A bank "bail-in" is what happens when a big bank fails and the government no longer bails them out. Such "bail-ins" comprise banks (legally in the US and possibly also in the EU!) confiscating the funds of its uninsured depositors (generally individuals and small companies) in order for the bank pay off its bondholders. This is not hypothetical! If you have your retirement nestegg deposited in one of the six largest U.S. banks, you have a strong chance of losing it if you don't find a safer place for it soon...

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Banking Union Time Bomb: Eurocrats Authorize Bailouts AND Bail-Ins

Posted on March 29, 2014 by Ellen Brown

“As things stand, the banks are the permanent government of the country, whichever party is in power.”

 – Lord Skidelsky, House of Lords, UK Parliament, 31 March 2011)

On March 20, 2014, European Union officials reached an historic agreement to create a single agency to handle failing banks. Media attention has focused on the agreement involving the single resolution mechanism (SRM), a uniform system for closing failed banks. But the real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and “bail-ins” – the confiscation of depositor funds. The deal involves multiple concessions to different countries and may be illegal under the rules of the EU Parliament; but it is being rushed through to lock taxpayer and depositor liability into place before the dire state of Eurozone banks is exposed.

The bail-in provisions were agreed to last summer. According to Bruno Waterfield, writing in the UK Telegraph in June 2013:

Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under £85,000 (€100,000) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses . . . Under the deal all unsecured bondholders must be hit for losses before a bank can be eligible to receive capital injections directly from the ESM, with no retrospective use of the fund before 2018.

As noted in my earlier articles, the ESM (European Stability Mechanism) imposes an open-ended debt on EU member governments, putting taxpayers on the hook for whatever the Eurocrats (EU officials) demand. And it’s not just the EU that has bail-in plans for their troubled too-big-to-fail banks. It is also the US, UK, Canada, Australia, New Zealand and other G20 nations. Recall that a depositor is an unsecured creditor of a bank. When you deposit money in a bank, the bank “owns” the money and you have an IOU or promise to pay.

Under the new EU banking union, before the taxpayer-financed single resolution fund can be deployed, shareholders and depositors will be “bailed in” for a significant portion of the losses. The bankers thus win both ways: they can tap up the taxpayers’ money and the depositors’ money.

 The Unsettled Question of Deposit Insurance

 But at least, you may say, it’s only the uninsured deposits that are at risk (those over €100,000—about $137,000). Right?

Not necessarily. According to ABC News, “Thursday’s result is a compromise that differs from the original banking union idea put forward in 2012. The original proposals had a third pillar, Europe-wide deposit insurance. But that idea has stalled.”

European Central Bank President Mario Draghi, speaking before the March 20th meeting in the Belgian capital, hailed the compromise plan as “great progress for a better banking union. Two pillars are now in place” – two but not the third. And two are not enough to protect the public.As observed in The Economist in June 2013, without Europe-wide deposit insurance, the banking union is a failure:

[T]he third pillar, sadly ignored, [is] a joint deposit-guarantee scheme in which the costs of making insured depositors whole are shared among euro-zone members. Annual contributions from banks should cover depositors in normal years, but they cannot credibly protect the system in meltdown (America’s prefunded scheme would cover a mere 1.35% of insured deposits). Any deposit-insurance scheme must have recourse to government backing. . . . [T]he banking union—and thus the euro—will make little sense without it.

All deposits could be at risk in a meltdown. But how likely is that?

Pretty likely, it seems . . . .

What the Eurocrats Don’t Want You to Know

Mario Draghi was vice president of Goldman Sachs Europe before he became president of the ECB. He had a major hand in shaping the banking union. And according to Wolf Richter, writing in October 2013, the goal of Draghi and other Eurocrats is to lock taxpayer and depositor liability in place before the panic button is hit over the extreme vulnerability of Eurozone banks:

European banks, like all banks, have long been hermetically sealed black boxes. . . . The only thing known about the holes in the balance sheets of these black boxes, left behind by assets that have quietly decomposed, is that they’re deep. But no one knows how deep. And no one is allowed to know – not until Eurocrats decide who is going to pay for bailing out these banks.

When the ECB becomes the regulator of the 130 largest ECB banks, says Richter, it intends to subject them to more realistic evaluations than the earlier “stress tests” that were nothing but “banking agitprop.”  But these realistic evaluations won’t happen until the banking union is in place. How does Richter know? Draghi himself said so. Draghi said:

 “The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks … including through the provision of a public backstop. . . . These arrangements must be in place before we conclude our assessment.”

Richter translates that to mean:

The truth shall not be known until after the Eurocrats decided who would have to pay for the bailouts. And the bank examinations won’t be completed until then, because if any of it seeped out – Draghi forbid – the whole house of cards would collapse, with no taxpayers willing to pick up the tab as its magnificent size would finally be out in the open!

Only after the taxpayers – and the depositors – are stuck with the tab will the curtain be lifted and the crippling insolvency of the banks be revealed. Predictably, panic will then set in, credit will freeze, and the banks will collapse, leaving the unsuspecting public to foot the bill.

 What Happened to Nationalizing Failed Banks?

 Underlying all this frantic wheeling and dealing is the presumption that the “zombie banks” must be kept alive at all costs – alive and in the hands of private bankers, who can then continue to speculate and reap outsized bonuses while the people bear the losses.

But that’s not the only alternative. In the 1990s, the expectation even in the United States was that failed megabanks would be nationalized. That route was pursued quite successfully not only in Sweden and Finland but in the US in the case of Continental Illinois, then the fourth-largest bank in the country and the largest-ever bankruptcy. According to William Engdahl, writing in September 2008:

 [I]n almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990’s, nationalize the troubled banks [and] take over their management and assets … In the Swedish case the end cost to taxpayers was estimated to have been almost nil.

Typically, nationalization involves taking on the insolvent bank’s bad debts, getting the bank back on its feet, and returning it to private owners, who are then free to put depositors’ money at risk again. But better would be to keep the nationalized mega-bank as a public utility, serving the needs of the people because it is owned by the people.

As argued by George Irvin in Social Europe Journal in October 2011:

[T]he financial sector needs more than just regulation; it needs a large measure of public sector control—that’s right, the n-word: nationalisation. Finance is a public good, far too important to be run entirely for private bankers. At the very least, we need a large public investment bank tasked with modernising and greening our infrastructure . . . . [I]nstead of trashing the Eurozone and going back to a dozen minor currencies fluctuating daily, let’s have a Eurozone Ministry of Finance (Treasury) with the necessary fiscal muscle to deliver European public goods like more jobs, better wages and pensions and a sustainable environment.

A Third Alternative – Turn the Government Money Tap Back On

A giant flaw in the current banking scheme is that private banks, not governments, now create virtually the entire money supply; and they do it by creating interest-bearing debt. The debt inevitably grows faster than the money supply, because the interest is not created along with the principal in the original loan.

For a clever explanation of how all this works in graphic cartoon form, see the short French video “Government Debt Explained,” linked here.

The problem is exacerbated in the Eurozone, because no one has the power to create money ex nihilo as needed to balance the system, not even the central bank itself. This flaw could be remedied either by allowing nations individually to issue money debt-free or, as suggested by George Irvin, by giving a joint Eurozone Treasury that power.

The Bank of England just admitted in its Quarterly Bulletin that banks do not actually lend the money of their depositors. What they lend is bank credit created on their books. In the U.S. today, finance charges on this credit-money amount to between 30 and 40% of the economy, depending on whose numbers you believe.  In a monetary system in which money is issued by the government and credit is issued by public banks, this “rentiering” can be avoided. Government money will not come into existence as a debt at interest, and any finance costs incurred by the public banks’ debtors will represent Treasury income that offsets taxation.

New money can be added to the money supply without creating inflation, at least to the extent of the “output gap” – the difference between actual GDP or actual output and potential GDP. In the US, that figure is about $1 trillion annually; and for the EU is roughly €520 billion ($715 billion). A joint Eurozone Treasury could add this sum to the money supply debt-free, creating the euros necessary to create jobs, rebuild infrastructure, protect the environment, and maintain a flourishing economy.

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Ellen Brown is an attorney, founder of the Public Banking Institute, and a candidate for California State Treasurer running on a state bank platform. She is the author of twelve books, including the best-selling Web of Debt and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.

Take your savings acounts out of the "too big to fail banks" before they confiscate them. It's perfectly legal ...and inevitable, given the precarious conditions of the big banks due to their derivative speculations and the fact that futher taxpayer bailouts are now against the law. It's called a "bail-in." The FDIC can't save you, it's already broke. And don't let your stock broker keep your cash in money market funds, because these are mostly run by TBTF banks.

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Bail-out Is Out, Bail-in Is In: Time for Some Publicly-Owned Banks

Posted on April 29, 2013 by Ellen Brown

“[W]ith Cyprus . . . the game itself changed. By raiding the depositors’ accounts, a major central bank has gone where they would not previously have dared. The Rubicon has been crossed.”

—Eric Sprott, Shree Kargutkar, “Caveat Depositor”

The crossing of the Rubicon into the confiscation of depositor funds was not a one-off emergency measure limited to Cyprus.  Similar “bail-in” policies are now appearing in multiple countries.  (See my earlier articles here.)  What triggered the new rules may have been a series of game-changing events including the refusal of Iceland to bail out its banks and their depositors; Bank of America’s commingling of its ominously risky derivatives arm with its depository arm over the objections of the FDIC; and the fact that most EU banks are now insolvent.  A crisis in a major nation such as Spain or Italy could lead to a chain of defaults beyond anyone’s control, and beyond the ability of federal deposit insurance schemes to reimburse depositors.

The new rules for keeping the too-big-to-fail banks alive: use creditor funds, including uninsured deposits, to recapitalize failing banks.

But isn’t that theft?

Perhaps, but it’s legal theft.  By law, when you put your money into a deposit account, your money becomes the property of the bank.  You become an unsecured creditor with a claim against the bank.  Before the Federal Deposit Insurance Corporation (FDIC) was instituted in 1934, U.S. depositors routinely lost their money when banks went bankrupt.  Your deposits are protected only up to the $250,000 insurance limit, and only to the extent that the FDIC has the money to cover deposit claims or can come up with it.

The question then is, how secure is the FDIC?

Can the FDIC Go Bankrupt?

In 2009, when the FDIC fund went $8.2 billion in the hole, Chairwoman Sheila Bair assured depositors that their money was protected by a hefty credit line with the Treasury. But the FDIC is funded with premiums from its member banks, which had to replenish the fund. The special assessment required to do it was crippling for the smaller banks, and that was just to recover $8.2 billion.  What happens when Bank of America or JPMorganChase, which have commingled their massive derivatives casinos with their depositary arms, is propelled into bankruptcy by a major derivatives fiasco?  These two banks both have deposits exceeding $1 trillion, and they both have derivatives books with notional values exceeding the GDP of the world.

Bank of America Corporation moved its trillions in derivatives (mostly credit default swaps) from its Merrill Lynch unit to its banking subsidiary in 2011.  It did not get regulatory approval but just acted at the request of frightened counterparties, following a downgrade by Moody’s. The FDIC opposed the move, reportedly protesting that the FDIC would be subjected to the risk of becoming insolvent if BofA were to file for bankruptcy.  But the Federal Reserve favored the move, in order to give relief to the bank holding company.  (Proof positive, says former regulator Bill Black, that the Fed is working for the banks and not for us. “Any competent regulator would have said: ‘No, Hell NO!’”)

The reason this risky move would subject the FDIC to insolvency, as explained in my earlier article here, is that under the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. Normally, the FDIC would have the powers as trustee in receivership to protect the failed bank’s collateral for payments made to depositors. But the FDIC’s powers are overridden by the special status of derivatives.  (Remember MF Global?  The reason its customers lost their segregated customer funds to the derivatives claimants was that derivatives have super-priority in bankruptcy.)

The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15 percent of insured deposits.  And the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivatives activities.  Drawing on the FDIC’s credit line with the Treasury to cover a BofA or JPMorgan derivatives bust would be the equivalent of a taxpayer bailout, at least if the money were not paid back; and imposing that burden on the FDIC’s member banks is something they can ill afford.

BofA is not the only bank threatening to wipe out the federal deposit insurance funds that most countries have.  According to Willem Buiter, chief economist at Citigroup, most EU banks are zombies. And that explains the impetus for the new “bail in” policies, which put the burden instead on the unsecured creditors, including the depositors.  Below is some additional corroborating research on these new, game-changing bail-in schemes.

Depositors Beware

An interesting series of commentaries starts with one on the website of Sprott Asset Management Inc. titled “Caveat Depositor,” in which Eric Sprott and Shree Kargutkar note that the US, UK, EU, and Canada have all built the new “bail in” template to avoid imposing risk on their governments and taxpayers.  They write:

[M]ost depositors naively assume that their deposits are 100% safe in their banks and trust them to safeguard their savings. Under the new “template” all lenders (including depositors) to the bank can be forced to “bail in” their respective banks. 

Dave of Denver then followed up on the Sprott commentary in an April 3 entry on his blog The Golden Truth, in which he pointed out that the new template has long been agreed to by the G20 countries:

Because the use of taxpayer-funded bailouts would likely no longer be tolerated by the public, a new bank rescue plan was needed.  As it turns out, this new “bail-in” model is based on an agreement that was the result of a bank bail-out model that was drafted by a sub-committee of the BIS (Bank for International Settlement) and endorsed at a G20 summit in 2011. For those of you who don’t know, the BIS is the global “Central Bank” of Central Banks. As such it is the world’s most powerful financial institution.

The links are in Dave’s April 1 article, which states:

The new approach has been agreed at the highest levels . . . It has been a topic under consideration since the publication by the Financial Stability Board (a BIS committee) of a paper, Key Attributes of Effective Resolution Regimes for Financial Institutions in October 2011, which was endorsed at the Cannes G20 summit the following month. This was followed by a consultative document in November 2012, Recovery and Resolution Planning: Making the Key Attributes Requirements Operational.

Dave goes on:

[W]hat is commonly referred to as a “bail-in” in Cyprus is actually a global bank rescue model that was derived and ratified nearly two years ago. . . . [B]ank deposits in excess of Government insured amount in any bank in any country will be treated like unsecured debt if the bank goes belly-up and is restructured in some form.

Jesse at Jesse’s Café Americain then picked up the thread and pointed out that it is not just direct deposits that are at risk. The too-big-to-fail banks have commingled accounts in a web of debt that spreads globally. Stock brokerages keep their money market funds in overnight sweeps in TBTF banks, and many credit unions do their banking at large TBTF correspondent banks:

You say you have money in a pension fund and an IRA at XYZ bank?  Oops, it is really on deposit in you-know-who’s bank.  You say you have money in a brokerage account?  Oops, it is really being held overnight in their TBTF bank.  Remember MF Global?  Who can say how far the entanglements go?  The current financial system and market structure is crazy with hidden risk, insider dealings, control frauds, and subtle dangers.

Also at Risk: Pension Funds and Public Revenues 

William Buiter, writing in the UK Financial Times in March 2009, defended the bail-in approach as better than the alternative.  But he acknowledged that the “unsecured creditors” who would take the hit were chiefly “pensioners drawing their pensions from pension funds heavily invested in unsecured bank debt and owners of insurance policies with insurance companies holding unsecured bank debt,” and that these unsecured creditors “would suffer a large decline in financial wealth and disposable income that would cause them to cut back sharply on consumption.”

The deposits of U.S. pension funds are well over the insured limit of $250,000.  They will get raided just as the pension funds did in Cyprus, and so will the insurance companies.  Who else?

Most state and local governments also keep far more on deposit than $250,000, and they keep these revenues largely in TBTF banks.  Community banks are not large enough to service the complicated banking needs of governments, and they are unwilling or unable to come up with the collateral that is required to secure public funds over the $250,000 FDIC limit.

The question is, how secure are the public funds in the TBTF banks?  Like the depositors who think FDIC insurance protects them, public officials assume their funds are protected by the collateral posted by their depository banks.  But the collateral is liable to be long gone in a major derivatives bust, since derivatives claimants have super-priority in bankruptcy over every other claim, secured or unsecured, including those of state and local governments.

The Cyprus Wakeup Call

Robert Teitelbaum wrote in a May 2011 article titled “The Case Against Favored Treatment of Derivatives”:

. . . Dodd-Frank did not touch favored status [of derivatives] and despite all the sound and fury, . . . there are very few signs from either party that anyone with any clout is suddenly about to revisit that decision and simplify bankruptcy treatment. Why? Because for all its relative straightforwardness compared to more difficult fixes, derivatives remains a mysterious black box to most Americans . . . .  [A]s the sense of urgency to reform passes . . . we return to a situation of technical interest to only a few, most of whom have their own particular self-interest in mind.

But that was in 2011, before the Cyprus alarm bells went off.  It is time to pry open the black box, get educated, and get organized.  Here are three things that need to be done for starters:

• Protect depositor funds from derivative raids by repealing the super-priority status of derivatives.
• Separate depository banking from investment banking by repealing the Commodity Futures Modernization Act of 2000 and reinstating the Glass-Steagall Act.
• Protect both public and private revenues by establishing a network of publicly-owned banks, on the model of the Bank of North Dakota.

For more information on the public bank option, see here. Learn more at the Public Banking Institute conference June 2-4 in San Rafael, California, featuring Matt Taibbi, Birgitta Jonsdottir, Gar Alperovitz and others.  

Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com.

A small extract from what you will read below: "An audit of the Federal Reserve released in July, 2011, revealed that the Federal Reserve had provided $16 trillion – a sum larger than US GDP or the US public debt – in secret loans to bail out American and foreign banks, while doing nothing to aid the millions of American families being foreclosed out of their homes. Political accountability disappeared as all public assistance was directed to the mega-rich, whose greed had produced the financial crisis."

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Americans’ Economic Prospects And Civil Liberties Have Been Stolen — Paul Craig Roberts

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March 24, 2013 | Original Here

Note: there are many new interviews posted [on his original]. If you have time on your hands, the interviews will give you a better result than video games.

I receive numerous questions from readers about our economic situation and the condition of civil liberty. There is no way I can answer so many inquiries, and no need. I have written two books that provide the answers, and they are inexpensive. I have done my job. It is up to you to inform yourself. Kindle Reader software is available as a free online download that permits you to read ebooks in your own web browser. No Kindle device is required. Here are the URls for Apple and PC free downloads: Kindle for PC: http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1000426311
Kindle for Mac: http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1000464931

My latest, The Failure Of Laissez Faire Capitalism And Economic Dissolution of the West, is available as an ebook in English as of March 2013 from Amazon.com and from Barnes&Noble. My book is endorsed by Michael Hudson and Nomi Prims and has a 5 star rating from Amazon reviewers (as of March 23, 2013). Pam Martens’ review at Wall Street On Parade is available here: http://wallstreetonparade.com/2013/03/paul-craig-roberts’-primer-on-why-the-great-recession-is-the-new-normal/

Libertarians who have not read the book have had an ideological knee-jerk reaction to the title. They demand to know how can I call the present system of crony capitalism laissez faire. I don’t. The current system of government supported crony capitalism is the end result of a 25-year process of deregulation. Deregulation did not produce libertarian nirvana. It produced economic concentration and crony capitalism.

Amazon provides as a free read the introduction by Johannes Maruschzik to the German edition. Below is my Introduction to my book.

Not only has your economy been stolen from you but also your civil liberties. My coauthor Lawrence Stratton and I provide the scary details of the entire story in The Tyranny of Good Intentions. In the US law is no longer a shield of the people against arbitrary government. Instead, law has been transformed into a weapon in the hands of the government.

Josie Appleton documents that in England also law has been turned into a weapon against the people. http://www.spiked-online.com/site/printable/13420/ Anglo-American law, the foundation of liberty and one of the greatest human achievements, lies in ruins.

Libertarians think that liberty is a natural right, and some Christians think that it is a God-given right. In fact, liberty is a human achievement, fought for by Englishmen over the centuries. In the late 17th century, the achievement of the Glorious Revolution was to hold the British government accountable to law. William Blackstone heralded the achievement in his famous Commentaries On The Laws Of England, a bestseller in pre-revolutionary America and the foundation of the US Constitution.

In the late 20th century and early 21st century, governments in the US and Great Britain chafed under the requirement that government, like the people, is ruled by law and took steps to free government from accountability to law.

Appleton says that the result is a “tectonic shift in the relationship between the state and the citizen.” Citizens of the US and UK are once again without the protection of law and subject to arbitrary arrests and indictments or to indefinite detention in the absence of indictments.

In the US, citizens can be detained indefinitely and even executed without due process of law. There is no basis in the US Constitution for these asserted powers. The unconstitutional powers exist only because Congress, the judiciary and the American people have accepted the lie that the loss of civil liberty is the price paid for protection against terrorists.

In a very short time the raw power of the state has been resurrected. Most Americans are oblivious to this outcome. As long as government is imprisoning and killing without trials demonized individuals whom Americans have been propagandized to fear, Americans approve. Americans do not understand that a point is reached when demonization becomes unnecessary and that precedents have been established that revoke the Bill of Rights.

If you are educated by these two books, you will be better able to understand what is happening and, thus, you will be in a better position to survive what is coming.

Introduction to The Failure of Laissez Faire Capitalism and Economic
Dissolution of the West: Towards a New Economics for a Full World

The collapse of the Soviet Union in 1991 and the rise of the high speed Internet have proved to be the economic and political undoing of the West. “The End Of History” caused socialist India and communist China to join the winning side and to open their economies and underutilized labor forces to Western capital and technology. Pushed by Wall Street and large retailers, such as Wal-Mart, American corporations began offshoring the production of goods and services for their domestic markets. Americans ceased to be employed in the manufacture of goods that they consume as corporate executives maximized shareholder earnings and their performance bonuses by substituting cheaper foreign labor for American labor. Many American professional occupations, such as software engineering and Information Technology, also declined as corporations moved this work abroad and brought in foreigners at lower renumeration for many of the jobs that remained domestically. Design and research jobs followed manufacturing abroad, and employment in middle class professional occupations ceased to grow. By taking the lead in offshoring production for domestic markets, US corporations force the same practice on Europe. The demise of First World employment and of Third World agricultural communities, which are supplanted by large scale monoculture, is known as Globalism.

For most Americans income has stagnated and declined for the past two decades. Much of what Americans lost in wages and salaries as their jobs were moved offshore came back to shareholders and executives in the form of capital gains and performance bonuses from the higher profits that flowed from lower foreign labor costs. The distribution of income worsened dramatically with the mega-rich capturing the gains, while the middle class ladders of upward mobility were dismantled. University graduates unable to find employment returned to live with their parents.

The absence of growth in real consumer incomes resulted in the Federal Reserve expanding credit in order to keep consumer demand growing. The growth of consumer debt was substituted for the missing growth in consumer income. The Federal Reserve’s policy of extremely low interest rates fueled a real estate boom. Housing prices rose dramatically, permitting homeowners to monetize the rising equity in their homes by refinancing their mortgages.

Consumers kept the economy alive by assuming larger mortgages and spending the equity in their homes and by accumulating large credit card balances. The explosion of debt was securitized, given fraudulent investment grade ratings, and sold to unsuspecting investors at home and abroad.

Financial deregulation, which began in the Clinton years and leaped forward in the George W. Bush regime, unleashed greed and debt leverage. Brooksley Born, head of the federal Commodity Futures Trading Commission, was prevented from regulating over-the-counter derivatives by the chairman of the Federal Reserve, the Secretary of the Treasury, and the chairman of the Securities and Exchange Commission. The financial stability of the world was sacrificed to the ideology of these three stooges that “markets are self-regulating.” Insurance companies sold credit default swaps against junk financial instruments without establishing reserves, and financial institutions leveraged every dollar of equity with $30 dollars of debt.

When the bubble burst, the former bankers running the US Treasury provided massive bailouts at taxpayer expense for the irresponsible gambles made by banks that they formerly headed. The Federal Reserve joined the rescue operation. An audit of the Federal Reserve released in July, 2011, revealed that the Federal Reserve had provided $16 trillion–a sum larger than US GDP or the US public debt–in secret loans to bail out American and foreign banks, while doing nothing to aid the millions of American families being foreclosed out of their homes. Political accountability disappeared as all public assistance was directed to the mega-rich, whose greed had produced the financial crisis.

The financial crisis and plight of the banksters took center stage and prevented recognition that the crisis sprang not only from the financial deregulation but also from the expansion of debt that was used to substitute for the lack of growth in consumer income. As more and more jobs were offshored, Americans were deprived of incomes from employment. To maintain their consumption, Americans went deeper into debt.

The fact that millions of jobs have been moved offshore is the reason why the most expansionary monetary and fiscal policies in US history have had no success in reducing the unemployment rate. In post-World War II 20th century recessions, laid-off workers were called back to work as expansionary monetary and fiscal policies stimulated consumer demand. However, 21st century unemployment is different. The jobs have been moved abroad and no longer exist. Therefore, workers cannot be called back to factories and to professional service jobs that have been moved abroad.

Economists have failed to recognize the threat that jobs offshoring poses to economies and to economic theory itself, because economists confuse offshoring with free trade, which they believe is mutually beneficial. I will show that offshoring is the antithesis of free trade and that the doctrine of free trade itself is found to be incorrect by the latest work in trade theory. Indeed, as we reach toward a new economics, cherished assumptions and comforting theoretical conclusions will be shown to be erroneous.

This book is organized into three sections. The first section explains successes and failures of economic theory and the erosion of the efficacy of economic policy by globalism. Globalism and financial concentration have destroyed the justifications of market capitalism. Corporations that have become “too big to fail” are sustained by public subsidies, thus destroying capitalism’s claim to be an efficient allocator of resources. Profits no longer are a measure of social welfare when they are obtained by creating unemployment and declining living standards in the home country.

The second section documents how jobs offshoring or globalism and financial deregulation wrecked the US economy, producing high rates of unemployment, poverty and a distribution of income and wealth extremely skewed toward a tiny minority at the top. These severe problems cannot be corrected within a system of globalism.

The third section addresses the European debt crisis and how it is being used both to subvert national sovereignty and to protect bankers from losses by imposing austerity and bailout costs on citizens of the member countries of the European Union.

I will suggest that it is in Germany’s interest to leave the EU, revive the mark, and enter into an economic partnership with Russia. German industry, technology, and economic and financial rectitude, combined with Russian energy and raw materials, would pull all of Eastern Europe into a new economic union, with each country retaining its own currency and budgetary and tax authority. This would break up NATO, which has become an instrument for world oppression and is forcing Europeans to assume burdens of the American Empire.

Sixty-seven years after the end of World War II, twenty-two years after the reunification of Germany, and twenty-one years after the collapse of the Soviet Union, Germany is still occupied by US troops. Do Europeans desire a future as puppet states of a collapsing empire, or do they desire a more promising future of their own?

WHY HAS THE RIGHT WING BEEN ABLE TO DESTROY THE MIDDLE CLASS IN WISCONSIN, MICHIGAN, INDIANA, AND NOW ARIZONA? HERE IS AN EXCERPT OF A SCHOLARLY WORK WRITTEN UP AS THOUGH A BEST-SELLING NOVEL. THE TALE IS AS ENTHRALLING AS IT IS ENLIGHTENING!

   Original here                                                                                                                     .

Picador Press / By Thomas Frank

Why We Got Ayn Rand Instead of FDR: Thomas Frank on How Tea Party 'Populism' Derailed a New New Deal

After a brutal recession was brought on by Wall Street greed, it looked for a moment like we'd rejected the Right's economic mythology. Then the "Tea Party" came along.

February 2, 2012 | Editor's note: In late 2007 and early 2008, the house of cards came crashing down around us, and all of the economic doctrine we'd been fed by the pundits and politicians of both parties over the past few decades was laid bare for all to see. The deregulated cowboy capitalism that was supposed to release unbridled prosperity had led instead to widespread economic pain – hardship that would spread globally and remain with us to this day.

It was a moment ripe for a populist uprising. Many observers expected the pendulum to swing back from the rightward lurch authored during the “Reagan Revolution” – perhaps a new New Deal would emerge as America elected its first black president in a dramatic rejection of George W. Bush's business-friendly ideology.

But something happened on the way to this much-anticipated swing back to the left. Instead of FDR, we got Ayn Rand. Rather than calling for programs that might alleviate some of working America's suffering, we saw the emergence of the Tea Parties, which demanded that ordinary Americans feel every bit of pain they had coming to them – and also that we leave the Wall Street hustlers who had precipitated the crash alone.

It was an ahistoric reaction to a recession caused by Big Finance, and it captured the imagination of author and columnist Thomas Frank. In 2005, Frank wrote the now-classic book, What's the Matter With Kansas? in which he detailed how the “Backlash Right” used social issues to hoodwink many Americans into voting against their economic interests. It was a classic bait-and-switch – they voted for politicians who promised to overturn Roe v. Wade, and got tax breaks for the ultra-rich, deregulation for Wall Street and trade deals that took down barriers to corporate offshoring.

In the aftermath of the crash, Frank returns to the topic to discover that the “New New Right” had once again offered Americans a bait-and-switch, but of a different kind. The result is Frank's new book, Pity the Billionaire: The Hard-Times Swindle and the Unlikely Come-Back of the Right. AlterNet is proud to bring you this excerpt from the book.

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An appropriate metaphor for the conservative revival is the classic switcheroo, with one fear replacing another, theoretical emergencies substituting for authentic ones, and a new villain shuffling onstage to absorb the brickbats meant for another. The conservative renaissance rewrites history according to the political demands of the moment, generates thick smokescreens of deliberate bewilderment, grabs for itself the nobility of the common toiler, and projects onto its rivals the arrogance of the aristocrat. Nor is this constant redirection of public ire a characteristic the movement developed as it went along; it was present at the creation. Indeed, redirection was the creation.

Drawer of Water, Hewer of Bullshit

The call that awakened the rebellion came not from some itinerant IWW organizer but from a TV “rant” delivered on February 19, 2009, by one Rick Santelli, a business reporter standing on the floor of the Chicago Board of Trade— a reporter ranting, let us be clear, not against the traders who surrounded him but on their behalf. In retrospect, there would be few better examples of the spirit of inversion that drives the conservative revival.

Rick Santelli had criticized many aspects of the bank bailouts over the preceding months, but on that day in February when he had the ear of the nation, the part of the TARP that drew his disgust was, significantly, the element designed to help homeowners modify the terms of certain underwater mortgages, making payments more affordable and thus preventing foreclosures. It was the only part of TARP that was intended to directly benefit individual borrowers rather than institutional players, and thus it was supposed to help make the program popular. Instead, it brought down the wrath of this man Santelli, who found it inconceivable that such an initiative was even under consideration. “This is America!” he yelled, working himself into a rage.

And in Santelli’s trading-floor “America,” such a program was “promoting bad behavior,” “subsidiz[ing] the losers’ mortgages” with public money that, were it directed to society’s winners, would presumably be spent on better, shinier things. Santelli’s outrage at these “losers” was inexhaustible, incandescent. They “drink the water” while others “carry the water.” Raising his arms and turning to his friends, the Chicago traders, he asked, “How many people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?

Boo, went the traders: Down with neighbors! To hell with their extra bathrooms, their arrogant water-drinking, their hard luck.

The next step, should government proceed along the mortgage-modifying paths of tyranny, the reporter reported, would be communist Cuba. But before Big Brother clapped us in statist irons, he’d have to deal with Rick Santelli, friend of the trader and scourge of the thirsty. Santelli was going to defy the Obama administration with a “Chicago Tea Party,” and he invited “all you capitalists.”

Over the following days, the question that seemed to transfix commentators was whether or not Santelli’s instantly famous tirade had been scripted or sincerely felt. But what interested me was the elephantine perversity of the moment. The country was then teetering on the edge of economic disaster; one reason it so teetered was due to the bonus-driven doings of people like the traders who cheered for Santelli. And one reason so many of us teetered along with it was that business-news outlets like CNBC had almost entirely failed to warn us about the mounting problems in investment banking and mortgage lending. But this CNBC host and his trader friends weren’t the villains; they were the guys with a grievance.

One point remained. Who were these disgruntled traders, the body politic for whom Rick Santelli was the eloquent voice?

Well, he told a CNBC colleague, they were “pretty straightforward...a pretty good statistical cross-section of America, the silent majority.”

Of all the capsized reasoning Rick Santelli used on that fateful February day, this was the most perverse. Traders may come in different shades and prefer different foods, but by definition they represent only one walk of life: they are people who buy and sell abstract commodities. They make nothing. They move nothing (except prices). They are the financial industry distilled down to its grasping essence. And if we are to judge by Trader Monthly, traders are a “cross-section of America” only if “America” is a place where truculence and bullying are the great national virtues and financial legerdemain is considered the noblest way of earning a living.

To others, however, the equation of traders with America, with We-the-People, was the wisest thing to pass Rick Santelli’s lips that morning. By sheer force of assertion, Santelli erased the stigma that had marked financiers ever since the start of the downturn. Now we could see, as one Tea Party organizer wrote later, that those traders were “simply working people who wanted the freedom to continue working and to enjoy the fruits of their labor in a fair way.”

As for Santelli himself, his oneness with the common man had been established even before his great moment in February. According to a Washington Post profile of the TV personality that was published in November of 2008, Santelli “is usually perched in a lower corner of the TV screen and is filmed from above, shouting up from a trading pit at the Chicago Board of Trade. It gives his rants a classic plain-speaking-little-man-against-the-system feel.”

And so the inversion was complete. The business reporter who speaks for the “working people” of the derivatives pits was a “little man” standing up to “the system” in classic '30s fashion.

Santelli’s rant caught the insurrectionary spirit of the times. Public choler at the powerful was blowing out the stops in those first few months of 2009, and the reporter’s outburst was an immediate sensation, replayed millions of times by the angry YouTubing multitude. The instant comparison was to Howard Beale, the populist anchorman character in the 1976 movie Network, raging against the system while the cameras rolled.

That the broadcaster was, in point of fact, speaking on behalf of the system and against the claims of the average people who were its victims was a subtlety Americans found easy to overlook. It was a time of confusion, and just about wherever you looked, the frustrated expressions of the powerful were being characterized as spontaneous eruptions of the American everyman, taking matters into his own hands.

Conditions were right for grand-scale perplexity of this kind. Who knew, for example, what a credit default swap was? And who could explain the process by which such an instrument had brought the mightiest economy on earth to a standstill?

Amid the tides of bewilderment, though, one piece of deviltry stood solid and unmoving, a sort of Gibraltar of populist outrage: the TARP bailout bill. Now, here was a villainy people could understand. It would be costlier, Americans were told, than the entire Vietnam War, or the Louisiana Purchase, or just about anything else. And it was unmistakably bad: the bailouts were the avenues by which our government obligingly moved the financial industry’s losings over to the taxpayers.

In different times, TARP might have become the rallying point of a revitalized Left. After all, the bailouts were clearly of a piece with the misbehavior that had come before: the deregulation of the banks, the bonus culture, the wrecking of the supervisory state. Business-friendly conservatives had been behind each of these, and then business-friendly conservatives had knitted together the TARP for the same rotten reason: to give the bankers what ever they wanted. Reformers might have depicted the TARP as the final chapter in the great book of fraud, the episode in which Wall Street used the captured state to transfer its debts to the public.

But it was the Right that grabbed the opportunity to define the debate, using bailouts to shift the burden of villainy from Wall Street to government. For them, the TARP was the only part of the crisis story that mattered— not the derivatives or the deregulation— and its conservative-Republican parentage made no difference. (That congressional Democrats voted for it, on the other hand, was deeply meaningful.) They were the sole rightful opponents of the TARP, conservatives insisted, because they opposed federal interventions in the market, and bailouts violated strict laissez-faire orthodoxy—their orthodoxy. Bailouts allowed government to decide who won and lost; they replaced the forces of competition with those of administrative fiat; and they puffed up the deficit, to boot. And so the Right staked its claim, making the TARP into the outrage that lifted a thousand snake flags.

“Let the Failures Fail”

The first of those snake flags was hoisted at a Tea Party rally in Washington eight days after the Santelli broadcast, and it was as perfect an example as any of the Right’s ability to capitalize on public confusion. That original Tea Party rally sure didn’t look spontaneous or grassroots to me when I showed up. In fact, it had every appearance of being one of those staged protests that happen all the time in Washington, in which a handful of people from a pressure group pose with signs for the media. I had heard about the plans for the gathering not from some radical handbill picked up on a street corner, but in an online message from an editor at the American Spectator, a sturdy pillar of right-wing Washington. The rally was to be held at the park across the street from the White House, the traditional staging ground for phony right-wing protest going back (at least) to the days when Jack Abramoff ran the College Republicans.

This was no act of defiance by the little man. It was astroturf of the most ersatz kind; plastic grass with extra vinyl content. The event was swarming with well-known conservative movement personnel. The blogger Michelle Malkin took a turn with the megaphone, as did Joe the Plumber, the itinerant proletarian, who was there to show working-class America’s faith in the cynical idealism of billionaire America. Lots of people were in suits, and some were wearing name tags from the Conservative Political Action Conference, which was going on a few subway stops away.

The protestors denounced deficit spending and bailouts and the item that had triggered Santelli’s explosion: the possibility that government might help people modify their mortgages. Where communities once used to rally to help out a foreclosed-upon neighbor, the prototypical populists now wanted to see that uppity neighbor get evicted from the oversized home the rascal had no business buying in the first place.

The symbols, costumes, and confusion that the nation would soon come to know so well were all pretty much present at that first gathering: the snake flags, the three- cornered hats, the Constitution worship, even the epidemic of spelling errors. And, of course, the small-minded vindictiveness that for years now has masqueraded as brave back-talk to arrogant authority. Photographing Tea Party protest signs would soon become something of a cliché, but on that first occasion, a woman proudly held up for my camera a homemade declaration of befuddled outrage that read as follows:

Can anyone on

Capital Hill read?

If so read the

Constitution

As Americans

we do not have the right:

To a house

To a car

To an education

Americans have a right

to persue happiness

not to have it given to

them!

There was talk about the conflict of “freedom versus tyranny,” as though the real danger Americans faced was not economic collapse but some bid to crack down on personal liberty. And there was a slogan, a cry of existential anxiety from the bitter '70s— or, rather, a confused homage to Rick Santelli— as speakers began one after another to repeat a famous line from Network: “I’m as mad as hell and I’m not going to take this anymore.”

“Anymore”? Barack Obama had been in the White House for a little over a month at that point, and yet already their suffering at his hands was more than they could bear. “They’re” not going to “take this”? For decades, politicians had catered to every short- fused demand that economic conservatives raised. This was a group that had been singularly well served by the political system; they had received exactly the deregulated world they now said they wanted.

But “mad as hell”? Oh, that note rang true. Even I could be roped into that sentiment. And for everyone who was livid about the financial crisis and the bailouts, those first-generation Tea Partiers had a simple proposal: “Let the Failures Fail.” That was the slogan I saw on one protest sign, and I have probably heard some echo of it hundreds of times since then. “Let the failures fail.”

Here, in one sentence, was a key to the amazing success the Right would shortly enjoy. They had an answer to the bailout outrage, and it was not modulated by lawyerly subtleties or votes-taken-with-nose-held, like the House Democrats who had voted for the TARP. “Let the failures fail”: it was a line that would allow the revived Right to depict itself as an enemy of big business, rooting for the collapse of the megabanks. The Tea Partiers may have looked ridiculous in their costumes, but their central demand was anything but.

The Bad Neighbor Doctrine

Not all “failure” is the same, however. What the newest Right has in mind is something philosophical, something both personal and sweeping. It demands liquidation across the board, a sort of deserved doomsday for the borrowing-based way of life. But in the great die-off it delights in imagining, the real culprits of 2008 have a way of disappearing from view.

If we watch closely, we can see the cards being switched. Whenever our tea-partying friends warm to the subject of letting-the-failures-fail—and they do so often—sooner or later they inevitably turn from the bailed-out banks to those spendthrift “neighbors” identified by Santelli, those dissolute people down the street who borrowed in order to live above their station. These are the failures who need to be made to fail. It is always personal. Here are conservative warriors Dick Armey and Matt Kibbe, in a chapter of their “Tea Party Manifesto” called “Bailout.”

Many of us knew instinctually the bailout was wrong. We understood that in order for capitalism to work we need to be able to not only keep the potential gains from the risks we take but also accept the losses that may come. With profit comes the potential of loss. Many of us had a neighbor or heard about someone who had been living too high on the hog for too long and were wondering why we were now supposed to pay for it.

At other times, the failure they long to see is cosmic failure, a “day of reckoning,” as Senator Rand Paul likes to say: failure as nature’s response to the hubris of big government, failure as our richly deserved punishment for our bad values. According to the former Fox News personality Glenn Beck, failure is a way of atoning for American materialism. Failure is a morally necessary and even a healthful thing, he wrote in a 2009 bestseller, “a necessary step in achieving success— a step that safety nets and bailouts attempt to take a shortcut around.” These bailouts are, in fact, an offense against nature and Republican virtue itself, an extension of the same selfishness that saw consumers go into debt and “politicians and the media” assure “us that America is about having the most stuff, the nicest cars, and the biggest homes.”

So let a thousand failures fail. Let all the losers go down. Government that handed out the bailouts, banks that received them, greedy neighbors that took out mortgages, and everybody in between: Let them all fall flat. Let the jobless go without unemployment benefits. Let the farmers go without subsidies. Let depositors in failed banks walk away empty-handed. Let the dollar fail, too, and let those who didn’t hoard gold coins for retirement in their own private hidey-hole suffer the consequences.

For decades, goes the sweet, scolding refrain, we’ve been living beyond our means. We thought we could waft to riches on flowery beds of ease, but now the bill has come due. The country is “broke,” as Glenn Beck and countless other conservatives love to remind us; we can no longer defy the “Laws of Nature.” The thrifty and productive can no longer support the profligate. Only those who sow get to reap. Life is harsh, and Americans need to get used to it. A few years down the road, this dogma would lead the rejuvenated Right to attempt actually to bring catastrophe down on the nation, via the federal debt-ceiling showdown.

But in the meantime, it was an attractive moral doctrine; a sweeping condemnation of a society that has lost its way, that worships false gods, that has become besotted with affluence. But the cult of failure appealed for another, subtler reason. It allowed the resurgent Right to shuffle the bitter mood of the moment and generate an outcome that was more to its liking— to deflect public anger from the obvious targets.

A Revelation- The Fed Grants $7.77 Trillion in Secret Bank Loans

Original here

The Fed Grants $7.77 Trillion in Secret Bank Loan - Now Do You Understand Occupy Wall Street?

Original here

DEBT "CRISIS" IS A FRAUD: AUTHOR AND ACTIVIST DAVID SWANSON LAYS OUT THE CASE.

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  theREALnews

July 17, 2011

PERMALINK

Debt Ceiling Debate "Fraud"

David Swanson : polling shows majority of Americans want to tax the rich and cut the military before making social program cuts



Bio

David Swanson is the creator of ImpeachCheney.org, co-founder of AfterDowningStreet.org and Washington Director of Democrats.com A writer and organizer, Swanson has worked for ACORN, the International Labor Communications Association, Dennis Kucinich 's 2004 presidential campaign and many others.

GREEK CRISIS IS A BANK BAILOUT IN DISGUISE: SHARP TOUNGUED ECONOMIST TOM FERGUSON EXPLAINS ALL

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  theREALnews

July 14, 2011

PERMALINK

Banks Refusing a "Haircut" Spur EU Financial Crisis

Tom Ferguson: Governments demand austerity so banks get paid, even though it deepens crisis



Bio

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow of the Roosevelt Institute. He received his Ph.D. from Princeton University and taught formerly at MIT and the University of Texas, Austin. He is the author or coauthor of several books, including Golden Rule (University of Chicago Press, 1995) and Right Turn (Hill & Wang, 1986). Most of his research focuses on how economics and politics affect institutions and vice versa. His articles have appeared in many scholarly journals, including the Quarterly Journal of Economics, International Organization, International Studies Quarterly, and the Journal of Economic History. He is a long time Contributing Editor to The Nation and a member of the editorial boards of the Journal of the Historical Society and the International Journal of Political Economy.

SO ARE WE ALL TO BE HELPLESS VICITMS OF THE TOO-BIG-TO-JAIL BANKSTERS? OR IS HELP ON THE WAY? WATCH THIS!!!

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PERMALINK

What Are We Capable Of?

TheAnonPress

Ron Paul Confirms 88% Of The Banker Bailout Money Went To Foreign Banks

LiveFreeorDieReport

MICHAEL HUDSON: "The Federal Reserve, by bailing out Wall Street, spent $13 trillion, more than tripling America's public debt just to give it away to Wall Street for the money that it had gambled and lost." RICHARD D WOLFF: "The reason we have a suddenly humungous deficit is because we had a failure of our private capitalist system, and that the government has come in to hold it up, to rescue it... When the government shores it up and borrows tremendous amounts of money ... it wants to make the people who pay for this be the poor people on Medicaid, the old people on Medicare."

  theREALnews

Debt and a Broken System

Hudson and Wolff: Massive public debt incurred to bail out a broken private system


Original with full transcript here.

Bio

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971). ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East. Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law. Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne).

EVEN THE LIBERAL MEDIA SEEMS TO HAVE ITS LIMITS WHEN IT COMES TO CALLING OUT THE CRIMES OF OUR CRIMINAL GOVERNMENT

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I Will Not Participate In the Journalism of Appeasement

Posted on Tuesday, December 21st, 2010 at 3:13 pm

By David DeGraw, AmpedStatus

Here’s a brief summation of my recent reporting:

If we continue to let our politicians and wealthy members of society live in comfort, free from the consequences of their actions, we are complicit in our own demise.

Our country is so overrun with corruption, we cannot remain passive and expect things to get any better.

The economy is propped up by smoke and mirrors and will inevitably collapse. Without immediately breaking up the banks and holding the thieves accountable, we will continue on our downward spiral with increasingly severe and devastating consequences.

These are extremely unpleasant truths that we are now forced to confront. We have to act now. If you are not calling for revolution or organizing, you are either unaware of what’s happening around you, horribly naïve or a fascist sympathizer.

In response to statements like those above, I’ve been exchanging emails with colleagues (journalists and news editors) who have become “uncomfortable” with my reporting style and been saying some variation of the following: “You’re being too radical. This is too extreme for us to publish.”

While I appreciate their opinions, I want to make something 100% clear. I am fully aware that these words are harsh, and may turn off some people. However, in extreme times, telling the truth will make you sound extreme. Ultimately, I don’t mind if you think I sound “too extreme,” I don’t care if I make people “uncomfortable,” or if, in your opinion, I’ve become “too radical.” Try telling that to the 52 million Americans who are now living in poverty. Tell that to the millions of American families who have lost their homes and jobs. Tell that to the 59 million people who can’t afford health insurance. Tell that to the overwhelming majority of the population who are stressed out, living paycheck to paycheck, buried in debt they will never get out of and desperately struggling to make ends meet.

Try telling that to all the people who have emailed me explaining their dire situations due to this economic crisis. Tell that to all the people I personally know who have taken major pay cuts.

I will not participate in the journalism of appeasement.

What has to happen for you to stop being a status quo supporting naïve journalist and realize that we are in the middle of a war? More accurately, it is a slaughter. An all-time record-breaking slaughter.

I refuse to “normalize the unthinkable.”

Here’s a list of stats that I am sure you are already extremely sick of hearing, what we have already passively accepted as “the new normal,” some new ALL-TIME RECORDS for you:

3 million families foreclosed upon;

30 million people in need of employment;

43 million people on food stamps;

52 million people in poverty;

59 million people without healthcare;

239 million living paycheck to paycheck;

$144 billion in Wall Street bonuses;

$13 Trillion in investible wealth within 1% of US population.

Ask yourself this question: How sick and depraved of a society do you have to live in to get an outcome like this?

We now have the highest and most severe inequality of wealth in the history of the United States. We have witnessed an economic shock and awe campaign, acts of financial terrorism have impoverished tens of millions of people and put our future prospects in an urgently dire situation. We know who is responsible for it, yet nothing is done to hold them accountable, and most astounding of all, the people responsible for this (a financial terrorism network) are still in power!

This is the largest criminal racket in world history. We need prosecutions under the Racketeer Influenced and Corrupt Organizations (RICO) Act, right now!

Another important point in response to emails that I get: when I write that Obama is a puppet, some people still get upset with me. Are you kidding me? What kind of president allows this to happen without holding people accountable? What kind of president allows our tax dollars to be taken and handed out as all-time record-breaking bonuses while we have an all-time record-breaking number of people living in poverty?
What kind of president puts career-long preeminent economic imperialists Tim Geithner and Larry Summers in charge of our economy, and supports Ben Bernanke’s reconfirmation as Fed Chairman? This is all absurd and inexcusable! These three people would be in prison if we lived in a nation ruled by law. Obama is a bullshit artist - Period, Full Stop.

This is a quintessential banana republic ruled by a puppet president. If that truth is too much for you to handle, stop reading this right now and go retreat into your “reality TV” world while you still can.

Let me defer to Senator Bernie Sanders. He recently said what I’ve been screaming about and gave us one of those very rare moments when truth was actually spoken on the Senate floor:

“There is a war going on in this county and I’m not referring to the war in Iraq or the war in Afghanistan. I’m talking about a war being waged by some of the wealthiest and most powerful people in this country against the working families of the United States of America, against the disappearing and shrinking middle class of our country.

The reality is that many of the nation’s billionaires are on the war path. They want more, more, more. Their greed has no end, and apparently there is very little concern for our country or for the people of this country if it gets in the way of the accumulation of more and more wealth, and more and more power….

Today… the crooks on Wall Street… the people whose actions, illegal actions, reckless actions, have resulted in millions of Americans losing their jobs, their homes, their savings… After we bailed them out, the CEOs today are now earning more money than they did before the bailout…. While the middle class of this country collapses and the rich become much richer… the United States now has, by far, the most unequal distribution of income and wealth of any major country on earth.

When we were in school, we used to read the text books which talked about the banana republics in Latin America… about countries in which a handful of people owned and controlled most of the wealth in those countries. Well, guess what? That is exactly what is happening in the United States today.”

What will it take to make you understand this? Don’t you get it? This is a war! This is a mass slaughter carried out by economic policy. This is the elimination of the existence of a middle class. These are financial terrorists committing crimes against humanity. Our country is being attacked! My family is under attack! My child is under attack! I am under attack!

We are under attack!

I know that TV news propaganda confuses people, but on a basic and profound level, whether people want to admit it or not, the overwhelming majority of the population knows that our nation has been taken over by a global banking cartel. We know that our future has gone up in flames. We know that both political parties have been paid off and don’t represent us. If the politicians don’t drastically change course and start representing the people, we have a duty, a Constitutional commitment and obligation to launch a revolution.

If you are not calling for revolution or organizing, you are either unaware of what’s happening around you, horribly naïve or a fascist sympathizer. If we continue to let our politicians and wealthy members of society live in comfort, free from the consequences of their actions, we are complicit in our own demise.

Our country is so overrun with corruption, we cannot remain passive and expect things to get any better. The economy is now propped up by smoke and mirrors and will inevitably collapse. Without immediately breaking up the banks and holding the thieves accountable, we will continue on our downward spiral with increasingly severe and devastating consequences. These are extremely unpleasant truths that we are now forced to confront. We have to act now.

People who still delude themselves into apathy by clinging to the belief that giving trillions of dollars to the banks had to be done, are buying into a baseless propaganda line. Use your commonsense. What kind of fool would think that the best way to solve the economic crisis would be to give trillions of dollars to the people who are most responsible for causing it. That is absurd! Instead of holding them accountable for the crimes they committed, they were given trillions in taxpayer funds which they used to further consolidate power and give themselves all-time record-breaking bonuses - and they deliberately impoverished tens of millions of people in the process. People are either confused as to what happened or they are in denial and afraid to confront the colossal crime committed. Whatever the case may be, there is no escaping the consequences. The implications are staggering. If you think it’s been bad over the past two years, get ready, you haven’t seen anything yet.

So are we going to start fighting back, or should I just move my family to another country? Most everyone who understands our economic and political situation are having this debate now and contemplating moving outside the country. Is that what we should do? Should we just leave the country and let it collapse?

Those who are aware have reached the point where our survival instinct is kicking in. Fight or flight?

I’m ready to fight, but I’m not ready to fight a losing battle. We all need to do what is best for our family.

Are you with me? Or should I start packing now?

– David DeGraw is the founder and editor of AmpedStatus.com. He is the author of The Economic Elite Vs. The People of the United States. His new book is The Road Through 2012.