,123 violent crimes. In 2007, there were 1,422,970 violent crimes. In 2008, there were 1,394,461 violent crimes. In 2009, there were 1,325,896 violent crimes. In 2010, there were 1,246,248 violent crimes. The figure is based on statistics from Table 1.

Criminals tend to think twice if they believe the person they are about to commit a crime against happens to be holding a gun. When will do-gooder liberal Democratic douchebags ever get it? An armed citizenry is the best deterrent to crime. Nutter is a Nut. His $20,000 bounty will result in more murders. Anyone turning in someone for murder will likely become the next victim in Killadelphia.

Nutter plans $20,000 bounty for tips leading to slaying arrests

BY DAVID GAMBACORTA
Philadelphia Daily News

THE NUMBERS tell you that the city is back to where it was four and five years ago, back to a murder or two a day and an incomprehensible number of shootings.

Faced with that grim reality, Mayor Nutter yesterday announced at a news conference at Strawberry Mansion High School that the city is, in so many words, now throwing the kitchen sink at its crime problems.

There was no clever, catchall nickname for the assortment of initiatives, just a clear sense that city leaders are ready to try anything to escape being forever known as “Killadelphia.”

One initiative that Nutter said he hopes will be a “major game-changer” simply involves cash: $20,000 for tips that lead to the arrest and conviction of a murder suspect, and $500 for information that leads to the arrest and conviction of thugs who carry or sell illegal guns.

“To every criminal out there, I just put a $20,000 bounty on your head,” Nutter said. “We are coming for you. We will find you. People will give up that information.”

The mayor said he had set aside $500,000 in the city’s budget to fund the reward program.

He discussed other plans:

* Doubling the city’s contribution to the district attorney’s witness-assistance program to $400,000 – an announcement that called to mind the cold-blooded murder earlier this week of North Philly store clerk Rosemary Fernandez Rivera, who had given police information about another slaying.

* Boosting the Police Department’s overtime budget – perhaps by a few million dollars, according to Police Commissioner Charles Ramsey – so that cops can work extra hours in the city’s most violent neighborhoods.

* Hiring 100 police recruits for a class that would start training at the Police Academy in June, coming on the heels of the 120 recruits scheduled to graduate from the academy in March.

* Establishing a program that would enable residents to text anonymous tips and crime photos to police.

* Expanding a Commerce Department corridor-improvement program to put surveillance cameras in residential neighborhoods and other public spaces.

And that wasn’t all.

Nutter noted that although the Pennsylvania Crime Code calls for people caught carrying illegal weapons to get up to seven years in jail, many offenders in the city often get off with a slap on the wrist – a couple of months in the slammer and a little probation.

He and D.A. Seth Williams said they want to make sure the stiffest penalties are being enforced by the courts, but were vague on how that might happen.

Nutter said the city also would establish a Gun Stat program that would bring together cops, prosecutors, prisons, and probation and parole officials to focus on closely tracking those who commit gun crimes.

Temple University criminologist Jerry Ratcliffe, who has helped the Police Department develop crime-fighting strategies, said “the more-specific, focused strategies have the best chance of succeeding. . . . It’s a good chance to try something new.”

 

WHO ARE THOSE DIRTBAGS NOT PAYING FEDERAL TAXES?

I’m really getting tired of the GOP storyline about 50% of Americans paying no Federal Income taxes. The unspoken, but clear message, is that 50% of Americans are lazy good for nothings riding the coattails of the hard working people who pay Federal Income taxes. The MSM and the ruling establishment want to distract the masses from the real culprits in destroying this country – Wall Street, K Street, and Mega-Corporations – by using propaganda to convince the middle class to focus their wrath on the poor. This 50% storyline has been pounded home day after day by the folks at Fox News and other MSM outlets. You hear it at the GOP debates as the ignorant candidates speak of the unemployed and people on food stamps as if they are lepers. 

The beauty of successful propaganda is having a smattering of truth mixed in with a large portion of exaggeration, misinformation and ignorance of a few facts. I happen to be related to one of these low life 50%ers living high on the hog off real working Americans. It’s my widowed mother.

I know she pays no Federal income taxes because I do her tax return. This leech on society doesn’t even pay state income taxes. She rakes in $15,000 per year in Social Security income and makes due with what remains of my Dad’s IRA. Her effective tax rate is zero. The GOP candidates declare that she should pay her fair share. Why should she live off the hard work of real Americans? That is the mantra being shoved down our throats day in and day out.

Well let’s dig a little deeper and maybe find some truth. Let’s try to figure out her EFFECTIVE OVERALL TAX RATE.

My mother still lives in the 900 square foot row home that her and my Dad bought in 1957 for $10,000. Even though they never used the public school system, they have paid real estate taxes for decades. In fact, the annual real estate taxes for her huge estate are $3,600. She also drives a car. The total state and Federal taxes on gasoline comes to 51 cents per gallon. She also uses electricity, phone service and natural gas in her house. Those bills contain approximately 5% taxes from various localities. In addition, she buys stuff to live. PA has a 6% sales tax on stuff you buy in the state.

So lets see what the effective overall tax rate of this “deadbeat” is.

Annual Income                            $15,000

Real Estate Taxes                         $3,600           24%

Gasoline Taxes                               $150                1%

Utility Taxes                                      $150                1%

Sales Taxes                                      $450               3%

Correct me if I’m wrong, but I think that comes to an effective overall tax rate of 29%. In addition, she hadn’t gotten any increases in her Social Security income for two years because the government said their was no inflation. But her Medicare premiums went up 5% per year. As you can see, the GOP candidates really are focusing on the right problem. Deadbeats like my mom are making out like bandits.

Now let’s look at a theoretical deadbeat based on the median salary of people in the U.S. The median worker salary in the U.S. is $25,000 per year. That means that 50% of Americans make less than $25,000 per year.

Let’s assume we have a married couple in my mom’s neighborhood living in a similar row home. The husband works in Philadelphia and makes $25,000, while the wife works part time because they have one child and brings in $10,000. With the deductions for mortgage, real estate taxes and kid, they would owe zero Federal Income taxes. These are the people scorned and ridiculed by the GOP establishment as worthless pieces of shit. Let’s assess their OVERALL TAX RATE:

 

Annual Income                            $35,000

State income taxes                       $1,050           3%

Phila & Local taxes                       $1,100           3.1%

Payroll taxes                                   $2,000           5.7%

Real Estate Taxes                         $3,600          10.3%

Gasoline Taxes                               $500            1.4%

Utility Taxes                                      $200               0.6%

Sales Taxes                                    $1,000             2.9%

If my math is correct that comes to a 27% overall effective tax rate for these free loaders.

So these are a couple examples of the dirtbags that are being used by the powers that be to try and convince you that the super rich in this country aren’t really pillaging the national wealth through their complete capture of the economic, financial and governmental apparatus in this country. Mitt Romney made $20 million last year and his effective Federal tax rate was 14%. I don’t know what his overall effective tax rate was, but I will bet you $10,000 it was lower than my mother’s 29% rate. He has 40 tax specialists working to insure he pays as little as possible under the law – which was written by people like him for people like him.

The next time I go to my mom’s estate, I’ll tell her to vote for Romney or Gingrich because people like her need to pay their fair share. That’s what’s wrong with this country.

LLPOH’s Grim Reality #2

This is an adjunct to Grim Reality #1. The following article, from The Washington Post, details how the US has lost some 687,000 high tech jobs in the last ten years – a decline of 28%. These jobs have gone to – you guessed it – China.

 http://www.washingtonpost.com/business/economy/us-losing-high-tech-manufacturing-jobs-to-asia/2012/01/17/gIQA9P1S6P_story.html?hpid=z4

Some salient points, in addition to the job losses, include:

– Research and development expenditures in China now matches that of the US. Of course, given their cost advantage, that implies that they are spending vastly more man-hours on R+D than is the US. Additionally, nine other nations world-wide now spend as much as the US on R+D.

– Doctoral degrees in engineering in China have doubled in the ten years and their output in this area now far exceeds that of the US. No surprise there.

– US multinationals are hiring great numbers of overseas research workers

– “Although the long decline of manufacturing employment in the United States is often attributed to the cheaper wages in developing countries, China and developing countries in Asia have in recent years sought to lure more sophisticated manufacturing operations — and better jobs — by expanding their engineering prowess through government investment in education and research.” Government investment in education and research – now there is a thought. Bet they aren’t investing in art history.

– It also says that China’s cost advantage is shrinking. However, it attributes a lot of that to America’s automation of its factories, which reduces labor cost per unit. So there is not a lot of joy there.

So, in sum, the US is under attack not only in manufacturing but in high tech as well. And service jobs (IT/accounting/etc.) are also under attack, but that is a story for another day. Oh happy days are here again.

INVESTING NEWSLETTER THAT BEATS THE MARKET? I HAVE A BRIDGE TO SELL YOU

Let’s imagine the easiest way to make a bunch of money for providing virtually no actual value, having very little accountability, and having the capability to scale your scam as much as you could ever imagine.  Here are a few common “business ventures” that come to mind:

a) Virtually any of the top selling affiliate programs and ebooks you see on numerous blogs. You know, the “make money online” genre, “natural” remedies and cures, diet solutions and workout programs.  Why would so many blogs promote the virtues of ebooks and programs that are worthless?  Well, that’s what affiliate marketing is all about!  The crappier the program, the more they charge for it and then give an ever-increasing cut to bloggers for each sale!  Often upwards of 50%.  Many bloggers don’t really think twice about promoting horribly useless and often, harmful advice for lucrative payouts like that!  Why do you think those reviews are so convincing?!

b) Multi-level marketing of pretty much any sort. MLM is one of the most vile “business” ventures in existence.  You basically convince other suckers in your downline to be scammed into the same useless system you were just scammed into so you can leach off their exploits as well.  At the end of the day, the goods and services sold through MLMs are invariably overpriced, useless and misleading and a few people at the top get rich.  Within months, the vast majority of all the “suckers” realize they’ve been suckered, they’ve run out of other suckers to recruit, and they quit with loads of time wasted and dollars spent.  Usually, they don’t talk about their lousy experience because they feel so ashamed for enthusiastically promoting something within their social circles and family members only to bail after such a short period.

c) Investment newsletters. Really?

Continue Reading Why Investment Newsletters are Scammy Rippoffs…

Stucky Ponders The Meaning Of Life For The Millionth Time

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PART ONE – TRAVAILS
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Out of the clear blue, SJ (my schizo son) decided Michigan was no longer a good place for him to live.

He decided to go back to Bellingham, Washington. He took his back-pack, filled it with some fruit and granola bars. In terms of clothes, he had nothing except what he was wearing. A not-so-warm leather jacket, no hat, no gloves, no scarf, and no sweater to keep him warm.

He also didn’t have a dime in his pocket. And I mean that literally. He does have a credit card but it has a limit of only $200 … and it was maxed out. In terms of getting money for the bus ticket from MI to WA ($250), he used his mother’s credit card. I guess that’s called stealing.

He did take his cell phone. He is not aware that his mother is able to track his location if the phone is on. He didn’t call for a few days, so his mother called him. When she saw he was in Chicago, she panicked, and called him while being careful not to disclose that she already knew where he was. He said he was walking around Grand Rapids. I guess that’s called lying. Anyway, she was able to track his westward travels… from Grand Rapids, to Chicago, to Minneapolis.

He called me about a half hour after his mother called him. By then I already knew where he was. But I pretended I didn’t. He lied to me also. But then I heard a voice in the background …. “I’m sorry sir, but your bus leaves at 9:30PM.”. When he got back on the phone, I told him that I heard the background voice. I finally got him to admit that he was at a Greyhound terminal and that he was heading out to Bellingham, Washington. “What will you do for food??”, I asked. “Beg, or play my guitar.”, he said. I tried not to cry.

The next day we see he’s in Minneapolis. We call constantly. He doesn’t pick up. Then around 2AM we get a phone call. I see from the caller id that it’s the Minny police department. This can’t be good. It turns out the Minny Greyhound station does not stay open all night. SJ’s bus doesn’t leave until the next morning. The Greyhound station is in a very bad neighborhood. SJ was just walking aimlessly around. The police tell us he was mugged and beat up. The cop wouldn’t give me ANY more information other than the hospital they took him too … and he said he shouldn’t have even told me that. Nice. I call the hospital. The ONLY info they give me was confirmation that he was admitted. They give me absolutely nothing else, despite my pleadings as his father. Tough shit. Something about confidentiality laws. The government can spy on me with impunity but I can’t get even basic information about my son’s condition. Amazing.

I fly out to Minny within 48 hours. By the time I get to the hospital, SJ has already left. He snuck out. No one is willing to give me information. Again with the privacy laws. I told the doctor that if he didn’t tell me right then and there what SJ was treated for, that I would rip his heart out and stick it in his mouth before he could even dial 9-1-1. I’m pretty sure I meant it. Apparently so did the doctor, so he gave me some info. No major injuries. Lots of bruising, minor lacerations, swollen face and some treatment for minor frostbite. (What the fuck is “minor” frostbite?). The nurse actually asked me where she should send the bill. I told her to stick it up her ass and walk the bill to New Jersey. Then I left. Quickly.

I hung around Minny for another half a day because the phone showed he was there. I kept calling the number and finally it is answered … by a voice I don’t recognize. It was a teenager. Turns out SJ sold him his very expensive phone for $40, so he could buy food. The kid was very apologetic and worried that he did the “wrong” thing and he was scared he’d get in trouble. I assured him this was not the case. I asked him if I sent him the $40 bucks would he please send the phone back? He said “sure”, and we got the phone back.

Fast forward. Several days later we hear from SJ. He borrowed someone’s cell phone. He’s in Spokane, WA. He says he made a big mistake. Can he come home? We immediately go online and get him a ticket to Grand Rapids. Another $250. It’s 2PM. He’s supposed to leave at 5:30PM. We get a call at 7PM. He says he fell asleep and missed the bus. The next bus doesn’t leave until the following morning. Fortunately, that Greyhound bus station stays open all night.

We call the number back about an hour later. A black man answers. We ask if SJ borrowed his phone, and if so, in what kind of condition did SJ appear. The man’s name is Kevin. “Yes”, he says, SJ borrowed his phone. He looks pretty tired and “lost”. Kevin says that SJ is sleeping nearby and that he (Kevin) is “watching over him”. It turns out that Kevin is traveling to Cleveland, so he’ll be on the entire trip with SJ. He tells us “not to worry”. He says he is “a god-fearing man”, and that he’ll watch over Sam the whole trip to Chicago like “he was my own son”. I thank him profusely and offer him money for his troubles. He will hear none of it. I hang up and I cry like a baby … amazed and overwhelmed at this incredible act of kindness from a total stranger.

Very fast forward. SJ is back in Grand Rapids. About 6 days ago SJ calls me to tell him he is “disappearing”. He sounds very sad. As always the phone “conversations” — if you can call them that — are very short before he hangs up. I take his statement about “disappearing” metaphorically .. as in, the real me is no longer here, I don’t really know who I am anymore — that kind of thing. Nevertheless, I call his mother. His mother calls SJ and get’s him to agree to meet her in a coffee shop. His mom gets there. They talk for a while. Then she asks what’s in the brown paper bag (like a brown grocery bag with handles) he’s carrying with him. He doesn’t answer. She says, “let me look”. He just shrugs his shoulders. She looks. In the bag is a bunch of fruit and granola bars. Goddammit!!! He meant “disappearing” literally!! This time he is going to San Francisco.

His mom calls me immediately. She’s freaking out. Understandable. Hell, I’m freaking out. What can we do??? He’s 6’2 and muscular. His mom sure as hell can’t hold him there. And we sure as hell can’t let him leave … again … with no money or clothes or anything. One of these days the call from the police will be, “Stucky, your son is dead.” Soooo … loathe as I am to do so …. we decided to have him committed. I stalled him as long as I could, then his brother showed up and stalled him. They were able to convince SJ to stay for the evening at his mom’s house for “just one more day”. Meanwhile, his mom was making phone calls to the judge (she knows the judge personally), social agencies, hospital, etc. In short, she was able to get a court-order to have SJ committed in less than 24 hours.

They picked him up at the house in the morning. SJ went peacefully …. in handcuffs. But he looked at his mother and said, “Thanks mom. I can’t believe you did this to me again.”. His mom said she cried as she watched the police take him away. But the facility is nearby and top notch. I told her at least we can get a decent night sleep for the first time in a month knowing where our son is and that he’s in the best possible care. Oh, if only that were true.

He broke out of the facility that evening. Threw a chair through the 2nd floor window and jumped. The police came … with dogs. SJ even got his 15 minutes of fame. He made the TV News!! Woohoo, my son made the big time! Well, about 12 hours later they caught him. So, this time they put him in a room with bars. When did their 1AM bed-check they found SJ trying to escape again …. He already had two of the metal bars removed. He’s very persistent. Maybe they’ll make a movie about him some day.

Anyway, he’s now safely tucked away in a room with no windows. I keep having this fear that I’ll be getting a phone call; “Mr. Stucky, you son escaped by eating through the concrete ceiling.”. He’s very resourceful when he needs to be.

He calls me several times a day. Sometimes the phone calls are kind of funny. Yesterday he tried to talk me into helping him escape. He wants me to help him escape to Austria to live with my relatives there. I told him he can’t even speak German and his Tante Linde doesn’t speak English. “No problem”, he says. He feels he can learn German in the next couple weeks before I help him break out. That’s some funny shit there.

I live in terror of the telephone. I now consider it a terrorist device, like an Iraqi IED. What horrible new revelations await when I pick up? I didn’t have to wait long for the latest bad news. Just this morning I was informed they’ll be releasing SJ. They can only hold if they feel he’s a danger to himself or others. And since he hasn’t threatened to kill himself or others they have to let him go. I’m tempted to call and let them know this kid is ripping my heart out and doesn’t that count for something?

I’ll probably go out to Michigan soon. I’m guess I’m going to wow everyone with my personality, cross my arms and blink like I-Dream-Of-Jeannie and make everything better. Ms. Freud suggested I just stay out there. I think she was only half-kidding. This has been quite a strain on our relationship.

But mostly, the phone calls are sad. He blames me for turning him in. Says I’m a traitor. Says he would have never taken drugs in the first place if I were a better father in the first place. Says he hates me and never wants to talk to me again. Says who the hell am I to give him advice considering how I messed up my own life and the family. Says I’m a huge failure, and a hypocrite. Then he hung up.

Well, I know that this isn’t the real SJ talking. It’s the drugs. It’s his own anger and issues. But, it still stings. And I do believe – as I suppose any parent does — that I could have done a better job, and that maybe, indeed, I have failed him to some degree. It wouldn’t be fair for me to tell HIM to accept responsibility for his life while at the same time denying that MY parenting skills had nothing to do with his life today.

I wish I could do things over again. I have all these regrets. I would be a better dad the 2nd time around.

But we don’t get 2nd chances, do we? So I’ve been thinking …. what can I do so that whatever remaining years I have left aren’t filled with even more regrets?

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PART TWO – PESPECTIVE
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Have you ever had one of those life-altering events that make you suddenly realize what’s really important in life vs. the triviality we THOUGHT was important? Quite often those type of moments are the result of a near-death experience. Perhaps you narrowly averted a head-on collision by mere inches. Or, perhaps someone you love is suddenly diagnosed with a horrible disease.

It seems people grow a lot when they are faced with their own mortality, or the mortality of a loved one. There was a study done of 50 people over the age of 95 who were asked what they would do differently if they had life to live over again. I think we can learn much from older folks. Here are the common themes.

1. “I wish I’d had the courage to live a life true to myself, not the life others expected of me.”

This was the most common regret. When people realize that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honored even half of their dreams and had to die knowing that it was due to choices they had made, or not made. It is very important to try and honor at least some of your dreams along the way. From the moment that you lose your health, it is too late. Health brings a freedom very few realize, until they no longer have it.

2. “I wish I didn’t work so hard.”

Not one person in a billion on their deathbed regrets that that didn’t work a few more hours of overtime or take a 2nd job. Quite the opposite is the case. Most people deeply regretted spending so much of their lives on the treadmill of a work existence. That is not to say working or making money is unimportant. Clearly, that’s an idiotic statement. But these people realize the even more idiotic thing was working to acquire so many “things” … the very things they would soon leave behind. It just wasn’t worth it, they say.

3.”I wish I had stayed in touch with my friends.”

There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying. They regretted becoming so caught up in their own lives that they had let golden friendships slip by over the years. It is common for anyone in a busy lifestyle to let friendships slip. A common theme starts to emerge here ….. that is, it is all comes down to love and relationships in the end. That is all that remains in the final weeks — love and relationships.

4. “I wish that I had let myself be happier.”

Many did not realize until the end – until it was too late — that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called ‘comfort’ of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content. But deep within, they longed to laugh properly and have silliness in their life again.

5. “I wish I looked for more opportunities to truly live more.”

How long have you lived?

In Thornton Wilder’s play “Our Town”, Emily, the main character dies given birth to a child. In the afterlife the Spirits allow her to return to earth to relive one day of her life. She chooses her 12th birthday. She goes back and watches herself and her family live out that day. They warned her not to do it but she does it anyway. She soon finds out why they told her not to do it because as she watches herself and her family live out that day she is shocked by the fact that they do not enter into the day’s experiences with sufficient appreciation and awareness of how precious this moment is. They just basically go through the motions. She yells at her family (of course they can’t hear her) and she yells at herself and asks … “Don’t you understand?? Don’t you understand you won’t have this moment forever? Don’t you understand that?!” And then she yells at the audience; “Do any of you … do any of you ever really live life when you’re alive?!”

So, “How long have you lived?” is not a question of how many days have gone by since you entered this world. These older folks are talking about those precious times – we’ve all had at least a few – where they felt really … REALLY alive!! All your senses were extra sharp. Reds were redder and blues were bluer. You were totally aware of .. and IN, your environment. You feared nothing. You could conquer anything. In other words, those moments that literally take your breath away. Of course, no one can live every single day like that. But then again, how long did you have to think about your own take-your-breath-away moment? How many do you have? One? Two? A handful? And that’s a shame. These folks realized they could have had many many more such moments, and also let the good feelings last longer, if only they looked for them and let them happen.

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PART THREE – THERE IS NO SHORTAGE OF FREE ADVICE
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So, I’m mulling over all these things in my tiny brain trying to figure out how I should live my life moving forward. And while there are only five measly little concepts listed above, and none of them all that earth shaking, I still find myself a bit overwhelmed. What I need to do is to simply it even further. I want to discover a single Unifying Theme. A simple sentence to live by. Maybe even just a word, or two. I need a Stephen Hawking-like Theory Of Everything that packages all of life’s complexities in a nice little box. This is what tiny brains need and want.

Faith.

I need to let Jesus in my heart. That’s what SJ’s mom, the ex-Mrs. Stucky, says I need. Every single phone call ends the same way. A little mini sermon. “We serve an awesome and mighty God.” “SJ is in God’s care.” “God knows even the number of hairs on SJ’s head and He surely knows where SJ is and how to take care of him.”. I just listen politely. That is, until I hear this one, “This is all in God’s plan.”. Oh, really? Sooo, billions of years ago when God formed the earth – or was it just 6,000 years ago — God had this plan to allow my son to have the gift of schizophrenia, and then in his 27th year of life he would get the shit kicked out of him by some thugs in Minneapolis? Is that the plan, Stan? If so, count me out. I am not anti-Jesus – if she wants to believe that I don’t care – but, it’s not for me. I’ve been there and done that. You can’t put toothpaste back in the tube. There’s no going back.

DN – SJ’s brother – suggests a different kind of faith. While still having religious overtones, it’s more a “spiritual” type of faith without a personal deity. Destiny. A Higher Power. It’s kind of like The Force in Star Wars. There’s Good. There’s Evil. We just need to believe that Good will prevail. The only problem with that is …. Darth Vader is my favorite character. I can’t be relying on some nebulous esoteric “force” to give me answers. Not unless Obi Wan Kenobe comes walking through the door.

Ms. Freud – my psychologist significant other – has even more ideas regarding the faith I need. Faith in myself. The Power of Positive Thinking. Building up my self-esteem. Cognitive Behavioral Therapy. And all other kinds of psycho-babble crapola. But doesn’t faith require at least a little bit of “mystery”? The Bible tells us faith is hoping for things unseen. The problem with the “believing in myself” line of thinking is that I have seen both the light AND the blackness of my soul. There is no mystery there. It ain’t a pretty sight. In fact, believing in myself is the very thing that got me to the point where I am now! I’m stuck in an endless loop. No! I need a better god than myself. Trust me.

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PART FOUR – EUREKA!!
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The ex-Mrs. Stucky was giving me one of her mini-sermons, one I heard a thousand times before …. how SJ won’t find any peace in his heart until he stops running from God. Much to my chagrin I actually thought about that for quite a while after we hung up. A million seemingly random thoughts were swirling around in my head until they gradually coalesced into one single word.

Surrender.

I am not talking about surrender in terms of “giving up”. It doesn’t mean lying around in bed all day or moping around the house.

I am not talking about surrender in terms of its religious connotations, even though the general concept is somewhat similar to that old-time religious hymn, “I surrender all”. (That hymn talks about surrendering all to Jesus.)

So, what is surrender? It’s a prayer and a state of mind.

The prayer goes something like this; “I surrender. But, I’m going to do everything that I can do. And when I’m done doing all I can do, I will leave the result in your hands. It’s OK!”

So I will continue to talk to SJ a thousand times a day, about the same topics, and with the same advice until I turn blue in the face. That’s OK. I will continue to talk to his doctors, and nurses, and his mother, his brother, Ms Freud, his grandparents, and all the people in the state bureaucracy doing all I can to encourage and motivate until I’m blue in the face. That’s OK. I’m going to continue to support SJ financially whenever I can even though I’m pretty sure the money is often pissed away. That’s OK. And, if, ten years from now he is still in the same state of mind that he’s in today, well … that’s OK too. I did all I could. I surrendered.

It doesn’t matter who the “you” is in the prayer above. The ‘you” isn’t key. Surrendering is. Is there a Higher Power, a personal one (like Jesus) or impersonal one (like The Force)? Who really knows? I’m not really concerned with what “name” is given to this “you”. All I know is I can’t control everything. My “prayer” is simply my reminder to me to do all I can … and then let it go.
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The other liberating aspect of surrendering is that it totally frees me from the prison-chains of expectation.

Looking back on my life it seems a huge portion of it was driven by expectations. I was expected to get good grades in school and go to college. There was the expectation to get a good paying job. Get married. Have kids. Get a house. Acquire stuff. Pay the bills. Save for retirement. Be fulfilled with all of this. Live a “normal” life. Not that there’s anything wrong with any of that.

But I wonder how much did I limit myself by having these expectations … these mental constructs of how life “should” turn out? I wonder who imposed these expectations on me? Myself? My parents? My teachers? Society? I actually achieved most of my expectations, but at what cost? Did I chain myself to a way of living that didn’t necessarily suit me? Am I more unhappy with expectations not met … or those that I did meet? Don’t expectations inevitably lead to disappointment?

And now I suppose I have expectations that SJ will get better because, dadgummit, we’re doing all the right things to make sure he gets better!! But what if SJ himself doesn’t want to get better?? Doesn’t a mentally ill person have the right to stay mentally ill, or must they conform to society’s expectation to conform and “get better”? It seems SJ is hellbent on living the life he CHOOSES. I can’t force him to meet my expectations. He has a right to his own life choices. I just need to find the grace, and power, to accept his choices. I’m tired of fighting the heartache.

You know what? I am friggin sick and tired of all these expectations imposed on me and that I impose on others. So, I am going to liberate myself from them by throwing them ALL out. I’m not going to live up to SJ’s expectations, Ms. Freud’s expectations, the world’s expectations, or even my own expectations. Screw that. I’m going to do all that I can and then simply allow each day to unfold however it may. One day at a time, Stucky. One day at a time. For the first time in my life I’m going to live the life I want, without expectations. It’s all I can do. I surrender.
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In closing, I hope it’s obvious that I’m not trying to convince anyone that I have “arrived” or that I have the answers … or, that I’m even correct in my thinking. I’m probably full of shit and mentally ill myself. I mostly wrote this for myself. It’s cathartic. Writing helps me slow down my mind. It helps me “see” my brain. I probably would have written this to myself if I didn’t have my TBP friends to share with. Many of you have been wonderfully supportive. I can’t thank you enough.

LLPOH’s Grim Reality #1

I came across the following article in the New York Times:

 http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&pagewanted=all

This article is reasonably long, but I highly recommend it, as it gives great insight as to why manufacturing is doomed in the western world, particularly in the US. The destruction cannot be avoided. Action was needed decades ago, but was not taken.

This article highlights the problems manufacturers face in the US, and clearly demonstrates why large-scale manufacturing is not coming back to the US. It is a fairly long article, and focuses mainly on Apple and its manufacturing, but the issues are the same for all manufacturing. China has a number of significant advantages that cannot be overcome, including: 1) huge economies of scale, a skilled, 2) a compliant and cheap workforce, 3) a government that invests in, and supports manufacturing, 4) major advantages in the supply chain (ie. all suppliers of sub-components of a product are located close together), and 5) enormous flexibility and responsiveness to customer requirements. Following are the salient points, and some comments of my own. The US in particular lacks all of these things. Following are salient points from the article, with my comments added.

– Obama (Einstein that he is) asked Steve Jobs why the manufacturing jobs cannot return to the US. Jobs replied that manufacturing jobs are not coming back.

– Made in the USA is simply not viable. (I have been making this point ad nauseum).

– Apple employees 63,000 people directly world-wide, about 2/3 of those in the US. An additional 700,000 are employed on their behalf, almost entirely overseas, designing and building Apple products. (700,000 employees transferred to the US would fix the US unemployment problem, when the trickle-down effect is considered. Of course, if Apple relocated the 700,000 from overseas to the US, they would go broke. Small problem there.)

– One of the primary sub-contracting agencies, Foxconn, employees 230,000 manufacturing workers in one facility. That bears repeating: One of the primary sub-contracting agencies, Foxconn, employees 230,000 manufacturing workers in one facility. They have dozens of facilities. The employees live in dorms at the facility. (Try that in the US!)

– The average wage in the above facility is $17 per day – for 12 hour shifts. (My average wage and benefits bill for a 12 hr. shift would be over $400 – or over 20 times more. I simply cannot compete.)

– The entire supply chain is geographically close together – i.e. parts suppliers are right next door to each other. (My suppliers are spread out across the country and across the world. As a result, transport costs for my sub-components are quite high, and delivery/lead-times times are long.)

– The US is not and has not produced enough mid-skill workers. (That is one of my theme songs.)

– China has the ability to increase and decrease production in a very short period of time – almost instantly. (I need weeks and/or months to do the same thing. For me to hire and train workers, get my supply chain in order, etc. for an increase is an extended process. To decrease production also takes weeks – I have outstanding purchase orders in place that I have to honor, I have work-in-process that needs to be completed, etc. I cannot compete on speed.)

– They give an example of a special made screw being made/delivered in 3 hours. (For me it would take days or weeks to get a special made screw, or anything else for that matter.)

– Governments assist their manufacturing industry. (Mine – not so much. Quite the opposite.)

– They are able to hire 3000 employees overnight if required. Let me repeat that – they can hire 3000 fully trained people overnight! (For me to hire/train 30 would take at least 5 or 6 months. I cannot compete.)

– They hired 8,700 industrial engineers in 15 days. Again, I repeat – they hired 8,700 industrial engineers in 15 days. In the US they predicted it would take 9 months to do the same thing. (No comment needed.)

– “The US has stopped producing people with skills we need” – unnamed Apple exec. (Wow – now there is a detail I had missed. Not. He is absolutely correct.)

– It predicts that middle class-jobs may return, eventually. But not for the current workers – for “future” workers. But it doesn’t predict when or in what fields. But it does say that those people already out in the workforce are screwed. (It doesn’t use the word screwed – that is my translation. But of course they are correct. Unskilled workers are available – but there is no market for them, as they are far too expensive and spoiled to compete in a global marketplace. Unskilled people or people with non-marketable skills are in for a very bad time. Skilled manufacturing people in particular are in for a bad time – as there are too few of them, and there are too many obstacles to overcome – wages (20 times higher), a dislocated supply chain, the inability to be able to react quickly, etc.).

So, in sum, the picture is not pretty. In fact, it is disastrous. Globalism is here to stay – it is not going away. The pain and suffering for the middle class will increase, and accelerate, in my opinion. We have fallen too far behind to recover position, even if the scale issues and cultural issues were not so severe. There may be some opportunities in niche markets, but they will not be plentiful.

It will be ever more difficult to start up and run a business, in any event, as US government policy continues to add to the burden of small businesspeople. Large companies will continue to send work overseas – the US cannot compete against the rest of the world, and the fact is that they have no choice, as they will fall prey to their competitors if they do not – not only to minimize cost, but to improve responsiveness to their customers, as it is suicide to be slow to meet customer’s demands. Anyone who believes that the situation can be reversed is deluding themselves. Manufacturing, and indeed services, will continue to leave the US as the Chinese are simply more cost efficient, educated, flexible, and responsive to their customers. It is game over, man. Game over. The Chinese have won and are now just running out the clock.

PAYCHECKS, PERCEPTION, PROPAGANDA & POWER

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” – Upton Sinclair

 

I began to write this article in early December. I had just written a piece that attempted to scrutinize how the American public could stand idly by while heavily armed mercenary thugs viciously crushed the Occupy encampments across the country in a Department of Homeland Security coordinated attack at the behest of the ruling oligarchy.  Comfortably Numb made a case that the political and economic systems of the United States have been captured by a few evil men and they use their wealth and power to control the message hammered into the psyches of an apathetic, distracted, vincibly ignorant public. I started to tackle the question of why Americans could stand by as the new Greatest Generation was being abandoned, derided, scorned, beaten, tear gassed, and arrested for having the courage and audacity to stand up to a powerful corrupt unholy alliance between Wall Street psychopaths, corporate fascist barbarians, and Washington DC power hungry jackals. But I became overwhelmed with a feeling of disillusionment and hopelessness and was unable to write anything for about a month. I found myself questioning whether it was worth fighting such a powerful foe after seeing how easily they crushed the opposition put forth by OWS. After a month I decided I am not one to love my servitude.

“Most men and women will grow up to love their servitude and will never dream of revolution.” – Huxley’s Brave New World

I owe it to my three sons to keep fighting the good fight. They deserve a future. Day by day we draw ever closer to a showdown with the traitors who have sold this country into debt slavery. I don’t dream of revolution, but my eyes are wide open and I see it coming. I had been trying to wrap my head around what happened with the Occupy Movement since the Department of Homeland Security coordinated destruction of most of the encampments around the country in November. The corporate mainstream media immediately moved onto more pressing issues like the Kim Kardashian divorce and Jessica Simpson’s weight gain. The American public has been instructed by the media the Occupy story is history, just like the BP oil spill, the Fukushima nuclear meltdown, and the Egyptian revolution. In a society consumed by reality TV Occupy Wall Street was just another show. The credulous American populace dutifully turned their attention to Black Friday and whipping out one of their 15 credit cards to purchase remote control pillows, 3D 72 inch HDTVs, a see through tank top from the Snooki line of slutware, or thousands of other ludicrous Chinese crap churned out by slave labor in factories built to support the “efficiency” efforts of U.S. conglomerates.

Without a constant irritating presence in the heart of NYC and other large cities, the Occupy Movement appears to have lost steam. I’ve been trying to figure out how and why this happened. The issues that motivated the protests have not gone away. The despicable MF Global crime, committed by a hall of shame member of the .01% – Jon Corzine – has proven beyond a shadow of a doubt the Wall Street/Washington DC criminal conspiracy is alive and well. Unless you have been sitting in line at a Wal-Mart for the last two months to get a $3 waffle-maker, you saw young people across the country tear gassed, shot with rubber bullets, maced, bludgeoned, and brutalized by the paid thugs of the ruling oligarchy on a daily basis. The outrage at the continued looting by the psychopathic Wall Street aristocracy and the horrific police brutality against young people exercising their Constitutional right to free speech and assembly should have ignited widespread anger and mass protest. Instead the reaction has been silence, scorn and smug satisfaction with the government response.

Paychecks & Perceptions

There are a plethora of rationales for the apathy and lack of critical thinking overwhelming our society as we plunge into the depths of a looming economic calamity. They include economic self interest, the power of propaganda to condition the masses, fear of opposing authority, and the perception of a reality that allows you to sleep at night. The Upton Sinclair quote above hit home for me a few weeks ago and explains much of the disdain for the Occupy movement. I was in a high level meeting at my University and during the course of the meeting the Occupy Movement was brought up. A senior executive made a derogatory comment about Occupy and then laughed. I smiled and bit my tongue. In retrospect it shouldn’t have surprised me. I work at one of the top business schools in the world. The person who made the comment has spent his entire life educating students who end up with jobs at Wall Street financial institutions and with America’s largest corporations. It is a natural response for someone whose whole life is reliant upon the existing financial system to psychologically overlook the obvious criminality of the Wall Street fat cats and corporate executives who validate his entire existence and life’s work. He chooses to not understand the message of these protestors because to truthfully comprehend their message would nullify his thirty years of academic efforts. My non-response to the comment about the Occupy Movement was also based upon self-interest and reliance on a paycheck to make a living. I had learned my lesson the hard way during a previous career stop.

It appears older generations have a considerably more negative view of young people protesting the capture of our political and economic system than younger generations. This also makes sense because they have the most to lose and cannot visualize a society other than the one they have created. To acknowledge the validity of the Occupy Movement and the justice of their positions would be to admit their own guilt in the creation of a society that has allowed a chosen few to enrich themselves at the expense of the many. The Baby Boom Generation has been living a lie their entire adulthood. It is true that prior generations created the welfare/warfare state we have today, but the Boomers have had the reins of power for the last two decades in Congress and chose to not only ignore the fact the entitlement promises made by previous administrations could not be fulfilled. They even made further promises in the trillions to their fellow Boomers. Instead of making a budgetary choice between guns and butter, the Boomers chose guns, butter, education, universal healthcare, the right to own a home, the right to a 72 inch HDTV, and zero percent financing on their Cadillac Escalade from government motors. The consequences of these choices are a $15.2 trillion National Debt growing at a rate of $3.7 billion per day and unfunded entitlement liabilities totaling in excess of $100 trillion.

I had the pleasure of meeting Neil Howe, co-author of The Fourth Turning and fourteen other books, in early December. His ground breaking work with William Strauss on generational theory has proven to be uncannily accurate, as their 1997 assessment of what dynamics would drive the course of history over the coming decades have materialized exactly as they presumed. We had a fascinating two hour discussion about various topics impacting the world today and I found that we were in agreement on just about everything, except for the Occupy protests. Neil Howe is an expert on interpreting how generations react to events. I expected him to be impressed by the courage and fortitude of the Millenials leading this protest against Wall Street gluttony and audacious criminality. This is the new GI Generation and I anticipated him perceiving these protests as a prelude to greater feats ahead by this generation. Instead he described them as naive adolescents being led down a phony path by anarchist Boomers. As an example he referenced the fact that many of the protestors were wearing Guy Fawkes masks, the most famous anarchist in history. He found this distasteful and dangerous. My interpretation of the Guy Fawkes masks was more in line with the movie V For Vendetta and the theme of a corrupt evil government keeping the public living in perpetual fear.

“Because while the truncheon may be used in lieu of conversation, words will always retain their power. Words offer the means to meaning, and for those who will listen, the enunciation of truth. And the truth is, there is something terribly wrong with this country, isn’t there? Cruelty and injustice, intolerance and oppression. And where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission. How did this happen? Who’s to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you’re looking for the guilty, you need only look into a mirror. I know why you did it. I know you were afraid. Who wouldn’t be? War, terror, disease. There were a myriad of problems which conspired to corrupt your reason and rob you of your common sense. Fear got the best of you, and in your panic you turned to the now high chancellor, Adam Sutler. He promised you order, he promised you peace, and all he demanded in return was your silent, obedient consent.” – V For Vendetta

Neil Howe’s impression of the movie centered on the terroristic aspects of blowing up Parliament, not on the symbolism of citizens rising up and casting off the yoke of a malevolent oligarchy that has used propaganda, fear and intimidation to manipulate and control the population. Howe is a Baby Boomer and I’m Generation X. We are each viewing the Occupy Movement through the prism of our life experiences and perceptions about the intentions of these protestors. The existing social, economic, and political structure is dominated by Boomers. Neil Howe views the Occupy Movement as a threat to the system he believes in and supports. As a cynical Xer with no allegiance to a corrupt government, a crony capitalist economic system or a greedy self centered society, I see these young revolutionaries as our last great hope.

 

Neil Howe runs a very successful consulting firm whose clients include Fortune 500 corporations, including Wall Street financial firms. His annual income and net worth is dependent upon the existing corporate dynamic. When your living depends upon not understanding the real reason young people are protesting corporate malfeasance, fraud and corruption, your mind can ignore observable facts and visible truths. Anything can be rationalized when putting food on the table requires you to ignore obvious truths and understandable facts.

Propaganda & Power

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” – Edward Bernays, Propaganda, 1928 

   File:Edward Bernays.jpg

I was shocked when I came across the above quote a few months ago. Bernays had it figured out 84 years ago before mass media, television, or spin doctors. His vision of a society manipulated by a small number of governing elite who believe they know better than the masses has come to fruition. True republican equality as defined by the founders in the Constitution is considered quaint and a belief of the trusting and naïve masses by the wealthy elite. Manipulation of the masses through a relentless never ending barrage of propaganda disguised as news and unremitting false advertising is designed to control and herd the cattle into the slaughterhouse. We are given the illusion of free choice, when in reality the choices are being made for us by a chosen few who think they know what is best. These puppeteers controlling the strings inhabit the financial, government and corporate halls of power. Their purpose is not to benefit society and its citizens but to protect their wealth and influence, using any means at their disposal. Propaganda to control the minds of a willfully uninformed public has been their most potent weapon.

Source: Mike Kreiger

Most people have never heard the name Edward Bernays. That is the way public relations specialists (manipulators of the truth) like it. They operate in the shadows, subtly influencing public opinion through what Bernays arrogantly referred to as the sinister method of “engineering of consent”. The Governing Elite have no time for messy processes like true capitalism or non-manipulated free elections. The objective for Bernays and his ilk has always been to provide corrupt government power brokers, shadowy bankers and corporate media kingpins with potent psychological instruments of social persuasion and mind control. Edward Bernays is considered the “father of public relations”, and he was the nephew of Sigmund Freud. He pioneered media manipulation techniques.

He understood the weaknesses of the human mind and developed methods and processes for taking advantage of that weakness.

“The average citizen is the world’s most efficient censor. His own mind is the greatest barrier between him and the facts. His own ‘logic proof compartments,’ his own absolutism are the obstacles which prevent him from seeing in terms of experience and thought rather than in terms of group reaction.” – Bernays, Crystallizing Public Opinion

Bernays got his big break during the administration of Woodrow Wilson, the outset of the American interventionist empire bankrolled by an inflation creating Federal Reserve and a tax and spend Congress.  During WWI, Edward began work for the Committee on Public Information, the immense propaganda machine ordered by Woodrow Wilson to sway the American public towards a war he campaigned to keep us out of. He became so instrumental he was invited to accompany Wilson to the Paris peace conference. His claims to fame afterward included:

  • Creating a false storyline of communists in Guatemala on behalf of his client United Fruit Company, resulting in a CIA led military coup which ushered in a brutal dictatorship resulting in the dislocation, torture and death of thousands.
  • He was responsible for breaking the taboo of women smoking in public while working for American Tobacco Company.

His biggest claim to fame was inspiring the most reviled propagandist in history. Bernays’ techniques were so effective that Joseph Goebbels, the Nazi propaganda minister, made copious use of Bernays’ book, “Propaganda” throughout the Holocaust, often crediting Bernays. That was quite a feather in Bernays’ cap. The German people were gradually indoctrinated by their government through propaganda into consenting and supporting the most horrific crimes in history as described by Milton Mayer in his book, They Thought They Were Free – The Germans, 1933-45:

“This separation of government from people, this widening of the gap, took place so gradually and so insensibly, each step disguised (perhaps not even intentionally) as a temporary emergency measure or associated with true patriotic allegiance or with real social purposes. And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath, of the whole process of government growing remoter and remoter.

“To live in this process is absolutely not to be able to notice it—please try to believe me—unless one has a much greater degree of political awareness, acuity, than most of us had ever had occasion to develop. Each step was so small, so inconsequential, so well explained or, on occasion, ‘regretted,’ that, unless one were detached from the whole process from the beginning, unless one understood what the whole thing was in principle, what all these ‘little measures’ that no ‘patriotic German’ could resent must someday lead to, one no more saw it developing from day to day than a farmer in his field sees the corn growing. One day it is over his head.”

Bernays was a master of using psychological techniques to mask the motives of his clients, as part of a calculated strategy aimed at keeping the public unaware of the forces that were working to mold their psyches. Bernays died in 1995, but his techniques have been taken to a new level as our government, media and financial elite use any means at their disposal to keep the masses sedated and content while they are fleeced and herded towards the slaughterhouse. The Big Lie perpetrated upon the masses is the fallacy of America being a democratic society. The anti-democratic and treacherous corporate public relations Madison Avenue maggots manage and manipulate the opinions of the many in order to make sure a true democratic system doesn’t threaten the privileges and supremacy of the governing elite.

I wonder if it was coincidental the creation of the Federal Reserve, implementation of the personal income tax, and virtually non-stop war coincided with the rise of an industry designed to manipulate and control the thoughts and opinions of an easily influenced and willfully unaware populace. Most people want to be led and told what to believe. Critical thinking and taking personal responsibility for your life and your society requires hard work, sacrifice, honesty, and self restraint. Simply believing storylines supplied by authority figures and media pundits allow the masses to continue living lives of debt delusion and hope, occasionally stirred into a frenzy of fear and loathing towards the foreign bogeyman of the moment, chosen by the governing elite. Bernays and his disciples understood this dynamic and have been able to utilize corporate mass media and the human weakness of trusting in the judgments of authority figures to control and manage the vast swath of America without them knowing it.

“If we understand the mechanism and motives of the group mind, it is now possible to control and regiment the masses according to our will without them knowing it.” – Edward Bernays

The propaganda techniques employed to manipulate the masses seemed less abhorrent when they centered upon just consumer products. Convincing women they would look like a gorgeous model if they used a company’s cosmetics or convincing a man he’d be admired by his neighbors if he drove a certain car was small potatoes. In the last few decades the misinformation and outright lies fed to the American public by oligarchy of governing elite has become more manifest and repugnant. The list of abuses is virtually endless.

  • The American public has been lured into debt by the incessant unrelenting lifestyle marketing messages spewed from our TVs 24/7. From the introduction of the show Lifestyles of the Rich & Famous in the early 1980s, wealth, materialism, and consumerism became the motivating force in America. Consumption accounted for only 63% of GDP in 1980, with capital investment accounting for 17%. Today, consumption accounts for 71% of GDP and capital investment only 12%. Keeping up with the Kardashians is the mantra of our times.
  • The utter failure of our government controlled educational system in teaching our children how to think critically or question the validity of government created data has allowed the elite to paper over the fact the average American worker has not had any real income gains in at least four decades. The insidious nature of Federal Reserve created inflation (up 600% since 1970) is incomprehensible to a public that finds math boring and not essential in their lives.

 

  • Once the manipulators convinced the masses they needed a 4,000 sq ft McMansion, two brand new stylish cars, four big screen HDTVs, three computers, stainless steel appliances, granite countertops, a Rolex, Armani suits, an in-ground pool, an ATV, and house at the shore, there was only one thing left to do – loan them the money to live the faux American dream. GDP has grown 525% since 1980. Personal consumption expenditures have grown 600% since 1980. Consumer debt outstanding has grown 700% since 1980. And total household debt outstanding has grown 800% since 1980. It seems the purveyors of debt on Wall Street have been the only beneficiaries of the apparition of an American dream sold to a willingly duped American populace.

 

  • The dream of home ownership was used by politicians of both parties to further their agendas, egged on by the Wall Street elite and the National Association of Realtors – two of the largest contributors to politicians. As politicians tried to outdo themselves creating programs to get poor people into homes, Federal Reserve Chairman Greenspan urged the masses to use creative new adjustable rate mortgage products. With a wink and nod from Greenspan and no fear of any regulation whatsoever, the Wall Street elite created liar loans, negative amortization loans, subprime loans, Alt-A loans and a myriad of other products to induce fraud in the housing market. Appraisers did their part by overstating the values of homes and Wall Street colluded with the rating agencies to package the toxic mortgages and sell them to clueless dupes around the globe with a AAA rating stamped on them. At the absolute peak in 2005, with prices two standard deviations above the long term average, Ben Bernanke declared the housing market strong and the NAR proclaimed it the best time to buy. As the coup de grace, Wall Street urged home owners to unlock that equity in their homes and borrow $3 trillion to spend on gadgets, home upgrades, automobiles, facelifts, new boobs, and exotic vacations. The greatest mass fraud in history was complete. And not one person has gone to jail.
  • Not only have the governing elite lured the masses into debt slavery, but they’ve convinced them to love their slavery. The governing elite have done a fantastic job of using their media mouthpieces to deflect criticism away from their pillaging and looting of the national wealth. They’ve successfully persuaded the slaves the extreme income inequality is beneficial to the country because the 1% are the job creators and have earned their way to the top through our free market capitalism system. Convincing the middle class to blame the poor for their three decade decline is a tribute to the effectiveness of their propaganda crusade. Jesse gives accolades to the father of propaganda as the moneyed interests have won:

“The moneyed interests have done quite a successful PR job in refocusing the national discussion on priorities involving social issues, and the reform of the support systems for the weak, the unfortunate, and the elderly. Turning one group against another, and objectifying your intended victims through slogans and stereotypes, has always been an effective method of bending the herd to your will. Score one for Edward Bernays.”

 

  • The Social Security System is an example of propaganda and misinformation on a grand scale. A modest (1% tax) insurance program designed to help widows and orphans during the Great Depression, which should have been treated much like term life insurance, morphed into a massive retirement plan at the behest of politicians over the last eight decades. The voters shockingly voted for more benefits. Millions are now totally dependent upon the monthly pittance they receive, as the promise of a Social Security pension deterred them from saving for their old age. Politicians perpetuated lies about the funds being protected in a lockbox. The truth is the politicians raided the lockbox and took every dime to spend on wars of choice, aid to dictators, paying off their corporate masters, and leaving only IOUs. They have promised $17.5 trillion more than they can payout. It could be made viable with a gradual rise in the retirement age and a simple means test that would eliminate payouts to those who do not need it. Instead politicians use it as a means to control their constituents and obscure the simple truths. Americans choose to remain ignorant of the facts based on their perceptions of a false reality.

 

  • Another storyline propagated by politicians of a liberal bent is that Medicare is a successful Federal government program. Only someone from the governing elite would declare a program that is $90 trillion underfunded, racked by fraud and abuse totaling almost $100 billion per year, despised by doctors across the land for its insane bureaucracy, and allows corporate insurance, drug and hospital conglomerates to dictate the costs, a success. The entire government run sickcare industry is a scam designed to enrich the corporations that contribute to the campaigns of the politicians writing the rules and regulations. The pricing mechanism between doctor and patient is broken, with neither having any say in the decisions.
  • With the unleashing of a torrent of inflation during the 1970s the governing elite needed to resort to obfuscation and manipulation of inflation figures to create the illusion of price stability and positive GDP, while screwing seniors citizens out of their Social Security benefits and convincing the middle class their annual 3% wage increases were getting them ahead in life. Inflation has been systematically understated by 5% to 7% annually since 1980.

 

  • The government drones at the BLS do the dirty work for their masters by reporting unemployment of 8.6% when the real level exceeds 20%, Great Depression levels. The corporate media just does the bidding of the corporate fascist state by unflinchingly reporting the bogus figures. Reporting the truth would be detrimental to the political and financial elites, so propaganda is rationalized as being beneficial to the country. The sheep just keep grazing as their shepherds herd them toward the slaughterhouse.

 

  • By conducting focus groups and testing words, master manipulators like Frank Lutz have been able to convince the masses to support repeal of the estate tax even though it does not affect 99.7% of American taxpayers. By renaming it a Death Tax, the public was convinced that this horrible abuse of the tax code should be repealed. The 0.3% with the ability and means to manipulate public opinion, won again.
  • The tax code and the propaganda campaign being waged by the richest .01% to obscure the truth and misinform the masses is the most barefaced attempt of the elite to retain their wealth and power. Their corporate media legions pound home the storyline of 50% of Americans not paying their fair share because they pay no Federal income tax. It sure sounds like these weasels must be doing something dishonest to avoid paying Federal taxes. What is not mentioned by the media mouthpieces is 50% of Americans make less than $25,000 per year. What is also conveniently forgotten is these people pay payroll taxes, local income taxes, state income taxes, real estate taxes, sales taxes, tolls and a multitude of other taxes, fees and charges to their utility, cable, and phone providers. In the real world, the total effective tax rate for someone making $50,000 per year exceeds the total effective tax rates of Mitt Romney, Lloyd Blankfein and Warren Buffett.

 

  •  The IRS tax code did not grow to 75,000 pages because the middle class and the poor used their undue influence to convince politicians in Washington DC to insert credits, loopholes and deductions for mega-corporations and the wealthy elite into the code. Only those with wealth, power and influence are allowed to “sway” legislation in Congress. This is called crony capitalist democracy. The current propaganda coming from the GOP candidates is our poor mega-corporations that outsourced millions of American jobs to Asia are overburdened by the 35% corporate tax rate, despite the fact they actually pay an effective rate of 18% and many multi-billion dollar conglomerates pay nothing. The truth is not important or relevant to those running the show in this country.

  • The most damaging and far reaching use of propaganda, misinformation and outright scare tactics by the financial and political elites was during the financial meltdown during September and October of 2008. The American public was whipped into a frenzy of fear by the protectors of Wall Street – Hank Paulson and Ben Bernanke – in order to funnel trillions of taxpayer funds to the Wall Street cartel that created the crisis in the first place. The governing elite declared the economic system would fail unless Wall Street was bailed out. When some courageous Congress members balked at passing TARP, the masters of the universe crashed the stock market with their super computer trading machines. The hysterical pundits on CNBC and the other corporate media outlets shrieked that our way of life would surely die if the banks were not saved. TARP was passed and Wall Street bankers rejoiced by paying themselves billions in bonuses. The truth not revealed to the masses was that the failure of a few reckless ravenously greedy Wall Street banks would not have destroyed our economic system. It would have destroyed the wealth of psychotic bankers like Blankfiein, Dimon, Pandit and a slew of other criminals on Wall Street. Wealthy stockholders and bondholders would have been wiped out. Bank depositors would not have lost a dime. The irresponsible risk junky bankers would have seen their banks liquidated. Bad debts would have been written off. The remaining good assets would have been sold to prudent banks. But instead, the ethically and financially bankrupt were saved by their corporate fascist partners in crime at the expense of the confused and disoriented American citizens. Saving bankers had been successfully marketed to the sheep as being on par with saving the nation. Chalk another one up for Bernays and his brethren.
  • After Bush and his banker cronies successfully fleeced trillions from taxpayers and handed it to bankrupt bankers, Obama and his minions continued the con on the middle class. With the help of Pelosi and Reid he was able to dispense $800 billion of payoffs to various contributors, constituents and special interests while calling it a job creating stimulus plan. When it became clear to even the ignorant masses that no jobs were being created, the governing elite channeled their best Edward Bernays and invented the term “jobs saved”. The beauty of this concept was the impossibility of ever verifying the figures spouted by the paid shills disguised as expert economists. Billions more were funneled to the housing industry and auto industry as paybacks for their contributions in the form of homebuyer tax schemes and Cash for Clunker scams. The bill for these complete failures was passed onto future generations as the National Debt soared from $10.6 trillion to $15.2 trillion in just three years of Obama rule.
  • The latest fraud being perpetrated on the American public is the lie about energy independence touted by GOP candidates for president. Rather than leveling with the people and explaining the facts of peak cheap oil to them honestly, the governing elite prefer slogans, half-truths and fantasy projections. The left touts solar, ethanol and other green energy fantasies, while the right peddles drilling, fracking, and fake estimates of supplies. Both are lying. All the cheap easy to access oil in the world has been found. The oil being discovered and accessed today is harder to reach, more expensive to produce and requires producers to expend almost one barrel of oil to produce a new barrel of oil. The easy to access oil is being depleted at the same rate that new hard to access oil is being brought on line. Meanwhile, demand grows across the globe. Our far flung suburban sprawl society teeters on the edge of an abyss and the governing elite pretend all is well.

The above list of abuses committed by the ruling oligarchy pales in comparison to the totalitarian like measures that have been executed since September 11,2001. With the country cowering in fear, the governing elite passed an Orwellian like 350 page bill that changed this country forever. The USA PATRIOT Act, which changed the relationship between our government and its citizens forever, was supposedly written, introduced, debated and passed in the space of 30 days in October 2001. I wonder which public relations firm came up with the Orwellian acronym?  Uniting (and) Strengthening America (by) Providing Appropriate Tools Required (to) Intercept (and) Obstruct Terrorism Act of 2001. The purpose of naming this bill was to imply that anyone who was against allowing our government to spy, monitor or place under surveillance anyone our government chooses would make you unpatriotic. The American people chose implied safety and security over true freedom and liberty by their deafening silence. The governing elite used fear and propaganda to achieve their goal of more domination over our lives.

Drunk with their new found power, the political elite decided to change the world by using their spin machine to create visions of mushroom clouds over U.S. cities in the minds of a gullible public to craft a believable storyline for the invasion of Iraq. A willingly pliant press corp. spread the misinformation about weapons of mass destruction and Al Qaeda connections to fashion a convincing plot for pre-emptive war on a sovereign country that did not threaten our country. Who benefitted from war with Iraq? The military industrial complex reaped billions in profits and the Wall Street banks bankrolled the invasion with more debt. It only destroyed the lives of thousands of low income American soldiers, killed 100,000 Iraqi peasants, drove the price of oil from $25 a barrel to $100 a barrel, and will ultimately cost American taxpayers $4 trillion. And the great thing about passage of the Patriot Act and invasion of Iraq was the bipartisan cooperation pushing us ever closer to an authoritarian state.

The erroneous notion that Americans have a choice between two political parties that offer distinct and clear opposing policies addressing the major issues facing our country is still perpetuated by politicians and the corporate media. It is untrue, as we have seen the Obama administration employ the same repressive methods instituted by the Bush administration. Military spending rises. Wars of choice proliferate and grow. Obamacare is virtually identical to a plan created by the leading GOP presidential nominee. Further restrictions, regulations and laws are put forth to keep the masses controlled, sedated and fearful. The governing elite and their propagators of misinformation are again formulating a false storyline to convince the easily fooled ignorant public that a sovereign country 7,500 miles from our shores is actually a threat to their lives. While our government has already committed acts of war against Iran (sanctions, assassinations, cyber warfare, and using drones to spy), the public is being worked into a bloodthirsty frenzy of nationalism. Bipartisanship worked so well with Iraq. How could it possibly go wrong with Iran?                      

In the last six months cracks have begun appearing in the fascist façade masquerading as a democratic republic. The rise of the Occupy Movement, increasing pain and discontent among the middle class, a small but vocal irate minority utilizing the internet to organize, inform and spread knowledge, and the growing support among the liberty minded for Ron Paul’s candidacy are the opening salvos in a coming revolution. The volleys being traded between the forces of the American aristocratic elite and the leading forces of this revolution are only the opening shots on par with Bunker Hill. The oligarchs have won the initial skirmishes with the Occupy Movement through their control of superior mercenary fire power and ability to falsify the message and nature of the protestors. The corporate mass media propaganda machine convinced an apathetic, non critical thinking public the protestors were nothing but dirty, lazy, college students looking for government handouts organized and led by George Soros. Journalist Robert Fisk reveals the true nature of the protests and rage:

“And that is the true parallel in the West. The protest movements are indeed against Big Business – a perfectly justified cause – and against “governments”. What they have really divined, however, albeit a bit late in the day, is that they have for decades bought into a fraudulent democracy: they dutifully vote for political parties – which then hand their democratic mandate and people’s power to the banks and the derivative traders and the rating agencies, all three backed up by the slovenly and dishonest coterie of “experts” from America’s top universities and “think tanks”, who maintain the fiction that this is a crisis of globalization rather than a massive financial con trick foisted on the voters.

The banks and the rating agencies have become the dictators of the West. Like the Mubaraks and Ben Alis, the banks believed – and still believe – they are owners of their countries. The elections which give them power have – through the gutlessness and collusion of governments – become as false as the polls to which the Arabs were forced to troop decade after decade to anoint their own national property owners. Goldman Sachs and the Royal Bank of Scotland became the Mubaraks and Ben Alis of the US and the UK, each gobbling up the people’s wealth in bogus rewards and bonuses for their vicious bosses on a scale infinitely more rapacious than their greedy Arab dictator-brothers could imagine.” – Robert Fisk, Bankers are the Dictators of the West

The mounting desperation of the oligarchs is palpable. They have circled the wagons as one of their leaders – Jon Corzine – was caught stealing $1.2 billion directly from the accounts of his customers after making reckless bets that went wrong and bankrupted his firm. The Department of Homeland Security coordinated brutality unleashed upon peaceful protestors in cities across America opened the eyes of more people to the approach of an increasingly oppressive state. The media lapdogs have come out in force with an organized smear campaign designed to derail the presidential campaign of Ron Paul, the only candidate talking about real change and a real downsizing of the American empire. Ron Paul’s platform of liberty, freedom, non-interventionism, sound money, and a government not controlled by bankers and corporate interests is anathema to the ruling elite of both parties. A vote for one of the hand selected candidates offered by the moneyed interests is simply a vote for the special interest status quo. As our economic system becomes more saturated with debt by the day a tipping point approaches.

Obama’s signing of the NDAA, overwhelmingly supported by politicians of both parties, now gives the ruling class the ability to track down and imprison indefinitely any American citizen they consider a threat to their power, without charges. The only remaining thorn in their side is the internet. The internet has allowed critical thinkers to share information, organize resistance to the oligarchs, create communities of like-minded citizens, and allow individuals the opportunity to turn the tables and perform surveillance on the state. The state does not like an unfettered internet because it allows citizens to find the non-manipulated truth and undermines their mainstream media propaganda machine. Young people are less able to be manipulated. The introduction of abominable legislation like SOPA and PIPA are a blatant attempt by the governing elite to crush dissent by locking down the internet and eliminating sites that question their version of reality.

Humans are a flawed species. Our minds are easily manipulated. We don’t like pain. We prefer instant gratification. We are susceptible to mass delusion. We will often choose hope over critical thought. Those with higher IQs will regularly attempt to take advantage of those with lower IQs. Fear and greed are the two motivations used by the minority in power to control and manipulate the majority. The American people have been led astray by a small group of powerful men. We were herded through a door in the wall of perception that promised an American dream of material goods, entitlements and pleasure with no obligations or responsibility to future generations. There is only one choice that can save this country from ruin. Each individual must make a choice to either to continue supporting the manipulative, corrupt status quo or coming back through the Door in the Wall.

 

“The man who comes back through the Door in the Wall will never be quite the same as the man who went out. He will be wiser but less sure, happier but less self-satisfied, humbler in acknowledging his ignorance yet better equipped to understand the relationship of words to things, of systematic reasoning to the unfathomable mystery which it tries, forever vainly, to comprehend” – Aldous Huxley

THE REAL REASON THE U.S. IS PUSHING FOR WAR WITH IRAN

Only a fool would believe the bullshit being spewed by our government and the MSM about Iran’s intentions. They will never launch a nuclear missile at Israel unless Israel does so first. I’m so tired of the propaganda about the Iranians wanting to cause a nuclear holocaust because of their religious beliefs. Their leaders know for a fact that if they ever launched a nuclear missile at Israel, their country would be obliterated within minutes. If this was their intention they could make it happen today by launching missiles at Saudi Arabia and the U.S. Navy in the Gulf. Why haven’t they done so? Because they don’t want to be obliterated. The entire cover story for forcing Iran into war is a crock of shit.

This article makes a great case for why the U.S. and Israel are forcing a showdown with Iran. They don’t need nuclear weapons. Their standard missiles are so accurate, they can actually defend themselves against Israel. The Iranians have proven to be a worthy adversary. They are technologically advanced enough to capture one of our predator drones. Obama and his neo-con friends in Congress think they know what they are doing. Nothing could be farther from the truth. These idiots are pushing the world towards a crisis that could spiral out of control.

Make sure you listen to George Galloway’s excellent rant at a caller into his radio show. When did common sense become such a rare trait in humanity?

The Real Story Versus the Cover Story             …by Mark H. Gaffney

  

Around a third of all oil shipped in tankers passes through the strait, and if this supply were disrupted it would out immense pressure on the rest of the world’s supplies.

 

Recently, President Obama imposed new sanctions on Iran which according to reports have been very effective, causing a sudden major devaluation of Iran’s currency. 

The Iranians correctly understand that they are under attack, and have threatened to respond by closing the strait of Hormuz, through which a large percentage of oil from the Mideast flows to the global economy. 

If the crisis deepens and Iran makes good on its threat to close Hormuz, there is little doubt that the US will intervene to reopen the strait. 

This will lead to a shooting war for which Iran will be blamed, even though the recent US sanctions were tantamount to overt aggression. 

Ed Note: George Galloway vs. the warmonger parrot who is no different to the current crop of warmongering US Republican Presidential contenders: 

 

I believe the US will exploit the situation to attack Iran’s nuclear facilities. But, even more importantly, the US will target Iran’s conventional missiles. Indeed, I believe this is the real reason for US sanctions in the first place, and for the buildup of tensions in recent days. 

Despite public perceptions, and all the rhetoric about nukes, the present crisis has nothing to do with Iran’s alleged nuclear weapons program. In my opinion, that is just a cover story. 

The real issue is the fact that Iran has upgraded its medium range conventionally-armed missiles with GPS technology, making its missiles much more accurate.  

This means Iran can now target Israel’s own nuclear, bio and chemical weapons stockpiles, located inside Israel, as well as the Dimona nuclear reactor.  

In short, Iran has achieved a conventional deterrent to Israel. Therefore, statements by Iranian officials that Iran has no nuclear weapons program are in my view probably correct. Presently, Iran does not need nukes to deter Israel. It can do so with its GPS-guided medium range missiles. 

The Israelis are no doubt gnashing their teeth over this, because they now find themselves threatened by their own WMD stockpiles, and by their own nuclear reactors, especially Dimona, all of which have become targets. 

A few direct hits by Iran could cause a toxic plume, killing thousands of Israelis. A worst case might signal the end of the Jewish state. 

It is important to realize that Iran would never launch a pre-emptive strike on Israel because the Iranians know that the US/Israeli response would be devastating. However, if Iran comes under attack first, all bets are off. Iran will defend itself.

A counter attack on Israel cannot be ruled out because Iranian leaders understand clearly (even if the American people do not) that the crisis has been manufactured, on Israel’s behalf. 

From the Israeli standpoint, the present Iranian deterrent (though conventional) is simply unacceptable. 

Israel’s military strategists have always insisted on total freedom of movement. This is why Israel refused a US offer many years ago to sign a defense pact with the US. Such a treaty would have limited Israel’s freedom of movement, and this was unacceptable. 

Israel’s leaders preferred to remain independent. Israel has always insisted on the “freedom” to intimidate its neighbors, whenever and howsoever it chooses. Iran’s conventional missiles now curtail that “freedom.” 

Israeli officials probably worry, for example, that Iran’s conventional missiles would limit its freedom to attack Hezbollah in Lebanon, in a future conflict. Hezbollah is closely allied with Tehran. 

I believe the present crisis has been manufactured to create the pretext for a US air campaign to take out Iran’s conventional missile sites. The US will also target Iran’s nuclear facilities, but the primary target will be Iran’s conventional missiles. 

The US will be doing Israel’s bidding. The Zionist tail will be wagging the servile US dog. Obviously, you can’t generate public support for such a bombing campaign, on Israel’s behalf. 

Hence the cover story about nukes and the alleged Iranian threat to wipe Israel off the map, all of which is untrue but very effective propaganda nonetheless. 

The problem for the US is that depriving Iran of its conventional deterrent will not be easy to accomplish. Indeed, it will be even more difficult than taking out all of Iran’s nuclear facilities. 

Iran’s conventional missiles are probably dispersed widely. If they come under attack, the purpose of the air campaign will be transparently obvious to the Iranian leadership. Faced with the prospect of losing their deterrent, the Mullahs may well decide to fire their conventional missiles. 

If they do and manage some direct hits on Israel’s nuclear-bio-and chemical weapons stockpiles, the ensuing disaster will prompt an Israeli response.  

Israel may even resort to the Samson Option, and attack Iran with nukes. Words cannot describe the horrific scale of such an outcome. Unfortunately, it is all too possible. 

Early in the war, US naval forces in the Gulf will also come under attack. No mistake, Iran has enough anti-ship cruise missiles to pose a grave threat to the US naval presence in the Gulf. Thousands of US sailors are now in harm’s way, and at risk. 

We must rally to prevent such a war. Peace activists must now marshal every asset for peace that we possess. The American people need to know the truth. This is a phony crisis. Yet the danger is very real. Now is the time to speak out with all of our strength. Tomorrow could come too late. 

Mark H. Gaffney is an environmentalist, peace activist, researcher, and the author of The First Tree of the Day; Gnostic Secrets of the Naassenes and Dimona, the Third Temple? His articles and essays have appeared in numerous journals, magazines, and newspapers. He lives in Chiloquin, Oregon.

BIPARTISAN SCREWING OF AMERICA

I got up this morning and just wanted to relax, read the paper and drink a couple cups of coffee. Then I open up my local paper and read the story below. By the time I was done the story, I thought my head was going to explode as I was cursing politicians across the land. When is this country going to wake up and realize this two party system of government is a joke? It is nothing but a game to distract the masses as both parties jointly screw the citizen taxpayers of this country.

This story proves my point. Just read the first couple sentences and you realize this country is doomed to economic collapse. The public school pension obligation in my state of PA went up 100% in the past year and will go up another 50% this year. That is mind blowing, but no one cares or even understands the implications. HOW COULD THIS HAPPEN?

Well the bastion of GOP conservatism, friend of George W, and the first generalisimo of DHS, Tom “Code Orange” Ridge signed a law in 2001 that guaranteed 50% pension increases for most legislators and 25% increases for more than 300,000 state workers and teachers. He didn’t give a fuck about the future. He was moving on to bigger and better things creating a new agency to strip Americans of their freedom and liberty. This REPUBLICAN dirtbag sentenced the taxpayers of PA to funding massive future deficits to pay union government workers’ outlandish gold plated pensions.

The next governor of PA was the ultra-liberal slimeball from Philly, Fast Eddie Rendell. You certainly couldn’t expect this tax and spend DEMOCRAT to ever cut anything. Just before he left office he signed another law that used the old tried and true method of not funding the pension obligation with cash until after 2030. Just extend and pretend. The American way.

Well, here is some news for the 300,000 government drones. You will not get those gold plated pensions. Promises do not equal cash. The money is not there. It won’t be there when you retire. The taxpayers will not be ponying up to fund your retirement. You’re as screwed as we the taxpayers are screwed.

The politicians of both parties are responsible. They are liars, thieves and traitors. It will get nasty when the clueless masses finally get a clue. The money is all gone.   

Pension costs a big worry for Pa. public schools

By MARC LEVY
Associated Press
January 14, 2012

HARRISBURG, Pa. (AP) — A spike in pension obligations could hardly come at a worse time for Pennsylvania’s public schools.

Gov. Tom Corbett, who has pledged to oppose any tax increase, will be proposing his second state budget on Feb. 7, and public school officials are worried about getting more bad news after working through the most difficult budget year in just about anyone’s memory.

The Corbett administration is projecting that its school employee pension obligations will rise by $320 million next year — or more than 50 percent — after more than doubling in this fiscal year.

Meanwhile, public schools are suffering through cuts of more than 10 percent to state aid. The cuts, approved by the Legislature and Corbett, fell most heavily on Pennsylvania’s poorest school districts, which officials argued get the most state aid.

It seems that no one in the public school community expects Corbett to propose more money for public schools next year, and he may even seek another round of cuts in light of his administration’s projection of a year-end deficit and rising costs in other parts of the budget, such as Medicaid and debt service.

Thomas Gentzel, executive director of the Pennsylvania School Boards Association, said Corbett administration officials have told him that they didn’t plan to cut public school aid again.

“But the question is, what are they counting?” he said.

If Corbett counts pension dollars as part of the state aid that helps keep the lights on and teachers in classrooms, then “there could be some significant cuts in major funding areas, although the overall funding may not be going down,” Gentzel said.

Corbett’s top budget adviser, Charles Zogby, declined to comment.

Rising pension obligations are being driven, in part, by lackluster investment performance on the money being paid into the system and a 2001 law under then-Gov. Tom Ridge that guaranteed 50 percent pension increases for most legislators and 25 percent increases for more than 300,000 state workers and teachers.

There’s not a whole lot that can be done about it.

The state constitution bars curtailing pension benefits for current or retired state employees and teachers. Meanwhile, a 14-month-old state law signed by then-Gov. Ed Rendell is designed to blunt the severity of the pension cost spike by deferring some payments past 2030.

That means that pension obligations shared by the state and school districts will jump to 12.4 percent next year, rather than 29.7 percent — a difference of about $2 billion, according to the Public School Employees’ Retirement System.

This year it is 8.7 percent, which still comes as something of a shock to school budgets after paying under 5 percent for much of the last decade and as little as 1.2 percent one year. School employees pay above 7 percent of salary, and have done so for much of the past decade.

This year, school districts are absorbing the rising cost of pensions while weathering sluggish tax collections and the loss of about $850 million in state aid for instruction and operations. To balance budgets, districts are laying off staff, freezing wages, closing buildings, renegotiating contracts, tapping reserves and using textbooks and computers longer.

In the Brookville Area School District in northwestern Pennsylvania, district officials are projecting a $400,000 increase in pension costs next year — or almost 2 percent of this year’s anticipated revenue from tax collections and government aid — to split between the district and the state. That will be compounded by increases in costs for employee salaries and health insurance premiums, out-of-district placements and cyberschool tuition, business manager Jason Barnett said.

This won’t be the last time school districts must wrestle with pension costs: The school employees’ retirement system estimates that the cost to the state and school districts will triple in four years and then stay at that level until 2035.

If there’s a silver lining, it’s that some school boards began saving for a spike in pension costs that they thought would be higher and come sooner. But because of the Legislature’s efforts to blunt the spike, some districts may have a little surplus cash to help absorb more losses in state aid next year.

“The good thing is they have that cash to weather this storm a little bit,” said Jim Buckheit, the executive director of the Pennsylvania Association of School Administrators. “At least, many have it.”

MITTENS NOT OUR CUP OF TEA

This is the most accurate report I’ve read on Tea Party Republican Primary conundrum.

Many Tea Party group like ours do not endorse candidates. We focus on providing candidates with a platform to discuss their positions. We give members an opportunity to vet the candidates and query them on how they adhere to our Constitution-based principals.

All Tea Party members are free to support the candidate of their choice.

We walk a fine line – but the acrimony among SC Tea Parties that endorsed candidates drives home the wisdom of staying above the fray.

This post is dedicated to all those who believe the Tea Party has been co-opted by the cocktail party Republicans. Not.

Tea Parties may not have gelled behind one candidate – yet. But to a tee, the majority of us abhor Mittens.

The Tea Party’s Not-So-Civil War

Tim Davis for The New York Times
A home in Greenville, the hub of conservative politics in South Carolina.
By MATT BAI
Published: January 12, 2012

I met Karen Martin, a few days before New Year’s, at a cafe in Greenville, the hub of conservative politics in South Carolina. A 54-year-old refugee from the North Shore of Massachusetts, Martin is the lead organizer of the nearby Spartanburg Tea Party. Another Tea Party leader described her to me as a grown-up, and in fact, Martin turned out to be the kind of activist — ideology notwithstanding — who makes you feel hopeful about the new age of political uprising. She recounted how she burst into tears at the moment she realized, watching the news in 2008, that children growing up today wouldn’t have the economic opportunities that she did. She talked about how the Tea Party would need to mature and become more politically sophisticated in the years ahead. “I think the movement is just too young and too emotional,” she said.

As the primary approaches, the Tea Party in South Carolina is deeply divided by the choice between pragmatism and its ideals.

Martin herself remained neutral when we met, though she said she was giving Newt Gingrich a longer look. “I’ve been forced to recognize that he might be the best weapon we have,” she said, though she was far more enthusiastic about the tomato soup on her tray. Martin was confident that her fellow Tea Partiers would, in the months after the primary, repair whatever wounds have opened, but she had all but given up hope that they might agree on a candidate before the voting starts. “I’ve talked to so many Tea Party members who said, ‘I will never again hold my nose and vote for someone,’ ” she told me. “They will vote for the pure candidate who doesn’t have accomplishments and who’s just going to get chewed up.”

The group of influential Republicans who came up with the idea for a South Carolina primary back in the late 1970s had a few goals in mind. First, they were hoping to bolster the Republican presence in the State Legislature, where they were then a perennial minority. Second, they wanted to give the emerging Republican South — with its mix of evangelicals, military families and states rights’ conservatives — an earlier and more influential voice in the nominating process.

They could hardly have met with more success. Three decades later, South Carolina is as reliably red as a state can be. And when it came to picking a nominee, South Carolina emerged as the firewall for the new party establishment — more Southern and Western than the old, northeastern elites — that came into power with Ronald Reagan. In every presidential campaign since 1980, the presumed front-runner and establishment favorite has come into South Carolina bruised and imperiled, having lost in Iowa or New Hampshire. And in every instance, that candidate has managed to win the primary and go on to win the nomination.

This year, though, that dynamic has reversed itself, and South Carolina has become the only possible firewall for the conservative base that hopes to stop the front-runner. If the discontented activists who stormed the party in 2010 can’t find a way to take out the establishment’s chosen nominee here, of all places, then they might as well slap those Romney/Rubio bumper stickers on their S.U.V.’s now and get it over with.

There are plenty of reasons to think that Romney, in South Carolina, is eminently beatable. Four years ago, he wagered several million dollars in the state only to come in fourth. This time, Romney has only sporadically visited the state — much to the frustration of a lot of local politicos who might otherwise have jumped in on his behalf — and by year’s end he had only a handful of paid staff members in South Carolina.

But fortune has been kind to Romney in this campaign. Because the field took shape so slowly last year, and because no other candidate ever had the money needed to stage a truly national campaign, the contest never really made it to South Carolina in advance of the voting. Driving around the state, I saw few yard signs and heard no radio ads. Influential Republicans in Columbia note, with a hint of regret, that the personal malice and trickery that have so inflamed past primary campaigns — like the insidious rumor back in 2000 that had John McCain fathering an illegitimate black child — have been utterly lacking before next week’s vote. It’s as if South Carolina Republicans, having largely been bypassed by this year’s candidates, simply decided at some point to sit back, wait for Iowa and New Hampshire to finish voting, then pack the entire primary campaign into 10 days of mayhem.

What all of this means is that Romney hasn’t missed much action by skipping the state up to this point, and with support for his more ideological rivals there so fragmented, he could easily win with a relatively low percentage of the vote. Four years ago, McCain stole a victory in South Carolina and cemented his hold on the nomination, winning with only 33 percent of the vote because Mike Huckabee, Fred Thompson and Romney split most of what remained. There’s a good chance Romney will do the same.

It’s generally assumed that a big part of Romney’s problem four years ago had to do with his Mormonism, which presented a hurdle for South Carolina’s sizable bloc of evangelical Christians. None of the Republicans with whom I talked, however, felt that it was much of a factor now. “If you want to debate whether Mormonism is a form of orthodox Christianity in South Carolina, then there is no debate here — it is not,” said Oran Smith, who runs Palmetto Family, a group that lobbies on behalf of Christian conservatives. “But is that important to his doing well in South Carolina? No.” In fact, Smith told me, “I think there are a lot of people who are for Romney and who are just afraid to admit it right now.”

He also acknowledged what other Republican leaders had been telling me — that on the whole, religious conservatives, who once dominated South Carolina politics through the intervention of powerful figures and institutions like Pat Robertson and Bob Jones University, are just less engaged this time and are wielding less influence over the process. Leaning back on the upholstered couch in his office, Smith, dressed in a cream turtleneck sweater and black-and-green-plaid pants, hypothesized that the lapse in political urgency might have something to do with a corresponding drop in millennial angst.

“There are a lot of folks who believe that we are really in the end times,” he told me, “and the election of Obama was a signal that the end times were here.” But after Republicans came roaring back in 2010, he said, a lot of those conservatives decided that maybe the apocalypse was still a way off, after all.

Instead, the energy this year is with the Tea Party, whose members represent an amalgam of disparate groups — Christian conservatives, libertarians, disgruntled independents. At various moments over the past year, activists here, as in the rest of the country, found themselves enthralled with a rotating cast of candidates: Bachmann, Perry, Herman Cain, Gingrich and now Santorum. (“I expected by this time for Rick Perry to just be kicking fanny in South Carolina,” Smith told me. “He was going to ride in and lasso South Carolina, and he wasn’t going to be stopped.”) By the time I visited the state, the movement was still deeply divided among several far-from-perfect candidates.

All the activists I talked to agreed that if there was any one person who might have been able to break through the clutter and channel all of this energy behind a single candidate, it was Jim DeMint. “None of them impress me at all,” Karen Martin said of the Republican candidates, “but if Jim DeMint were to walk into the room, I’d just start crying.” Having endorsed Romney four years earlier, DeMint pointedly refused to do so again, which was seen as something of a statement in itself. But the senator didn’t find any of the other candidates inspiring enough to warrant an endorsement, either. In other words, he felt pretty much the same way as his most ardent constituents. It seemed very unlikely, though not impossible, that DeMint would insert himself into the primary before the votes were cast.

Absent some direction from DeMint, Tea Party leaders in South Carolina had settled into a standoff. Everyone agreed that it would be better for the movement to coalesce behind a single candidate who could topple Romney. But everyone seemed to be waiting for the moment when all the activists working for other campaigns would realize that his or her candidate was clearly the one they should rally behind. “It’s tough,” Mike Vasovski, who is Ron Paul’s state chairman, told me. “How do you compromise yourself if you’re really committed to someone?”

Vasovski is an affable family doctor and a Tea Party activist in rural Aiken County, near the Georgia border. When I met him and his wife, Cindy, at their favorite pizza place, he told me that Paul was the first candidate for whom he ever worked, and he likened his passion — the campaign was taking up about 40 hours of his week — to the way liberals must have felt about Robert Kennedy. He was getting ready to pile a bunch of volunteers into his truck the next morning and drive the 1,000 miles to Iowa.

I asked Vasovski whether there were any other candidates he found intriguing, just as a backup.

“Huntsman is interesting,” he said. It’s hard to find a Republican candidate less like Paul than Jon Huntsman, and the puzzlement must have shown on my face. “He understands China,” Vasovski said, as if this explained the disconnect.

I wondered if any of the other, more clearly conservative candidates might interest him — maybe Gingrich or Santorum?

Vasovski thought for a moment. “No,” he said. “Not in the least.”

As in other states, the story of the Tea Party in South Carolina is largely the story of newcomers to the political process, people who harbored conservative views but had never before felt moved to become involved in politics, or in some cases even to vote. In the months that followed the initial rallies in 2009 (at the Bi-Lo Center in Greenville, about 10,000 people came out to vent), organizers of the various chapters forged close friendships through e-mail and Facebook. It’s a familiar narrative, one I heard frequently while writing about leftist blogs during the Bush years and again while spending time with the founder of the Utah Tea Party in 2010. The modern, online movement is about more than politics; it’s about building community too, which is why it’s probably not a coincidence that several of the most involved activists I met had recently moved to South Carolina from someplace else.

But South Carolina isn’t just another state with pent-up fury at the status quo. It’s also an early and crucial primary state, and so it was inevitable that the Tea Party movement there would attract the attention of Republican candidates looking to gain an organizational foothold. In the same way that big-time contributors and evangelical activists had always been highly sought as recruits by the various campaigns, so now were the Tea Party volunteers in demand. “All of the campaigns, in one form or another, except for Romney’s, have contacted me,” Karen Martin said matter-of-factly, as if we were discussing cellphone carriers offering special deals.

The most aggressive candidates throughout the fall were Bachmann and Gingrich. As far back as 2009, Gingrich’s Washington-based advocacy group, American Solutions, employed a Tea Party liaison, a 26-year-old Connecticut native named Adam Waldeck, to connect Gingrich to organizers around the country. In October, Waldeck moved down to South Carolina full time to assume control of Gingrich’s statewide operation, working out of a Greenville strip plaza. He soon put three Tea Party organizers on his payroll, a move that caused some alarm inside the movement.

Still, things remained mostly copacetic until the endorsements started. In general, there was widespread disagreement inside and among the various chapters about whether to endorse candidates. And then in December, a vocal Tea Party chapter in Myrtle Beach voted to endorse Gingrich. This might not have been so notable, except that the treasurer of the Myrtle Beach chapter was being paid by the Gingrich campaign. Several of Bachmann’s backers soon issued a statement accusing Gingrich’s Tea Party supporters of having betrayed the cause. Activists quickly chose sides. Bachmann inflamed the situation by echoing the allegations in an interview with CNN, suggesting that “money is changing hands” in South Carolina’s Tea Party.

“I took personal offense to that,” Allen Olson, wearing a khaki Tea Party hat and a gray Tea Party polo shirt, said when we met at a steakhouse on the outskirts of Columbia. Olson is a carpenter who moved here from Milwaukee about a decade ago, and served as chairman of the Columbia Tea Party before resigning last fall so he could endorse Gingrich. He recalled bitterly that he had once spoken to a high-school civics class taught by Kelly Payne, a Tea Party leader who was working for Bachmann and who had signed her name to the allegations. “There’s no way I’ll be able to work with Kelly Payne again,” he said, shaking his head in disgust.

I asked if he had lost other friends in the movement because of divisions over the campaign.

“Not really, because if they’re doing this stuff, then they were never really friends to begin with,” Olson said. “I’m losing acquaintances.” He sipped glumly from his Bud Light. “The only thing I want to do is just to cut all the bickering, realize it’s not going to be a single voting bloc and just stop burning bridges.”

Like some other Tea Party leaders I talked to, Olson posited that all of this started with Republican consultants, who were purposely infiltrating and dividing the movement. You could make a solid case that South Carolina is where the modern culture of the political consultant was born; Republican politics here have been heavily influenced by a generation of well-paid strategists and dirty tricksters, going back to Harry Dent, an architect of Nixon’s “Southern Strategy,” and Lee Atwater, who was most famous for devising the Willie Horton ad that helped sink Michael Dukakis. Tea Party activists generally blame consultants for having bled the party of its conservative convictions. “They call themselves conservatives, but they’re not — they’re Lee Atwater-type Republicans,” Olson told me at one point, when discussing the party’s establishment politicians. When I asked what it was about Atwater, who played a significant role in moving the party viciously to the right in the 1980s, that seemed insufficiently conservative, he replied, “The way I understand it, he was more interested in numbers than in principle.”

Olson and other Tea Party adherents were now focusing their ire on Wesley Donehue, a Columbia-based consultant who advised Bachmann’s ill-fated campaign and who was the first to publicly raise the issue of Gingrich paying Tea Party members. Clearly, the Tea Party leaders said, Donehue had been whispering nefariously in Bachmann’s ear and was trying to turn real conservatives against one another.

Not surprisingly, Donehue rejected this theory. “That’s stupid,” he told me when we talked a few days before Bachmann flamed out in Iowa and left the race. “I’m just calling out the Tea Parties who have strayed from what the Tea Party believes in.” Then he added, for good measure, “Newt Gingrich is the antithesis of everything the Tea Party stands for.”

In fact, I had little doubt that Donehue had set out to do exactly the thing that political consultants often try to do, which is to “drive a wedge” between an opposing candidate and his potential supporters. But as I talked to Tea Party activists involved in the imbroglio, it seemed there was something else going on, too. The Tea Party leaders were getting a sense of what it was like to be real players in the process, and some of them, however sincere their beliefs, found themselves drawn to the idea of having the very same back-room influence that they criticized in the consultants. Like an earlier generation of Ralph Reeds and Gary Bauers, they were transforming themselves from activists into advisers and even candidates, and this was bound to strain a movement whose entire identity was based on disdaining the establishment.

“You’re starting to see some of the Tea Party folks getting into that realm, becoming political consultants,” Bill Connor, a Tea Party activist who’s backing Santorum, told me when I visited his home in Orangeburg. An Army Ranger who was the senior American adviser to local forces in Afghanistan’s Helmand province, Connor looks a bit like Roger Clemens and projects a stern sobriety. “Being around politics, it’s like a drug,” he said. “People love having their name in the paper, getting attention, having people suck up to them. And that’s happening with the Tea Party.”

I got some sense of what Connor was talking about when I called Gerri McDaniel, treasurer of the Myrtle Beach Tea Party. McDaniel was singled out by Donehue; she took a paid position with Gingrich just a few weeks before her chapter voted to endorse him.

“You know Rick Perry’s saying, when he first came to South Carolina, that the Tea Party was the ‘boots on the ground’ in South Carolina?” McDaniel asked me. I told her I did not, which seemed to surprise her. “That’s my saying,” she said. “I’m the one who said, ‘The Tea Party is the boots on the ground.’ They took that from me.”

McDaniel went on to tell me that she had not taken the process of making an endorsement lightly and that every one of the candidates had taken the time to meet her. “I had quite a few candidates who wanted me on board with them,” McDaniel said. “I chose the candidate who I thought could turn this country around. It wouldn’t have mattered if I was paid or not.”

McDaniel said she was trying to ignore all the controversy. “You have to keep your head up,”she said. “Just don’t get pulled into areas that can change you as a person.”

The Capitol in Columbia was closed the week after Christmas, but I found Curtis Loftis, South Carolina’s treasurer, puttering around his office in a blue oxford shirt and khakis. The 53-year-old Loftis, heir to a local pest-control business, never ran for office before 2010, when he decided to take on the incumbent treasurer and caught the same Tea Party wave that swept Haley into the more august office across the hall. He’s now serving as Romney’s campaign chairman in the state. That both officials endorsed Romney would seem to signal some kind of coordinated decision at the highest levels of the Tea Party leadership in South Carolina, but such is the danger of thinking about the Tea Party as a single, cohesive entity. It’s well known in Columbia that Haley and Loftis are disinclined to stand in the same room together, much less coordinate their political decisions.

As we sat in leather armchairs on either side of a coffee table, Loftis explained to me that, now that he was actually serving in elective office, he had come to understand how important it was to choose a candidate who could actually do the job in question, rather than one who said all the right things about slashing government and all of that.

“Before, when I was strictly looking at it as a partisan from the outside, I could understand exactly why people are working themselves up over these other candidates,” Loftis said. “And these people who are actively engaged in such heated debates — they’re my brothers and sisters, you know? I get them, and I understand them, and I appreciate them.” But, he added, “I’m just not interested in this ongoing conversation about first principles and this heated rhetoric.”

According to Loftis, Romney was the only Republican running with real expertise. “Every time I’m with him, I bring him a financial problem from my desk and let him solve it,” Loftis said, motioning toward the accordion files stacked on his table. At another point, he guiltily described for me marching Romney through a roomful of contributors at a Loftis fund-raiser: “I felt like he was an old mule that I had ridden hard and put up wet.” I found myself imagining how stoked Mitt Romney must be to see Curtis Loftis pop up on his schedule.

Loftis told me he liked a lot of the other candidates too. “I love Rick Santorum,” he said. “I spent a good amount of time with Rick. He’s a good guy.” But neither Santorum nor any other of Romney’s rivals, he said, was going to be able to win in pivotal, more moderate states like Ohio and Florida. And Loftis seemed confident that as Primary Day approached, more and more of the Tea Party members who supported him in the treasurer’s race — maybe even those who angrily canceled fund-raisers after they heard he was going to work for Romney — would get their heads around that reality.

“If you want four more years of Barack, then go off on a flight of fancy and vote your constitutional conscience,” Loftis said. “But if you want to stop Barack Obama, Mitt Romney is your guy.”

Of course, most ardent Tea Party activists would tell you that this kind of calculation is exactly what drove them out of their homes and into parking lots and public squares in the first place. The way they see it, “big-government conservatives” and “crony capitalists” have been doing whatever it takes to get elected and re-elected for decades, while Republicans in Washington caved on the small-government principles that were supposed to guide the party. For a Romney supporter to preach pragmatism and electability only confirms for your average Tea Party member everything he or she already suspected about the candidate. You might as well try selling an Escalade to Greenpeace.

And yet, it’s precisely this aversion to political calculation that may relegate the movement to the margins, at least as far as the 2012 nomination is concerned. The pragmatic thing, after all, would have been for the various Tea Party leaders to coalesce around a single conservative candidate who might beat Romney in South Carolina. But such machinations would have been antithetical to the decentralized, uncompromising nature of the movement. Instead, activists followed their own impulses and their own agendas, the result being that they may yet find themselves flattened by a less energized but more cohesive establishment.

It’s not as if they can’t see this. In the days after the Iowa vote and just before New Hampshire, as polls showed Romney surging in South Carolina, activists in the state seemed ready to embrace Santorum in hopes of turning the primary into a referendum on Romney, rather than a multiple-choice test with several right answers. “My sense is there will be a very large coalescing of forces around Rick Santorum,” Stephen Brown, a conservative activist and Bachmann supporter, told me on the day his candidate withdrew from the race. “I think he’s going to be the guy.”

When I called Karen Martin, though, she sounded less sure. “I’ve had some e-mails from Tea Party people today saying, ‘Look, can we just put our emotions aside and get behind the candidate who has the best path to victory?’ ” she said. “But I just don’t know if that’s possible.”

I asked her which candidate had the best path to victory. There was a pause on the line.

“And that’s the question,” she finally said.

Matt Bai is the chief political correspondent for the magazine.

Editor: Joel Lovel
l

Money in America, Part Three

Previously, we saw the post-bellum era in the light of political economy: who controls the money and what kind shall it be? Those decades were but an overture to a concerted scheme to change the nature of money and government. The plot thickens …

The Indianapolis Monetary Convention

Every special interest has a Very Good Reason why some policy should be adopted that favors them. Protectionists love tariffs – high prices on Main Street be damned. Remember the northern tariff benefited the manufacturers of the region at the expense of the agricultural South.

The silver miners wanted a free market that supported their productivity even if the federal government had to pick up the tab with a premium. The Populists wanted ‘an elastic money’.and no one thought of the law of supply and demand. Everyone wants more money and few understand that extra units of currency are actually the hidden tax of inflation.

Monetary reform in the guise of the Indianapolis Monetary Convention ­of January 12, 1897 promised to find an answer.

The alleged grassroots movement of midwestern businessmen, with behind-the-scenes advice from banking interests, particularly the J.P. Morgan faction, petitioned President McKinley to appoint a presidential commission to craft legislation for a national monetary reform bill. This effort produced a bill which passed in the House but died an ignominious death in the Senate.

Snatching a potential victory from the jaws of that defeat, the secretary of the Indianapolis executive committee, George Foster Peabody,appointed the group’s own commission. Peabody, of an elite Boston family and an investment banker, had picked influential bankers, high-powered businessmen, people having railroad interests, and academics. Funding for the commission came from the banking and corporate world and included J.P. Morgan personally.

Their first major effort was a detailed monetary questionnaire sent to hundreds of chosen experts. Selected portions of the document were sent to newspapers throughout the country.

This public relations effort and other measures to form public opinion reached over 7,000 newspapers, along with support through letters from prominent businessmen and a large cadre of organized partisans. The goal of affirming the monometallism gold standard ended the influence of the Bryan and Populist believers of free silver.

Lobbying in Washington, led by Mark Hanna, McKinley’s “brain” and manager of his campaigns of 1896 and 1900, left no stone unturned. Hanna also urged a public letter-writing effort in support of a proposed reform bill.

The Monetary Commission met in Washington on September 22, 1897 and worked into December to produce a preliminary report:

REPORT OF THE MONETARY COMMISSION
TO THE EXECUTIVE COMMITTEE OF
THE INDIANAPOLIS MONETARY CONVENTION

and quoting the resolution establishing the committee

that it has become absolutely necessary that a consistent, straightforward
and deliberately-planned monetary system shall be inaugurated, the
fundamental basis of which should be: first, that the present gold standard
should be maintained; second, that steps should be taken to insure the
ultimate retirement of all classes of United States notes by a gradual and
steady process, and so as to avoid injurious contraction of the currency or
disturbance of the business interests of the country, and that until such
retirements provision should be made for a separation of the revenue and
note-issue departments of the Treasury ; third, that a banking system be
provided which should furnish credit facilities to every portion of the
country and a safe and elastic circulation, and especially with a view of
securing such a distribution of the loanable capital of the country as will
tend to equalize the rates of interest in all parts thereof.

By now, enough public relations schemes had influenced the people. A second convention in Indianapolis in early 1898 included nearly 500 delegates from 31 states – and a thorough sampling of the nation’s corporate leaders. Bankers were included and academic economists, also.

The second convention approved of the monetary commission work on January 26, 1898 and requested a final report of greater detail. This was finished and printed for distribution in June 1898. Improvements included a broader currency base – and specifically, a central bank with sole authority to issue bank notes.

McKinley’s Secretary of the Treasury, Lyman Gage agreed with this idea, and asserted that, without a central bank, the Panic of 1893 would not be the last. With Mark Hanna’s help, he sponsored bills in the House to no avail.

1900 – The Gold Standard Act

Agreeing to support the gold standard helped McKinley get the presidency and the new century was a fine time to deliver.

The groundwork had been done by the Indianapolis conventions and the independent monetary commission reports – along with that great public relations effort of Hanna and friends. The Congress met in December, 1899 and the Gold Standard Act of 1900 came to official life in March. Some of the fine print favored currency that was flexible, “especially at harvest time” and in other instances of the need for money …

Certain factions would never be satisfied and the insistence of more reform of the banking system continued. All this agitation came from the large bankers. Small town and rural banks had no problem with the existing system – mainly because their business model apparently was founded on common sense. (Maybe they were the models for “George Bailey”.)

No system exists without someone wanting to tinker and ‘improve’ it – to their benefit. Morgan’s Chase National Bank and the American Bankers Association crafted further reform proposals which became the Fowler Bill. One provision suggested other assets than government bonds for banks would be a Good Idea, expanding the fractional reserve notion even more.

Better yet, the big banks wanted to legalize branch banking for the national banks. This would be accomplished by a third factor: centralization of the banking system via a troika at the Treasury, a preliminary step to a true central bank.

The Indianapolis Monetary Convention favored this but small banks across the country and ordinary people writing their representatives in government succeeded in killing the Fowler Bill.

Enter Plan B and Senator Nelson Aldrich of Rhode Island. The Aldrich Bill of 1903 would have authorized New York national banks to issue “emergency currency” as necessary, backed by other assets, principally railroad and municipal bonds. Not for nothing was Aldrich known in the press as the “general manager of the nation” though mention of his connection to the Rockefeller interests was ignored. Even with reputation and influence, the Aldrich Bill failed.

Too, Aldrich never saw a tariff he did not like, especially when it protected American factories. Wealthy when he entered public service, he retired a multimillionaire from his investments in sugar, rubber, street railroads – and banking. Tariff induced higher prices on Main Street weren’t his problem.

The Panic of 1907

Surely, it was only happenstance that J.P.Morgan claimed the Knickerbocker Trust Company was insolvent.

The initial instability happened on Wall St on October 14, in a failed attempt to corner the stock of United Copper Company, with collateral damage to an associate at Knickerbocker a week later. By the following day, a bank run on the Knickerbocker began.

Contagion spread. Trust Company of America and Lincoln Trust Company. Twelfth Ward Bank, Empire City Savings Bank, Hamilton Bank of New York, First National Bank of Brooklyn, International Trust Company of New York, Williamsburg Trust Company of Brooklyn, Borough Bank of Brooklyn, Jenkins Trust Company of Brooklyn and the Union Trust Company of Providence.

The New York Stock Exchange was in danger of failing. The City of New York reckoned insolvency by November 1.

J.P. Morgan left a church conference in Richmond, Virginia and assembled a cabal of prominent bankers. The cabal saved the Exchange with $23 million and Morgan bought $30 million city bonds. There were peripheral issues handled by President Theodore Roosevelt, U.S. Steel and a potential anticompetition takeover of Tennessee Coal, Iron and Railroad company.

To fix such problems in 1908, the Aldrich–Vreeland Act established a National Monetary Commission, of which good ol’ Nelson was both sponsor and chairman. Thirty reports were issued leading to an Aldrich Plan, the rudiments of a central bank.

A year later, Aldrich found a tariff feature he did not like and co-authored the Payne-Aldrich Tariff Act of 1909. This struck down excessive import duties on fine European art – and ultimately benefited some of America’s museums.

That was the same year Aldrich introduced a constitutional amendment for an income tax – a policy he had strongly opposed only a decade before.

Columbia University gathered other academics and interested persons after the Panic and the last speaker was one Paul Warburg. His main points were the superiority of the European banking system over the American one (no surprise!) and the need for a government central bank to replace competition. “Small banks,” he said, constituted the real danger. Yes …

Next, Paul Warburg and the Creature, Aldrich (again), the Crimes of 1913, Liberty Bonds, the gold standard can’t pay for a war, stay tuned!


RECOVERY STORYLINE IS PURE BULLSHIT

John Hussman shoots dozens of holes in the MSM storyline of economic recovery and the avoidance of recession. If the economy is really recovering than why are Federal Reserve governors and the financial press talking about QE3 by the summer? You wouldn’t need more quantitative easing if the economy was really recovering. This is a long detailed analysis of why the storyline is pure bullshit. John is too professorial to say it in such a way, so I did it for him. These two paragraphs capture the gist of his article:

In sum, the balance of leading evidence continues to indicate a very high likelihood of an oncoming recession. We respect the various marginal improvements in the data in recent months, which do take the probability to less than 100%, but that is a far cry from suggesting that recession risk is anywhere close to being “off the table.” Recession is not a certainty, but it remains the most probable outcome at present.

Even if we allow for the possibility of improvement, my impression is that the potential outcomes for the market are very asymmetrical. Investors now expect pleasant, if gradual, economic progress, convinced by a stream of economic anecdotes in recent weeks. That hopeful expectation is already largely reflected in the overvalued, overbought, overbullish condition of the market. If the economy does in fact improve, we may observe further upside progress, but again – this is largely reflected in the advance that stocks have already enjoyed. The asymmetric risk is the potential for great disappointment if the economy does fall into a contraction – as well-correlated leading evidence continues to suggest.

Leading Indicators and the Risk of a Blindside Recession

John P. Hussman, Ph.D.

Over the past few weeks, investors used to setting their economic expectations based on a “stream of anecdotes” approach have seen their economic views evolve roughly as follows:

“After a brief ‘scare’ during the third quarter, economic reports have come in better than expectations for weeks – a sign that the economy is on a gradual but predictable growth path; Purchasing managers reports out of China and Europe have firmed, and the U.S. Purchasing Managers Indices have advanced, albeit in the low 50’s, but confirming a favorable positive trend, and indicating that the U.S. is strong enough to pull the global economy back to a growth path, or at least sidestep any downturn; New unemployment claims have trended gradually lower, and combined with a surprisingly robust December payroll gain of 200,000 jobs, provides a convincing signal that job growth is on track to improve further.”

I can understand this view in the sense that the data points are correct – economic data has come in above expectations for several weeks, the Chinese, European and U.S. PMI’s have all ticked higher in the latest reports, new unemployment claims have declined, and December payrolls grew by 200,000.

Unfortunately, in all of these cases, the inference being drawn from these data points is not supported by the data set of economic evidence that is presently available, which is instead historically associated with a much more difficult outcome. Specifically, the data set continues to imply a nearly immediate global economic downturn. Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) has noted if the U.S. gets through the second quarter of this year without falling into recession, “then, we’re wrong.” Frankly, I’ll be surprised if the U.S. gets through the first quarter without a downturn.

Three basic issues are at play. One is that analysts aren’t making distinctions between leading, coincident and lagging data. The second issue is that there is little effort to measure the predictive strength of a given economic data point (or set of data points) in explaining subsequent movements in the economy. The third is that analysts seem to be forming expectations report-by-report (what I call a “stream of anecdotes” approach) instead of taking those reports in context of the full ensemble of data that is available at each point in time.

Let’s examine the seemingly most “compelling” data point first – the fact that December payrolls grew by 200,000. Surely that sort of jobs number is inconsistent with an oncoming recession. Isn’t it? Well, examining the past 10 U.S. recessions, it turns out that payroll employment growth was positive in 8 of those 10 recessions in the very month that the recession began. These were not small numbers. The average payroll growth (scaled to the present labor force) translates to 200,000 new jobs in the month of the recession turn, and about 500,000 jobs during the preceding 3-month period. Indeed, of the 80% of these points that were positive, the average rate of payroll growth in the month of the turn was 0.20%, which presently translates to a payroll gain of 264,000 jobs.

Likewise, in 5 of the past 10 recessions, the ISM Purchasing Managers Index was greater than 50 just weeks before the recession began, and the new orders component of that index was greater than 50 in most cases, immediately prior to the recession.

Very simply, neither a strong monthly employment gain nor a slight uptick in the PMI are informative signals that recession risk has eased. Both the PMI and the level of payroll job growth are what one might call “weak learners.” It’s not that these figures aren’t useful – just that neither of them has a particularly good record by itself of signaling recessions. As it happens, a PMI below 54, coupled with year-over-year payroll growth below 1.3% is a stronger “learner” than either of the two data points individually (see the 2007 comment Expecting A Recession ). That combination – which is actually alternate Condition 4 of our Recession Warning Composite – remains in place at present, as are the other conditions in that Composite. Our more complex ensemble models also indicate strong recession risk.

The chart below provides a good picture of the behavior of non-farm payroll growth in the months before and after a recession begins, based on all U.S. postwar recessions. Notice in particular that in the month a recession starts, payroll job growth has not only been positive in 80% of cases, but has actually been higher, on average, than the three preceding months. Neither the level of job growth nor its short-term trend had any “leading” information content at all about the subsequent direction of the economy.

Notably however, the month following entry into a recession typically featured a sharp dropoff in job growth, with only 30% of those months featuring job gains, and employment losses that work out to about 150,000 jobs based on the present size of the job force. So while robust job creation is no evidence at all that a recession is not directly ahead, a significant negative print on jobs is a fairly useful confirmation of the turning point, provided that leading recession indicators are already in place.

I’ve discussed the “positive surprises” argument (see When Positive Surprises are Surprisingly Meaningless ) and the negative implications of the European ISM, despite last month’s uptick (see The Right Kind of Hope ) in other recent comments. Suffice it to say that broadly speaking, the recent “surprises” in the data reflect minor fluctuations within overall levels that remain fairly tepid, and more importantly, that remain clearly unfavorable as an ensemble.

How to spot a leading indicator

I want to begin this section with a simple statement – I do not hope for a recession. Rather, that is the expectation that the data forces on us. Frankly, much of my time in recent weeks has been devoted to analyzing data in the hope that a more compelling case could be made for avoiding a recession, since that would free us to be more constructive should market internals improve. But that’s not what the evidence indicates here, and the recent economic data hasn’t reversed that conclusion – not yet at least. I like to think I do a good job of showing you the same things that I am seeing. I don’t challenge rosy outlooks because I enjoy being defensive – I don’t. In fact, I can hardly wait for market conditions where risk is priced appropriately. It’s just that Wall Street’s simplistic cases that stocks are cheap and recession is “off the table” just don’t hold water when we examine the data.

I’ve written a lot in recent months about the distinction between leading, coincident and lagging indicators. One of the ways to distinguish these is to calculate a whole set of correlations between an indicator and what it is intended to predict, using various leads and lags. If a given indicator is correlated with whether or not the economy was in a recession say, 6 months later, we would say that the indicator has a certain amount of usefulness as a “leading” indicator. In contrast, if a given indicator is correlated with whether or not the economy was in a recession say, 6 months previously, we would say that the indicator has a certain amount of usefulness as a “lagging” (or “confirming”) indicator. The stronger the correlation at a given point, the more useful that indicator is as a leading, coincident, or lagging indicator. Importantly, it is the strength of the correlation, not simply where the correlation curve peaks, that defines the usefulness of the indicator. [Geek’s note – it’s more elegant to do this work in the frequency domain, but correlations work nicely for the purposes here].

The chart below is a little bit busy, but presents the correlation profile of a variety of widely followed indicators, as well as an ensemble of recession indicators we track (see Measuring the Probability of Recession in the September 5 comment). In the chart below, month zero represents the start of a recession.

Notice that about 9 months prior to a recession, the Conference Board Leading Economic Indicators, the ECRI Weekly Leading Index and the 6-month change in the S&P 500 often show some weak leading characteristics, but the correlation is too small to make inferences very reliable. Advancing to about 6 months prior to a recession, a few more indicators begin to show a weak correlation with the oncoming recession, including our own ensembles, as well as the average of Fed surveys (such as Philly Fed and the Empire Manufacturing survey) and the ISM Purchasing Managers Index. Still, at that point, the correlations are typically fairly weak. Though none of these indicators are particularly good at anticipating a recession even 6 months out, the Conference Board Index of Leading Economic Indicators (LEI) has historically had a slight edge looking two quarters ahead (the LEI makes a very interesting study on its own here, so more on that below).

Once a recession is within three months away, the strongest leading indicators are our own ensemble and the ECRI Weekly Leading Index (though I expect that an ensemble of ECRI’s other indicators, such as the long-leading and coincident measures would, in combination, give an even stronger overall signal than the WLI alone). The 6-month change in the S&P 500 approaches its strongest correlation with an oncoming recession with only a 1-3 month lead, suggesting that investors wishing to anticipate recession-linked stock market weakness would want to focus on indicators have even better leading characteristics than stocks themselves.

Once a recession hits, our recession ensemble, the ECRI Weekly Leading Index, and the average of multiple Fed surveys have the strongest likelihood of confirming the downturn in real-time. Immediately following entry into the recession, as noted earlier, payroll growth tends to turn negative. Though recessions tend to be preceded by sub-par employment growth over the preceding 3-12 month period, the 3-month growth rate of payrolls actually acts as a bit of a lagging indicator, reaching its highest correlation with a recession – not surprisingly – about 3 months after the recession starts.

New claims for unemployment have very slight short-leading usefulness, but new claims, the unemployment rate, and the slope of the yield curve (flattening) actually have much better lagging characteristics, so these should be used primarily to confirm an ongoing recession (particularly if the NBER hasn’t made an official determination yet), rather than to anticipate a downturn. The yield curve generally flattens significantly coming into a recession, but the change in the yield curve (not plotted) is also most useful as a lagging indicator. Consumer confidence has mixed characteristics, with weak leading characteristics and somewhat greater usefulness as a lagging indicator, but in any case is too much of a “weak learner” to be used in isolation.

At present, our own recession ensembles, as well as ECRI’s official views, remain firmly entrenched in the recession camp. This feels more than a little bit disconcerting, as the entire investment world appears to have the opposite view. My problem is that the data don’t support that rosy “U.S. leads the world off the recession track” scenario. Leading data leads. Lagging data lags. Weak data is weak data. To anticipate a sustained economic upturn here would require us to place greater weight on weak, lagging data than we presently place on strong leading data. It’s really that simple. If the evidence turns, we will shift our view – and frankly with some amount of relief. At present, though, we continue to expect a concerted economic downturn.

The LEI and monetary bias

One of the interesting aspects of present conditions is the apparent disconnect between the Conference Board’s index of leading economic indicators and the ensemble of other economic indicators that we follow (including ECRI’s indices). The LEI is a composite of 10 measures, including the average workweek, jobless claims, new consumer orders, capital equipment orders, vendor deliveries, building permits, consumer expectations, stock prices, the yield curve, and real M2 money supply.

What’s problematic here is that close to half of the weight in the index goes to the two monetary components – the yield curve, and real M2. I suspect that this is a legacy of inflationary business cycles where monetary tightening in response to inflation was the typical event preceding recessions, but it adds noise in the present environment, where the primary economic risks are related to leverage and credit strains. Remember that at present, monetary policy is way out on the “liquidity preference” curve, to an extent that is historically unprecedented (see Monetary Policy in 3D ). Normally, there is a general, if weak, linear relationship between monetary variables, interest rates and economic activity. But given the current scope of monetary policy, M2 velocity has collapsed (and moves as a perfect inverse of M2 itself), and interest rates are at the zero bound, so these variables are essentially detached from economic activity. So you’ve got two highly weighted variables in the index that have gone almost perfectly horizontal with respect to their effect on the economy. The crisis in Europe has triggered a flight of time deposits from European banks to U.S. banks, which shows up as a further boost to M2, which has driven much of the advance in the LEI.

Notably, the Conference Board announced last week that they will replace real M2 with a new “Leading Credit Index” component, among other changes, which will be reflected in the January 2012 release.

That change makes sense. If you’re going to put nearly half of your weight on monetary variables, it’s really only sensible if about half of your predictive power resides in those two variables, but in the case of the LEI, that’s not true at all. Below, I’ve weighted the present components of the LEI in proportion to their correlation with subsequent recessions (using a 6-month smoothed growth rate for the non-stationary ones such as stock prices, capital orders and so forth, and standardizing the values of each to have zero mean and unit variance prior to weighting). The chart also presents the simple average of the non-monetary components of the LEI, as well as the smoothed growth rate of the actual published index, similarly scaled.

Notice that unlike the typical behavior of the LEI in prior recessions, the LEI did not spike down to nearly the same extent as the nonmonetary components during the downturn that began in 2007, thanks to unprecedented monetary policy actions. Likewise, the LEI has held up much better in recent months than either its non-monetary components, or its accuracy-weighted components, also as a result of monetary policy that is outside of historical norms and stretched far along the zero bound.

A troublesome issue here is that once the non-monetary components of the LEI have turned negative to the extent we observe presently (again, on a 6-month smoothed basis), we find only one instance (a brief signal in the late-1960s) that was not associated with an actual recession. Below, the red bands denote official NBER-dated recessions. Downturns in the non-monetary components of the LEI are highlighted in blue.

Our own recession ensembles remained unfavorable last week, and the ECRI Weekly Leading Index deteriorated to -8.2, from -7.6 the previous week. The 3 month growth rate of non-farm payroll employment – despite last month’s employment gain – is among the lowest 13% of all historical observations. The 6-month change in the S&P 500 is among the lowest 20% of historical observations. The current value of ECRI’s Weekly Leading Index is among the lowest 9% of all historical observations. We don’t disregard the marginal improvement in various economic measures in recent weeks. It’s just that those marginal improvements are either too small or too statistically uninformative to be helpful in shifting the evidence.

In sum, the balance of leading evidence continues to indicate a very high likelihood of an oncoming recession. We respect the various marginal improvements in the data in recent months, which do take the probability to less than 100%, but that is a far cry from suggesting that recession risk is anywhere close to being “off the table.” Recession is not a certainty, but it remains the most probable outcome at present.

All of that said, significant new strength in stocks – particularly if broadly based – further contraction in new unemployment claims, well-defined (not just marginal) improvement in a broad sampling of Fed economic surveys, and a reversal in industrial commodity prices, among other factors, would provide a good basis to ease recession concerns. If that was coupled with confirmation by a reversal in ECRI’s measures, the evidence that weighs down our economic views would become dramatically lighter. But that’s what we need – evidence. Well correlated, strong, leading evidence.

Even if we allow for the possibility of improvement, my impression is that the potential outcomes for the market are very asymmetrical. Investors now expect pleasant, if gradual, economic progress, convinced by a stream of economic anecdotes in recent weeks. That hopeful expectation is already largely reflected in the overvalued, overbought, overbullish condition of the market. If the economy does in fact improve, we may observe further upside progress, but again – this is largely reflected in the advance that stocks have already enjoyed. The asymmetric risk is the potential for great disappointment if the economy does fall into a contraction – as well-correlated leading evidence continues to suggest.

Market Climate

As of last week, the Market Climate for stocks remains “hard negative” – characterized by conditions that cluster among other historical instances that usually resulted in “whipsaw” declines on the tail of overbought rallies. About 30% of these instances did resolve into further gains, and we aren’t frozen to a defensive stance. As noted above, there are certainly developments that would mute our economic concerns and even allow for a modestly constructive position despite what we continue to view as an overvalued market from a longer-term perspective. Presently, we would need at minimum a further improvement in market internals – primarily breadth and leadership. The situation would also be helped by clear strength in Fed surveys and a further retreat in new claims. Without this sort of broad-based improvement, the modest “positive surprises” we’re seeing are still too tightly centered in a range that really doesn’t change the picture at all. Strategic Growth and Strategic International remain well-hedged. Strategic Total Return continues to carry a duration of about 3 years in Treasuries, and we used the spike advance early last week to clip a few more profits in our precious metals shares, taking our exposure to a still-constructive but comfortable 12% of assets.

As a final note, given our pointed economic and market concerns, I’ve included a chart below showing the profile of past major market declines, mostly as a tool to display the significant variability of outcomes. The chart shows major U.S. market declines as a “stochastic” – the bull market high being 1.0, the bear market low being zero. Time is measured in days, with the bull market peak set at 100 days in each (denoted by the red arrow).

The main regularity you’ll notice is that the first 6-8 weeks or so off the top are uniformly bad, typically inflicting about one-fifth to one-third of the eventual peak-to-trough loss. That initial decline is then typically followed by a rebound of highly variable duration, lasting anywhere between 2-5 months and usually recovering half to two-thirds of the initial decline (denoted by the green arrow). As a result, by 3-6 months into a major market decline, the market is often not far from its original peak (a tendency I noted last May in Extreme Conditions and Typical Outcomes ). Unfortunately, that is not a rule that one would want to rely on, because when it has failed, it has often failed spectacularly.

Each decline has its own character, so there is no predictable point at which breakdowns occur. Notice that the bottom of the decline is also highly variable, so outside of quoting a broad range from 3 months to 3 years, with the average at a bit less than 18 months, major market declines don’t have a predictable duration. The upshot is that major declines are not diagonal and do not follow well-behaved patterns. It’s exactly that variability that makes it dangerous to “finesse” them excessively, and advisable to stick with the broad evidence, recognizing that there will be a lot of unpredictable short-term volatility. For our part, we remain defensive here.

NEW from Bill Hester: Five Global Risks to Monitor in 2012

2012 – THE YEAR OF LIVING DANGEROUSLY

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability –  problem areas where America will have neglected, denied, or delayed needed action.” – Strauss & Howe – The Fourth Turning – 1997

 

In December 2010 I wrote an article called Will 2012 Be as Critical as 1860?, that pondered what might happen with the 2012 presidential election and the possible scenarios that might play out based on that election. Well, 2012 has arrived and every blogger and mainstream media pundit is making their predictions for 2012. The benefit of delaying my predictions until the first week of 2012 is that I’ve been able to read the wise ponderings of Mike Shedlock, Jesse, Karl Denninger, and some other brilliant truth seeking analysts regarding what might happen during 2012. The passage above from Strauss & Howe was written fifteen years ago and captured the essence of what has happened since 2007 and what will drive all the events over the next decade. Predicting specific events is a futile human endeavor. The world is so complex and individual human beings so impulsive and driven by emotion, that the possible number of particular outcomes is almost infinite.

But, as Strauss and Howe point out, the core elements that created this Crisis and the reaction of generational cohorts to the implications of debt, civic decay and global disorder will drive all the events that will occur in 2012 and for as far as the eye can see. Linear thinkers in mega-corporations, mainstream media and Washington D.C. focus on retaining the status quo, their power and their wealth. They believe an economic recovery can be manufactured through monetary manipulation and Keynesian borrowing and spending. They are blind to the fact that history is cyclical, not linear. In order to have an understanding of what could happen in the coming year, it is essential to keep the big picture in focus. As we enter the fifth year of this twenty year Crisis period, there is absolutely no chance that 2012 will see an improvement in our economy, political atmosphere or world situation. Fourth Turnings never de-intensify. They exhaust themselves after years of chaos, conflict and turmoil. I can guarantee you that 2012 will see increased mayhem, riots, violent protests, recessions, bear markets, and a presidential election that will confound the establishment. All the episodes which will occur in 2012 will have at their core one of the three elements described by Strauss & Howe in 1997: Debt, Civic Decay, or Global Disorder.

Debt – On the Road to Serfdom

The world is awash in debt. Everyone is focused on the PIIGS with their debt to GDP ratios exceeding the Rogoff & Reinhart’s 90% point of no return. But, the supposedly fiscally responsible countries like Germany, France, U.K., and the U.S. have already breached the 90% level. Japan is off the charts, with debt exceeding 200% of GDP. These figures are just for the official government debt. If countries were required to report their debt like a corporation, their unfunded entitlement promises to future generations are four to six times more than their official government debt.

Any critical thinking person can look at the chart above and realize that creating more debt out of thin air to solve a debt problem is foolish, dangerous, and self serving to only bankers and politicians. The debt crisis took decades of terrible choices and bogus promises to produce. The world is now in the midst of a debt driven catastrophe. At best, the excessive levels of sovereign debt will slow economic growth to zero or below in 2012. At worst, interest rates will soar as counties attempt to rollover their debt and rolling defaults across Europe will plunge the continent into a depression. The largest banks in Europe are leveraged 40 to 1, therefore a 3% reduction in their capital will cause bankruptcy. Once you pass 90% debt to GDP, your fate is sealed.

“Those who remain unconvinced that rising debt levels pose a risk to growth should ask themselves why, historically, levels of debt of more than 90 percent of GDP are relatively rare and those exceeding 120 percent are extremely rare. Is it because generations of politicians failed to realize that they could have kept spending without risk? Or, more likely, is it because at some point, even advanced economies hit a ceiling where the pressure of rising borrowing costs forces policy makers to increase tax rates and cut government spending, sometimes precipitously, and sometimes in conjunction with inflation and financial repression (which is also a tax)?” – Rogoff & Reinhart

The ECB doubling their balance sheet and funneling trillions to European banks will not solve anything. The truth that no one wants to acknowledge is the standard of living for every person in Europe, the United States and Japan will decline. The choice is whether the decline happens rapidly by accepting debt default and restructuring or methodically through central bank created inflation that devours the wealth of the middle class. Debt default would result in rich bankers losing vast sums of wealth and politicians accepting the consequences of their phony promises. Bankers and politicians will choose inflation. They believe they can control the levers of inflation, but they have proven to be incompetent, hubristic, and myopic. The European Union will not survive 2012 in its current form. Countries are already preparing for the dissolution. Politicians and bankers will lie and print until the day they pull the plug on the doomed Euro experiment.

The false storyline of debt being paid down in the United States continues to be propagated by the mainstream press and decried by Paul Krugman. The age of austerity storyline gets full play on a daily basis. Total credit market debt in 2000 was $27 trillion. It skyrocket to $42 trillion by 2005 as George Bush and Alan Greenspan encouraged delusional Americans to defeat terrorism by leasing SUVs and live the American dream by putting zero down on a $600,000 McMansion, financing it with a negative amortization no doc loan. Paul Krugman got his wish as a housing bubble replaced the dotcom bubble. Debt accumulation went into hyper-speed in 2006 and 2007 as Wall Street sharks conducted a fraudulent feeding frenzy by peddling their derivatives of mass destruction around the globe. By the end of 2007, total credit market debt reached $51 trillion.

In a world inhabited by sincere sane leaders, willing to level with the citizens and disposed to allow financial institutions that took world crushing risks to fail through an orderly bankruptcy process, debt would have been written off and a sharp short contraction would have occurred. The stockholders, bondholders and executives of the Wall Street banks would have taken the losses they deserved. Instead Wall Street used their undue influence, wealth and power to force their politician puppets to funnel $5 trillion to the bankers that created the crisis while dumping the debt on taxpayers and unborn generations. The Wall Street controlled Federal Reserve provided risk free funding and took toxic mortgage assets off their balance sheets. The result is total credit market debt higher today than it was at the peak of the financial crisis in March 2009.

 

Our leaders have done the exact opposite of what needed to be done to address this debt crisis. The country is adding $3.7 billion per day to the National Debt. With the debt at $15.2 trillion, we have now surpassed the 100% to GDP mark. The National Debt will be $16.5 trillion when the next president takes office in January 2013. Ben Bernanke has been able to keep short term interest rates near zero and the non-existent U.S. economic growth and European disaster has resulted in keeping long-term rates near record lows. Despite these historic low rates, interest on the National Debt totaled $454 billion in 2011, an all-time high. The effective interest rate was approximately 3%. If rates stay at current levels, interest will be between $400 and $500 billion in 2012. Each 1% increase in rates would cost American taxpayers an additional $150 billion. A rapid increase in rates to the 7% level would ratchet interest expense above $1 trillion and destroy the last remaining vestiges of Bernanke’s credibility. It can’t possibly happen in 2012. Right? The world has total confidence in pieces of paper being produced at a rate of $3.7 billion per day. Confidence in Ben Bernanke, Barack Obama and the U.S. Congress is all that stands between continued stability and complete chaos. What could go wrong?

Debt related issues that will likely rear their head in 2012 are as follows:

  • A debt saturated society cannot grow. As debt servicing grows by the day, the economy losses steam. The excessive and increasing debt levels will lead to a renewed recession in 2012 as clearly detailed by ECRI, John Hussman and Hoisington Investment Management.

“Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street.” – ECRI 

At present, we observe agreement across a broad ensemble of models, even restricting data to indicators available since 1950 (broader data since 1970 imply virtual certainty of recession). The uniformity of recessionary evidence we observe today has never been seen except during or just prior to other historical recessions.-  John Hussman 

Negative economic growth will probably be registered in the U.S. during the fourth quarter of 2011, and in subsequent quarters in 2012. Though partially caused by monetary and fiscal actions and excessive indebtedness, this contraction has been further aggravated by three current cyclical developments: a) declining productivity, b) elevated inventory investment, and c) contracting real wage income. In summary, the case for an impending recession rests not only on cyclical precursors evident in productivity, real wages, and inventory investment, but also on the disfunctionality of monetary and fiscal policy. – Van Hoisington 

  • The onrushing recession will send housing down for the count. With 2.2 million homes already in the foreclosure process and another 13 million homes with negative or near negative equity, the recession will push more people over the edge. As foreclosures rise a self reinforcing loop will develop. Home prices will fall as banks dump houses at lower prices, pushing millions more into a negative equity position. Home prices will fall another 5% to 10% in 2012, with a couple years to go before bottoming.
  • The recession will result in companies laying off more workers. It won’t be as dramatic as 2008-2009 because companies have already shed 6 million jobs. The working age population will increase by 1.7 million, the number of people employed will go up by 1 million, but the official unemployment rate will drop to 7% as the BLS reveals that 10 million people decided to relax and leave the workforce. Surely I jest. The government manipulated unemployment rate will rise above 9%, while the real rate will surpass 25%.
  • The American people rationally increased their savings rate to 6.2% in the 2nd Quarter of 2009. When you are over-indebted and the country heads into recession, spending less and saving more is a sane option. Consumer expenditures accounted for 69% of GDP in 2007, prior to the economic collapse. The “recovery” of 2010-2011 has been driven by Ben’s zero interest rate policy, the resumption of easy credit peddling by the Wall Street banks, and consumers convinced that going further into hock to attain the American dream is rational. Consumer spending as a percentage of GDP has actually risen to 71% and the savings rate has plunged to 3.6%. The 20% drop in gas prices since April bottomed in December. This decline temporarily boosted consumer spending, but prices are on the rise again. With the State and local governments reducing spending, do the Wall Street Ivy League economists really believe consumers will increase their consumption to 73% of GDP and reduce their savings rate to 1%? If you open your local newspaper you will see the master plan. Car dealers are offering 0% financing with nothing down for 60 months. The GMAC/Ditech/Ally Bank zombie lives as subprime auto loans are back. The “strong” auto sales are a debt financed illusion. Ashley Furniture is offering 0% financing for 50 months with no payments through Wells Fargo Bank. When the Federal Reserve provides the Wall Street banks with 0% funding, banks are willing to take big risks knowing that Uncle Ben and the naive American taxpayer will be there to bail them out when it blows up again.

 

  • With recession a certainty as fiscal stimulus wears off, home prices fall, employment stagnates, and consumer spending grinds to a halt, what will happen to the stock market? The Wall Street shills paraded on CNBC and interviewed by the multi-millionaire talking head twits assure you that stocks are undervalued and the market will surely be up 10% to 15% by 2013. It’s a mortal lock, just as it has been for the last twelve years, with the S&P 500 at the same level as January 1999. The fact is the stock market drops 30% on average during a recession. The talking heads declare that corporate profits are at record levels and will continue higher. Not bloody likely. Corporate profit margins are at an all-time peak about 50% above their historical norms. Profits always revert to their mean. These profits are not sustainable as they were generated by firing millions of workers, zero interest rates for banks, fraudulent accounting by the banks, and trillions in handouts from the middle class taxpayers to corporate America.

 

In a true free market excess profits will draw more competitors and profits will fall due to competition. When corporate profits exceed the mean by such a large amount, you can conclude that crony capitalism has replaced the free market. Government bureaucrats have been picking the winners (Wall Street, War Industry, Big Media, Big Healthcare) and the American people are the losers. Corporate oligarchs prefer no competition so they can reap obscene risk free profits and reward themselves with king-like compensation. Mean reversion will eventually be a bitch. Real S&P earnings have reached the 2007 historic peak. To believe they will soar higher as we enter a recession takes the same kind of faith shown by Americans buying a $600,000 McMansion in Stockton with no money down in 2005. The result will be the same. Do you ever wonder how corporations are doing so well while the average American sinks further into debt, despair and poverty?

The brilliant John Hussman captures the gist of an investor’s dilemma in his latest article:

“With 10-year Treasury yields below 2%, 30-year yields below 3%, corporate bond yields below 4%, and S&P 500 projected 10-year total returns below 5%, we presently have one of the worst menus of prospective return that long-term investors have ever faced. The outcome of this situation will not be surprisingly pleasant for any sustained period of time, but promises to be difficult, volatile, and unrewarding. The proper response is to accept risk in proportion to the compensation available for taking that risk. Presently, that compensation is very thin. This will change, and much better opportunities to accept risk will emerge. The key is for investors to avoid the allure of excessive short-term speculation in a market that promises – bends to its knees, stares straight into investors’ eyes, and promises – to treat them terribly over the long-term.”

Ben Bernanke, Wall Street shysters and Barack Obama want you to be drawn in by the allure of short-term gains based on hopes of QE3. The stock market will be volatile in 2012 with stocks falling 20% when it becomes evident the country is going back into recession. Ben will try to ride to the rescue with QE3 as he buys up more toxic mortgage debt. Wall Street will do their usual touchdown dance celebration, but the bloom will fall off this rose fast, as quantitative easing has proven to be a failure in stimulating economic growth.Gridlock in Washington D.C., chaotic national conventions, and the implosion of Europe will contribute to the market finishing down by at least 15% for the year.

  • Even though the U.S. economy has been stagnant for the past year and Europe is back in recession, oil is trading at $102 a barrel (Brent – $113 a barrel). This is a classic Catch-22 for Bernanke and his central banker buddies. The higher the price goes, the more recessionary economies become as energy and food costs rise. This would normally decrease demand and lower prices, but the massive money printing by the Fed and ECB artificially inflates the price of oil. The Canadian oil sands are only viable at $90 a barrel. Saudi Arabia needs $90 oil to balance their budgets. The onset of peak cheap oil, lack of Libyan supply, possible war with Iran, and increased demand from the developing world (China, India) will put a floor of $80 to $90 a barrel under oil. A shooting war with Iran would result in $150 a barrel of oil overnight. The trend in gasoline prices over the last three years is not your friend:

January 2009           $1.65

January 2010           $2.57

January 2011           $3.04

January 2012           $3.29

Gas prices are rising during the lowest usage time of the year. The average price of oil will exceed $100 during 2012 resulting in the highest average gas price in history for American drivers. These high prices, along with various weather related issues will keep food prices elevated, with 5% or higher increases likely. This should spur a few more peasant revolutions around the globe.

  • The question of whether gold can keep its streak of 11 consecutive positive return years in a row intact is an easy one. Will Obama and Congress spend $1.3 trillion more than they bring in during 2012? Will Ben Bernanke and other central bankers around the globe keep printing pieces of paper and calling it currency? If the answer to these two questions is yes, then gold will finish the year higher. As always, it will be volatile and manipulated by the powers that be. A drop below $1,500 in the beginning of the year is possible, but when Ben announces QE3, it will be off to the races. I expect gold to reach $1,900 by year end. Silver will be more volatile, but will likely reach $40 by year end.

Civic Decay – Occupying, Plundering, Capturing

Civic decay revealed itself dramatically in 2011 as millions of young people across the country occupied parks and town squares in a fruitless effort to correctly point out how the ruthless oligarchs inhabiting Wall Street bank executive suites, Mega-corporation boardrooms, the Marriner S. Eccles Federal Reserve Board Building, and the hallways of Congress had pillaged the wealth of the middle class through inflation, taxation, fraud and outright thievery. The majority of over-medicated, lethargic, uninterested, ignorant Americans yawned at this selfless display of courage and civil disobedience as they chose to occupy lines for hours to get the latest iPad or $3 waffle-maker at Wal-Mart. Delusional, non-thinking dolts across the land watched on their 60 inch HDTVs as young protestors got clubbed, beaten, tear gassed, tasered, maced, and brutalized by paid mercenaries for the ruling oligarchy. They treated the horrific scenes of brutality as if it was just one of their 30 favorite reality TV shows like I Didn’t Know I Was Pregnant or Toddlers & Tiaras. They thought this was a new show called Mace A Millenial.

Despite controlling the media, the money and the levers of power in Washington D.C., those in power cannot spin the reality of a middle class being systematically wiped out by the policies put in place by the corporate fascist oligarchs running this country. As Wall Street profits and bonuses flow like honey, the lines at food banks look like the lines at Best Buy on Black Friday and homeless shelters overflow with former members of the middle class. The ministry of propaganda (BLS, BEA) reports improving economic conditions while the number of Americans in the food stamp program has jumped from 38 million when the recession officially ended in late 2009 to 46.3 million today. Having 15% of the population surviving on food stamps is surely a sign of economic recovery.

 

The mainstream media methodically spews misinformation and happy talk about increased consumer spending and retail sales above expectations as if Americans borrowing to buy another laptop, TV, Kindle, or Rolex proves we have a real recovery. Meanwhile, old line mall based retailers like Sears and J.C. Penney die a slow agonizing death as they stagger into the sunset like Montgomery Ward, Circuit City and thousands before them. There is a disconnect in society as high end retailers like Saks, Tiffany, and Neiman Marcus report record sales as the 1% feel confident and flush with cash. Meanwhile, real median income is lower than it was in 2001. It seems tax cuts didn’t lift all boats, just the yachts. The average Joe pays twice as much for a gallon of gas and 50% more for food since 2001 while taking home less pay. The ruling elite can’t figure out why the peasants are getting restless.

 

The wealthy elite have been out in force over the last few months broadcasting their storyline about 50% of Americans not paying taxes. They and their media mouthpieces pound this message home unceasingly. They portray themselves as job creators, when the facts prove they have destroyed jobs here in America. They successfully painted the Occupy Movement as a bunch of lazy good for nothing socialists who needed to get a job. Then they unleashed the full fury of their brute strength upon these citizens practicing their right to assembly and free speech by crushing them with their hired police thugs, while the ignorant by choice public looked away. Controlling the message is essential for the oligarchs to retain their wealth, power and control. Aldous Huxley’s understanding of the American people is as true today as it was eighty years ago:

 “Most ignorance is vincible ignorance. We don’t know because we don’t want to know.”

It is time to not choose ignorance. The storyline peddled to the masses is false. The ruling oligarchy will do everything in their power to obscure and manipulate the truth. It is true that 50% of American workers pay no Federal income tax. It is also true that 50% of American workers make less than $25,000 per year. If these workers are employed in Philadelphia they pay 4% city income tax, 3% state income tax, 7.65% Social Security and Medicare tax, 6% sales tax on everything they buy, 15% state and federal taxes on gasoline, and they pay city and county property taxes whether they own or rent. They also pay the various sewer, trash, and myriad of other fees inflicted on them by government drones. Maybe someone should inform multi-billionaire hedge fund guru Steve Schwarzman that lower income families actually have most of their skin in the game. They can’t hire hoards of high powered lawyers and tax accountants to minimize their tax burden while contributing millions to politicians who write the laws to protect the oligarchs. I wonder why hedge fund managers don’t pay taxes on their profits.

Asked if he were willing to pay more taxes in a Nov. 30 interview with Bloomberg Television, Blackstone Group LP CEO Stephen Schwarzman spoke about lower-income U.S. families who pay no income tax. “You have to have skin in the game,” said Schwarzman, 64. “I’m not saying how much people should do. But we should all be part of the system.”

We are all part of the system, and the system is rigged. The middle class is systematically being obliterated as high paying jobs were shipped to low paying countries by mega-corporations. Their huge cost advantages have driven small domestic “job creating” firms out of business. The middle class has the majority of their wealth tied up in their homes, and they continue to see that wealth decline on a daily basis. The culprits in the housing collapse – the major Wall Street banks – have seen their profits skyrocket as they held the middle class hostage to a multi-trillion dollar banker bailout. Americans don’t hate the wealthy. Wealthy men like Steve Jobs and Bill Gates have been admired and emulated by Americans because they exhibited the true admirable traits of entrepreneurship, creativity, hard work, taking chances, and creating a better society. Wall Street shysters create nothing. They exhibit the worst traits of greed, avarice, and non-existent empathy for their fellow man.

 Gains and Losses in 2007-2009, Average CEO Pay vs. Average Worker Pay

Matt Taibbi summed up how the system is rigged rather succinctly in a recent article:

“And in the bigger picture, of course, you need the state and the private sector both to be functioning well enough to provide you with regular work, and a safe place to raise your children, and clean water and clean air. The entire ethos of modern Wall Street, on the other hand, is complete indifference to all of these matters. The very rich on today’s Wall Street are now so rich that they buy their own social infrastructure. They hire private security, they live on gated mansions on islands and other tax havens, and most notably, they buy their own justice and their own government.

But citizens of the stateless archipelago where people like Schwarzman live spend millions a year lobbying and donating to political campaigns so that they can jump the line. They don’t need to make sure the government is fulfilling its customer-service obligations, because they buy special access to the government, and get the special service and the metaphorical comped bottle of VIP-room Cristal afforded to select customers.”

The wealth inequality in this country did not occur because half the population is lazy and stupid. It didn’t happen because the 1% is intellectually superior, more highly motivated, or more entrepreneurial than the 99%. If any of these statements were true, the inequality would be consistent across decades and centuries. But, as the chart below details, the phenomenon has happened since 1979. Interestingly, it also occurred just prior to the 1929 stock market crash and Great Depression.  

  

The chart reflects the results of three decades of crony capitalism based upon phony tax canards; delusions of a debt based American dream peddled by bankers, politicians and the media; and complete capture of our economic and political system by a self selected wealthy few. Jesse captures the essence of how it happened in a recent article:

“Anyone who has seriously studied applied macroeconomics knows that crony capitalists hate free markets, with all the fairness and transparency that they imply. Competition is a serious drag on enormous profits and introduces significant uncertainty and risk. As soon as the game is underway, successful capitalists are constantly pushing the envelope of the rules, seeking to establish rents, monopolies, unfair advantages, and debt traps to snare the bulk of the players and stifle the profit-eroding tendency of real competition.

This is the basis of all aristocracies, which are merely the institutionalization of privilege.  Once they make it they bloody well want to change the rules to hang on to it, and take the risk out of their equation. They foster a culture of two sets of books, two sets of rules, and two systems of justice. They are given over in their personal and professional lives to the benefits of hypocrisy and cheating, with little conscience to restrain them. There is a predatory class that is nationless, without allegiance to anything, any principle, but their own greed and lust for power.”

What has happened over the last three decades is not particular to the United States. It is a flaw in all humanity. The majority of humans are inherently honest and if raised by good parents will do the right thing most of the time. When society allows psychopaths and evil men to attain high status in government and business through chosen ignorance, lack of vigilance, casting aside the rule of law, or admiration for wealth attained by any means, then wealth disparity reaches extreme levels. The fatal defect of the Wall Street psychopaths is their hubris. Too much is never enough. They are like sharks, always needing more to satiate their hunger. They will eventually go too far and collapse their crony capitalist system resulting in revolution and ultimately their demise. We are very close to the tipping point and 2012 is likely to reveal deep cracks in the foundation of our warped dysfunctional corporate fascist economic system. These are a few things I expect to happen in 2012:

  • The Occupy Movement will become more extreme with more disruptions of the economic system with less warning so the authorities don’t have time to prepare. I expect more cyber hacking into Wall Street, government, and media computer networks, causing disarray and uncertainty regarding financial information. I expect the Democratic and Republican presidential conventions to be overrun by protestors. The authorities will respond with excessive force, resulting in further violent protests in other cities.
  • Two simultaneous trends will eventually result in a domestic conflict. The Federal government grows ever more panicked by the knowledge that its ponzi scheme economy is going to collapse. This is why passage of the NDAA and the future passage of SOPA are so important to them. Imprisonment of citizens without charge and shutting down the only remaining means of truth – the Internet – are essential to retaining their power and control over the masses. At the same time, gun sales are at record levels. Critical thinking Americans can see the writing on the wall and no longer trust corrupt politicians of either party. Arming yourself and buying physical gold and silver is a prudent act in today’s world. If the financial system implodes in 2012 and an MF Global like stealing of customer funds from IRAs, 401ks, and bank accounts happens, all hell could break loose.
  • The ruling elite hand selected puppets for the 2012 presidential election are Obama and Romney. They are virtually interchangeable and both are acceptable to the Wall Street oligarchs. The monkey wrench in the gears is Ron Paul. His message of freedom, liberty, non-interventionism, living within our means, self reliance, and a sound currency are poison to the establishment. His message appeals to young people and a growing number of realists who understand we are already bankrupt. He will run as a 3rd Party candidate and focus a light on the crony capitalism that passes for free markets in America today. He will be vilified by both parties and their media mouthpieces, but if he gains traction I fear an unfortunate accident will befall him. Either way, he will have a dramatic impact on the debate and the outcome of the 2012 election.

The question for 2012 is whether the gaping multitude will come to their senses and respond accordingly against the ruling oligarchy.

“Modern fanaticism thrives in proportion to the quantity of contradictions and nonsense it pours down the throats of the gaping multitude, and the jargon and mysticism it offers to their wonder and credulity.” – William Hazlitt

Global Disorder – War, Oil, Religion

“We do not have to visit a madhouse to find disordered minds; our planet is the mental institution of the universe.” – Johann Wolfgang von Goethe

Disorder is an understatement when describing what is happening on the global scene. It seems like the inmates are running the insane asylum. The beauty of globalization, sold to Americans by the corporate oligarchs, is being revealed for all to see. Besides seeing millions of jobs shipped overseas by mega-corporation executives and our industrial base gutted beyond repair, the other “benefits” are aplenty. The interconnectedness of the global economy insures that a recession in Europe and the U.S. will spread across the world. The producing countries will fall when the consuming countries run out of fiat currency to spur consumption. Federal Reserve created inflation in the United States instantaneously spreads around the world creating revolutions across the Middle East and social unrest in China as food and energy prices surge to levels of pain which cause the poor to revolt against the ruling establishment. People lose it when they have nothing to lose.

But, the biggest gift of globalization has been provided by whom else – the Wall Street banks and the large European banks. The European banks did their part by loaning hundreds of billions to PIIGS that could never pay them back. Next, they leveraged their balance sheets 40 to 1, insuring that a 3% loss on their capital wipes them out. When their losses clearly exceeded 40%, the bankers employed their politician puppets running the insolvent countries across the continent to dump the losses on the taxpayers through austerity measures that insure a deep European recession. Since derivatives of mass destruction link the insolvent Wall Street banks to the insolvent European banks, the Federal Reserve has now stepped into the breach with American taxpayer money by providing swap lines to European banks. The oligarchs are perfectly willing to destroy the lives of hundreds of millions of citizens across the globe to insure their wealth and power remains intact.

The other crucial component of global disorder is oil. The storyline currently being peddled to the masses is the return of energy independence for America. The political class and their lapdog media pundits blatantly lie to the American public with stories of 100 years of oil supply under our soil. GOP candidates declare we can be energy independent in two years if we just drill, drill, drill. Meanwhile, in the real world 33 billion barrels of oil are consumed every year, with the U.S. consuming 7 billion barrels per year, of which 3.3 billion barrels are imported. Total U.S. oil production continues its 40 year decline, despite the shale oil boom in the Dakotas and the massive fracking hype touted by the gas industry. If Americans used some critical thinking skills they would conclude that our oil dependent society is balanced on the head of a pin. The chart below paints a picture of current and future global disorder.

One look at this chart and you begin to understand the War on Terror cover story. The average person in these Muslim oil rich countries wants a chance for a better life, food, clothing, and hope for their children’s future. They are not the evil, freedom hating, religious fanatic terrorists portrayed by the neo-cons and war mongers like Santorum, Gingrich and Romney. American troops are stationed in or around the countries with the most oil. Any dictator that fails to play along with the U.S. and its oil demands isn’t around for long. Hussein and Gaddafi learned the hard way. It’s just a matter of time for Ahmadinejad. Expect the rhetoric about the dangerous Chavez to escalate in the near future. Controlling 300 billion barrels of oil will be essential to keeping our suburban sprawl society functioning. Soccer moms will become irate when they can’t fill up their GMC Yukon with 39 gallons of precious fuel. Our own military clearly documented why the War on Terror will never end in their 2010 Joint Operating Environment report:

 A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest. By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.

The likeliest global events which will make 2012 a year to remember include:

  • The disintegration of the European Union with outright default by Greece and the exit from the Union by Italy, Spain, and Portugal. A default and currency devaluation would bankrupt banks across Europe and would guarantee a worldwide recession and possibly depression.
  • It seems more likely by the day that someone will do something stupid in or around Iran and the Persian Gulf will explode into a virtual hell on earth. The unintended consequences of such a development will far outweigh the intended consequences.
  • The revolutions, protests, and brewing civil wars in Egypt, Syria, Libya and Iraq will flare up even if Iran doesn’t explode into a shooting war. The tensions in the Middle East will keep oil prices above $100, despite a world plunging into recession.
  • China’s hard landing will arrive in 2012. Keynesianism on steroids has failed as they’ve built more than enough vacant malls, vacant cities, vacant condo towers, and bridges to nowhere. Property prices will plunge, exports will decline, and peasants will revolt as food and energy prices push them over the edge. Chinese leaders will look for a foreign bogeyman so they can rally their 1 billion peasants around the flag. With 11% of their oil supply coming from Iran, it could get very interesting.

Just as no one saw the most significant events of 2011 (Arab Spring, Mubarak & Gaddafi overthrown, Japanese earthquake, tsunami, nuclear meltdown, and Occupy Wall Street) in advance, 2012 will surely have some surprises. Possibilities include:

  • An earthquake on the New Madrid fault or off the coast of California causing a tsunami to hit the west coast.
  • One or more hurricanes entering the Gulf of Mexico causing widespread oil rig destruction and causing oil and natural gas prices to soar.
  • A new bird flu or swine flu pandemic that spreads around the world.
  • An actual terrorist attack in the United States in a mall, hotel or public venue that provokes a massive over response by our government could change this country forever.
  • The assassination of political leaders and prominent bankers around the world as radicals take retribution into their own hands.

We have now entered the fifth year of this Fourth Turning Crisis. George Washington and his troops were barely holding on at Valley Forge during the fifth year of the American Revolution Fourth Turning. By year five of the Civil War Fourth Turning 700,000 Americans were dead, the South left in ruins, a President assassinated and a military victory attained that felt like defeat. By the fifth year of the Great Depression/World War II Fourth Turning, FDR’s New Deal was in place and Adolf Hitler had been democratically elected and was formulating big plans for his Third Reich. The insight from prior Fourth Turnings that applies to 2012 is that things will not improve. They call it a Crisis because the risk of calamity is constant. There is zero percent chance that 2012 will result in a recovery and return to normalcy. Not one of the issues that caused our economic collapse has been solved. The “solutions” implemented since 2008 have exacerbated the problems of debt, civic decay and global disorder. The choices we make as a nation in 2012 will determine the future course of this Fourth Turning. If we fail in our duty, this Fourth Turning could go catastrophically wrong. I pray we choose wisely. Have a great 2012.          

“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. Thus might the next Fourth Turning end in apocalypse – or glory. The nation could be ruined, its democracy destroyed, and millions of people scattered or killed. Or America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis; all they suggest is the timing and dimension.” – Strauss & Howe

 

  Source: www.williambanzai7.blogspot.com