FedUpUSA

Archive for July 3rd, 2011

Iceland is free.  And it will remain so, so long as her people wish to  remain autonomous of the foreign domination of her would-be masters — in this  case, international bankers.

On April 9, the fiercely independent people of island-nation defeated a  referendum that would have bailed out the UK and the Netherlands who had covered  the deposits of British and Dutch investors who had lost funds in Icesave bank  in 2008.

At the time of the bank’s failure, Iceland refused to cover the losses.   But the UK and Netherlands nonetheless have demanded that Iceland repay them for  the “loan” as a condition for admission into the European Union.

In response, the Icelandic people have told Europe to go pound sand. The  final vote was 103,207 to 69,462, or 58.9 percent to 39.7 percent.    “Taxpayers should not be responsible for paying the debts of a private  institution,” said Sigriur Andersen, a spokeswoman for the Advice group that  opposed the bailout.

A similar referendum in 2009 on the issue, although with harsher terms, found  93.2 percent of the Icelandic electorate rejecting a proposal to guarantee the  deposits of foreign investors who had funds in the Icelandic bank. The  referendum was invoked when President Olafur Ragnur Grimmson vetoed legislation  the Althingi, Iceland’s parliament, had passed to pay back the British and  Dutch.

Under the terms of the agreement, Iceland  would have had to pay £2.35 billion to the UK, and €1.32 billion to the  Netherlands by 2046 at a 3 percent interest rate.  Its rejection for  the second time by Iceland is a testament to its people, who feel they should  bear no responsibility for the losses of foreigners endured in the financial  crisis.

That opposition to bailouts led to Iceland’s decision to allow the bank to  fail in 2008.  Not that the taxpayers there could have afforded to.   As  noted by Bloomberg News, at the time the crisis hit in 2008, “the banks had  debts equal to 10 times Iceland’s $12 billion GDP.”

“These were private banks and we didn’t pump money into them in order to keep  them going; the state did not shoulder the responsibility of the failed private  banks,” Iceland President Olafur Grimsson told Bloomberg Television.

The voters’ rejection came despite threats to isolate Iceland from funding in  international financial institutions.  Iceland’s national debt has already  been downgraded by credit rating agencies, and now those same agencies have  promised to do so once again as punishment for defying the will of international  bankers.

This is just the latest in the long drama since 2008 of global institutions  refusing to take losses in the financial crisis.  Threats of a global  economic depression and claims of being “too big to fail” have equated to a  loaded gun to the heads of representative governments in the U.S. and  Europe.  Iceland is of particular interest because it did not bail out its  banks like Ireland did, or foreign ones like the U.S. did.

If that fervor catches on amongst taxpayers worldwide, as it has in Iceland  and with the tea party movement in America, the banks would have something to  fear; that is, the inability to draw from limitless amounts of funding from  gullible government officials and central banks.  It appears that the root  cause is government guarantees, whether explicit or implicit, on risk-taking by  the banks.

Ultimately, such guarantees are not necessary to maintain full employment or  even prop up an economy with growth, they are simply designed to allow these  international institutions to overleverage and increase their profit margins in  good times — and to avoid catastrophic losses in bad times.

The lesson here is instructive across the pond, but it is a chilling  one.  If the U.S. — or any sovereign for that matter — attempts to  restructure their debts, or to force private investors to take a haircut on  their own foolish gambles, these international institutions have promised the  equivalent of economic war in response.  However, the alternative is for  representative governments to sacrifice their independence to a cadre of  faceless bankers who share no allegiance to any nation.

It is the conflict that has already defined the beginning of the  21^st Century.  The question is whether free peoples will choose  to remain free, as Iceland has, or to submit.

Bill Wilson is the President of Americans for Limited Government. You can  follow Bill on Twitter at @BillWilsonALG.
Bill Wilson for NetRightDaily

Every year when July 4th rolls around, Americans from coast to coast celebrate July 4th with cookouts, outdoor concerts and fireworks.  We love celebrating Independence Day and yet we are deeply enslaved to debt.  We like to think of ourselves as “free” and yet we have rolled up the biggest pile of debt the world has ever seen.  The people that we have borrowed all of this money from expect to be paid.  Sadly, instead of addressing the problem, we have been loading more debt on to the backs of future generations with each passing year.  What we are doing to our kids and our grandkids is so immoral that is almost defies description.  At the heart of this debt-based system stands the Federal Reserve.  It is a perpetual debt machine that was designed to trap the U.S. government in a spiral of debt permanently.  Today, the U.S. national debt is 4700 times larger than it was when the Federal Reserve was created back in 1913.  This year alone, we will add more to the national debt than we did from the presidency of George Washington to the beginning of the presidency of Ronald Reagan.  So yes, enjoy the hotdogs and the fireworks, but also remember that we will never be free as long as this constantly expanding debt problem is hanging over our heads.

If you know anyone that does not take our national debt problem seriously, please share with them the video posted below.  It is entitled “Economic Armageddon and You” and it is definitely worth the 5 minutes that it takes to watch it.  Someone out there did a really great job of explaining our debt problem in a way that almost anyone can understand….

So is there any solution to this problem?

Not under the current system.

The debt-based Federal Reserve system is designed to expand U.S. government debt indefinitely.  But of course all debt bubbles burst eventually and we are rapidly reaching that point.

It is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course.  The truth is that it would never get even close to that high because the whole system would completely collapse long before then.

So what should we do?

We need to abandon our current debt-based financial system.  The way that our current system normally works, whenever more money is created more debt is also created.  Such a system is inevitably doomed to fail.

We need to transition to an entirely new system that has nothing to do with the Federal Reserve or Federal Reserve notes.  We need an entirely new system where the money is not based on debt.

But even though more Americans than ever are awake to the flaws in our monetary system, the truth is that neither major political party is remotely ready to even consider an end to the current financial system.

Many Republicans believe that if we can just cut government spending enough we can solve the problem.  Many Democrats believe that if we can just “raise enough revenue” we can solve the problem.

Neither of those solutions will work.

Many conservatives are so frustrated with the whole thing that they just want Congress to refuse to raise the debt ceiling.  I have taken a lot of heat over the past couple of days for suggesting that this is a bad idea.

If we refuse to raise the debt ceiling, our borrowing costs will absolutely explode.  Even if the U.S. government adopted a “balanced budget” by some miracle, the reality is that the federal government would still need to “roll over” very large amounts of debt every single year.  If interest rates on U.S. debt rise substantially it will be beyond catastrophic.

In 2010, the U.S. government paid $413 billion in interest on the national debt.

If interest rates were to start rising as a result of a debt default, interest on the national debt would likely double or even triple.

Look, if we want to come anywhere close to balancing the budget under our current system, it will be a whole lot easier to do if we are spending 400 billion dollars on interest on the national debt rather than 1.2 trillion dollars.

Today, the U.S. government only takes in about 2.2 trillion dollars in taxes.  How in the world are we going to have a chance if we have to pay out a trillion dollars just in interest on the national debt?

The yield on 10-year U.S. Treasuries rose from 2.86% to 3.18% just this past week.  Let us hope that this is not the beginning of a bad trend.

A refusal to raise the debt ceiling would also likely set off another recession (or worse).  The following is what a new article on CNBC says would happen if the U.S. does not raise the debt ceiling by August 2nd….

A U.S. default would not only be historic, it would also almost certainly lead to a new financial crisis. Interest rates would likely spike, equity markets would plunge along with the value of the dollar, and the country could fall back into a recession.

We have to raise the debt ceiling.

So does this mean that I am advocating “kicking the can down the road”?

No.

If you are a conservative, you can still get the same result that you want without destroying the credit rating of the United States.

All the Republicans in Congress have to do is to pledge that they will never pass anything but a balanced budget for 2012 or for any year beyond that.  Without the permission of the House of Representatives, Barack Obama and the Democrats cannot continue their deficit spending.  The sad truth is that the Republicans have been enabling and actively participating in this debt binge all along.

A balanced budget would definitely hurt the economy, but at least it would not wreck our credit rating and cause our borrowing costs to multiply.

But is that what the Republicans are shooting for?

No.

It is being reported that the Republicans and the Democrats have tentatively agreed to between $1 trillion and $2 trillion in budget cuts over the next 10 years.

So that comes to $200 billion in spending cuts a year at most.

Considering the fact that we are running budget deficits of about a trillion and a half dollars a year, that is not nearly enough.

So don’t accuse me of wanting to kick the can down the road.  I want to actually do something substantial about the national debt.  I just don’t think it is a good idea to trash our credit rating in the process.

It is the Republicans and the Democrats in Congress that are kicking the can down the road.

Trillion dollar deficits are not acceptable.  Our nation is on the road to financial ruin.

But it is not just the federal government that is in massive financial trouble.

The reality is that we have “government debt problems” from coast to coast.

Did you hear that the government of Minnesota shut down the other day?

As the financial health of almost every single state government continues to decline, this type of thing is going to become more common.

In the state of Illinois things are so bad that some income tax refunds have not been paid since 2009.  The following is a brief excerpt from an article on the Economic Policy Journal blog….

I repeat, this is no time to own state or municipal bonds. The desperation level at various states and municipalities is getting more and more intense.

With the start of a new budget year just two days away, thousands of Illinois businesses are still waiting for state income tax refunds dating back to 2009.

In a recent article entitled “Is The Economy Improving?“, I went into greater detail about the horrific financial crisis that Illinois is facing….

*****

Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is letting bills go unpaid for long periods of time on a regular basis?

It’s true.

Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almost indescribable.

In one recent article, author Stephen Lendman described the horrific financial crisis that Illinois is facing right now….

With spending exceeding revenues, and obligations not postponed, unpaid bills are growing “at a frightening rate. For instance, IGPA’s Fiscal Futures Model indicates (they) could reach $40 billion by July 1, 2013, with an associated delay in paying those bills of more than five years.”

Besides its $13 billion deficit and $6 billion in unpaid bills, its pension fund is about $130 billion in the red – a red flag that state workers may lose out altogether, wiping out their promised retirement savings.

But it isn’t just the state government that is having problems.  According to Cook County Treasurer Maria Pappas, the average household in Chicago would owe a whopping $63,525 if all local government debt was divided up equally among all of the households.

*****

How can we claim that our country is free when we are enslaved to such horrible debt burdens?

The borrower is always a servant of the lender.  As a nation, we are becoming a little bit less independent every single day.

So enjoy celebrating Independence Day while you still can.

If we continue on the path that we are currently on, nobody is going to be celebrating much of anything in the future.

The Economic Collapse

If you weren’t clear on the government’s intent up until now, you should be after listening to this clip.

http://www.breitbart.tv/shocking-audio-rep-dingell-says-obamacare-will-eventually-control-the-people/

Independence Day eh?

Independence from… what or whom…. and when?

Hattip: Samadams on the forum

As noted, yes you can.

JERUSALEM—Israel’s powerful dairy companies have surrendered to a three-week boycott and pledged to lower prices on cottage cheese, as Israeli consumers joined the wave of popular protest sweeping the region—in their case, to take on rising prices.

The people won and the big corporations lost.

Why?  Because instead of whining, complaining and bitching the people instead withdrew their consent, organized and boycotted.

“Facebook not only brought down the president of Egypt, it has now brought down one of the big monopolies in Israel,” said Efraim Sadka, an economics professor at Tel Aviv University. “This is really the first time that the consumers were really able to bring down the monopoly or a market power.”

The first time of many, one can hope.  As for the impact?  It was quite real:

A person close to Tnuva Food Industries, the Israeli dairy company that controls 70% of the cottage-cheese market, said sales dropped between 10% and 13% during the boycott’s first week. Other people familiar with the issue put the drop at between 20% and 25%.

Now that is an impact.

For those of you out there who believe that the consumer has no power, that the people just must bend over and take it whenever the government – or big business – say “assume the position!” here’s your example folks.

You have the economic power.  You.  Not they, you.

All it takes is your willingness to use it.

The Market-Ticker