Friday, August 28, 2015

The Bureau of Labor Statistics claims that 215,000 jobs were created in July and that the unemployment rate is 5.3 percent. This is far from true. If counting those who have given up finding a job, the unemployment rate would be 23 percent! One would think that investment advisors would know this. But, no, many of them expected the stock and bond markets to rise this last two weeks because of the BLS lies. Now they are puzzled. Yesterday's big drop was partially undone at the last minute, encouraging them to believe that today it would keep on rising. But no, the Dow, S&P, and Nasdaq strugguled all afternoon to avoid a rout. And finally Bloomberg and other financial outfits began to wonder if "Moms and Pops" might be bailing out. But not THIS Pop! By the end of the day, seven of my nine picks were in strongly in the green (e.g., +4.91%), one 0.0%, and the only one in red was only -0.24%. The Dow was red all day long, as much as -0.35% but magicaly reduced itself to -0.07% in the last fiew seconds.





















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Retail Investors Pull Out Billions in Wild Week                                               Original w/ Video Here

  • Credit Suisse report shows
  • First back-to-back months of simultaneous outflows since 2008
Mom and pop are running for the hills.
Since July, American households -- which account for almost all mutual fund investors -- have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse.
Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta.
“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting,” Saporta said in a phone interview. “It may be that this is an interesting oddity but if we continue to see this it could reflect a more broad-based nervousness on the part of household investors.”
Withdrawals from equity funds are usually accompanied by an influx of money to bonds, and an exit from both at the same time suggests investors aren’t willing to take on risk in any form. While retail investor sentiment isn’t the best predictor of market moves, their reluctance could have significance, Saporta said.
“It might suggest households are getting nervous about holding investments, and that could lead to some real economic implications including cutting back on spending,” she said. “Should the market turn lower again, it will be interesting to see if we have the traditional move back into bonds or if households move to cash.”
After an 11 percent plunge in the Standard & Poor’s 500 in the past week, investors are searching for signs of strength in the U.S. economy in the face of slowing growth abroad. The S&P 500 gained 2.4 percent Thursday as data showed gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg.
While the flows out of mutual funds suggest retail investors -- who held 89 percent of U.S. mutual fund assets last year, according to ICI -- may not have faith in financial markets, recent economic data show the average American is spending more. Sales at U.S. retailers rose 0.6 percent in July and the prior two months were revised up, according to Commerce Department data on Aug. 13.

Wednesday, August 26, 2015

Paul Craig Roberts searches for the possible ways that the stock market might settle down again. On one hand, "The belief that a hike in interest rates is in the cards keeps the US dollar from losing exchange value in relation to other currencies, thus preventing a flight from the dollar that would reduce the Uni-power to Third World status." But "On the other hand, the stock market decline last Thursday and Friday could indicate that the players in the market have comprehended that the stock market is an artificially inflated bubble that has no real basis. Once the psychology is destroyed, flight sets in." And "If flight turns out to be the case, it will be interesting to see if central bank liquidity and purchases of stocks can stop the rout."


Central Banks Have Become A Corrupting Force — Paul Craig Roberts and Dave Kranzler

August 23, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

Central Banks Have Become A Corrupting Force

Paul Craig Roberts and Dave Kranzler

Are we witnessing the corruption of central banks? Are we observing the money-creating powers of central banks being used to drive up prices in the stock market for the benefit of the mega-rich?

These questions came to mind when we learned that the central bank of Switzerland, the Swiss National Bank, purchased 3,300,000 shares of Apple stock in the first quarter of this year, adding 500,000 shares in the second quarter. Smart money would have been selling, not buying.

It turns out that the Swiss central bank, in addition to its Apple stock, holds very large equity positions, ranging from $250,000,000 to $637,000,000, in numerous US corporations — Exxon Mobil, Microsoft, Google, Johnson & Johnson, General Electric, Procter & Gamble, Verizon, AT&T, Pfizer, Chevron, Merck, Facebook, Pepsico, Coca Cola, Disney, Valeant, IBM, Gilead, Amazon.

Among this list of the Swiss central bank’s holdings are stocks which are responsible for more than 100% of the year-to-date rise in the S&P 500 prior to the latest sell-off.

What is going on here?

The purpose of central banks was to serve as a “lender of last resort” to commercial banks faced with a run on the bank by depositors demanding cash withdrawals of their deposits.

Banks would call in loans in an effort to raise cash to pay off depositors. Businesses would fail, and the banks would fail from their inability to pay depositors their money on demand.

As time passed, this rationale for a central bank was made redundant by government deposit insurance for bank depositors, and central banks found additional functions for their existence. The Federal Reserve, for example, under the Humphrey-Hawkins Act, is responsible for maintaining full employment and low inflation. By the time this legislation was passed, the worsening “Phillips Curve tradeoffs” between inflation and employment had made the goals inconsistent. The result was the introduction by the Reagan administration of the supply-side economic policy that cured the simultaneously rising inflation and unemployment.

Neither the Federal Reserve’s charter nor the Humphrey-Hawkins Act says that the Federal Reserve is supposed to stabilize the stock market by purchasing stocks. The Federal Reserve is supposed to buy and sell bonds in open market operations in order to encourage employment with lower interest rates or to restrict inflation with higher interest rates.

If central banks purchase stocks in order to support equity prices, what is the point of having a stock market? The central bank’s ability to create money to support stock prices negates the price discovery function of the stock market.

The problem with central banks is that humans are fallible, including the chairman of the Federal Reserve Board and all the board members and staff. Nobel prize-winner Milton Friedman and Anna Schwartz established that the Great Depression was the consequence of the failure of the Federal Reserve to expand monetary policy sufficiently to offset the restriction of the money supply due to bank failure. When a bank failed in the pre-deposit insurance era, the money supply would shrink by the amount of the bank’s deposits. During the Great Depression, thousands of banks failed, wiping out the purchasing power of millions of Americans and the credit creating power of thousands of banks.

The Fed is prohibited from buying equities by the Federal Reserve Act. But an amendment in 2010 – Section 13(3) – was enacted to permit the Fed to buy AIG’s insolvent Maiden Lane assets. This amendment also created a loophole which enables the Fed to lend money to entities that can use the funds to buy stocks. Thus, the Swiss central bank could be operating as an agent of the Federal Reserve.

If central banks cannot properly conduct monetary policy, how can they conduct an equity policy? Some astute observers believe that the Swiss National Bank is acting as an agent for the Federal Reserve and purchases large blocs of US equities at critical times to arrest stock market declines that would puncture the propagandized belief that all is fine here in the US economy.

We know that the US government has a “plunge protection team” consisting of the US Treasury and Federal Reserve. The purpose of this team is to prevent unwanted stock market crashes.

Is the stock market decline of August 20-21 welcome or unwelcome?

At this point we do not know. In order to keep the dollar up, the basis of US power, the Federal Reserve has promised to raise interest rates, but always in the future. The latest future is next month. The belief that a hike in interest rates is in the cards keeps the US dollar from losing exchange value in relation to other currencies, thus preventing a flight from the dollar that would reduce the Uni-power to Third World status.

The Federal Reserve can say that the stock market decline indicates that the recovery is in doubt and requires more stimulus. The prospect of more liquidity could drive the stock market back up. As asset bubbles are in the way of the Fed’s policy, a decline in stock prices removes the equity market bubble and enables the Fed to print more money and start the process up again.

On the other hand, the stock market decline last Thursday and Friday could indicate that the players in the market have comprehended that the stock market is an artificially inflated bubble that has no real basis. Once the psychology is destroyed, flight sets in.

If flight turns out to be the case, it will be interesting to see if central bank liquidity and purchases of stocks can stop the rout.



Tuesday, August 25, 2015

Here top economist Michael Hudson explains what is now going on with the stock market. It isn't what you think. It's about the rich trying to get richer. But Michael believes that the less rich won't lose very much of their stock market savings (if well selected). This blogger, guided by Jim Rickards the author of Currency Wars and The Death of Money, believes that gold and silver perchased now will fly when the dollar crash comes. But be sure to buy the physical metal or else buy shares of outfits that are in control of a lot of these metals and haven't fallen into debt waiting for the crash, e.g., Royal Gold (RGLD) and Silver Wheaton (SLW).


Smoke and Mirrors of Corporate Buybacks Behind the Market Crash

Michael Hudson, the author of Killing the Host: How Financial Parasites and Debt Destroy Global Economy, says the stock market crash on Monday has very little to do with China and all to do with shortermism and buybacks of corporations inflating their own stocks -   August 25, 2015

https://youtu.be/D0EPfMAYy1A

Bio                                                                                          Original here

Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He is the author of The Bubble and Beyond and Finance Capitalism and its Discontents. His most recent book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

Sunday, August 23, 2015

According to the the Bureau of Labor Statistics: "Total nonfarm payroll employment increased by 215,000 in July, and the unemployment rate was unchanged at 5.3 percent. Job gains occurred in retail trade, health care, professional and technical services, and financial activities." If this were really true, why is it that Americans not only cannot afford to buy houses but even afordable rentals are becoming hard to find. Your government lies about everything. If you don't believe this you may soon find your to-big-to-fail bank "bailing in" your life's savings. Wake up America!




'Housing Bubble 2' has bloomed into full magnificence


Wolf Richter, Wolf Street
The current housing boom has Dallas solidly in its grip.

As in many cities around the US, prices are soaring, buyers are going nuts, sellers run the show, realtors are laughing all the way to the bank, and the media are having a field day.
Nationwide, the median price of existing homes, at $236,400, as the National Association of Realtors sees it, is now 2.7% higher than it was even in July 2006, the insane peak of the crazy housing bubble that blew up with such spectacular results.

Housing Bubble 2 has bloomed into full magnificence:

In many cities, the median price today is far higher, not just a little higher, than it was during the prior housing bubble, and excitement is once again palpable. Buy now, or miss out forever! A buying panic has set in.

And so the July edition of D Magazine – “Making Dallas Even Better,” is its motto – had this enticing cover, sent to me by David in Texas, titled, “The Great Dallas Land Rush”:

“Dallas Real Estate 2015: The Hottest Market Ever,” the subtitle says.

That’s true for many cities, including San Francisco.

The “Boom Town,” as it’s now called, is where the housing market has gone completely out of whack, with a median condo price at $1.13 million and the median house price at $1.35 million. This entails some consequences [read… The San Francisco “Housing Crisis” Gets Ugly].

The fact that Housing Bubble 2 is now even more magnificent than the prior housing bubble, even while real incomes have stagnated or declined for all but the top earners, is another sign that the Fed, in its infinite wisdom, has succeeded elegantly in pumping up nearly all asset prices to achieve its “wealth effect.”

And it continues to do so, come heck or high water. It has in this ingenious manner “healed” the housing market.
 
But despite the current “buying panic,” the soaring prices, and all the hoopla round them, there is a fly in the ointment: overall homeownership is plunging.

The homeownership rate dropped to 63.4% in the second quarter, not seasonally adjusted, according to a new report by the Census Bureau, down 1.3 percentage points from a year ago. The lowest since 1967!




The process has been accelerating, instead of slowing down. The 1.2 percentage point plunge in 2014 was the largest annual drop in the history of the data series going back to 1965. And this year is on track to match this record: the drop over the first two quarters so far amounts to 0.6 percentage points.

This accelerated drop in homeownership rates coincides with a sharp increase in home prices. Go figure.

The plunge in homeownership rates has spread across all age groups, but to differing degrees. Younger households have been hit the hardest. In the age group under 35, the homeownership rate in Q2 saw a slight uptick to 34.8%, from the dismal record low of 34.6% in the prior quarter. Either a feeble ray of hope or just one of the brief upticks, as in the past, to be succeeded by more down ticks on the way to lower lows.

This chart by the Economics and Strategy folks at National Bank Financial shows the different rates of homeownership by age group. The 35-year and under group is where the first-time buyers are concentrated; and they’re being sidelined, whether they have no interest in buying, or simply don’t make enough money to buy (represented by the sharply descending solid black line, left scale). Note how the oldest age group (dotted blue line, right scale) has recently started to cave as well:

The bitter irony? In the same breath, the Census Bureau also reported that the rental vacancy rate dropped to 6.8%, from 7.5% a year ago, the lowest since 1985. America is turning into a country of renters.

This chart shows the dynamics between homeownership rates (black line, left scale) and rental vacancy rates (red line, right scale) over time: they essentially rise and dive together. It makes sense on an intuitive basis: as people abandon the idea of owning a home, they turn into renters, and the rental market tightens up, and vacancy rates decline.

This too has been by design, it seems. Since 2012, private equity firms bought several hundred thousand vacant single-family homes in key markets, drove up prices in the process, and started to rent them out. Thousands of smaller investors have jumped into the fray, buying homes, driving up prices, and trying to rent them out. This explains the record median home price across the country, and the totally crazy price increases in some key markets, even as regular Americans are trying to figure out how to pay for a basic roof over their heads.

This has worked out well. By every measure, rents have jumped. According to the Census Bureau’s report, the median asking rent in the US rose 6.2% from a year ago, and 17.6% since 2011. So inflation bites. But the Fed is still desperately looking for signs of inflation and simply cannot find any.

And how much have incomes risen over these years to allow renters to meet these rising rents? OK, that was a rhetorical question. We already know what has been happening to incomes.

That’s what it always boils down to in the Fed’s salvation of the economy: people who can’t afford to pay the rising rents with their stagnant or declining incomes should borrow the money to make up the difference and then spend even more on consumer goods. After us, the deluge.

But the party may not last much longer, as a “decades-long tailwind will shift to a housing headwind.” Read… Home-Buying Panic Sets in, Housing Bubble 2 Soars, Industry Drools, But It’s Doomed, Says Zillow

Read the original article on Wolf Street. Copyright 2015. Follow Wolf Street on Twitter.

Wednesday, August 19, 2015

Paul Craig Roberts: "The American people are not politically competent, and they are easily brainwashed by Washington’s propaganda. It has only taken two years for Washington’s demonization of Russia to convince hapless Americans that Russia is the Number One Threat to the United States. This unbelievable hogwash is constantly broadcast by the presstitute media and is now believed by a majority of the American Sheeple."


US Has Been Planning To Wipe Out Russia Since 1945

August 18, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

US Has Been Planning To Wipe Out Russia Since 1945

Paul Craig Roberts

An article on Sputnik by Ekaterina Blinova, http://sputniknews.com/politics/20150815/1025789574.html , provides a history of US and British plans to destroy the Soviet Union with nuclear weapons in the early post-World War II years before the Soviets got the bomb and prior to President John F. Kennedy reining in the plans to use nuclear weapons against Soviet civilian populations. If truth be known, the Cold War was entirely a Washington creation.

The military/security complex, against which President Dwight Eisenhower warned the American people to no avail, has found that its profits cannot survive the end of the Cold War and has orchestrated its resumption. Washington has revived its plans for surprise nuclear attack on Russia and this time on China as well. These plans are known and have destroyed the trust among nuclear powers, leading to an even more dangerous situation than existed during Cold War I.

The American people are not politically competent, and they are easily brainwashed by Washington’s propaganda. It has only taken two years for Washington’s demonization of Russia to convince hapless Americans that Russia is the Number One Threat to the United States. This unbelievable hogwash is constantly broadcast by the presstitute media and is now believed by a majority of the American Sheeple.

Armageddon will be the consequence.



For the longest time, the U.S. government-cum-mainstream-media claimed that Russia had attacked Ukraine. Finally when it became obvious that it hadn't, they accused Russia of giving armaments to the "separationists", i.e., Russian speakers whose ancesters lived that area for centuries. However, the U.S.-installed government in Kiev, armed by the U.S. and trained by NATO, had instantly broken the Minsk Agreement and now plans to attack with superior numbers and armaments, while Russia continues to seek peace.


Minsk Agreement Has Failed — Paul Craig Roberts

August 18, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

Minsk Agreement Has Failed  
Will the failure lead to Putin’s failure?

Paul Craig Roberts

It appears that the Russian government has made a mistake with regard to its approach to the breakaway Republics consisting of Russian peoples in former Russian territories who reject being governed by the anti-Russian coup government installed in Kiev by Washington. The Russian government could have ended the crisis by accepting the requests of these territories to be reunited with Russia. Instead, the Russian government opted for a diplomatic approach—hands off Donetsk and Luhansk—and this diplomacy has now failed. The coup government in Kiev never had any intention of keeping the Minsk agreement, and Washington had no intention of permitting the Minsk agreement to be kept. Apparently, even the realistic Putin succumbed to wishful thinking.

The Minsk agreement, which the Russian government backed for diplomatic reasons, has served to allow Washington time to train, equip, and mobilize much stronger forces now preparing to resume the attack on Donetsk and Luhansk. If these Republics are overrun, Vladimir Putin and Russia itself will lose all credibility. Whether Putin realizes it or not, Russia’s credibility is at stake on the Donetsk frontier, not in diplomatic meetings with Washington’s European vassals who are powerless to act outside of Washington’s control. If Washington prevails in Ukraine, Russia and China can forget about the BRICS and Eurasian trade groups offering alternatives to Washington’s economic hegemony. Washington intends to ensure its hegemony by prevailing in Ukraine.

In his description of the situation, the leader of the Donetsk Republic appears to be worn down by having lost the advantages over Ukraine that Donetsk had prior to the failed Minsk agreement: http://russia-insider.com/en/moscows-top-man-donbass-says-all-out-war-will-start-soon-video/ri9255 Perhaps he is thinking of Shakespeare’s Julius Caesar when Cassius says to Brutus, “There is a tide in the affairs of men which, when taken at the flood, leads on to fortune, omitted, all the voyage of their life is bound in shallows and miseries.”



The U.S. "mainstream media" now fall in line repeating the lies promugated by the U.S. government. For example, convincing the ordinary Joe that we now need a nuclear war with Russia. Ironically, Mark Twain was able to see through the same sort of thing happening back when there was no TV. If only we could educate the average American to think rather than automatically believe government lies, we'd all be a whole lot safer.


Gullible Americans Forever — Paul Craig Roberts

August 17, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

Gullible Americans Forever

Paul Craig Roberts

“Next the statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutations of them; and thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception.” — Mark Twain

Listening to NPR news today I was reminded how thoroughly this once independent voice has sold out.

I was also reminded of the Mark Twain quote above. NPR reported that Syrians were lined up in Turkey waiting on passage on inflatable rafts to Greece. According to the NPR report, there are 2 million Syrian refugees in Turkey and 250,000 Syrians have been killed. NPR said nothing about the cause of this murder and displacement of vast numbers of people. It was if the plight of these people materialized out of thin air. The fact that Washington sicced ISIS, al Qaeda, Turkey, the US and NATO Air Forces, and Washington’s Middle Eastern vassals on Syria was not mentioned. The view on NPR is the same as Washington’s — that if only Assad would resign and hand Syria over to Washington, everything would be fine.

Americans don’t go to bed every night unable to sleep from shame from the atrocities that the US government has inflicted on Syria. And on Iraq. And Libya. And Afghanistan. And Pakistan. And Yemen. And Somalia. And Ukraine. And Serbia. According to the prostitute media, all of these human catastrophes are the work of dark forces that America must combat. It is all a clever orchestration of public emotion in favor of the military/security complex’s bank balance.

The corruption of public discourse in America, indeed throughout the West, is total. There are no reliable reports, not from public or private institutions. The economic reports are propaganda to keep alive the image of a successful America. The reports about Russia, Ukraine, and Muslims are propaganda designed to inculcate fear in the gullible, fear that ensures more power and profit for Washington and the military/security complex.

Americans have proven themselves to be the easiest sheep ever to be shorn.

The gullibility of Americans threatens the world with armageddon. 


Monday, August 17, 2015

According to the Bureau of Labor Statistics, Current Employment Statistics - CES (National): "Payroll employment rises by 215,000 in July; unemployment rate unchanged at 5.3% 08/07/2015; Total nonfarm payroll employment increased by 215,000 in July, and the unemployment rate was unchanged at 5.3 percent. Job gains occurred in retail trade, health care, professional and technical services, and financial activities." How then is it possible for worldwide mass layoffs to be carried out at the same time? Answer: The U.S. Government is lying and will continue to lie until the dollar finally crashes, whereupon the deceived poor will be horribly poorer while the informed filthy rich will find themselves even richer.


Bankruptcy and Economic Stagnation: Mass Layoffs Worldwide as Corporate Mergers near New Record


Major transnational corporations, including Kraft, Motorola, Lenovo, Tyson and HTC have announced mass layoffs in recent days amid a boom in mergers and acquisitions, which are on track to hit a record this year.

Processed foods maker Kraft Heinz Co said Wednesday that it would cut 2,500 jobs in North America, amounting to 5 percent of its global workforce. The announcement is the result of last month’s $49 billion merger between Kraft and H.J. Heinz Co, in a deal orchestrated by Warren Buffett’s Berkshire Hathaway.

The announced layoffs will include 700 at the company’s headquarters in Northfield, Illinois, near Chicago. Thousands more layoffs are expected as a result of the deal, as the company said it was “confident” that it would meet its estimated cost savings from the merger of $1.5 billion through 2017.

On Thursday, Chinese computer maker Lenovo announced 3,200 layoffs, or 5 percent of its global workforce. The layoffs will be concentrated in the company’s Motorola Mobility subsidiary, which this week announced an initial round of 500 layoffs in its Chicago-area headquarters. Another three hundred employees will lose their jobs with the closure of the company’s facility in Plantation, Florida. Lenovo purchased Motorola Mobility from Google in 2014.

Also Thursday, Smartphone maker HTC announced that it would slash 2,250 jobs, or 15 percent of its global workforce, by the end of the year. The company is seeking to cut costs by 35 percent.

These layoffs follow last month’s announcement by Microsoft that it would eliminate 7,800 positions, mostly from its Nokia mobile phone division that it acquired in 2013. Only weeks later, San Diego-based semiconductor company Qualcomm Incorporated announced 4,700 layoffs.

Mass layoffs in the food processing and technology sector come amid an ongoing jobs bloodbath in the global energy sector. On Friday, Samson Resources Corp, a Tulsa, Oklahoma-based oil and gas producer, filed for bankruptcy, threatening over a thousand jobs. The bankruptcy follows the firm’s purchase in 2011 by private equity firm KKR & Co.

Earlier this month, Alpha Natural Resources, America’s second-largest coal producer, filed for bankruptcy, endangering the jobs of the company’s 8,000 employees. Oil consulting firm Swift Worldwide Resources reported in June that over 150,000 energy sector jobs have been lost globally since the beginning of the downturn in oil prices last year.

Samson’s bankruptcy filing followed the announcement by multinational oil giant Royal Dutch Shell that it would eliminate 6,500 positions this year, as well as the announcement by British-based mining conglomerate Anglo American, the world’s fifth largest mining company, that it would slash 53,000 jobs.

The latest round of mass layoffs is closely related to the global boom in mergers and acquisitions. Under conditions of slowing global economic growth, together with record amounts of cash sitting on corporate balance sheets, Wall Street is using mergers and acquisitions to put additional pressure on US and global corporations to cut costs and restore profitability on the backs of employees.

Global mergers and acquisitions are close to hitting a record high this year, according to Thomson Reuters data. With a quarter of the year still to go, the value of deals hit $2.9 trillion, just shy of the $3 trillion figure for 2007, immediately before the 2008 financial crisis. In the United States, mergers have hit $1.4 trillion in 2015, up by 62 percent from a year ago.

On Monday, Warren Buffett’s Berkshire Hathaway announced the biggest corporate takeover so far this year: the $37 billion purchase of Precision Castparts, an aerospace and defense metal fabricator with nearly 30,000 employees.

The growing rate of mergers and acquisitions is made possible by the continual infusion of cheap money from global central banks, which have pumped trillions of dollars into the global financial system through years of quantitative easing and zero-interest-rate policies.

Mergers activity has soared even as real economic growth has slowed. According to predictions by the International Monetary Fund, 2015 is set to be the slowest year for economic growth since 2009. The already gloomy growth outlook for the year was made worse Friday with the release of economic data for the Eurozone showing that the region’s economy grew only 0.3 percent in the second quarter; significantly lower than had been predicted by analysts.

This followed Friday’s release of negative economic figures for China, which showed that the country’s exports plunged by 8.3 percent in July. China’s poor exports performance likely contributed to its central bank’s decision to devalue the yuan this week, a move that roiled the global financial system.

The global boom in mergers and acquisitions, far from expanding economic output and growth, has as its aim the enrichment of shareholders through layoffs and wage cuts. The end result of this vicious cycle of economic stagnation and parasitism is the further enrichment of the financial oligarchy at the expense of the working class.


Sunday, August 16, 2015

After reading Mike Whitney's analysis, I'm convinced that he has a correct view of Syria today and the two ways it can possibly turn out: Washington and NATO's next war or Vladimir Putin's plan for peace. Below, Paul Craig Roberts wonders if Washington may have "killed so many Muslims and destroyed so many countries and institutions that there is nothing left to organize against the Islamist Revolution?"


The Islamist Revolution

August 16, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

This is an interesting analysis by Mike Whitney: http://www.counterpunch.org/2015/08/14/is-putin-planning-to-sell-out-assad/

One question is: Can the Islamist Revolution unleashed by Washington be contained? Or have Washington and its NATO vassals killed so many Muslims and destroyed so many countries and institutions that there is nothing left to organize against the Revolution? If this is the case, then Russia and Iran are making a fundamental strategic mistake by cooperating with Washington against the Islamist Revolution. Instead, Russia and Iran should unite with the Revolution against the hated West.
 

At some point, if Muslims are to have a future, the historic split between Shia and Sunni must end. The Iranians should take the lead in bringing the split to an end. Russia and Iran should be helping the Middle East to achieve self-determination free of Western control and interventions. That is the only way to peace. 



Friday, August 14, 2015

Ellen Brown: "Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history." Although it renegotiated it's debt the opportunist "vulture funds" held out for 100 cents on the dollar. "In June 2014, the US Supreme Court declined to hear an appeal of a New York court’s order blocking payment to the other creditors until the vulture funds had been paid."


Cry for Argentina: Fiscal Mismanagement, Odious Debt or Pillage?


Argentina has now taken the US to The Hague for blocking the country’s 2005 settlement with the bulk of its creditors. The issue underscores the need for an international mechanism for nations to go bankrupt. Better yet would be a sustainable global monetary scheme that avoids the need for sovereign bankruptcy.

Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history. In 2005, it renegotiated its debt with most of its creditors at a 70% “haircut.” But the opportunist “vulture funds,” which had bought Argentine debt at distressed prices, held out for 100 cents on the dollar.

Paul Singer’s Elliott Management has spent over a decade aggressively trying to force Argentina to pay down nearly $1.3 billion in sovereign debt. Elliott would get about $300 million for bonds that Argentina claims it picked up for $48 million. Where most creditors have accepted payment at a 70% loss, Elliott Management would thus get a 600% return.

In June 2014, the US Supreme Court declined to hear an appeal of a New York court’s order blocking payment to the other creditors until the vulture funds had been paid. That action propelled Argentina into default for the second time in this century – and the eighth time since 1827. On August 7, 2014, Argentina asked the International Court of Justice in the Hague to take action against the United States over the dispute.

Who is at fault? The global financial press blames Argentina’s own fiscal mismanagement, but Argentina maintains that it is willing and able to pay its other creditors. The fault lies rather with the vulture funds and the US court system, which insist on an extortionate payout even if it means jeopardizing the international resolution mechanism for insolvent countries. If creditors know that a few holdout vultures can trigger a default, they are unlikely to settle with other insolvent nations in the future.

Blame has also been laid at the feet of the IMF and the international banking system for failing to come up with a fair resolution mechanism for countries that go bankrupt. And at a more fundamental level, blame lies with a global debt-based monetary scheme that forces bankruptcy on some nations as a mathematical necessity. As in a game of musical chairs, some players must default.

Most money today comes into circulation in the form of bank credit or debt. Debt at interest always grows faster than the money supply, since more is always owed back than was created in the original loan. There is never enough money to go around without adding to the debt burden. As economist Michael Hudson points out, the debt overhang grows exponentially until it becomes impossible to repay. The country is then forced to default.

Fiscal Mismanagement or Odious Debt?

Besides impossibility of performance, there is another defense Argentina could raise in international court – that of “odious debt.” Also known as illegitimate debt, this legal theory holds that national debt incurred by a regime for purposes that do not serve the best interests of the nation should not be enforceable.

The defense has been used successfully by a number of countries, including Ecuador in December 2008, when President Rafael Correa declared that its debt had been contracted by corrupt and despotic prior regimes. The odious-debt defense allowed Ecuador to reduce the sum owed by 70%.

In a compelling article in Global Research in November 2006, Adrian Salbuchi made a similar case for Argentina. He traced the country’s problems back to 1976, when its foreign debt was just under US$6 billion and represented only a small portion of the country’s GDP. In that year:
An illegal and de facto military-civilian regime ousted the constitutionally elected government of president María Isabel Martínez de Perón [and] named as economy minister, José Martinez de Hoz, who had close ties with, and the respect of, powerful international private banking interests. With the Junta’s full backing, he systematically implemented a series of highly destructive, speculative, illegitimate – even illegal – economic and financial policies and legislation, which increased Public Debt almost eightfold to US$ 46 billion in a few short years. This intimately tied-in to the interests of major international banking and oil circles which, at that time, needed to urgently re-cycle huge volumes of “Petrodollars” generated by the 1973 and 1979 Oil Crises. Those capital in-flows were not invested in industrial production or infrastructure, but rather were used to fuel speculation in local financial markets by local and international banks and traders who were able to take advantage of very high local interest rates in Argentine Pesos tied to stable and unrealistic medium-term US Dollar exchange rates.
Salbuchi detailed Argentina’s fall from there into what became a $200 billion debt trap. Large tranches of this debt, he maintained, were “odious debt” and should not have to be paid:
Making the Argentine State – i.e., the people of Argentina – weather the full brunt of this storm is tantamount to financial genocide and terrorism. . . . The people of Argentina are presently undergoing severe hardship with over 50% of the population submerged in poverty . . . . Basic universal law gives the Argentine people the right to legitimately defend their interests against the various multinational and supranational players which, abusing the huge power that they wield, directly and/or indirectly imposed complex actions and strategies leading to the Public Debt problem.
Of President Nestor Kirchner’s surprise 2006 payment of the full $10 billion owed to the IMF, Salbuchi wrote cynically:
This key institution was instrumental in promoting and auditing the macroeconomic policies of the Argentine Government for decades. . . . Many analysts consider that . . . the IMF was to Argentina what Arthur Andersen was to Enron, the difference being that Andersen was dissolved and closed down, whilst the IMF continues preaching its misconceived doctrines and exerts leverage. . . . [T]he IMF’s primary purpose is to exert political pressure on indebted governments, acting as a veritable coercing agency on behalf of major international banks.
Sovereign Bankruptcy and the “Global Economic Reset”

Needless to say, the IMF was not closed down. Rather, it has gone on to become the international regulator of sovereign debt, which has reached crisis levels globally. Total debt, public and private, has grown by over 40% since 2007, to $100 trillion. The US national debt alone has grown from $10 trillion in 2008 to over $17.6 trillion today.

At the World Economic Forum in Davos in January 2014, IMF Managing Director Christine Lagarde spoke of the need for a global economic “reset.”  National debts have to be “reset” or “readjusted” periodically so that creditors can keep collecting on their exponentially growing interest claims, in a global financial scheme based on credit created privately by banks and lent at interest. More interest-bearing debt must continually be incurred, until debt overwhelms the system and it again needs to be reset to keep the usury game going.

Sovereign debt (or national) in particular needs periodic “resets,” because unlike for individuals and corporations, there is no legal mechanism for countries to go bankrupt. Individuals and corporations have assets that can be liquidated by a bankruptcy court and distributed equitably to creditors. But countries cannot be liquidated and sold off – except by IMF-style “structural readjustment,” which can force the sale of national assets at fire sale prices.

A Sovereign Debt Restructuring Mechanism ( SDRM) was proposed by the IMF in the early 2000s, but it was quickly killed by Wall Street and the U.S. Treasury. The IMF is working on a new version of the SDRM, but critics say it could be more destabilizing than the earlier version.

Meanwhile, the IMF has backed collective action clauses (CACs) designed to allow a country to negotiate with most of its creditors in a way that generally brings all of them into the net. But CACs can be challenged, and that is what happened in the case of the latest Argentine bankruptcy. According to Harvard Professor Jeffrey Frankel:
[T]he US court rulings’ indulgence of a parochial instinct to enforce written contracts will undermine the possibility of negotiated restructuring in future debt crises.
We are back, he says, to square one.

Better than redesigning the sovereign bankruptcy mechanism might be to redesign the global monetary scheme in a way that avoids the continual need for a bankruptcy mechanism.  A government does not need to borrow its money supply from private banks that create it as credit on their books. A sovereign government can issue its own currency, debt-free. But that interesting topic must wait for a follow-up article. Stay tuned.

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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.