FedUpUSA

Archive for December 17th, 2011

First of all, I’m surprised you’re reading this. Thanks to the corrupt media, many of you might be clueless to the fact we share quite a bit of commonground.

Let me clarify: By “Tea Party,” I am in no way referring to the hijacked movement we know and love today. By “Tea Party,” I don’t mean Iran warmongers, bailout lovers, the “extreme right,” and people who think what happens in your bedroom affects them in any way. No, what I mean is the Tea Party as it started in 2007 as opposition to Bush policies.

The media loves to paint a picture of OWS vs. TP, “right” vs. “left,” etc. It’s an old tactic called divide and conquer. If we fight amongst ourselves, no one looks at the true criminals at work in society.

Of course, Fox loves to make corporations out to be our “capitalist saviors.” They’ll cover every corrupt government action they can find (if there’s a Democrat in the White House), but they won’t admit the greed of the mega banks and corporations. They rarely talk about the private Federal Reserve system and how it robs the lower and middle classes of their wealth via inflation. MSNBC is no better. They do point out how the corporations literally stole trillions of dollars from the American people through the bailouts and the Fed. However, for some reason they’re hard-pressed to admit these actions are carried out by government guns. CNN is STILL no better. In their effort to be “right down the middle” they don’t point out any of the criminals! Whether in the corporate world or the government.

And by the way, we do need to start calling actions like the bailouts what they are: Theft. The corporations, through their rental politicians, used government force to take from the people trillions of dollars. If we refuse to pay the taxes to pay this “debt” off we face risk of government guns carrying us off to jail. That is the very definition of theft.

This brings us back to the commonground we share. The original Tea Party (not counting the historical Boston Tea Party) was focused on ending the corporatist (fascist?) model ourselves. The original Tea Party was for ending the wars and against policing the world. We are against legislation that invades privacy of citizens here and abroad. Think unPatriot Act and the recently passed NDAA bill. The NDAA gives the military the authority to raid homes without warrants and imprison citizens indefinitely without trial.

If we actually want to change this country, we have to unite on issues like these and others. General Assemblies: invite Tea Party groups to participate. If you can find shared values organize joint protests. If you can find local Tea Parties that want to occupy with you, encourage it.

The system we live under is a corporatist model rapidly deteriorating into a fascist police state. The reason I added “Marine” to the heading of this letter was to (hopefully) attract active duty servicemembers, veterans, and law enforcement. We took an oath to the Constitution in order to join. The oath clearly gives us not only the option, but the responsibility to disobey ALL illegal orders. The police attacking peaceful protesters in the streets are in direct violation of that oath. If you are attacking peaceful people you are already on the wrong side of history.

Remember, focus on commonground. Just don’t look to government to be our saviors. Our politicians (yes, including our President) are bought and paid for by corporations and the mega banks. In fact, Obama’s biggest campaign donor is Goldman Sachs. His Treasury Secretary worked at Goldman Sachs himself. Why do you think some Europeans call us the United States of Goldman Sachs?

Semper Fi and Semper Occupare. Because nothing would terrify the establishment more than a united Occupy Tea Party movement.

- Cpl. Stephen Mark Allen, USMC – Liberty Spin Network

The euro was a doomed project from the start, and now we are starting to see the endgame play out.  Today, the euro fell to an 11-month low against the U.S. dollar.  As I write this, the EUR/USD is at 1.2983.  Back in July, the EUR/USD was over 1.45.  As panic has swept the financial markets, the euro has lost more than 3 percent over the past three days.  But this is just the beginning.  When the euro drops below 1.20, analysts will talk about the collapse of the euro.  When the euro falls toward parity with the dollar, headlines around the world will scream about the death of the euro.  But when the European financial system finally collapses, we may very well actually see the end of the euro.  Yes, it actually could happen.  The eurozone, as it is currently constructed, simply does not work.  You just can’t take 17 different nations that have 17 different fiscal policies, 17 different tax policies and 17 different economic agendas and cram them all into a single currency and expect the thing to work.  The euro is a doomed currency, and if a big nation like Germany decides to walk away at some point the game is going to be over.

It is not as if the euro is just having a bad week.  Just check out this chart that shows what the euro has done relative to the U.S. dollar over the past 6 months.

The truth is that a collapse of the euro has already begun.

And a whole lot of investors expect it to continue.  Right now, huge amounts of money are being poured into bets that the euro is going to go even lower.

All over the world, financial professionals are speculating about how far the euro will eventually fall.  Scott Mather, the head of global bond portfolio management at PIMCO, says that he believes that the euro is going to go much, much lower….

“Parity with the dollar next year is not out of the question”

Of course the central banks of the world could step in at some point with coordinated action to help support the value of the euro.  This kind of thing has happened before.  But such support would only be temporary.

Central banks can manipulate the markets for a while, but in the end the long-term trends are going to prevail.  Just look at what is happening with European bond yields.

European bond yields are rising once again even though the European Central Bank has already spent over 274 billion dollars buying up European government bonds.

There will be more efforts to try to prevent the death of the euro, but those efforts will be kind of like spitting into the wind.

A recent article posted on Crackerjack Finance talked about some of the fundamental problems that make the euro such a flawed currency….

The problems of the Eurozone’s flawed construct are now completely exposed. A block of 17 sovereign nations have adopted a common currency and outsourced monetary policy to a common central bank. Yet each of the 17 sovereign nations have different comparative advantages, industries, debt levels, interest rates, budget deficits, labor market rules, and tax policies. Reflecting on all the differences, it is amazing that the Eurozone has survived in the current construct for over a decade.

Greece would probably not be going through an economic depression right now if they had not joined the euro.  But now, 100,000 businesses have closed since the beginning of the recent crisis and a third of the country is living in poverty.

As this crisis spreads throughout the rest of Europe, it is going to put an incredible amount of stress on the European financial system.  Many now believe that the euro may not be able to make it through the tough times that are ahead.

The following comes from a report recently produced by Credit Suisse’s Fixed Income Research unit….

“We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

So will we actually see the end of the euro?

Only time will tell.

But one thing is for sure – the situation in Europe is rapidly getting worse.

In Greece, approximately 20 percent of all bank deposits have been withdrawn since the start of 2011.

If you still have money in a Greek bank, you might want to do something about it before the run on the banks gets even worse.

In fact, if you still have money in any European bank, you might want to consider your options.

Today it was revealed that Germany’s second largest bank is going to need a bailout.

The following comes from a Sky News report….

Germany’s second largest bank, Commerzbank, is reportedly in discussions with the German government about a bailout after regulators said it needed to raise more money to cope with a potential default on its loans to governments.

“Intense talks” have been going on for several days, according to sources who spoke to the news agency Reuters.

Let the bailouts begin!

European governments are going to save the banks that they want to save, and the rest they are going to let fail.

So who will live and who will die?

We just don’t know.

But without a doubt, a whole lot of European banks are in trouble.  In fact, Fitch Ratings downgraded the credit ratings of five more major European banks on Wednesday.

The eurozone worked well for a while, but now the flaws in the system are becoming appallingly evident.  To get an idea of just how badly the European financial system is unraveling, just check out this chart.  European bond yields are not supposed to be acting like that.

In the end, someone is going to leave the euro.  There has been a lot of talk about Greece or Italy leaving the euro, but the truth is that it is probably more likely that a strong nation such as Germany will be the first to make a move.

If Germany leaves the euro, will they start printing up new German currency?

No, I believe in that case that Germany would seek to establish an entirely new European currency for an entirely new European financial system.  Germany is very committed to the idea of a “European superstate“, and just because the euro is a failure does not mean that they are ready to give up on the idea.

But time will tell who is right and who is wrong.

For much more on why we are on the verge of a massive financial collapse in Europe, please check out these articles….

*”Mega Fail: 17 Signs That The European Financial System Is Heading For An Implosion Of Historic Proportions”

*”22 Reasons Why We Could See An Economic Collapse In Europe In 2012”

As I have written about previously, it doesn’t take a genius to figure out what is happening in Europe.  The equation is simple….

Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions

Unfortunately, the United States is not going to escape all of this chaos unscathed either.

The financial systems of the United States and Europe are more deeply tied together than ever before.  When the financial crisis in Europe fully erupts, we are going to see lots of banks in the United States fail too.

The U.S. economy never recovered from the financial crisis of 2008, and this next financial crisis could send us into a huge tailspin.

2012 is going to be a very interesting year for the financial world.  I hope that you all are ready for what is about to happen.

The Economic Collapse

There are those in the “Fedspace” that attempt to make somewhat of an effort to be informative in their speeches.  Richard Fisher is typically one of these; however, when it comes to actual fiscal policy it’s difficult, because the truth is hard to stomach — or speak of.

In a nutshell, my vision has been as follows: In 2008, businesses were experiencing cost-push pressures. They discovered they could not price the goods and services they were selling aggressively enough to match rising production costs. Headline inflation for both June and July 2008 was scored at an annualized rate of 11 percent, as measured by the Consumer Price Index; the 12-month rate in July 2008 was 5.5 percent—the highest level since January 1991. Driven by fear that inflation was beginning to systematically take root, and aided by an acceleration in the ability to harness productivity-enhancing technology and more sophisticated exploitation of globalization, businesses began to focus in earnest on cost containment. They began this process with their largest cost center, labor. When the Panic of 2008–09 struck in late summer, they doubled down on their cost-control initiatives. Final demand imploded; pricing power vanished; the prospect of top-line growth evaporated. To preserve margins, cost-control management became even more aggressive, with the result that labor took it in the neck and unemployment skyrocketed.

You don’t think that this chart had anything to do with that do you Richard?

Hmmm…. the economy tends to have a lag in it on inputs, doesn’t it?  Gee, what was happening in the time leading up to 2008?  There wasn’t this massive surplus of credit money that was flowing into the economy and driving up prices, was there?

Today, over three years into this dynamic, businesses remain cautious about cost control and adding significantly to payrolls and job-creating domestic capex. This is despite being awash in liquidity. The Federal Reserve has flooded the markets with cheap, readily available money. The private sector, the wellspring of productive job creation, now has the financial means to grow employment. But it lacks the incentive to do so.

Well, how many times do you expect people to get fooled?

This is one of the things I find most-amusing about the Fed wonks of various sorts — they never actually talk about what not only happened, but what is still going on!

How does Richard think that the above chart happened?  It wasn’t from the market being flooded with cheap, readily-available credit money, was it?  Oh wait….

My reluctance to support greater monetary accommodation has been based on efficacy: With businesses’ cash flow—driven by record high profits and bonus depreciation—at an all-time high, both absolutely and as a percentage of GDP; with every survey, including those of small businesses, indicating that access to capital is widely available and attractively priced;[6] with balance sheets having been amply reconfigured; and with bankers and nondepository financial institutions sitting on copious amounts of excess liquidity, I have argued that further accommodation was unlikely to motivate the private sector to put people back to work. It might even prove counterproductive should it give rise to fears the Fed is so hidebound by academic theory as to be blind to the practical consequences of harboring an ever-expanding balance sheet. This inevitably raises concerns we are creating distortions in the fixed income markets that inhibit proper market functioning, or concerns that—despite our protestations to the contrary—we are given to monetizing the government’s debt, an impulse that ultimately destroys a central bank’s credibility.

We got in this mess because The Fed destroyed proper market function, in conjunction with Congress that wanted desperately to overspend!

Now, having done so, you wish to ignore that which you (and Congress) intentionally created?

I maintain that no matter how much cash you have on your balance sheet, or how compliant your banker might be, or how cheap the cost of money, you will not commit substantial capital to expanding your payroll or investing significant amounts to expand plant and equipment until you know what it will cost you to run your business; until you know how much you will be taxed; until you know how federal spending will impact your customer base; until you know the cost of employee health insurance; until you are reassured that regulations that affect your business will be structured so as to incentivize rather than discourage expansion; until you have concrete assurance that the fiscal “fix” the nation so desperately needs will be crafted to stimulate the economy rather than depress it and incentivize job creation rather than discourage it; or until you are reassured that the sinkhole of unfunded liabilities like Medicare and Social Security that Republican- and Democrat-led congresses and presidents alike have dug will be repaired so that our successor generations of Americans will prosper rather than drown in dark, deep waters of debt.

Oh really Dick?  How the hell did that happen?

That time is now. Our nation’s economy is at risk. The Federal Reserve has done everything it can to reduce unemployment without forsaking our sacred commitment to maintaining price stability, or crossing over the monetary river Styx into full-blown debt monetization. I personally don’t care which party is in the White House or controls Congress. All I know is that the “honorable” members of Congress and presidents past, Republicans and Democrats alike, have conspired over time, however unwittingly, to drive fiscal policy into the ditch. They purchased their elections and reelections with popular programs so poorly funded that they now threaten the economic well-being of our children and our children’s children. Instead of passing the torch on to the successor generation of Americans, they have simply passed them the bill. This is the opposite of honorable.

Like all of you here, I am sickened by our politicians’ tendency to kick the can down the road, even when it is starkly clear that doing so jeopardizes America’s well-being. Small wonder that some recent polls show only 9 percent of the American people view Congress favorably. (One senator posited that the 9 percent consisted of blood relatives and congressional staff!)

The above bolded text cannot happen without The Monetary Authority (that would be The Fed) intentionally repressing interest rates so the market is unable to punish, in real time, such ridiculous overspending and purchased elections!

So who did that eh?  You did it!  You intentionally and willfully put in place monetary programs in the 1990s, in the 2000s and now once again in the contemporary time frame that encouraged, bolstered and provided for Congressional overspending and vote-buying programs and you refused to stand back and let the market punish such behavior!

In fact the last revolt you allowed to take place at The Fed was when Clinton tried to ram through his “Hillary Care” health program.  From that point forward intentional financial repression became the order of the day and two monstrous bubbles, both fueled by ridiculous government overspending and an utter lack of market discipline were the result.

If the American dream is to survive, we will need to re-create a fiscal and regulatory environment that—in conjunction with the Fed conducting prudent monetary policy—will liberate the forces of entrepreneurial risk taking that have always been America’s hallmark, and that allowed successor generations to live far better lives than their parents ever thought possible. Only then will we get back to generating the jobs and the prosperity for all of our people, not just for financial sharpies. Only then will we restore faith in the prospect of upward mobility for all, not just the few. And only then, with the nation’s economy firmly back on a trajectory of promise and prosperity, will we feel “braced” with confidence that no force can dislodge by sneaking up behind us with a proverbial lead pipe.

You, and the rest of The Fed, Mr. Fisher, need to “Come to Jesus” if you’re really going to spout this crap, considering that you and your cohorts are the very enablers who led to this mess in the first place.