There Will Be No Double Dip - It Will Be A Lot Worse

More Truth.

This article contains a lot of good economic information that everyone should know.

We all need to take it one step further – and not assume that the governments and banks of the world are trying to prevent a collapse.

As I’ve said many times – a global economic collapse is part of a plan for world government and world domination.  There’s no way to sugar-coat this truth.

If you don’t think it’s possible - it’s time to learn how the world’s economy really operates.  It’s all about debt – and control of the world’s population.

http://endtimediscussions.blogspot.com/2006/09/our-monetary-system.html

Get ready – a global stock market collapse is coming – and soon.

jg – August 16, 2010

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www.zerohedge.com

http://www.zerohedge.com/article/matterhorn-asset-management-there-will-be-no-double-dip-it-will-be-lot-worse

THERE WILL BE NO DOUBLE DIP…..

by Egon von Greyerz – Matterhorn Asset Management

No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced.  But his will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer.

The End of an Era

The hyperinflationary depression that many western countries, including the US and the UK, will experience is likely to mark the end of an era that has lasted over 200 years since the industrial revolution.  A major part of the growth in the last 100 years and especially in the last 40 years has been built on an unsustainable build-up of debt levels. These debt levels will continue to swell for another few years until the coming hyperinflation in the West leads to a destruction of real asset values and a debt implosion.

In the last 100 years the Western world has experienced a historically unprecedented growth in production, in inventions and technical developments leading to a major increase in the standard of living. During the same period government debt, as well as private debt have grown exponentially leading to a major increase in inflation compared to previous centuries.

Until the early 1970s the growth in credit to GDP had been going up gradually since the creation of the Fed in 1913.. But from 1971 when Nixon abolished gold backing of the dollar, virtually all of the growth in the Western world has come from the massive increase in credit rather than from real growth of the economy. The US consumer price index was stable for 200 years until the early 1900s. From 1971 to 2010 CPI went up by almost 500%. The reason for this is uncontrolled credit creation and money printing. Total US debt went from $9 trillion in 1971 to $59 trillion today and this excludes unfunded liabilities of anywhere from $70 to $110 trillion. US nominal GDP went from $1.1 trillion to $14.5 trillion between 1971 and 2010.  So it has taken an increase in borrowings of $50 trillion to produce an increase in annual GDP of $13 trillion over a 40 year period. Without this massive increase in debt, the US would probably have had negative growth for most of the last 39 years.

Total US debt to GDP is now 380% and is likely to escalate substantially.

The coming hyperinflationary depression and the credit and asset implosion that is likely to follow will most probably lead to the end of a 200 year era of growth for the Western world. If only the excesses from the 1970s were corrected we might have a circa 20 year decline. But more likely we will correct the era all the way back from the industrial revolution in the 18^th century and this could take 100 years or more.

So after the tumultuous and very painful times that we are likely to experience in the next few years, the West will have a sustained period of decline. All the excesses in the economy and in society must be unwound. These abnormal and unreal excesses are not just corporate executives, bankers, hedge fund managers or sportsmen earning $10s to $100s of millions but also a total collapse of ethical and moral values as well as a breakdown of the family as the kernel of society.

Most people believe and hope that this major trend change could not happen today with all the measures that governments have at their disposal. But very few people comprehend that it is precisely the government interference, controls and regulations as well as money printing that have created the problems in the first place. Power corrupts, and the more pressure a government is under the more they intervene. Because they believe that their interference in the economy will save the country – read Obama, or the world – read Gordon Brown. Little do they understand that each interference, each regulation or each dollar or pound or Euro printed will exacerbate the problems of the economy manifold.

Governments now have two options; continue to spend and print money like the US or introduce austerity programmes like Europe. Whichever way they chose will not matter since they have reached the point of no return. The economy of the West cannot be saved by any means. But governments both in the US and in Europe will still apply the only method they know which is to print money.

Government is Stealing from the People

Very few people understand that money printing is a form of robbing the citizens of their money and their work. Money is supposed to be a medium of exchange for goods and services equalling the value of the good or the service produced.  For example, an individual works extremely hard to earn an annual wage of say $40,000 which he receives in the form of paper money. The government, due to its mismanagement and incompetence simultaneously prints $40,000 in order to cover its deficits. So the government has by pressing a button produced the same amount of money that a man had to work a year for. This is what is currently taking place all over the world and which will accelerate in coming months and years leading to a total destruction of paper money. Paper money has completely lost its function as a medium of exchange or a store of value. This is why gold is gaining and will continue to gain value against perishable paper that is called money.

Deflation Inflation or Hyperinflation

The only reason that the US could build up such a major debt is that the US dollar has been the reserve currency of the world and therefore the US has been able to finance its debts and deficits internationally. The US has now reached a point when debts have to increase dramatically for the country just to standstill. Like all Ponzi schemes this one will also come to an end – and this very soon. The US dollar will decline dramatically and lose its reserve status and the US government will be unable to finance its deficit in any market. This process will lead to endless money printing, collapsing treasury bonds (substantially higher interest rates) and the dollar becoming worthless in a hyperinflationary black hole.

Let us just reiterate that hyperinflation arises as a result of money printing leading to a currency collapse and not from demand pull. The slight deflation that we are experiencing currently is a prerequisite for hyperinflation. The fear of a deflationary implosion forces governments to print money, leading to a collapsing currency which historically has always been the cause of hyperinflation.

Real M3 (source: Shadow Government Statistics) is falling at an unprecedented rate. This is the precursor to economic decline, quantitative easing and inflation (see early 1970s in the chart).

Many “experts” make the analogy between the deflationary period in Japan since the 1990s and the US today. In our view the US is in a totally different situation for the following reasons:

• In the early 1990s Japan could still export their production to the rest of the world.
• In the current downturn all countries (even China and India) will suffer and there will be no one to export the problems to.
• The ability to export made Japan a creditor nation with major payment surpluses.  US are a major debtor and have been for 25 years.
• Japan had a very high personal savings ratio at the time (which has now disappeared). US has had a declining savings rate for years (the US savings rate is now going up which it always does in a downturn).
• The balance of payments and the personal savings surpluses made it possible for Japan to finance their budget deficit without resorting to QE. Very soon he US will only be able to finance their deficits with QE and so will most of the rest of the Western world.
• Japanese unemployment in 1992 was 2% and went slowly up to 5% by 2000 where it is now. Real US unemployment is 22% and increasing.
• Many major sovereign states are now virtually bankrupt and the financial system is on life support. This was not the case in the 1990s.

The above are some of the reasons why the current US situation is totally different to Japan. QE will accelerate in the US and worldwide.

What will make this process so much more complex than the world has ever experienced is that the same development is likely to take place in many countries around the world simultaneously. It will most probably happen in the UK, the rest of the EU and most other European nations. Due to the total interdependence of the world financial system, it will be difficult to forecast which countries can withstand the coming worldwide tsunami of money printing but many Asian countries probably stand a good chance.

Can we be wrong in our forecast of a hyperinflationary depression? Yes, of course we can. But the alternative can only be a deflationary collapse which would be unacceptable to (dropping money from) helicopter Bernanke and deficit demagogue Obama as well as most other governments.

Conventional wisdom and most experts say that we will not have inflation but deflation. The problem with most conventional wisdom is that it is only conventional without an ounce of wisdom. When have the world’s so called experts, politicians etc ever been right on the current crisis? They will be wrong this time again.

The “conventional wisdom experts” also say that it will be years before we can see inflation or hyperinflation. In our view it can happen a lot faster. The world economy is resting on a foundation of matchsticks. All that is needed is a change in confidence or psychology for this fragile foundation to crumble.Falling currencies, rising bond yields and falling stock markets could very quickly result in a vicious and fast spinning hyperinflationary circle. The frailty of the financial system could make this happen like a flash fire.

Wealth Creation

Banks and the financial industry have throughout history existed in order to finance production and trading of goods. But in the last 100 years and especially in the last 20-30 years it has become a major industry in its own right and an important but unproductive part of the economy in many countries. Today, the financial industry is too a great extent involved in trading for its own and clients’ accounts, creating a raft of obscure instruments that only benefit the banks and as well as financing consumption rather than investment. All of these areas are totally non-productive and the only beneficiaries are the participants in the financial industry. And the rewards have been absolutely astronomical. In investment banking, hedge funds and private equity in particular, the most massive wealth has been created. Many players have become billionaires or created fortunes of tens to hundreds of millions of dollars in the last 10-15 years just by shuffling money around. In the past fortunes were created by building factories and industries. But today any normal employee working in Wall Street or the City in London will, by just showing up to work, make hundreds of thousands to millions of dollars. This is the proof of a world totally out of balance when people dealing in money become the richest segment of society. Since this activity contributes very little to the prosperity of a nation (but very much to its participants) it is not sustainable. The biggest reason why it exists is the massive amount of money that governments have created or printed and the fact that the financial industry has developed into a fractal wealth creation machine for the benefit of its participants.

For the last 40 years in particular the rich are getting richer and the average person has seen very little increase in real income. In the US, the real annual income of the bottom 90% of US families has increased by only 10% since 1970. And in the expansion between 2002 and 2007, median US household income dropped $2,000. The perceived increase in wealth for the majority of Americans derives from an increase in their debt level not from an increase in real earnings. So the improvement in living standards that the average American and many other Western countries have enjoyed in the last 40 odd years is primarily based on debt – debt that can never be and will never be repaid with normal money.

On the other hand, management has achieved a major increase in income and wealth. In 1973, chief executives in the US earned 26 times the median income. Today they earn 300 times. This enormous widening of the gap between the top few percent in society and the masses is morally and socially unacceptable. When the bad times start in earnest, this is likely to lead to major social unrest and violence directed against the privileged.

The Focus will Shift

For a major part of 2010 the focus has been on the problems within the EU starting with Greece, then Spain, Portugal, Italy etc. The problems in Europe are major and many European countries as well as the European financial system will lead to massive money printing. Although the problems in Europe are very serious, the US economy is in a much worse state. The diversion of the focus away from the problems in the US economy onto Europe has suited the US Administration perfectly. It can hardly be a coincidence, for example, that US rating agencies downgrade the Sovereign debt of Greece and Spain on the same days as Treasury auctions are held. But the problems in the US economy are deteriorating at a rapid rate; factory orders, consumer confidence, existing home sales, retail sales, the ECRI index (Economic Cycle Research Institute) are all falling more than expected and real unemployment, personal bankruptcies (will exceed 1.6 million in 2010), trade deficit, state and federal deficits are all increasing.

The ECRI index is an important leading indicator. It has now fallen for 10 straight weeks.

There are three insurmountable problems in the US economy that are of a magnitude and gravity which can only be remedied by money printing:

• Federal and state deficits will soon escalate at an exponential rate. The US Federal debt has increased from $ 8 trillion in 2006 when Bernanke took office to soon $ 14 trillion. Many forecasts expect this debt to go up to nearer $ 20 trillion in the next 5 years. In our view it will be substantially higher. Add to that interest rates of 15% or higher and the American people will work just to pay taxes that don’t even cover the interest payments on the federal debt. This is why the US will either default or more likely print unlimited amounts of money.

• The real unemployment rate is now 22%. Since 2007 over 8 million Americans have lost their jobs and it will get a lot worse.  Non-farm unemployment in the 1930s reached 35% and we would expect this level to be reached in the next few years.

• The financial system is bankrupt. Banks are failing at a much faster rate than last year. To date circa 110 banks have failed. More seriously the assets of the failed banks are only worth an estimated 30-50% of their balance sheet value. Banks are valuing their toxic debt at phoney values with the blessing of the government. But even debt that today is considered safe will soon turn toxic with the consumer coming under enormous financial pressure. Add to that the OTC derivatives held by US banks of at least $ 400 trillion. A big percentage of these are worthless and there are virtually no reserves to cover potential losses.

Within the next few years, the three areas above are likely to result in the biggest money printing programme in world history and simultaneously lead the US (and many other countries) into the abyss.

Markets

There has probably never been a period in world history which has caused the amount of wealth destruction that we are likely to see in the next few years. If we are correct in our assumption that the West will see a correction of the excesses of the last circa 40 years but more probably of the last 200 years, since the start of the industrial revolution, we could see a total annihilation of the assets that have been fuelled by the credit bubbles. The spike in asset values in the last 100 years, which is unprecedented in history, is likely to be corrected by a waterfall which could start at any time. We will issue a separate report in the next 10 days covering our market predictions and the importance of physical gold for wealth preservation purposes.

16th August

Egon von Greyerz

Stimulus Bill Causes Hope to Fade

I imagine that if we could be transported back in time to the final years of the Roman Empire – it would look a lot like the United States today. Lots of inept leaders ignoring the truth of what is happening – still pretending that nothing has changed – still clinging to failed policies and a failed system – until the entire system fails one day.

This blog post by Chris Martenson does a great job of summing up the current state of our leaders. They are still ignoring the glaring warning signs that the party is over. They are still adding pet projects to ‘stimulus’ bills in order to benefit themselves. They can’t see that this is the end – we’re heading for a complete and final train wreck. Rome is burning and everyone’s playing a fiddle. This is the inevitable result of the blind leading the blind. Amazing.

jg – February 2, 2009

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Stimulus Bill Causes Hope to Fade
Saturday, January 31, 2009, 2:45 pm, by cmartenson

The subtitle to this article is Bringing a Hose to a Flood

I’ll be honest, I was equal parts hopeful and doubtful that anything new would come out of Washington because, well, I’ve been watching the situation for a long time and nothing really “new” comes out of there very often.

For now, I must content myself to sit back and watch, and wait, knowing that sooner or later reality will force itself back onto the radar screens of our leaders. For now, they remain hopelessly out of touch. For example, check out this well-meaning statement:

“This is a continuing disaster for America’s working families,” Obama said at the White House yesterday. “They need us to pass the American Recovery and Investment Plan,” designed to save more than 3 million jobs, he said. House lawmakers passed the stimulus Jan. 28, moving action to the Senate next week.

I agree with the ‘disaster’ part, but I am less than certain of the ’save more than 3 million jobs’ part.

Here’s why:

An $800 billion-plus package, it turns out, gives lawmakers plenty of opportunities to rid themselves of nagging headaches left over from the days when running up the government's $10 trillion-plus debt was a bigger concern.
There's $345 million for Agriculture Department computers, $650 million for TV converter boxes, $15 billion for college scholarships — worthy, perhaps, but not likely to put many Americans back to work quickly.

There's $1 billion to deal with Census problems and $88 million to help move the Public Health Service into a new building next year. The Senate would devote $2.1 billion to pay off a looming shortfall in public housing accounts, $870 million to combat the flu and $400 million to slow the spread HIV and other sexually transmitted diseases such as chlamydia.

But nothing is in the legislation by accident. By including in the Senate stimulus bill such far-ranging ideas as $40 million to convert the way health statistics are collected — from paper to an electronic system — lawmakers are able to thin out their in-boxes, even if they aren't doing much to create jobs.

There's also $380 million in the Senate bill for a rainy day fund for the Women, Infants and Children program that delivers healthful food to the poor. WIC got a $1 billion infusion last fall.

But some Democrats, like Sen. Ben Nelson of Nebraska, think the $3.5 billion in the stimulus package devoted to health research, or the $14 billion-$15 billion for boosting Pell Grant college scholarships by $400 to $500 would be better spent on additional brick and mortar infrastructure projects.

Instead of directing money where it is most needed, Congress could not resist using this massive appropriation as free money for pet projects. In other words, there’s no sense that we need to be smart or careful with our money. Instead, an $850 billion package is the ideal time to do all the nifty things that couldn’t be funded during normal budget discussions.

It's exactly how we might expect a lottery winner to behave during their first few weeks in the millionaire bracket.

How is it possible that DC Congressmen can see things this way? This embarrassing quote sums it up:

"If the house is burning, you're not going to worry about which hose you grab, so long as you get water on the fire," said Rep. David Obey, D-Wis., one of the chief authors of the House package as chairman of its appropriations committee.

Well, Mr. Obey, it might matter if you’ve misdiagnosed the problem and it turns out the economic house is not on fire but rather caught in a flood of debt. Then your additional “spray and pray” deficit spending could be more harmful than helpful over the long haul. Having a basic understanding of the problem is essential to picking effective solutions.

It is attitudes like Mr Obey’s that cause me to lose hope that adults are in charge in DC and have some idea what they are doing. The vast amount of spending waste has convinced me that the actual seriousness of the predicament has not yet penetrated the thicker layers of the more obtuse lawmakers.

Watt's the Deal?

I mentioned in an earlier post that there will be a battle for control of our monetary system (money). The blog post below by Karl Denninger is what I’m referring to – there will be some of our leaders who are honorable (Ron Paul) and will try to rest control from this international cartel of bankers. There will also be leaders who are not at all honorable – who will only look at what they can gain from the current system – and will fight for the bankers (Watt). It doesn’t matter to them if this destroys the United States. They can only see wealth, power and glory for themselves. They are most likely aware of the coming global government – and are attempting to solidify their place within it.

This is only the beginning. As our economy continues to decline – this will change from a battle over an audit of the Federal Reserve – to a battle for the system itself.

jg – November 18, 2009
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Wednesday, November 18. 2009

Posted by Karl Denninger in Federal Reserve at 08:05

Watt's The Deal?

As I noted on Blogtalk a couple of weeks ago, Representative Watt is doing his level best to derail the "Audit the Fed" bill and amendments introduced by Representatives Grayson and Paul.

Representative Watt's "alternative", however, doesn't open The Fed's books - it further snaps them shut! It not only leaves all the existing restrictions against an audit in place and refuses to mandate audits it also places four new restrictions on any such audit activity.

The most outrageous new restriction is that an audit, under Watt's proposal, may not examine the loans or liquidity arrangements that The Fed enters into or the impact of those deals on the reserves, balance sheet or financial condition of either a Fed-regulated bank or The Federal Reserve itself.

It isn't hard to figure out why Watt would want such blanket secrecy. One need only look at his heavily-gerrymandered district, which happens to contain the corporate headquarters of Bank of America.

This gives new meaning to "kneel before Zod."

The Dishonorable Representative Watt must resign - there have been ridiculous and outrageous claims made in the past, but any representation that his amendment would somehow "open the books of The Fed" is an outrageous lie, and further, it appears to be intentionally designed to protect one of the very "too big to fail" banks that likely has caused The Fed to get in trouble in the first place - Bank of America.

Government Sweeping Size of Oil Spill Under the Rug & September 11, 2001

THURSDAY, JULY 8, 2010


Government Trying to Sweep Size of Oil Spill Under the Rug, Just As It Has Tried to Sweep the Economic Crisis, 9/11 and All Other Crises Under the Rug

Washington’s Blog

http://www.washingtonsblog.com/2010/07/government-keeping-scientists-away-from.html

As I previously pointed out, the Gulf oil spill is very similar to 9/11, because - in both cases - the responders helping with rescue and clean up were getting sick ... but were told they don't need any safety gear. And see this.

In addition, the government is keeping scientists away from "ground zero" of the oil spill and - for that reason - scientists cannot accurately measure the size of the oil spill.

BP has also tried to cover up its blunders by lowballing spill estimates, keeping reporters out of areas hardest hit by the oil (and see this, this, this and this) and threatening to arrest them if they try to take pictures (and see this), hiding dead birds and other sealife, and using dispersants to hide the amount of spilled oil (the dispersants are only worsening the damage caused by the spill).

The government is complicit in all of these cover-ups. Indeed, the Obama administration has made it a felony to get near enough to oiled wildlife and beaches to film them.

Similarly, the official 9/11 investigators were themselves largely denied funding, access to the site and the evidence contained there, or even access to such basic information as the blueprints for the world trade center.

Indeed, just as the government and BP have consistently underestimated the amount of oil gushing out of the Gulf, the blueprints for the World Trade Center are still to this day being withheld from reporters and the public, and the government agency in charge of the investigation has grossly mischaracterized the structure of the buildings.

How are we supposed to improve building safety regulations if the blueprints are still being hidden from engineers and scientists investigating the collapse of world trade center buildings 1, 2 and 7 on September 11th?

Moreover, as I previously pointed out:

9/11 Commission co-chairs Thomas Keane and Lee Hamilton wrote:

Those who knew about those videotapes — and did not tell us about them — obstructed our investigation.

[Moreover]:

• The chairs of both the 9/11 Commission and the Joint Inquiry of the House and Senate Intelligence Committees into 9/11 said that government "minders" obstructed the investigation into 9/11 by intimidating witnesses

• The 9/11 Commissioners concluded that officials from the Pentagon lied to the Commission, and considered recommending criminal charges for such false statements

• The tape of interviews of air traffic controllers on-duty on 9/11 was intentionally destroyed by crushing the cassette by hand, cutting the tape into little pieces, and then dropping the pieces in different trash cans around the building as shown by this NY Times article (summary version is free; full version is pay-per-view) and by this article from the Chicago Sun-Times

• Investigators for the Congressional Joint Inquiry discovered that an FBI informant had hosted and even rented a room to two hijackers in 2000 and that, when the Inquiry sought to interview the informant, the FBI refused outright, and then hid him in an unknown location, and that a high-level FBI official stated these blocking maneuvers were undertaken under orders from the White House. As the New York Times notes:

Senator Bob Graham, the Florida Democrat who is a former chairman of the Senate Intelligence Committee, accused the White House on Tuesday of covering up evidence . . .

* * *

The accusation stems from the Federal Bureau of Investigation's refusal to allow investigators for a Congressional inquiry and the independent Sept. 11 commission to interview an informant, Abdussattar Shaikh, who had been the landlord in San Diego of two Sept. 11 hijackers.

In his book "Intelligence Matters," Mr. Graham, the co-chairman of the Congressional inquiry with Representative Porter J. Goss, Republican of Florida, said an F.B.I. official wrote them in November 2002 and said "the administration would not sanction a staff interview with the source.'' On Tuesday, Mr. Graham called the letter "a smoking gun" and said, "The reason for this cover-up goes right to the White House."

Of course, the government's response to the economic crisis, torture, the anthrax attacks, and just about every other crisis has been the same: try to sweep it under the rug.

It almost seems as if the main activity of government these days is trying to cover up criminal negligence and fraud ... instead of actually solving problems, firing - let alone convicting - the folks who caused the problems, or changing things enough to prevent future crises.
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Tape of Air Traffic Controllers Made on 9/11 Was Destroyed

The New York Times

By MATTHEW L. WALD

Published: May 7, 2004

WASHINGTON, May 6— At least six air traffic controllers who dealt with two of the hijacked airliners on Sept. 11, 2001, made a tape recording a few hours later describing the events, but the tape was destroyed by a supervisor without anyone making a transcript or even listening to it, the Transportation Department said Thursday.

The taping began before noon on Sept. 11 at the New York Air Route Traffic Control Center, in Ronkonkoma, N.Y., where about 16 people met in a basement conference room known as the Bat Cave and passed around a microphone, each recalling his or her version of the events of a few hours earlier. The recording included statements of 5 or 10 minutes each by controllers who had spoken by radio to people on the planes or who had tracked the aircraft on radar, the report said.

Officials at the center never told higher-ups of the tape's existence, according to a report made public on Thursday by the inspector general of the Transportation Department.

A quality-assurance manager at the center destroyed the tape several months after it was made, crushing the cassette in his hand, cutting the tape into little pieces and dropping them in different trash cans around the building, according to the report. The tape had been made under an agreement with the union that it would be destroyed after it was superseded by written statements from the controllers, the report said.

The quality-assurance manager told investigators that he had destroyed the tape because he thought making it was contrary to Federal Aviation Administration policy, which calls for written statements, and because he felt that the controllers ''were not in the correct frame of mind to have properly consented to the taping'' because of the stress of the day.

None of the officials or controllers were identified in the report.

The inspector general, Kenneth M. Mead, said that keeping the tape's existence a secret, and then destroying it, did not ''serve the interests of the F.A.A., the department, or the public,'' and would raise suspicions at a time of national crisis.

The value of the tape was not clear, Mr. Mead said, because no one was sure what was on it, although the written statements given later by five of the controllers were broadly consistent with ''sketchy'' notes taken by people in the Bat Cave. (The sixth controller did not give a statement, apparently because that controller did not speak to either of the planes or observe them on radar.)

Mr. Mead had been asked by Senator John McCain, the Arizona Republican who is chairman of the Senate Commerce Committee, to look into how well the aviation agency had cooperated with the federal commission investigating the Sept. 11 attacks. Mr. McCain said in a statement that he looked forward to ''appropriate disciplinary actions'' and that he might investigate this matter further.

A spokesman for the 9/11 commission, Al Felzenberg, said Mr. Mead's report was ''meticulous'' and ''came through the efforts of a very conscientious senator.'' Mr. Felzenberg said that the commission would not comment now on the content of the report, but that it ''does speak to some of the issues we're interested in.''

The quality-assurance manager destroyed the tape sometime in December 2001, January 2002 or February 2002. By that time he and the center manager had received an e-mail message from the F.A.A. instructing officials to safeguard all records and adding, ''If a question arises whether or not you should retain data, RETAIN IT.''

The inspector general ascribed the destruction to ''poor judgment.''

An F.A.A. spokesman, Greg Martin, said that ''we have taken appropriate disciplinary action'' against the quality-assurance manager.

Fed Gets More Power & Responsibility - July 15 2010

Our wonderful leaders (actors) put on a grand show that would lead us to believe they would fight for the American people – and in the end – we see the truth.

Once again – we hear lots of rhetoric that the Federal Reserve’s power will be reduced (talk).

Once again, the Federal Reserve gains more power over us (actions).

We need leaders that are concerned about the future of the United States of America – not how good they look on camera.

jg – July 15, 2010
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JULY 15, 2010

Fed Gets More Power, Responsibility

By LUCA DI LEO

After fending off most challenges to its independence and winning new powers to oversee big financial firms, the Federal Reserve has emerged from a bruising debate on the overhaul of U.S. financial rules as perhaps the pre-eminent regulator in the sector. But that could only bring it added blame if things go wrong again.

Just a few months ago, amid populist anger at the Fed for failing to prevent the financial crisis of 2008 and bailing out Wall Street, Congress was talking of stripping the central bank of its supervisory oversight of banks or forcing it to submit to congressional audit of its interest-rate decisions.

Instead, the new law gives the Fed more power and a better tool box to help prevent financial crises. It will become the primary regulator for large, complex financial firms of all kinds, such as American International Group, the insurer which built a massive derivatives portfolio that regulators didn't see until it was too late.

Congress approved a sweeping rewrite of rules that touch every corner of finance in the biggest expansion of government power over banking and markets since the Great Depression. David Wessel, David Reilly and Al Lewis discuss the likely impact of Dodd-Frank.

This isn't the first time Congress has expanded the Fed's role. After the Great Depression, it passed the Employment Act in 1946, charging the Fed with averting the huge unemployment seen in the 1930s. After the double-digit inflation of the 1970s, the Fed was formally given a dual mandate of promoting both price stability and maximum sustainable employment. In the wake of the latest financial crisis, the Fed is effectively being told to add the maintenance of financial stability to its responsibilities.

The risks, however, are that the Fed still won't be able to prevent another crisis, and that it will be an even clearer target for blame if that occurs. "The bill has good intentions, but I'm worried about its implementation. If I were the Fed, I'd be seriously worried about being left holding the bag," said Anil Kashyap, a professor at the University of Chicago's Booth School of Business.

The Fed, of course, still shares responsibility for overseeing the financial system with the Federal Deposit Insurance Corp., the Securities and Exchange Commission and other agencies with which it sits on the new Financial Stability Council. And in a change, the new law requires the Fed to get the Treasury's go-ahead before using its extraordinary authority to lend to almost anyone, and limits loans to sectors of the economy rather than individual firms, such as Bear Stearns or AIG.

But the Fed's role is in most respects expanded by the legislation. The central bank will decide whether the council should vote on breaking up big companies if they threaten the stability of the entire financial system. It also will be able to force big financial companies—not just firms legally organized as banks—to boost their capital and liquidity. It will have the power to scrutinize the largest hedge funds.

All this could suck the Fed into political controversies. A decision to break up a big bank because of its size likely would subject the Fed to conflicting pressures from lobbyists and politicians. "It could give a lot of people reason to interfere," says Thomas Cooley, professor at the New York University Stern School of Business.

The Fed's role in the rescue of AIG and Bear Stearns, and its acquiescence in letting Lehman Brothers fail, led the public to question the Fed's powers and prompted Congress to consider curtailing its powers. One threat came from legislation sponsored by long-time Fed critic Ron Paul (R., Texas), author of the best-selling book "End the Fed," who sought to expand the authority of the congressional Government Accountability Office to audit the Fed. The new law expands the GAO's auditing authority but avoids nearly all provisions that alarmed the Fed.

In the end, the Fed's emergency lending during the 2008 crisis will face a one-time audit to be published by Dec. 2010 and it will be required—with a two-year lag—to reveal which banks borrow from its discount window. With lobbying from several presidents of the 12 regional Federal Reserve Banks, the Fed also fought off proposals to remove it from supervision of the large number of smaller banks.

"Basically, they ended up winning almost on everything that counts," says Laurence Meyer, a former Fed board governor now with economic consulting firm Macroeconomic Advisers LLC.

The Fed will surrender its responsibilities for consumer-finance regulation —never central to its mission or to its chairmen—which will be shifted to a new independent agency. It will be housed and financed by the Fed, but the central bank won't have any authority over it.

In a sign of the greater importance assigned to financial stability, the Federal Reserve Board will get a second vice chair position, this one responsible for supervision, to be chosen by the White House. One likely contender is Daniel K. Tarullo, a Georgetown University law professor who was President Barack Obama's first appointee to the Fed board and is the point person on bank regulation. He already has been pulling control of bank supervision to Washington from the New York and other regional Fed banks, which oversees the big Wall Street firms.

Congress also gave the Fed responsibility for setting the fees merchants must pay banks when customers use their debit cards, another political hot potato. The Fed will have nine months to collect data and decide on a ceiling for such fees that must be "reasonable and proportional to the cost of processing those transactions." During this time, there's certain to be a lobbying war pitting retailers and banks. The Fed faces criticism from consumer groups if it sets the fee threshold too high or anger from banks if the level is set too.

The Purpose Behind an Engineered Economic Collapse - August 18 2010

This article speaks to many of the reasons why people do not believe a small group of ‘elitists’ could control the world’s governments and financial system.

Believe it.

jg – August 18, 2010
_________________________

Guest Post: The Purpose Behind Engineered Economic Collapse

Submitted by Tyler Durden on 08/17/2010 08:47 -0500

www.zerohedge.com

http://www.zerohedge.com/article/guest-post-purpose-behind-engineered-economic-collapse

The Purpose Behind Engineered Economic Collapse

By Giordano Bruno, of Neithercorp Press

“From now on, depressions will be scientifically created.” — Congressman Charles A. Lindbergh Sr., 1913

Everyone loves money. Even people like myself who abhor the abuse of money and commerce, who understand the fraudulent nature of the system we live in, still work hard and save so that we might attain a sense of stability within that system. Many people see money as a focal point to their existence. But is it really money that they are after, or is it something else entirely? In truth, money represents ‘security’ in the minds of the masses. Money affords us the ability to survive, and the more of it we have, the safer we all feel. Because we subconsciously associate the extension of our very life with the variable health of the economic structure in which we live, we tend to become unwitting devotees to its continued existence, even if it is corrupt and condemned to failure. We gullibly deny the system or the currency that supports it is doomed to the contrary of all evidence because, even though it has beaten us bloody, we have never known anything else.

In light of this entrenched way of perceiving things, especially in the U.S., it is difficult enough to convince some people that the economy is in fact not providing the security they desire, but is actually destroying their future completely. To explain to them that this is deliberate, that the economy is designed to self-destruct, that is another prospect altogether.

Many people hit a proverbial wall on this issue because they simply cannot fathom that certain groups of men (globalists and central bankers) view money and economy in completely different terms than they do. The average American lives within a tiny box when it comes to the mechanics and motivations of finance. They think that their monetary desires and drives are exactly the same as a globalist’s. But, what they don’t realize is that the box they think in was BUILT by globalists. This is why the actions of big banks and the decisions of our mostly corporate establishment run government seem so insane in the face of common sense. We try to rationalize their behavior as “idiocy”, but the reality is that their goals are highly deliberate and so far outside what we have been taught to expect that some of us lack a point of reference. If you cannot see the endgame, you will not understand the steps taken to reach it until it is too late.

In the past we have covered numerous instances in which global bankers have admitted to fraud on a massive scale, fraud which is now crushing our already fragile economy. We have covered the private Federal Reserve and how it knowingly facilitated the creation of the housing bubble, as well as how it is now inflating a Treasury bubble which is soon to implode. We have covered Goldman Sachs and its efforts to promote and sell toxic derivatives all over the world while at the same time betting against those derivatives on the open market. We have covered the manipulation of gold and silver markets by companies like JP Morgan, which have recently been exposed by whistleblowers and GATA investigations. And, most importantly, we have executed in-depth analysis on the growing weakness of the U.S. dollar in preparation for severe currency devaluation. These revelations raise questions, which is natural, but they also illicit misconceptions and reckless knee-jerk reactions, especially when broaching the fact that the illegal strategies of international banks are part of a greater agenda.

Below, we will examine some of the most common narrow minded responses to the issue of engineered economic collapse, as well as why people think the way they do when the “semi-sacred” subject of money is involved…

1. The economy is too complex to be controlled by just a handful of people…

This response often comes from people who make presumptions on economics, rather than actually educating themselves on how the system works. From the outside looking in, the world of finance appears chaotic; a mixture of mathematical and legal standards swirling in a void of mass psychology. Many Americans are either frightened off by the seemingly complicated field of study, or they find it rather boring and not worth their time. This, however, does not stop them from assuming that they know how money works.

The problem is that just because a person participates in his economy daily, it does not mean he has any understanding of how it operates. Many watch television on a daily basis, but few have any idea how the picture actually gets onto the screen, or how to fix a television once it is broken. Sadly, our egocentric culture has led a substantial portion of the public to imagine that they are experts on EVERYTHING, and thus, true researchers in the fields of economics and globalism get reactions like the one above constantly.

At bottom, once all the quasi-technical biz-babble used by mainstream talking heads is removed from the equation, economics is rather simple. Supply and Demand will always be at the center of any and every economy, regardless of the political atmosphere it exists in. These two fundamental factors can be manipulated to a point, by the creation of artificial supply, or the conjuring of false demand. This is achieved in many ways by global bankers, but primarily through domination of the issuance of currency, the ability to change interest rates at will, as well as the ability to inject or remove incredible sums of money from any market.

A perfect example is the suppression of silver prices by JP Morgan:

http://www.zerohedge.com/article/whistleblower-exposes-jp-morgans-silver-manipulation-scheme

Gold and silver represent competing currencies to the fiat dollars created by the Federal Reserve, and suppressing the value of these commodities helps to ensure that the public will never see them as a viable alternative to paper assets. JP Morgan, who along with other international banks has the ability to throw around massive quantities of capital wherever they please, suppresses the value of physical silver by issuing paper securities for silver that doesn’t actually exist (creating an artificially high supply), and naked short selling silver markets to drive them lower (creating the false impression of low demand).

Another good example of economic manipulation is the private Federal Reserve’s strategy during the 90’s under Alan Greenspan to artificially lower interest rates, allowing banks to issue credit at historical levels for over a decade. Linked below is an article from Ron Paul’s ‘Texas Straight Talk’ dated March, 2007, before the housing market even began its full swan-dive. In it, he discusses the Federal Reserve’s direct role in the creation of the housing bubble:

http://www.house.gov/paul/tst/tst2007/tst031907.htm

Men like Ron Paul, Peter Schiff, Gerald Celente, Jim Rogers, and many others were able to predict long before hand that the Federal Reserve’s actions were creating an explosive mortgage and credit bubble, yet, we are supposed to believe that the Federal Reserve had “no idea” that their actions would result in a debt implosion?

Catherine Austen Fitts, former Assistant Secretary of Housing and Commissioner of the U.S. Department of Housing and Urban Development under the first Bush Administration stated conversely that the mortgage bubble was absolutely not an accident, and that she had witnessed outright and deliberate fraud on the part of the U.S. government and the Federal Reserve Bank in creating the bubble. The fact that disturbed her most, however, was her discovery that only a small handful of international banks were responsible for the perpetuation of toxic mortgage debt, not just in America, but around the world:

http://solari.com/blog/?p=2058

Goldman Sachs (one of the primary globalist banks involved in the igniting of the debt crisis) was caught red-handed selling toxic derivatives to investors and governments all over the planet while at the same time betting against those derivatives on the market. Goldman even bet against mortgage securities the bank itself created!

http://www.businessweek.com/news/2010-04-26/goldman-sachs-bet-against-its-own-deals-senate-s-levin-says.html

This is sort of similar to a car maker selling vehicles without brake lines, then placing bets that their clients will crash and burn. Essentially, it is blatant and sociopathic fraud! Goldman’s actions directly contributed to credit collapses in numerous countries, including Greece, and here in the U.S.

The idea that global banks can turn the economy on and off like a light switch may be a stretch, but the vast majority of evidence shows that they do have the ability to shift the direction of markets to a point, as well as the ability to spur the growth of bubbles that eventually lead to recessions, depressions, and beyond. In fact, if one examines the U.S. economy from the inception of the Federal Reserve in 1913, they would find that the past century has been nothing but a series of engineered equity bubbles designed to slowly hobble, but not completely cripple, our financial system and our currency, at least, until recently. Like a steam locomotive on a collision course with a bottomless canyon, globalist banks can slow or speed up the pace of our descent, but the final destination never changes.

Now that we have established that market collapses can be created by a small handful of bankers and done knowingly, lets move on to the next most common sheeple-like talking point.

2. Yes, international banks triggered the meltdown, but the “greed of Capitalism” is truly to blame (i.e. Its all the Republican Party’s fault)…

First off, if you’re parroting the fiscal debate points of two dimensional socialist gatekeepers like Michael Moore, then you’re already hopelessly lost in the mind warping hedge maze of the false left/right paradigm. You should stay as far away as possible from adult conversions on economics, especially if you plan on associating the “greed” of capitalism and corporatism with the Republican Party alone.

News Flash! Barack Obama received far more in corporate campaign donations (including donations from BP and Exxon) than McCain did. Both Bush Jr. and Obama increased government spending to record levels meaning Neo-Conservatives are in no way “conservative” (as a true Republican is supposed to be). Obama has consistently surrounded himself with banksters and corporate lobbyists, including various hobgoblins from the bowels of Goldman Sachs. BOTH major parties are owned and operated by global banks. This is a cold hard undeniable truth of our political system. There is no way around it. Learn it, accept it as reality, and stop trying to blame one side or the other for problems that both sides created! If you cannot do this, your view of our cultural state of affairs will always be horribly skewed and your insights on our social problems will be utterly worthless.

While wannabe socialists desperately clamor to point fingers at the free market ideology as the cause of all our ills, the fact is that none of us have ever lived in a truly free market system. Since the inception of the Federal Reserve in 1913, all markets and even our own currency have become more and more vulnerable to manipulation by the banking elite. We have lived our entire lives in a rigged market, not a free market. To blame the very concept of Capitalism for our current dire circumstances is not only naïve, it is dangerous. Globalists would like nothing better than to promote the illusion that “too much freedom” led us to this disaster, and that severe controls must be put into place to ensure that it “never happens again”.

3. Global banks would never engineer the collapse of the U.S. economy or the Dollar. It makes them too much money…

This often heard song and dance ties in with the number two comment above. Again, the assumption is that the globalists only do what they do out of an “uncontrollable greed for money”. This perpetuates a couple fallacies. First, it encourages the false belief that the end concern for the Elite is the accumulation of riches. Central bankers have the ability to PRINT all the money they want from thin air! Remember, the Federal Reserve has never been subjected to a full audit, meaning they could easily create billions if not trillions without any oversight whatsoever. Greed for money, to them, is surely an absurd notion. What they do want, more than anything else, is social power. They want control over every living human being without question. All other concerns are secondary.

The next fallacy underlying the above argument is the conjecture that the U.S. economy is somehow indispensable to global banks. This is simply not so. Where we see the economy as an extension of our culture and ourselves, the Elites see financial systems as mere tools in the pursuit of a greater goal: World Government. Imagine you are building a house. Once your saw has fulfilled its intended role of cutting the wood, do you cling to it, or do you throw it aside and pick up a hammer? This is how globalists look at financial systems. They are perfectly willing to cast off the U.S. economy like a snake shedding skin if it brings them closer to attaining their ultimate aim.

The same goes for the Dollar. The Greenback may be the premier world reserve currency now, but that can and likely will change very quickly over the next couple years. The Dollar is a device that has outlived its usefulness as far as global bankers are concerned. The IMF has on several occasions made it clear that they eventually intend for the SDR (Special Drawing Rights) to replace the Dollar as the world reserve currency, and they have openly admitted that it will one day be established as a global currency. IMF press releases make this development sound far off and away, but SDR accumulations by countries around the world have risen dramatically in the past year. This along with other factors we will cover (namely China’s preparations to dump their U.S. T-bond holdings) show that IMF actions indicate they are preparing for a collapse of the Dollar now!

4. China would never dump U.S. Treasuries because it would hurt them as much as it hurts us…

The theory that China is somehow fused to the U.S. in a kind of symbiotic seesaw relationship that can never be broken is so ingrained among mainstream American financial analysts it simply will not die, regardless of how much contradictory evidence you show them. It really is like a mental disease which causes MSM pundits to go into involuntary Tourettic convulsions every time you mention the words “Treasury bond dump”. America and China are not conjoined twins, and one can survive without the other. We have covered the China issue over and over again, and I will not rehash all that evidence here. To lay it out simply: China has re-engineered its economy towards consumption and importation rather than relying on exports. The IMF has talked about this on many occasions with apparent excitement:

http://www.imf.org/external/np/tr/2010/tr072910c.htm

China has also finalized the ASEAN trading bloc which has combined export markets at least equal to that of the U.S. Meaning, China already has another place to send its exports besides America.

Most importantly, China must increase their currency’s value if their new consumer based system is to survive. Allowing the Yuan to rise sharply in value will revitalize the buying power of the Chinese populace making greater consumption possible. Indeed, China MUST dump their Treasury holdings and pump up the Yuan if they are to hold their economy together. And, the Federal Reserve has given China every reason to turn its back on Treasuries through never ending liquidity injections. This is not to say that a U.S. collapse will not affect them, it would negatively affect the entire world. However, China has positioned itself to survive, and perhaps even thrive with their economic expansions into Africa, and their new financial agreements with Germany.

Finally, the Chinese have been very forthcoming over the past week about plans to drop Treasuries. China has dumped over 7.7% of their U.S. T-Bond holdings since January, including the biggest T-bond dump on record this month. They have openly admitted to a plan to diversify away from the Dollar:

http://www.bloomberg.com/news/2010-08-17/china-cuts-long-term-treasury-holdings-by-most-ever-as-u-s-yields-decline.html

I’m always fascinated by those economists who vehemently deny China will ever turn away from the U.S. Dollar while they are doing so right in plain view. Are MSM analysts simply crazy? I don’t know, but it would explain a lot…

5. Sure, bankers took advantage, but it’s really the American people’s fault for getting suckered…

Yes, a sizable portion of the American public can be gut wrenchingly stupid. It hurts my head and my feelings to see people act so idiotic, it really does. The problem with this argument though is that when it is taken too far it becomes an attempt to divert blame away from the criminals and place it on the victims. If you knowingly leave your front door unlocked in a bad neighborhood and you find your home ransacked the next day, then you are partly responsible. But, we cannot forget that the neighborhood is “bad” in the first place because of the criminals, not the people who don’t lock their doors.

Just because global banks can sucker the public doesn’t mean they should, or that they cannot be judged for it. The crime ultimately rests on those men who made the conscious effort to destroy this country, and the blame rests with them as well. I see the attempt to parlay the economic collapse into the lap of the American people very often lately, especially from bankers who now claim that it’s the American public’s fault entirely. Why? Because they will not spend more, they will not take on more debt, they will not take on more risk, and they will not believe hard enough in the recovery that never was. Imagine a serial rapist behind a podium admonishing women for carrying pepper spray. It’s eerily similar…

6. Ok, maybe the banks are causing a collapse, but to say the government is helping them is just crazy conspiracy theory…

Why is it that the Federal Reserve has never been fully audited? Why is it that when Ron Paul tried to pass HR 1207 Federal Reserve Transparency Bill, it was muddled in committees and then eventually derailed? Why is it that banks like Goldman Sachs have been caught, yes caught, setting the stage for an economic implosion in this country, yet no government indictments have been formed to criminally prosecute them? Why are these men still roaming free like locusts to continue pillaging at will? Are we supposed to feel lucky that we get table scraps like Bernie Madoff behind bars while the Federal Reserve commits Ponzi fraud on a scale that dwarfs his?

Our government, both major parties, is owned lock stock and barrel. This is why there are no satisfactory answers for the questions posed above. Elements of the U.S. Government including almost every president since 1912 have not only turned a blind eye to Globalist activities, they have offered their full support to the bankers.

Nixon removed the Dollar from the gold standard in 1971 giving the Fed free reign to print as much fiat as they wished without limitations. In 1980 the Depository Institutions Deregulation and Monetary Control Act was passed placing all banks essentially under the rules of the Federal Reserve. The Glass-Steagall Act which kept investment banks and depository banks separate was repealed under a Republican majority in the Senate, and then finalized by Democratic President Bill Clinton in 1999. 30 years ago, banks that held your home mortgage were for the most part required to keep that mortgage until it was finally paid. But, a series of government decisions spanning that period and influenced by global banks allowed for the “securitization” of mortgages, leading to the creation of “derivatives”, which were then used by corporate mobsters like Goldman Sachs to destroy our financial system. Last, but certainly not least, both the Bush and Obama Administrations pressured Congress into passing highly unpopular bailout legislation which basically rewarded the same banks that created the credit crisis with trillions in taxpayer dollars (yes, the bailouts are now actually in the trillions, not billions). This led to the coining of the term “too big to fail” (or “too big to jail”). Our Government has been nothing but complicit in the banker takeover of this country. To debate otherwise is to invite embarrassment.

I haven’t even scratched the surface of government involvement in the collapse of our economy. Cases like the Savings and Loan crisis of the 1980’s led to serious prosecutions and jail time for more than 1100 criminal bankers, but this only caused the government to respond by changing investigation rules to make it even more difficult to catch the high level fraudsters in the act! Linked below is an interview between Max Keiser and bank regulator Prof. William K Black who outlines our government’s complicity in the breakdown of the country it is mandated to protect:

http://www.youtube.com/watch?v=5Bf5Frx1lZk

Elites destroy cultures to make way for new philosophies; their philosophies. Its not so much “conspiracy theory” as it is a widely admitted methodology. Corporate globalists believe in global government on their terms and they barely try to hide it. If someone thinks this sounds “fantastical” then they haven’t been paying the slightest attention. When one understands how Elites view economy, and realizes their primary motivations, the fact that they purposely triggered a collapse is perfectly logical. Nothing besides all out war inspires more fear and desperation in a society than a financial upheaval. Such elements on a mass scale allow changes in our collective psychology that were never possible before. Most people tend to falter under such an overwhelming threat and turn towards any authority (or fake authority) to save them from harm. Some people scoff at this idea, but it is likely they have never actually been in the wake of a real national catastrophe before. Men, especially those who know little of themselves, can change quickly in the face of calamity. The Elites recognize this, engineer tragedy, then waltz into the aftermath to merrily lord over the rubble.

Will their plan work? I think not, but I’m an optimist (no, really). The pursuit of total control and total power seems rather infantile to me, be it on an impressively psychotic level. Although, if we are made to forget who the real enemy is, then I think they do have a chance at success. That is how they have remained successful to this point. Only now does the average man have such immense knowledge at his fingertips, the knowledge to bring down a line despots and tyrants that have reigned for centuries. If only the average man was not so easily deterred by WMD’s (Weapons of Mass Distraction). The Elites will likely ignite some wars, tempt us into in-fighting, and fabricate enemies like Al Qaeda out of the ether. As the slogan goes, “Order Out Of Chaos”. Whatever happens, our eyes must remain fixed on the root of the problem; the bankers, and nothing else.

Globalists are not invincible, they are not untouchable, they are not even all that brilliant. They are human, and they have made many mistakes. The engineering of an economic meltdown really changes nothing. Hired thugs, useful idiots, corrupt officials, even hyperinflation, all tiny obstacles when considering the world we could have if the Elites were finally made to face the reckoning they deserve. Americans once took on the greatest empire on Earth. We once took a feared king to task. Are a bunch of frothing corporate bankers really so daunting? All that is needed is a principled movement with the will to see justice done, and I believe we have that already.

You can contact Giordano Bruno at: giordano@neithercorp.us