"Spectators at the parade to recruit civilian defense volunteers"
Ilargi: We're supposed to be celebrating the birth and the life of the man whose only ever act of aggression was he threw the money changers out of the temple, right? Just checking. It's just that I can't seem to find much of anything that reminds me of that.
Looks to me as if the money changers won after all, to be honest. Looks like they've made the man who threw them out of the temple just another pawn in their game. And his followers. All in good faith. Thirty pieces of silver for everyone.
So what do we see happening in 2012? I'm going to have to say that I see a lot of credit downgrades, sovereigns, banks, and precious few upgrades. One or more countries leaving the Eurozone, which will then become very hard to keep intact.
A lot of potential mayhem, and negatives, and tons of lies too. I know some will say that's what I see every year. Well, yes, I do. And it all gets worse every year. You just don't necessarily see it in your personal lives yet. Others do though.
It sneaks up on them when they least expect it. And then they find themselves out of a job, a home, a pension. It will sneak up on you too. Unless you can safely count yourself among the 1%. Then something else will sneak up on you. That may take us beyond 2012, but it will come to pass.
A series of articles in this week's Daily Telegraph provides a good take on the topic, and leads us quite fluently into the next, and bigger, set of problems. First: what already has been and is being lost, according to Paul Farrow:
Average UK family household income falls 8.4% this yearThe latest Asda Income Tracker has revealed that family spending power fell by £15 a week in November 2011, leaving the average UK family with £161 of weekly disposable income – 8.4 per cent down from this time last year.
Ilargi: If the average family(!) has only $250 per week to feed and clothe itself, we may just have a slight problem.
Austerity measures are only now starting to kick in for real in Britain, and lots of people have bought homes at prices that won't last much longer. Hence, millions that have just £161 in weekly disposable income today will be further squeezed, and mercilessly so. You buy a home in a bubble, you lose it in the bust.
Our societies are being increasingly gutted, cut to the bone. This is not something that will hit only some people, in some areas, it will affect everybody, and all over the western world. Japan, too, is on the verge of implosion. And China .. well, with home prices dropping dozens of percentage points in just one or two months, China may well be on the verge of an explosion.
2012 may be the year for increasing large-scale conflicts, such as another US attack in the Middle East. There's a lot of chest-thumping going on, and plenty of theaters to choose from. Iran, Syria, Egypt and more. I would be surprised though if it happens that soon, though I'm sure it will eventually.
War is simply too good a way to deflect attention from domestic mayhem, and solidly proven, for politicians to ignore. But I don't really see Obama invading any country yet in order to save his career or his campaign. Not yet.
Don't see it in Europe either. 2012 looks too early there too, though that may change if things get out of hand, too fast. We will see a further run-up to what we at TAE call the Balkanization of Europe: the re-surfacing of age-old conflicts and prejudices. As a truly deeper political union looks completely out of reach, a truly deeper division looks all but inevitable.
Europe doesn't have either the political nor the financial means to "save" its periphery. It can sweep Greece, Portugal, Ireland under the carpet for a while, but that's about it. Handing out half a trillion euros to 523 banks in exchange for already shredded paper assets will prove to be nothing but counterproductive.
It doesn't make any bank more solvent, it only puts more pressure on both the financial position of every European citizen, and on the ties that have bound their respective countries closer together for 50 years. Today, all major banks, and all countries too, are preparing scenarios for a Eurozone break-up.
What may be worse than all of this is a conflict that is brewing, slowly simmering, and that will tear our societies apart from within. It happens slow enough to perhaps not be much noticed next year, but that is not a good thing: it would be better to put out the fire before it spreads. Unfortunately, there is no way in sight to put it out. It looks like it will have to burn it course before it fades. This one will pit parents against their own children and grandchildren. That's how you tear a society apart.
Again from the Telegraph, this time Ian Cowie:
Baby boomers with 80% of UK wealth shouldn’t feel guilty about younger generations' problemsBaby boomers shouldn’t feel guilty about being better-off than younger generations, because people aged over 50 today saved harder and spent less when they were young than is the case today.
That’s the conclusion of analysis of more than 2,000 people by the Chartered Insurance Institute (CII). The study acknowledges that baby boomers – or those born within 20 years of the end of World War II – were fortunate to enjoy easy mortgage availability and decades of house price inflation plus final salary or defined benefit pensions denied to most young adults today.
As a result, about 80% of the Britain's net personal wealth of £6.7trn or £6,700bn is owned by people aged over 50 while younger folk often have no savings, substantial debts and little hope of becoming homeowners any time soon. The average age of first-time buyers is now 37 or about 10 years later than two decades ago.
But the CII claims that 'generation rent' are partly to blame for their own misfortune because many fail to follow their elders’ example by starting to save early. They have come to expect regular foreign holidays, among other treats once regarded as luxuries, often funded by credit cards taken out earlier than their parents did.
A third of the people surveyed who are now in their thirties spent more than half their net income on leisure and entertainment when they were in their twenties, compared to a fifth of those who are now in their fifties and sixties. Most of the younger generation now expect to holiday abroad an average of 2.5 times a year, whereas a quarter of baby boomers never travelled overseas in their twenties. [..]
"While some of this can be baby boomers received undeniable financial advantages during their working lives, there's no doubt that their financial security today is also due to a more frugal mentality in their youth. Today's generation spends more and saves less when compared to the baby boomers, and while people should enjoy their youth and live for today they should not do so at the expense of planning for their tomorrow." [..]
People who start to save young are far more likely to achieve an acceptable outcome than those who wait until later because of compound interest. Pensions are not the only way to save for retirement but they do enjoy substantial tax reliefs. Youngsters who say savings and pensions are boring should ask themselves how exciting poverty in old age is likely to be.
Ilargi: I'd say the numbers, and the opinion offered, speak for themselves.
Let's see here. A generation is normally seen as covering about 25 years. So if we say the youngest baby boomer is now about 50, then we have another generation aged 25-50, and yet another aged 0-25. I know that this is playing with the numbers a bit, but that's not all that important.
What is important is that these generations are set to blame each other for all manner of things. And I can't see how that will work out alright.
The baby boomers made one crucial and fatal mistake right from the start. They didn't have enough children. At least not to keep their pension systems going. The oldest are fine; but anyone now aged 50 has very little to no chance of ever getting a penny in pension money.
Pensions plans are Ponzi schemes, pyramid games. They need fresh blood all the time, and always more of that than there was before. Well, those days are long gone. Moreover, the younger generations, in general and on average, make less money than their parents. And they have to pay a lot more to go to college and university. Ponzi schemes don't collapse slowly. They're here one day and gone the next.
Stories about frugality are cute, but comparing our societies from 30 or 50 years ago with today is real tricky. How much richer did the baby boomer generation get by letting their kids spend? How much did, and still do, they profit from real estate prices so high younger generations can't afford to buy a home?
That is an endless and useless discussion. Useless because the young will take over political power at some point regardless of any external circumstances. What's disconcerting is that this transition may take too long in the face of a rapidly collapsing economy.
Wherever you look, unemployment amongst young people is far higher than the average. Still, the older generations think their children will pay to keep their pension money coming in anyway. With what, though?
The baby boomer generation, willingly or not, it makes no difference, have accumulated a large part of their wealth at the cost of the future. And perhaps, but only perhaps, we would be able to keep that mirage of borrowing from infinity going a little longer if we could keep the economy growing at 5-6-7% annually.
Thing is, we can't. We're stuck in the biggest and deepest credit crunch mankind has ever seen, and we haven't even started to see its true character. In fact, the only thing alleged to be a solution is more of the same: borrowing from the future. Which is what each and every bailout plan is. Nothing more, nothing less.
So we’re setting ourselves up for an epic fight that will tear our societies apart, rip them to shreds. Who's going to willingly give up their pension? Who’s going to volunteer to pay for other people's pensions when they can't even earn enough to feed their own kids? In the end, this will be decided by political power. Or rather, it would, provided we would be able to have our societies function more or less normally until then. What are the odds?
This is of course not all the whole coin, not all sides to it. Our major problems are seldom one- or even two-dimensional. E.S. Browning for the Wall Street Journal:
Oldest Baby Boomers Face Jobs BustMany older Americans fear they will be working well into their 60s because they didn't save enough to retire. Millions more wish they were that lucky: Without full-time jobs, they are short of money and afraid of what lies ahead. [..]
Older Baby Boomers are trying to postpone retirement, as many find their spending habits far outpaced their thrift. With U.S. unemployment at 8.6%, and much higher among people in their teens and 20s, younger members of the labor pool accuse Boomers of refusing to gracefully exit the workplace.
But their long-held grip is slipping, as employers look past older Americans to younger, cheaper workers. The Labor Department counts people as unemployed only if they have looked for a job in the previous month. By that definition, 6.5% of workers aged 55 to 64 were unemployed in October, below the national average but more than twice the jobless rate for the group five years earlier.
Taking into account the number of older people who want full-time work but are unemployed, working part-time or need a job but have quit looking, the percentage jumps to 17.4%, or 4.3 million Americans ages 55 to 64, according to the government data. The number has grown from 2.4 million in October 2006. This group without full-time work now accounts for more than one in six older Americans seeking positions. [..]
Older people have more trouble finding new jobs. Among unemployed workers older than 55, more than half have been looking for more than two years, compared with 31% of younger workers, according to the Heldrich Center. Among older workers who found a new job, 72% took a pay cut, often a big one, the Rutgers data show.
The problem has been building for decades: Inflation-adjusted, middle-class incomes have stagnated in parallel with a free-spending culture of indebtedness that has left many Americans with too little saved. Over the same time, many U.S. companies cut pensions and shifted to less-generous retirement-savings plans such as 401(k) accounts that have stagnated or diminished in the market tumult of past years.
Older families aren't just failing to save, they are increasingly draining accounts that were supposed to help finance retirement.
The median household headed by someone aged 55 to 64 has $87,200 in retirement accounts and other financial assets, according to Strategic Business Insights' MacroMonitor database. If each of the 4.3 million unemployed or underemployed people in this age group runs through half the family savings, that will, in theory, total $188 billion in lost retirement money. [..]
The trouble spreads across generations. Older people hang on to jobs or, out of desperation, take lower-level jobs for which they are over-qualified. Either way, they displace younger workers. [..]
At an age when they should be generating peak incomes and savings, many unemployed and underemployed Americans are applying for early Social Security benefits and spending what's left in their retirement accounts.
Ilargi: Yes, it's not just generation versus generation, not just parents against their children. The problem is much more perverted. We no longer have a functioning financial system, a functioning banking system, or a functioning political system for that matter. All these systems died on the same battlefield. Credit.
When Richard Nixon threw out the gold standard in 1971, the younger baby boomers were getting their first jobs and buying their first homes. Happy Days! It took an entire generation, actually a bit more than 25 years, for the inevitable outcome of that decision to reach the high point of its devastating glory.
But here we are now. We've all been had. All but 1% of the people. When it's no longer the fruits of his labor that determine a man's wealth, but the fruits of his wagers, when our leaders are those who are best connected to the moneylenders in the temple, instead of those that throw them out, there is no way we could not have ended up where we have.
Still, pitted against each other we will be. Whether in our own countries, or in skirmishes between countries -Europe-, or a WWIII over energy resources that keep the cattle at home docile, we will fall for it all again. We haven't learned much. But then again, maybe it isn't about learning after all.
We are ready and willing to destroy our societies, and eventually our planet, over a few scraps falling off the big table, like a Mac Mansion, an iPod, an SUV, because that is who we really are. Because we can make ourselves believe those are not scraps, that we are indeed kings now, seated at the table, and heaven knows we have lived better than ancient kings of any age over the past decades.
And most of all because we are no good at all at planning long-term. We can pay into a pension plan, that seems long-term, but at the very same time we can't figure out that if at some point there's less new contributors than older ones, that plan must and will implode.
We all will swear we love our children above anything in the world, and most would give their lives for their kids. And we honestly mean it when we say it.
The reality, however, is that we leave our children with a world that is polluted beyond recognition, in which species disappear at a rate 1000 times faster than before, and in which everything we’ve trained our kids for is vanishing right before their eyes.
Our "leaders" are psychopath lackeys of a long bankrupt financial system that uses its servants to gobble up the yet to be earned wealth of our progeny, and we just sit by and watch it happen.
We never noticed what happened to our financial systems when Nixon pulled his trick in '71, after all, we got richer, right, so who's to complain? We never noticed how the increasing fake wealth drove our societies and families apart, we wanted more space, more individualism, more things to buy and possess. We never noticed how our energy supplies started to run out; hey, we're driving more than ever, so there must be more oil than ever...
We have done exactly the same that any primitive life form would do when faced with a surplus, of food, energy, and in our case credit, cheap money. We spent it all as fast as we can. Lest less abundant times arrive. It's an instinct, it comes from our more primitive brain segments, not our more "rational" frontal cortex.
It's not that we're in principle, or talent, more devious or malicious than more primitive life forms. It's that we use our more advanced brains to help us execute the same devastation our primitive brain drives us to, but much much worse.
That's what makes us the most tragic species imaginable. We’ll fight each other, even our children, over the last few scraps falling off the table, and kill off everything in our path to get there. And when we're done, we’ll find a way to rationalize to ourselves why we were right to do so.
We can be aware of watching ourselves do what we do, but we can't help ourselves from doing it. Most. Tragic. Species. Ever.
Correcting the Growth of Human History
by Bill Bonner - Daily Reckoning
And so, yesterday, the northern hemisphere had its shortest day of the year. In Baltimore, the sun never rose and never set. It was gray all day. Then it was night again.
And so the days dwindle down to a precious few. In astronomical terms, the year is already over. We have passed the winter solstice. From here on out the days grow longer. In terms of the Gregorian Calendar, we still have a few more days to go in 2011. Then, we face a new year. New challenges. New crises. And new opportunities. Will 2012 be the year the human race goes into a downturn…a slump…a correction?
Time moves on. So do opinions.
Investors were all hot to put their money on stocks on Tuesday. They thought the euro debt crisis had been solved. And housing was looking up in the US.
But yesterday, there was no follow-through. It was as if they had forgotten what they were so excited about.
That’s the way it has been all year. One day, investors are sure recovery is right around the corner. Then, they turn the corner and there’s nothing there.
2011 began with most people expecting a recovery. Now, they know; there’s something else going on. Something more complicated…something different from the typical recession/recovery pattern they’ve been used to.
If they looked more closely, they would notice that each of the recoveries since the ’80s has been a bit weaker than the one that preceded it. The feds still fight downturns in the same way — with counter-cyclical fiscal and monetary policy. Each time output goes down, the Fed reduces interest rates. This cuts the price of credit, which usually gets people going again — with new investments and new hiring.
But credit is not so different from everything else in the world of economics. The law of diminishing marginal utility applies. The first dollar you borrow pays off. You put it to work building new, more efficient and more productive businesses. The investment pays off. Later borrowings are less effective. Finally, they don’t work at all.
Part of the explanation is merely that the borrowers shift from borrowing for very productive purposes to borrowing for less productive purposes…to borrowing not to produce at all. There’s no payback when you borrow to consume. Zero.
Finally, the recession of 2001 was met with a muscular Fed response — with much lower interest rates and a federal budget far in the red. But the recovery was the weakest ever. It was a "jobless" recovery, with an unusually slow rehiring pattern.
Now, 10 years later…we have something new — a jobless non-recovery! People are beginning to wonder. What is really going on?
Even Martin Wolf, chief intellectual at The Financial Times is beginning to ask questions. "The future is not what it used to be," he writes.
Here at The Daily Reckoning we have known for a long time that the Great Correction is no ordinary recession. We didn’t know exactly what it was correcting, but we had a list of possibilities.
Is it correcting the 60-year boom in credit that began after WWII? Seems like it is… Credit, in the private sector, has been going down since 2008.
Is it correcting the bull market in stocks that began in August 1982? So far, not much sign of it…but we think so. People are bound to realize, sooner or later, that business profits cannot expand when credit is contracting.
Is it correcting the power of the US empire? Yes…perhaps…but that’s a long story for another time…
Is it correcting the paper-currency, faith-based, centrally-planned monetary system put in place by Richard Nixon in 1971? Not yet. Instead, US debt — denominated in those paper dollars — gets more respect than ever. But we have a feeling that it will be corrected before this crisis complex is over.
On Monday, word got out that the European Central Bank has lined up with the Fed and other central banks to fight the debt crisis by…yes…creating more debt. And more paper currency. It will lend another half-trillion euros — or so — to the banks. The banks are supposed to make more new loans and buy up more old ones. Specifically, they’re expected to take money from the central banks and use it to buy government debt, thus keeping the chickens from coming home to roost as long as possible.
In the meantime, economic growth, it is hoped, will finally get into action. Growth, they think, is the "mean" to which the developed economies will revert…which will raise GDP and tax receipts, reducing deficits and debts.
But what if growth itself were being corrected?
What if the entire period from the invention of the steam engine to the invention of the internet were not the normal thing, but the abnormal thing? What if the "lost decade" we have just gone through is actually the mean…the usual…the normal thing? And what if — after nearly 3 centuries — we have just now reverted to it?
Until about two weeks ago, we thought human beings had only existed for 100,000 years. Now, archeologists are guessing that we’ve been around as a species for twice as long.
You know what that means? It means that our mean rate of growth — already negligible — is actually only about half what we thought it was. In other words, it took not 99,700 years for humans to invent the steam engine, but 199,700. And now, what if we are not going on to something new, but back to something old? What if the New Age is really more like the Old Age…where growth and progress were unknown.
Let’s see, the typical person in 1750 lived better than the typical person in say 100,000 BC. The person in 100,000 BC lived in a cave or maybe a wigwam. The typical person in 1750 lived in a hovel. There were some great houses too, of course. By the 18th century, humans had been building with arches and columns…and domes…dressed stone with elaborate decoration…for thousands of years. But most people had no access to those monuments. They lived in whatever they could put together — usually of wood or mud.
They lived on what they could grow…with their own hands, or with the help of domesticated draft animals. They hunted wild animals…or got their calories from their own herds and flocks.
The person from 100,000 BC was a hunter-gatherer. But his life was not all bad. At least he got plenty of fresh air and didn’t get caught in traffic jambs or have to watch television.
But the progress between 200,000 BC, when mankind is now thought to have emerged…to 1765, when Watt produced his first engine…was extremely slow. In any given year, it was nearly negligible…imperceptible. Over thousands of years there was little progress of any sort, which was reflected in static human populations with static levels of well-being.
Then, after 1765, progress took off like a rocket. Over the next 200 years, the lives of people in the developed countries, and the human population, generally, changed completely.
It took 199,700 years for the human population to go from zero to 125 million. But over the next 250 years it added about 6 billion people. Every five years, approximately, it added the equivalent of the entire world’s population in 1750.
"Progress" made it possible. People had much more to eat. Better sanitation. Better transportation (which eliminated famines, by making it possible to ship large quantities of food into areas where crops had failed). The last major famine in Western Europe occurred in the 18th century when crops failed. After that, the famines in the developed world at least have been intentional — caused largely by government policies.
Progress abolished hunger. It permitted huge increases in population. And it brought rising real wages and rising standards of living.
By the late 20th century, people took progress and GDP growth for granted. Governments went into debt, depending on future growth to pull them out. So did corporations and households.
Everyone counted on growth. Spending and tax policies were based on encouraging growth. The enormous growth in government itself was made possible by economic growth. After all, as we’ve seen in our Theory of Government, beyond the essentials, government is either parasitic or superfluous. The richer the host economy, the more government you get.
Today, there is hardly a stock, bond, municipal plan, government budget, student loan, retirement program, housing development, business plan, political campaign, health care program or insurance company that doesn’t rely on growth. Everybody expects growth to resume…after we have put this crisis behind us.
Growth is normal, they believe.
But what if it isn’t normal? What if it was a once-in-a-centi-millenium event, made possible by cheap energy?
The Economic Solutions Of Vampires
by Brandon Smith - Alt-Market.com
The vampire bat is a horrifying pig-nosed wart of a creature which feasts in a manner that, believe it or not, is a rather familiar scene to those of us who closely study alternative economics. After erratically flittering about in the sinking evening sky, it targets the warmth of a sleeping farm animal and latches onto it with its claws.
Carefully, it inserts a fang into a vein dense region of the creature’s body, and laps away at the blood. Normally, the oblivious livestock are completely unaware and helpless to the attack. The tiny parasite does not inflict an immediately mortal blow to its host, but over time, disease and physical debilitation result. The vampire has destroyed the animal, and, pathetically, the animal has no idea.
Just as in nature, the economic world has its own bloodsucking vermin in the form of banking elites which are a wretched drain on the whole of the human race. Without their vicious and predatory presence, I envision a world so rapturously above and beyond what we wallow in today that it is impossible to describe.
The disgust many feel when considering the virulent feeding habits of the common mosquito or the slithering leech does nothing to compare to the utter gut churning revulsion I feel when studying the financial habits of banks like the Federal Reserve and the "too big to fails". They are without a doubt the most malignant form of social cancer imaginable.
And yet, after nearly four years of ongoing fiscal exsanguination, a sizable portion of the American populace is still looking to these pests for economic comfort and reassurance, just like farm animals consistently grazing near the entrance of a vampire bat cave, as if it is a shelter from harm.
Worst of all is the willingness by which investors still, to this day, commit their savings and their livelihoods to the stock market meat grinder. Let’s be honest; the typical American daytrading investor is a complete moron. They have absolutely no sense of the fundamentals of our financial structure nor the eccentric rules by which it operates. They only have the faintest inkling of the functions of the highly manipulated stock market.
They foolishly believe that what little money they make today riding the wave of an illegitimate liquidity driven rally they will actually get to keep. For them, stock investment is no different from buying a scratch-off lotto ticket at a hillbilly gas station; it is a cheap and tawdry game rife with failure but exciting to play, if only for a fleeting guilt addled thrill.
To be fair, they play because the game is indeed "rewarding", at least, initially. The first taste is so sweet that it soils the plasma; the very skin of the cellular membrane of the financial mind becomes saturated. It swells within the weakening heart of a culture, and overrides its sense of logic.
It makes us do terrible and stupid things, and we clasp our hands together and pray that it will never end. But, of course, an ending is painfully inevitable. The more we indulge, the more it takes down the road to satisfy us. We become an addict nation, riding the chemical wave of a pharmaceutical roller coaster fed by the opiates of fiat and fantasy.
The bottom line; we are being drained of our lifeblood as a country. However, the mainstream media is rife with talk of "recovery", and one might ask how this could be possible. An overwhelming spectrum of solutions has been presented over the past 3-4 years, and each one has given the stock market a little push towards the green, so what’s the problem?
The problem is, the actions taken by our government and banking elites have built the connecting strands of a spider’s web, instead of a safety net.
Let’s examine some the most common solutions presented to the increasingly desperate American public and why these delusions have lulled us into the role of victim in the most elaborate monster movie of all time…
Centralization As a Solution To…Centralization…?
Europe’s current disintegration is a perfect example of this strange and ultimately destructive policy. The EU as an experiment is an utter disaster. Once the jewel of the open border dynamic and a bastion of the "merits" of globalization, the economic union has been exposed as a kind of waxwork museum; a tourist trap curiosity filled with illusions of life, but rather hollow upon closer inspection.
Half of the countries committed to the EU are burdened with liabilities well beyond the 60% debt to GDP ratio outlined in the 'Growth and Stability Pact’. Some countries, including Greece, met few if any of the presented criteria for membership and were allowed to join anyway. The only reason the system was able to function at all was due to the imaginary wealth of the toxic derivative framework which now no longer exists.
The problem with globalization is that it requires assimilation; it demands that sovereign nations adopt the fiscal character of their neighbors in order to present the face of a single entity.
Of course, when these countries are unable to do this because of their cultural differences, or their incongruent economies, something has to be slapped together instead. Artificially tying together societies by forcing them to financially harmonize is, in my view, a criminal act of collectivism.
Now that this crime is being unveiled for all the world to see, though, the corrupt governments and banking puppeteers of Europe have suggested even MORE of the same! That’s right…their solution to the collapse of the EU is a harmonization not just of finance, but of politics and law. A single governing body which would dictate every nuance of the union.
The claim that Europe was not centralized enough, and that this is what caused the breakdown, is absolutely preposterous. Globalization makes a system inflexible and weak. If any portion of that system fails, it sends shockwaves through the rest.
This is because centralization removes the protections of independently insulated structures and allows corrupt policy to spread like a plague. As the economic situation grows more dire, the end result will always be a reduction in the common citizen’s standard of living. In harmonization, It is far easier to make everyone equally poor than it is to make them equally rich.
With a single, narrow minded leadership, especially one that is completely unaccountable to the people, the EU will become the most fragile makeshift empire in history, and a model for a global government that hopefully will never exist.
Print To Avoid The Pain…
I can’t tell you how truly exhausted I am with the constant rehashing of bailout bills and cheap lending windows as if they have ever or will ever change anything. Let’s make this clear; Keynesian stimulus measures are useless. They will always be useless. Governments do NOT create jobs, they destroy them. Central banks do NOT create wealth, they dilute it.
Quantitative easing and zero interest lending does NOT diminish debt, it displaces it; removing it from the shoulders of private corporate banking institutions where it belongs and dumping it in the laps of taxpayers.
I’ll say it again; the debts created by major banks have not been paid. They have been handed to you, and your children. Forget the December Santa Rally and the temporary holiday job boost. Nothing has changed since 2008.
The process of transferring private debt into public obligation is a tool of economic vampires. The utility in this is obvious. A program of wealth transference has the ability to prolong full collapse while at the same time giving the impression of stability. The dollar itself characterizes this conflict. The currency has been overprinted since the credit crisis began by some estimates in the ten’s of trillions.
Not only has it been devalued to temporarily stave off a purging in the U.S., but now also in Europe. And yet, the dollar index, which supposedly measures the Greenback’s global value, has spiked.
We are lulled into a sense of safety by such arbitrary measurements, but our buying power is being subversively annihilated. In less than a year’s time, those who dove into the dollar as a safe haven will discover their bones picked clean by predatory banks and hidden flesh eating inflation. Count on it…
Create A New Currency…
Globalists love currencies, as long as they aren’t tied down by a commodity. For central bankers, each fiat currency is a stepping stone to something more sinister. They are disposable. They are expendable. Like toothbrushes. Yes…even the dollar. And in this rests the key to economic control.
A currency is a symbol of trade and labor; if you can create and destroy that symbol at will, then you can dominate trade and labor. Through a mere piece of paper, you manipulate the very breath of social life. No one should be given that kind of power without uncompromising transparency and constant public governance, but the Federal Reserve is free from both.
The suggestion that we can solve our current financial despair with the formation of a whole new currency, or a global currency, is like suggesting to a slave that he would be much more free with a shinier set of chains. Any solution that purports to undo the crisis by doing more of the same was probably devised by an economic vampire.
This includes digital currencies like the failed "Bitcoin", which swagger about in the classy looking threads of technology and diversity while flashing us impromptu peace signs. Digital currencies are a Star Trek theme park distraction, and just like any paper fiat currency, they make promises they cannot keep.
Any trade system that depends upon good faith in ones and zeros traveling across a network of machines that can be hacked or rendered useless by collapse is doomed. We have already tasted the danger of digital through the debauchery of credit cards. Why tempt fate even further?
More Regulation And Control…
Regulation is not the problem in America’s economy; the REGULATORS are the problem with America’s economy. The SEC is given thousands of potential investigations a year to pursue, but rarely do they ever follow through, and when they do, it’s to throw the angry masses a Bernie Madoff or two; an act of insincere appeasement in light of much greater fraud.
Being that true free markets have not existed for at least a century, the insinuation that free markets are the root of the collapse is a bit absurd. The guidelines for government oversight of business in the U.S. already exist; government has just refused to implement them. Adding new restrictions to an already restricted market will change nothing.
Therefore, the only solution that makes any sense whatsoever as far as regulation is to wipe the slate clean entirely. Remove the Federal Reserve, replace the SEC, and replace the current establishment leadership.
I have heard it said that the philosophy of our economic system is the problem. This is an ignorant cop-out. The principals of free markets are not the issue; the men who abuse them and diminish them, on the other hand, are. Anyone who suggests that we as a country focus our anger on the idea of the system rather than the men behind the misuse of that system is, without a doubt, an economic vampire.
Lurking in the Shadows...
The question of solutions is difficult, not because there aren’t any, but because those that will actually succeed require pain, sacrifice, and incredible hard work. Most people don’t like to think about that sort of thing.
This is why global banks and their proponents have been able to maintain the recovery magic act for the past few years (just barely), and it is why the useless concepts they put forward are still given public consideration. We WANT to be sold on the proposal of an easy way out.
One rule to never forget when considering any solution is to take into account who benefits most from its implementation, and who has to labor for its success. If average people are forced to exert all the effort, and an elite few reap all the substantial benefits, this contradiction outweighs any assertion of practicality.
It is not worth our time, nor our energy, to shadowbox reality. Unfortunately, this is all we have been doing as a nation since 2008.
The creeping terror that lay ahead is not the economic collapse, but the men who would use it to their favor. The stakes are high. With the NDAA and similar bills in place, fiscal distress is no longer just a matter of economics, but a matter of personal liberty. Without a doubt, a collapse will be used as a rationalization for totalitarianism.
If we do not make the hard decisions now, and take it upon ourselves to construct our own localized economies separate and insulated from the mainstream, we will, indeed, find ourselves one day cowering in the dark of a long drawn night infested with fiends, and desperate enough to actually ask them for help. They will be happy to give it, at a very bloody price
Why Are We Forced to Worship at the Feet of 'Mythical' Financial Markets Controlled by the Elite?
by Les Leopold - AlterNet
The markets are "jittery," "upset," "skittish" and "unnerved." They are "confident" or "unsure." They are "demanding" that political leaders "put up or shut up." And they are "reacting unfavorably" to Obama’s newfound populism.
These are just a few of the many ways financial markets are described each and every day by the media, financial players and public officials. At first it seems as if these markets are humanoids onto which we project our feelings. Yet, on closer inspection, it’s more like we have ascribed to them god-like powers.
We are told to appease the market gods or face eternal financial damnation. As President Obama warned Europe recently, they must "muster the political will" to "settle markets down."
Why do we worship these angry market gods?
Trading has been around for as long as humans. We, no doubt, increased our chances of survival through trading what we had more of for what we needed or wanted. The more complex our societies became the more markets grew.
At some point during the Renaissance, markets emerged that traded money as well as goods, as city-states and nations sought ways to fund wars. But these markets were far from god-like. Sovereign nations ruled supreme and money-lenders had to do their bidding if they hoped to be repaid or in some cases, if they hoped to avoid execution.
Even Adam Smith didn’t suggest that financial markets had god-like powers. In fact, these markets seemed more like petulant children throwing tantrums as they puffed up tulip bubbles, South Sea bubbles, railroad bubbles and periodic financial panics.
When the mother of all financial crashes struck in 1929, it seemed as if markets would forever lose their god-like status. A consensus emerged that financial speculation was a major cause of the Great Depression, and tight controls were established during the New Deal to teach these petulant children a lesson they would never forget.
They forgot. We forgot.
After WWII, a new generation of economists emerged who worshiped the markets and detested any and all government interference. For these true believers, markets were infallible, blessed by what they called the "efficient markets" theory.
Financial markets, they claimed, always got prices right. They always provided the best allocation of society’s scarce resources, and most importantly, they undermined bad government decisions. And all of this happened without any guidance and without anyone exercising any control whatsoever.
These great autonomous and anonymous forces of modern economies ruled supreme and that was absolutely wonderful, according to these worshipers– praise the lord!
Led by economist Milton Friedman, these market apostles undermined any and all regulations that were put in place during the Great Depression to contain the diabolical impacts of markets run wild. "Let them run wild," we were told, "and we’ll get an economic boom to make all boats rise."
Starting with President Carter, each and every president unleashed financial markets more and more until the financial sector towered over the global economy.
Not only were the new financial market gods, bigger and more powerful than ever before, but the new high priests -- our financial elites -- earned millions of dollars, then hundreds of millions, and then billions as they collected modern-day tithes from all of us for tending to the financial gods.
While markets were said to be intermediaries between our savings and needed investment, the financial elites became the intermediaries between our money and their own pockets.
Our financial high priests taught our political leaders how to appease the financial market gods: cut more taxes for the rich, gut more regulations and trim social programs. Not only didn’t the riches flow to all of us, but the markets again crashed in 2008 revealing as they did in 1929 to be nothing more than enormous casinos designed by and for the high priests.
When President Obama came into office, the market gods were in total disarray and the high priests were on their knees begging for help. That was the perfect time to unmask the false gods and the false profits.
Instead, like the Bush administration, Obama turned over policy-making to the high priests – Geithner, Summers, Bernanke – who secretly provided up to $7.77 trillion in free loans and asset guarantees to help their fellow Wall Street priests become even more powerful. The market gods were resurrected again and given license to run wild.
The "new and improved" markets would do the bidding for the high financial priests who feared a populist reaction. The financial elites worried they might be pressured by the masses to pay for the damage they had done – the collapsed economy, the loss of millions of jobs, and the reduction of government tax revenues that, in turn, forced up the deficits.
But, in a world ruled by false market gods and greedy priests, the rest of us were asked to shoulder the new deficits. And if we refused, the priests who lurked behind the markets would see to it that money rushed away from any government that resisted them.
The first act of these vengeful money gods concerned America’s debt rating. To tame American populist passions, the high priests sent out their vassals – the rating agencies – to do their bidding (even though those same agencies misrated thousands of toxic assets that led to the crash).
This happened precisely at the time last summer when Congress was debating how to pay back the enormous debts that were created by the financial crash. The message from the vassals was clear – the public must pay, not the high priests, or beware of the vengeful market gods.
When Europe considered controls on financial markets through transaction taxes, the rating agencies again began cutting the debt ratings of European countries and banks, causing them to pay more for financing and helping to heighten the Eurozone crisis.
Again the message is clear: the financial elites want the masses to sacrifice even more in order to pay back the debts that came about in large part as consequence of the financial crash.
Who are these financial elites who pull the strings behind these god-like markets?
They are the proprietary trading desks at the too-big-to-fail banks that grew even bigger during the crash, financed by secret government loans. They are the hedge funds that make billions during crises as they stir up runs against sovereign bonds and banks. They are the enormous pools of private wealth moved by private asset managers.
In short, the markets gods are actually the disembodied cover for the 1/10 of the 1 percent that collectively holds trillions of dollars in capital. These financial elites are using their market gods to bludgeon democracy. Their game is now rigged to the point where all politicians must appease them…or face excommunication.
But this charade may not last. As we watch our democratic processes fold before these avenging gods, unrest is growing. Occupy Wall Street could be the first sign of a serious uprising in defense of democracy against the financial elites.
But nothing is certain except this: The financial high priests will never relinquish their money and power without an enormous and determined populist movement.
Our choices will become increasingly stark as the high priests demand more sacrifice from us – cuts in schools, cuts in social security, cuts in health care coverage, cuts in our standard of living. They will push us down until we develop the organizational power to unmask their false gods and fight back.
Our resistance can start with this simple cognitive step: every time you hear a commentator talk about what the markets "want" or what the markets "reject," remember the financial elites who are pulling the strings.
Average UK family household income falls 8.4% this year
by Paul Farrow - Telegraph
The latest Asda Income Tracker showed that the average family lives on just £161 a week. Inflation may have showed signs of easing but family budgets continued to be squeezed thanks to higher energy and transport costs.
The latest Asda Income Tracker has revealed that family spending power fell by £15 a week in November 2011, leaving the average UK family with £161 of weekly disposable income – 8.4 per cent down from this time last year. Annual growth in the cost of basics decreased to 5 per cent in November but budgets continue to be squeezed by the rising costs of running a family home.
In October, gas prices were some 25.3 per cent higher than a year ago, while electricity prices grew by 15.5 per cent, Asda said. Transport costs continue to put pressure on the inflation rate too, with the cost of getting around remaining a large driver of the headline rate of CPI inflation. Figures from the AA show the cost of unleaded petrol grew by 12.3 per cent over the year to November, while diesel prices increased by 14.6 per cent during the same period.
As well as rising outgoings – a weak jobs market further increases the pressure on family budgets – with the unemployment rate remaining elevated at 8.3 per cent during the quarter to October.
With official forecasts indicating that the public sector is likely to lay off more workers than previously anticipated, there are fears that unemployment could rise to 8.7 per cent in 2012.
In addition to the November data, a specially commissioned forward-looking report compiled by Cebr predicts that the amount of disposable income available to UK families in 2012 will stabilise in 2012.
Slowing inflation will help ease the pressure on household budgets, although an increase in mortgage interest costs and weak employment conditions could present a risk to spending power. Cebr therefore predicts a fall of £11 per month in December, and £8 a month in January.
Charles Davis, managing economist, Cebr, said:"Difficult times are set to continue for British households, as economic fallout from the on-going debt crisis in the Eurozone takes its toll on employment and wage growth prospects in the UK.
"With high unemployment set to rise further as deeper than anticipated public sector cutbacks outweigh job creation in the private sector, household spending power is likely to be held back by slow earnings growth. The rising cost of living is expected to slow further in the coming months, taking some pressure off, but household budgets are likely to be constrained for some time to come."
Andy Clarke, Asda President and CEO, said: "2011 saw UK families face an unprecedented budget squeeze, with the cost of basics putting immense pressure on disposable income.
Baby boomers with 80% of UK wealth shouldn’t feel guilty about younger generations' problems
by Ian Cowie - Telegraph
Baby boomers shouldn’t feel guilty about being better-off than younger generations, because people aged over 50 today saved harder and spent less when they were young than is the case today.
That’s the conclusion of analysis of more than 2,000 people by the Chartered Insurance Institute (CII). The study acknowledges that baby boomers – or those born within 20 years of the end of World War II – were fortunate to enjoy easy mortgage availability and decades of house price inflation plus final salary or defined benefit pensions denied to most young adults today.
As a result, about 80% of the Britain's net personal wealth of £6.7trn or £6,700bn is owned by people aged over 50 while younger folk often have no savings, substantial debts and little hope of becoming homeowners any time soon. The average age of first-time buyers is now 37 or about 10 years later than two decades ago.
But the CII claims that 'generation rent' are partly to blame for their own misfortune because many fail to follow their elders’ example by starting to save early. They have come to expect regular foreign holidays, among other treats once regarded as luxuries, often funded by credit cards taken out earlier than their parents did.
A third of the people surveyed who are now in their thirties spent more than half their net income on leisure and entertainment when they were in their twenties, compared to a fifth of those who are now in their fifties and sixties. Most of the younger generation now expect to holiday abroad an average of 2.5 times a year, whereas a quarter of baby boomers never travelled overseas in their twenties.
David Thomson, a director of the CII, said: "Despite the current financial climate, the younger generation is more likely to spend money on a meal out rather than put it in their pension pot, as their older counterparts might have done.
"Holidays abroad are now an accustomed treat for 20-year-olds rather than a luxury for baby boomers, many of whom never took overseas holidays at that age and where a vacation might have meant a week in Norfolk rather than a beach in foreign climes.
"While some of this can be baby boomers received undeniable financial advantages during their working lives, there's no doubt that their financial security today is also due to a more frugal mentality in their youth. Today's generation spends more and saves less when compared to the baby boomers, and while people should enjoy their youth and live for today they should not do so at the expense of planning for their tomorrow."
All that may sound insufferably smug to youngsters today, burdened by student debts and confronted by collapsing confidence in savings and investment after more than a decade of disappointing returns, stockmarket shocks and financial scandals. But the mathematical fact remains that the earliest pounds invested have the longest to work in your favour.
People who start to save young are far more likely to achieve an acceptable outcome than those who wait until later because of compound interest. Pensions are not the only way to save for retirement but they do enjoy substantial tax reliefs. Youngsters who say savings and pensions are boring should ask themselves how exciting poverty in old age is likely to be.
Baby boomers 'more frugal in youth'
by Nick Collins - Telegraph
They may have enjoyed generous pensions and benefited from a surge in house prices, but baby boomers were also more frugal in their youth than today’s thirtysomethings, according to a new report.
While the current "generation bust" has been dealt a harsh hand by the financial climate, the new figures suggest they are partly to blame for their financial woes because they are worse at saving money.
A third of people in their thirties admits to having spent more than half the money they earned in their twenties on leisure and entertainment, compared with the modest 21 per cent of income spent by the average baby boomer at the same point in life.
Most thirtysomethings enjoyed on average two and a half foreign holidays each year in their twenties, while a quarter of the baby boomer generation, now in their sixties, say they never went on vacation at that age.
This enabled the baby boomers to save more money, with the average person in their sixties having commenced pension contributions between the ages of 20 and 24. In contrast 38 per cent of people in their thirties today admit they still have not begun saving for their retirement.
Despite this most people in their thirties today blame the baby boomers’ lack of investment in future generations for their problems today, the survey showed. People now in their sixties also tended to buy homes at a younger age than today and took out their first credit cards much later, helping them stay debt-free for longer, researchers found.
David Thomson, Director of Policy & Public Affairs at the Chartered Insurance Institute said: "More than 80 per cent of the nation's £6.7trn in wealth is owned by baby boomers. "While some of this can be attributed to the undeniable financial advantages baby boomers received during their working lives, there's no doubt that their financial security today is also due to a more frugal mentality in their youth.
"Today's generation spends more and saves less when compared to the baby boomers, and while people should enjoy their youth and live for today they should not do so at the expense of planning for their tomorrow."
Britons save half as much in 2011 as previous year
by Rosie Murray-West - Telegraph
Savers have been put off depositing cash by poor interest rates, choosing to pay down mortgages instead. Britain's savers put away half as much in 2011 as they did the year before, because poor interest rates are putting them off holding money in the bank.
Figures from the British Bankers' Association (BBA) showed that while customers are paying down their mortgages and paying off their credit cards, deposits and savings have increased by £15.8 billion in the first eleven months of 2011 compared with £30 billion in the same period last year. "The incentive for holding bank deposits has given way to paying down debt and using cash for household expenditure" statistics director David Dooks said.
The figures showed a slight increase in mortgage lending in November, with figures 5pc higher than the same period in 2010, House purchase approvals were 16pc higher than in November 2010.
However, the BBA said that large numbers of people were paying down existing mortgages. The amount of unsecured credit - personal loans and credit card debts - also fell by 1.2pc over the year. Many people are using their money to pay down debt and mortgages rather than put money in the bank.
This makes sense because interest rates on deposits are so low that many are struggling to beat inflation, whereas paying down a mortgage has tax advantages and consumers may also be paying a higher rate on these mortgages.
"November's £8 billion of new mortgages, £7 billion of new card credit and £1 billion of new personal loans show that household finance continues to be provided by the banks but until there are clear signs of improvement in the economy and stability on the international front, households and businesses lack the confidence needed to seek credit for spending of investment," Mr Dooks said.
"Stocks of bank lending therefore continue to be driven down as repayments dominate over the absence of any material rise in borrowing demand."
Oldest Baby Boomers Face Jobs Bust
by E.S. Browning - Wall Street Journal
Many older Americans fear they will be working well into their 60s because they didn't save enough to retire. Millions more wish they were that lucky: Without full-time jobs, they are short of money and afraid of what lies ahead.
Deborah Kallick was a professor of biomedical chemistry at the University of Minnesota until she ventured into the private sector in 2000 with a job in genome research. She is now one of more than four million Americans aged 55 to 64 who can't find full-time work. That number has nearly doubled in five years, according to U.S. Department of Labor figures in October.
Ms. Kallick, 60 years old, has been unemployed since 2007 and lives in the Northern California home of an ex-boyfriend. She has run out of unemployment insurance, used up most of her retirement savings and is indebted to relatives and credit-card companies.
A good job could settle her accounts, she said. Until then, Ms. Kallick relies on generosity, occasional consulting work and the sale of sweaters, purses and other possessions on eBay. "It is very hard to work through this and learn to be calm and happy day to day," said Ms. Kallick, who never married. "It has taken a lot of strength and courage to learn to do that."
Older Baby Boomers are trying to postpone retirement, as many find their spending habits far outpaced their thrift. With U.S. unemployment at 8.6%, and much higher among people in their teens and 20s, younger members of the labor pool accuse Boomers of refusing to gracefully exit the workplace.
But their long-held grip is slipping, as employers look past older Americans to younger, cheaper workers. The Labor Department counts people as unemployed only if they have looked for a job in the previous month. By that definition, 6.5% of workers aged 55 to 64 were unemployed in October, below the national average but more than twice the jobless rate for the group five years earlier.
Taking into account the number of older people who want full-time work but are unemployed, working part-time or need a job but have quit looking, the percentage jumps to 17.4%, or 4.3 million Americans ages 55 to 64, according to the government data. The number has grown from 2.4 million in October 2006. This group without full-time work now accounts for more than one in six older Americans seeking positions.
In some ways, older people are doing better than everyone else: Among all U.S. workers, 20% are unemployed, underemployed or have given up looking for jobs. But older people have far less time to rebuild savings.
"This is new. It is different. It is worse than we have experienced before and it is very widespread," said Carl Van Horn, head of the John J. Heldrich Center for Workforce Development at Rutgers University. "It is going to get worse. You are going to have a higher level of poverty among older Americans."
Older people have more trouble finding new jobs. Among unemployed workers older than 55, more than half have been looking for more than two years, compared with 31% of younger workers, according to the Heldrich Center. Among older workers who found a new job, 72% took a pay cut, often a big one, the Rutgers data show.
The problem has been building for decades: Inflation-adjusted, middle-class incomes have stagnated in parallel with a free-spending culture of indebtedness that has left many Americans with too little saved. Over the same time, many U.S. companies cut pensions and shifted to less-generous retirement-savings plans such as 401(k) accounts that have stagnated or diminished in the market tumult of past years.
Older families aren't just failing to save, they are increasingly draining accounts that were supposed to help finance retirement.
The median household headed by someone aged 55 to 64 has $87,200 in retirement accounts and other financial assets, according to Strategic Business Insights' MacroMonitor database. If each of the 4.3 million unemployed or underemployed people in this age group runs through half the family savings, that will, in theory, total $188 billion in lost retirement money.
The typical retirement-age household has too little saved to maintain its standard of living in retirement, according to actuarial and Federal Reserve data.
Financial planners often advise that retirement resources be large enough to provide 85% of a person's working income. Median households headed by a person aged 60 to 62 with a 401(k) account have saved less than one-quarter of what is needed in that account to live as well in retirement, according to Fed data analyzed for The Wall Street Journal by the Center for Retirement Research at Boston College.
The trouble spreads across generations. Older people hang on to jobs or, out of desperation, take lower-level jobs for which they are over-qualified. Either way, they displace younger workers.
In the past, older people who lost jobs often gave up and retired. No longer. In October, two-thirds of people aged 55 to 64 had jobs or wanted them, up from 59% in 1994, according to Labor Department data.
At an age when they should be generating peak incomes and savings, many unemployed and underemployed Americans are applying for early Social Security benefits and spending what's left in their retirement accounts.
Kathi Paladie, 64 years old, lost her job as an executive assistant at a mortgage company in Tacoma, Wash., six years ago. She hasn't found full-time work since but works occasionally as a phone interviewer for a political survey firm.
Her retirement savings is spent, and she said her monthly $800 Social Security checks, $100-a-week unemployment benefits and occasional paychecks barely cover expenses. "If I don't buy a lot of groceries, then I am OK," said Ms. Paladie, who is divorced. "I do a lot of puzzles sitting here and watching TV. And I play with my bird. And that's about it."
She rarely goes out, she said, "but I've got a clean house." To save money, she sometimes eats Frosted Flakes for dinner. She shares them with her African Grey parrot, Muffin, who also likes the sweetened cereal.
Ms. Paladie hasn't been to the doctor for five years, she said. She frets about paying rent after her unemployment benefits run out next year. Her daughter lives nearby but doesn't have the room for her, Ms. Paladie said. "It is kind of a standing joke," she said, "that if this fails, that I can always move in with them and sleep in the garage."
The problem of older, out-of-work Americans extends beyond individuals to the U.S. economy. Among jobless people aged 55 to 64 who want to work, lost annual wages exceed an estimated $100 billion, based on the median income of this age group.
Retirement savings losses exceed $10 billion a year, assuming contribution rates of 8% for employees and 2% for employers. Even if only half the people were working, the economy would gain $50 billion a year in income and another $5 billion in retirement savings. That doesn't count the lost wages of people who have taken salary cuts to get new jobs.
Richard Foster, 59 years old, a former computer programmer and software analyst in Arvada, Colo., near Denver, has been unemployed several times over the past decade. The older he gets, the more trouble he has finding jobs in computer mainframes, his specialty, amid changing technologies. And the longer his absence from programming, the harder it is to attract recruiters, who prefer people with experience in the past six months, Mr. Foster said.
These days, he works on the telephone nearly full-time as a customer-service representative. His employer grades him on how fast he finishes each call and how customers rate his service. Mr. Foster recently contracted Bell's palsy, a temporary facial paralysis thought to be stress-related.
The work pays a lot better than a previous job, delivery driver for a dry cleaner. Still, Mr. Foster said, it pays 40% less than what he earned as a programmer at the University of Colorado Hospital, a job he lost in a restructuring that kept more tenured employees.
Mr. Foster's wife, Tina, has complications from a detached retina, which keeps her from working. Her treatment is only partially paid for by his medical plan, which classified Ms. Foster's eye problem as a pre-existing condition.
He has a retirement-savings plan at his new employer, he said, but it's hard to save, given the couple's struggle "to make ends meet day to day." He is putting off dental work, for example, to save money.
While out of work, Mr. Foster said, he sometimes depended on food banks. He filed for personal bankruptcy in 2003. He and his wife got a break recently: his wife's sister and her husband helped them purchase a home. Mortgage payments to his in-laws are less than his rent. Retirement? He said he has no idea when.
Mr. Foster's worries aren't unusual. More than two-thirds of unemployed people older than 50 report extreme stress, trouble sleeping or family strains, according to surveys by the Heldrich Center at Rutgers. More than 60% of respondents said they didn't expect to hold another full-time job in their field and a similar percentage said they were pessimistic about finding any job soon. One-third of those over 55 reported selling possessions to stay afloat.
In another unfortunate consequence, the younger people are when they apply for Social Security retirement benefits, the lower their monthly checks for the rest of their lives. Two-thirds of Americans older than 50 expect to file for the benefits earlier than they would prefer, or already have done so, according to the Rutgers survey.
"People are taking in boarders, they are moving in with their kids, selling their homes for the cash that they can live on," said Abby Snay, executive director in San Francisco for JVS, a community agency that teaches work skills.
Although her agency has long focused on young people, the fastest-growing client group is closer to retirement age. Before the recession, only 11% of her clients were older than 55; now, it is 17%.
"We are seeing people in a panic, in survival mode," she said. "They are about to finish their financial assets and all they have after that is their retirement funds. They are trying to figure out some kind of bridge so they won't have to pay an early withdrawal fee for their retirement incomes."
Ms. Snay has even seen former donors return as clients. "There is a level of shame and humiliation," she said, "and, 'What have I done wrong?' " She recently offered older clients a workshop on the website LinkedIn. She recalled some people said, "'If I put up a picture, no one will hire me.'" Her response: "We advise people to put up a photo, put their best foot forward."
ECB's Risky Plan to Flood Banks with Cash
by Stefan Kaiser - Spiegel
The European Central Bank has launched the biggest lending operation in its history, and banks pounced on the offer on Wednesday, borrowing almost a half-billion euros for three years at a low interest rate. Governments hope the banks will use the cash to buy sovereign bonds, but critics warn the ECB's strategy is risky and could stoke inflation.
Central bankers tend to be diplomatic and cautious in their public statements, so the dramatic wording the European Central Bank (ECB) used this week to warn about an escalation of the euro crisis was indeed striking.
Tensions in the financial markets had "intensified to take on systemic crisis proportions not witnessed since the collapse of Lehman Brothers three years ago," the ECB warned in its latest report issued on Monday.
ECB President Mario Draghi told a committee of the European Parliament that Europe's banks faced major dangers in the coming months. "The pressure that bond markets will be experiencing is really very, very significant if not unprecedented," Draghi said.
It will be a tough year for banks. In 2012 overall they will have to pay back €725 billion ($953 billion) in debt, of which €280 billion will fall due in the first quarter alone. They will have to borrow fresh money to service this debt, but it's almost impossible for them to raise that money in the private market. Most of them have large holdings of European government bonds on their balance sheets, so they don't have the mutual trust necessary to lend each other large sums of money.
"The interbank market is pretty shut," said Dieter Hein, a finance expert at Fairesearch, an independent research company for institutional investors, banks and brokers. "Virtually no one outside is lending any money to euro-zone banks any more."
ECB Becomes Banks' Lendor of Last Resort
That's why the ECB has become the lendor of last resort for many banks. Ever since the start of the 2008 financial crisis it has kept on supplying the banking sector with fresh cash, for up to one year in some cases. On Wednesday, it launched the biggest lending operation in its history, and banks responded by borrowing €489 billion in the ECB's first ever offering of three-year funding -- at an interest rate of just one percent initially.
This carte blanche for the financial sector has whetted the appetite of Europe's policymakers. French President Nicolas Sarkozy said weeks ago that cash-strapped countries could start turning to their banks for credit again if they had sufficient liquidity.
At first sight everyone gains. The banks could lend their cheaply obtained borrowed cash to governments at higher interest rates, and governments would at last be able to find buyers for their bonds again. The ECB might even be able to abandon its own controversial purchases of government bonds.
But critics are sounding the alarm. They say that by bailing out the banks, the ECB is financing governments through the back door. Bill Gross, head of the world's biggest bond investor Pimco, said Europe was simply shifting funds from one hand to the other.
Hugo Beck, economics professor at Pforzheim University in Germany, said the flood of money would eventually stoke inflation. "The ECB is hurling gigantic amounts of liquidity into the market," he said. "It can't control that, it's playing with fire."
Despite all the risks, the plan seems to be working in the short term. In recent days the risk premiums on high-debt euro member states have fallen significantly. Spain was able to borrow twice as much in the market as originally planned, and at relatively low interest rates. The banks are evidently buying bonds again in anticipation of receiving ample ECB assistance.
But the impact could prove short-lived. Experts believe that banks have recently been buying bonds mainly to use them as collateral for borrowing from the ECB. Once they get the central bank cash, the buying spree could quickly evaporate. After all, the financial sector still regards bonds issued by ailing euro-zone states as toxic for balance sheets.
Eurozone zombies follow Mario Draghi's cheap money
by Damian Reece - Telegraph
Mario Draghi donned his plague suit on Wednesday and urged European banks to "Bring out your dead". But rather than financial corpses it was €489bn (£408bn) of zombie debt from zombie banks that emerged blinking into the daylight.
Far from reassuring markets, the scale of Wednesday's bail-out for eurozone banks by Draghi's European Central Bank (ECB) should simply confirm worst fears.
European banks face a €600bn tsunami of debt coming due in 2012 (mostly in the first quarter) and many simply can't pay up because the usual source of refinancing, wholesale money markets, are refusing to lend them any more. Sound familiar?
One Northern Rock-style collapse after another would have reverberated around the eurozone over the next three months if the ECB hadn't stepped in with unlimited cash costing 1pc. Almost certainly there would have been a euro-Lehman moment too as a once mighty lender, probably in France, fell over.
Draghi has had to ignore any sense of moral hazard and agree to fund weak banks at the expense of strong. He has opened a quantitative easing (money printing) exercise of enormous proportions. Weak banks unable to fund themselves on the open market are now hooked on cheap ECB money.
In return they have to post collateral with the ECB, making wholesale money market debt subordinate to the ECB borrowings. These wholesale funds become even more expensive as a result, making it even less likely that eurozone banks can access them in future, thus increasing their addiction to ECB cash.
Banks accessing cheap ECB funds will lend this on to lowest risk credits, such as blue-chip corporate borrowers, to make an easy profit and rebuild their earnings and invigorate their living dead balance sheets. Bonuses all round. They can also subsidise lending to consumers, grabbing market share from stronger banks without the same balance sheet failings.
Nicolas Sarkozy hopes banks will use the ECB's cheap cash to buy sovereign debt from the usual Club Med suspects. But why banks would load up on even more of the loss-making stuff that's caused their capital positions to deteriorate already is unclear.
There is a carry trade potential of borrowing cheap from the ECB and lending dear to Italy but using three-year money to execute that is against most bankers' instincts and there is a clear risk the trade could go wrong in what are hugely volatile markets. Draghi has avoided a devastating 2012 credit crunch but such a cheap, short-term palliative is no cure for Europe's fundamental problems.
Banks rehearse the euro break-up scenario
Sir Philip Hampton, chairman of Royal Bank of Scotland, thinks that while Europe will move heaven and earth to try to keep the euro together, there is a chance it could split asunder with Greece the most obvious first candidate to leave.
If anyone tells you a break-up of the single currency is simply a swivel-eyed eurosceptic fantasy, think again. RBS, and every other sane bank, has a contingency plan for that very eventuality given its increasing likelihood.
Sir Philip's lucid views are included in Jeff Randall's Sky News show tomorrow evening*. Perhaps most intriguingly, however, are Sir Philip's views on exactly how a country, such as Greece, would go about leaving.
The watchdogs that didn't bark
by Scot Paltrow - Reuters
Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.
The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.
The government also hasn't brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.
But this part of the financial system, a Reuters examination shows, is filled with potential leads.
Foreclosure-related case files in just one New York federal bankruptcy court, for example, hold at least a dozen mortgage documents known as promissory notes bearing evidence of recently forged signatures and illegal alterations, according to a judge's rulings and records reviewed by Reuters. Similarly altered notes have appeared in courts around the country.
Banks in the past two years have foreclosed on the houses of thousands of active-duty U.S. soldiers who are legally eligible to have foreclosures halted. Refusing to grant foreclosure stays is a misdemeanor under federal law.
The U.S. Treasury confirmed in November that it is conducting a civil investigation of 4,500 such foreclosures. Attorneys representing service members estimate banks have foreclosed on up to 30,000 military personnel in potential violation of the law.
In Alabama, a federal bankruptcy judge ruled last month that Wells Fargo & Co. had filed at least 630 sworn affidavits containing false "facts," including claims that homeowners were in arrears for amounts not yet due.
Wells Fargo "took the law into its own hands" and disregarded laws banning perjury, Judge Margaret A. Mahoney declared.
And in thousands of cases, documents required to transfer ownership of mortgages have been falsified. Lacking originals needed to foreclose, mortgage servicers drew up new ones, falsely signed by their own staff as employees of the original lenders - many of which no longer exist.
But the mortgage-foreclosure mess has yet to yield any federal prosecution against the big banks that are the major servicers of home loans.
Unprecedented Fraud
Reuters has identified one pending federal criminal investigation into suspected improper foreclosure procedures. That inquiry has been under way since 2009.
The investigation focuses on a defunct subsidiary of Jacksonville, Florida-based Lender Processing Services, the nation's largest subcontractor of mortgage servicing duties for banks.
People close to the investigation said indictments may come as early as the end of this month. Nationwide press reports had showed photos of what appeared to be obviously forged signatures on foreclosure affidavits.
The Justice Department doesn't disclose pending investigations, making it impossible to say if other criminal inquiries are underway. Officials in state attorneys' general offices and lawyers in foreclosure cases say they have seen no signs of any other federal criminal investigation.
"I think it's difficult to find a fraud of this size on the U.S. court system in U.S. history," said Raymond Brescia, a visiting professor at Yale Law School who has written articles analyzing the role of courts in the financial crisis. "I can't think of one where you have literally tens of thousands of fraudulent documents filed in tens of thousands of cases."
Spokesmen for the five largest servicers - Bank of America Corp., Wells Fargo & Co., JP Morgan Chase & Co, Citigroup Inc., and Ally Financial Group - declined to comment about the possibility of widespread fraud for this article.
Paul Leonard, spokesman for the Housing Policy Council, whose membership includes those banks, said any faults in foreclosure cases are being addressed under a civil settlement earlier this year with federal regulators.
False Statements
Justice Department and Federal Bureau of Investigation officials say they have brought mortgage-fraud criminal cases through their "Operation Stolen Dreams." None, however, were against big banks. All targeted small-scale operators who allegedly defrauded banks with forged mortgage applications or took advantage of homeowners by falsely promising arrangements to get them out of default and then pocketing their money.
Justice Department spokeswoman Adora Andy declined to comment on the absence of prosecutions for foreclosure practices by big banks. She said in a statement: "The Department of Justice has been and will continue to aggressively investigate financial fraud wherever it occurs, including at all levels of the mortgage industry and, when we find evidence of a crime, we will not hesitate to pursue it."
Some judges have accused banks of falsely stating in court that they are working on loan modifications for homeowners in default.
In a November 30 court hearing, not previously reported, a federal bankruptcy judge in New York accused Bank of America of falsely telling courts and the public that it was working to renegotiate loans.
"Bank of America issues constant press releases about how it is responsive to their borrowers on these issues. They are not, period," said Judge Robert Drain, in a case involving homeowner Richard Tomasulo, a pharmacist from Crompond, New York. Drain said Bank of America had been telling the court since January that it was working to modify Tomasulo's mortgage, but hadn't done so.
"Whoever is in charge of this program and their supervisor, who should be following it, should be fired" because "they are frankly incompetent."
Bank of America spokeswoman Jumana Bauwens said the bank has completed "nearly one million" modifications since 2008. The U.S. Treasury this year suspended loan modification incentive payments to the bank because it was "seriously deficient" in responding to requests for modifications.
Cheaters and Liars
Foreclosure fraud came to light in September 2010, with evidence that employees of Ally Financial Corp. had committed "robo-signing," in which low-level workers signed and swore to the facts in thousands of affidavits they hadn't read or checked.
The affidavits were notarized outside the signers' presence, in apparent violation of state and federal criminal laws.
Since then, mounting evidence of possible foreclosure fraud has convinced judges and state regulators that servicers have harmed homeowners and the investors who bought mortgage-backed securities.
A unit of the Justice Department that oversees bankruptcy court cases, the U.S. Trustees Program, said in its 2010 annual report that there were "pervasive and longstanding problems regarding mortgage loan servicing," which "are not merely 'technical' but cause real harm to homeowners in bankruptcy."
Banks, the Trustees Program says, have falsified affidavits by claiming homeowners owe fees for services never rendered and by overstating how much owners are behind on payments.
Former federal prosecutor Daniel Richman, a professor of criminal law at Columbia University Law School, says a central question is who prosecutors would target in criminal investigations. Richman said it would be easy but not worthwhile to charge large numbers of rank-and-file workers who, directed by supervisors, falsely churned out affidavits.
He said criminal investigations would be warranted, but harder to bring, "if there are particular individuals who lie at the heart of this conduct in a very significant way."
In October 2010, members of Congress pressed the Justice Department to investigate. Attorney General Eric Holder said investigations were best left to the states, with help from the Justice Department.
The Office of the Comptroller of the Currency, the top bank regulator, quickly negotiated settlements with the 14 largest servicers, requiring changes in practices and "remediation" for harmed homeowners. That settlement allows the banks to choose their own contractors to determine who was harmed and by how much.
Lawmakers and homeowner advocates have criticized the arrangement, contending that it will let the banks avoid making all wronged homeowners whole, because the contractors are paid by and answer to the banks.
Since then, the department's civil division has worked with a shaky coalition of all 50 states, which have been seeking a civil settlement with five banks that are the largest loan servicers. The negotiations center on requiring them to pay $20 billion or more in penalties, only some of which would go to compensate wronged homeowners.
States Take Action
Federal law enforcement has been noticeably absent, even in areas hardest hit by the crisis, such as Las Vegas.
In 2010 the FBI's Las Vegas office shut down its mortgage fraud task force, which had focused on small-scale swindlers.
Tim Gallagher, chief of the FBI's financial crimes section, said that the Las Vegas office had asked to transfer agents to other duties.
Impatient with the lack of federal prosecution, states including New York, Massachusetts, Delaware and California have launched their own investigations of the banks.
In November, it became the first state to file criminal charges. The state attorney general obtained a 606-count indictment against two California-based executives of Lender Processing Services.
It accuses the executives of paying Nevada notaries to forge the pair's signatures and falsely notarize them on notices of default, documents Nevada requires in foreclosure actions. State officials said more indictments are expected.
In an interview, John Kelleher, Nevada's chief deputy attorney general, said the investigation began in response to citizen complaints.
"We were concerned and then shocked at the sheer number of fraudulent documents we were finding that had been filed with the county recorder," Kelleher said.
Investigators found "tens of thousands" of false records filed on behalf of big mortgage servicers, he said.
The two executives have pleaded not guilty. In a press release, the company said: "LPS acknowledges the signing procedures on some of these documents were flawed; however, the company also believes these documents were properly authorized and their recording did not result in a wrongful foreclosure."
Back Home In New York
The U.S. Attorney's Office in Manhattan is the federal prosecutors' office that traditionally has filed the most cases against top banks and financiers. But it hasn't brought any foreclosure-related criminal cases involving Wall Street's biggest financial houses or the law firms that represent them.
To date the only step it has taken publicly was an October 2011 civil settlement with New York State's largest foreclosure law firm.
The Steven J. Baum P.C. law firm, based near Buffalo, New York, in recent years filed approximately 40 per cent of all foreclosures in New York State, on behalf of banks and other mortgage servicers. Court records show that the firm angered state court judges for alleged false statements and filing suspect documents.
Arthur Schack, a state court judge in Brooklyn, in a 2010 ruling said that pleadings by the Baum firm on behalf of HSBC Bank, a unit of London-based HSBC Holdings, in a foreclosure case were "so incredible, outrageous, ludicrous and disingenuous that they should have been authorized by the late Rod Serling, creator of the famous science-fiction television series, The Twilight Zone."
Another state judge that year imposed $5,000 in sanctions and ordered the firm to pay $14,500 in attorneys' fees, ruling that "misrepresentation of the material statements here was outrageous."
But the U.S. Attorney's office in Manhattan filed no criminal charges against the Baum firm. Instead, it signed a settlement with Baum ending an inquiry "relating to foreclosure practices." The agreement made no allegations of wrongdoing, but required the firm to improve its foreclosure practices.
Baum agreed to pay a $2 million civil penalty, but didn't admit wrongdoing.
The law firm said it would shut down after New York Times columnist Joe Nocera in November published photographs of a 2010 Baum firm Halloween party in which employees dressed up as homeless people. Another showed part of Baum's office decorated to look like a row of foreclosed houses.
"The settlement between the Manhattan U.S. Attorney's Office and the Steven J. Baum Law Firm resulted in immediate and comprehensive reforms of the firm's business practices," said Ellen Davis, spokeswoman for the Manhattan U.S. Attorney's office.
Earl Wells III, a spokesman for Baum, said the lawyer wouldn't comment because "he's laying low right now."
An HSBC spokesman said: "We are working closely with the regulators to address any matters raised regarding" the bank's foreclosure practices.
Broken Promises
The most serious potential foreclosure violations involve falsified mortgage promissory notes, the documents homeowners sign vowing to repay mortgage loans. Courts uniformly have ruled that unless a creditor legally owns the promissory note, it has no legal right to foreclose. For each mortgage there is only one promissory note.
Bankruptcy court records reviewed by Reuters show that at least a dozen radically different documents purporting to be the authentic promissory note have turned up in foreclosure cases involving six different properties in the federal bankruptcy court for the Southern District of New York.
In one, Wells Fargo is battling to foreclose on the Bronx home of Tindala Mims, a single mother who works as an ambulance driver. In September 2010, Wells Fargo filed a promissory note bearing a signed stamp showing that the note belonged to defunct Washington Mutual Bank, not Wells Fargo. The judge threw out the case.
In a second attempt, the court was given a different version of the note. But inspection showed physical alterations. A variety of marks on the original were missing or seemed obviously altered on the second. And the second version had a stamped endorsement, missing on the first, that appeared to give Wells Fargo the right to foreclose.
The judge threw out the second attempt too. Wells Fargo is trying a third time. It declined to comment on the case.
Linda Tirelli, Mims' lawyer, in October sued Wells Fargo, alleging "fabrication of documents."
"It seems to me that Washington is deathly afraid of the banking industry," Tirelli said. "If you're talking about filing false documents and filing false notarizations, do you really think that the U.S. Attorney would find it too difficult to prosecute?"
The office of U.S. Attorney Preet Bharara in Manhattan has routinely brought charges involving forgery and filing false documents against smaller targets.
In April, the FBI arrested seven employees of the USA Beauty School in Manhattan. Bharara's office alleged that the seven suspects had forged documents such as high school diplomas, attendance records and applications for financial aid for students taking cosmetology classes.
In August, Bharara's office filed felony charges against a sports-memorabilia company's CEO, accusing him of auctioning jerseys falsely advertised as "game used" by Major League Baseball players.
In a press conference, a U.S. Postal Inspection Service official said prosecution was important because "victims felt that they had a piece of history only to be defrauded and left with a feeling of heartbreak."
Given the record of Bharara's office, and those of his fellow U.S. Attorneys around the country, to aggressively pursue violations both big and small, the absence of cases involving the foreclosure fiasco seems to stand out.
"Why there hasn't been more robust prosecution is a mystery," said Brescia, the visiting professor at Yale.
Jack Bogle: 'Our Markets Have Gone Crazy'
by Mark Jewell - AP
John C. Bogle counted himself among the 1 percent of wealthiest Americans a couple decades ago. You might not guess that today, when you hear the 82-year-old founder of mutual fund company Vanguard rail against economic inequality. He can sound almost like an Occupy Wall Street protester: "Our markets have gone crazy, and there is 200 times as much speculation as there is investing," he says.
It has been 15 years since the low-cost investing pioneer stepped down as CEO of Vanguard. It was Bogle who launched the first index mutual fund in 1976. Vanguard Group has since grown into the largest fund company, managing nearly $1.7 trillion in U.S. fund assets.
Bogle remains wealthy, but his income is a fraction of what he earned when he ran Vanguard. He's paid a modest retainer to run Vanguard's Bogle Financial Markets Research Center, a think tank in Valley Forge, Pa.
He resists a label that applies to most people his age: "I'm so far from retired, it's almost an embarrassment. I'm here in the office every day." He's also writing his 10th book, "The Clash of Cultures: Investment vs. Speculation." And he continues to deliver speeches.
Bogle says he's paying close attention to tax policies he considers unfair, including one that's favorable to the fund industry and investors with taxable accounts. The top rate for dividends and long-term capital gains is historically low at 15 percent, as a result of the extension of Bush era tax cuts that Congress and President Barack Obama agreed to a year ago. In contrast, top earners pay 35 percent on regular income. He doesn't like that disparity.
Here are excerpts from a recent interview with Bogle:
Q: What do you think about the ongoing discussion over tax fairness?
A: I believe the rich should pay more, but that's not a good platform for tax policy. What has gone wrong is that we've failed to recognize the difference between earned income and unearned income. Is it really fair for gamblers on Wall Street to pay a 15 percent rate when they make a winning investment, and an honest working person — a bricklayer for example — may pay an equal or higher tax on their wages than a gambler? That's absolute absurdity.
Rates may have to be changed, but we also need to look at what is taxed, and how. Dividend income should be taxed at the same rate as ordinary income. As for capital gains, there ought to be some distinction between capital made by people who start businesses, and contribute value to society, and capital made by gamblers on Wall Street, some of whom win. Earned capital income should carry the regular dividend rate, but capital income gains by trading, and particularly short-term trading, should pay a higher tax, even than the present ordinary income rate.
Q: What's your take on the Occupy movement?
A: I'm happy to say that my current income puts me in the 99 percent group. So maybe I'm not so happy, I don't know.
This movement has brought to the surface some very serious problems in our country about disparities in opportunity and income. So many young people are having a terrible time getting a job. Young people have great idealism, and the Occupy movement has been a bit unrealistic at times. So what? I can't imagine a worse America if our younger generation didn't have great idealism. I salute them for their enthusiasm, and their mission.
The negative side is that they just pushed too hard for too long. It's very difficult for any movement without any seeming leadership — other than a good idea — to have any sense of taste or judgment. Who's to say, 'This is going too far'? In some places, it's just gone on too long, and it's been too disruptive. So I think it's good that we've been cleaning up the plazas where the Occupy movement set up.
Q: What's the focus of the book you're writing?
A: That our financial system has gone off the rails. It's something we think of as providing capital for new businesses, that will enable people to finance new companies or add to the capital of existing companies. We do that to the tune of about $200 billion a year in financing through Wall Street, or through the financial system. And yet we do some $40 trillion worth of trading every year. I'm selling my investment to you, and you're buying it from me, and it creates no value for society. Indeed, it subtracts value, because the guy in the middle gets his piece.
Many mutual funds turn over 100 percent of their portfolios each year. When I got into this business, it was maybe 18 percent a year. It's amazing. This industry is a big part of the problem. What we need is a transfer tax on trading. We need to tame the trading and speculative element in our financial system.
Q: What's your investment outlook heading into 2012?
A: If you're investing in stocks with the idea of a one-year outcome, you should not invest. You can lose a lot. If you invest in stocks with a five-year outlook, I would think it is highly debatable if you should do that. You have to think about more than just the probabilities of a market crash. You have to consider the consequences for your savings, and whether you'd be decimated.
As for bonds, with interest rates and yields so low now, you just have to take those for what they are — a lot lower than what they have been historically.
With the economy, I'm cautious. I don't expect a boom in consumer spending over the next two or three years. People don't have the wherewithal to spend a lot more, and in today's world, they don't have the confidence. Confidence can change overnight, but wherewithal cannot.
The 7 most illuminating economic charts of 2011
by James Pethokoukis
My Magnificent Seven. Some bust myths. Others highlight a reality the media is ignoring. Enjoy!1. The overly optimistic unemployment forecast of the Obama White House.
This may be the most infamous economic prediction in U.S. political history (helpfully updated by The Right Sphere). For the original January 2009 chart from White House economic advisers Jared Bernstein and Christina Romer, see here.
2. The real unemployment rate. The official (U-3) unemployment rate is 8.6 percent. But the labor force has been shrinking as discouraged workers have been disappeared by government statisticians rather than counted as unemployed. But what if they weren’t? What if the Labor Department added those folks back into the numbers? Well, you would get this:
3. Middle-class incomes have been stagnant for decades—not. It is an oft-repeated liberal talking point, one that President Obama himself used in his populist Osawatomie Speech: The rich got richer the past 30 years while the middle-class went nowhere. In short, the past few decades of lower taxes and lighter regulation have been a failure. Or, rather, pro-market policies have been a failure … except that new research from the University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan find that “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”
4. Inequality has exploded—not. According to the MSM and liberal economists, U.S. inequality has exploded to levels not seen since the 1920s or perhaps even the Gilded Age of the late 19th century. And to prove their point—that the 1 percent has gotten amazingly richer in recent decades—the inequality alarmists will inevitably trot out a famous income inequality study from economists Emmanuel Saez and Thomas Pike. But why not instead look at wealth—all financial and nonfinancial assets—instead of income? It’s less volatile and a truer measure of all the economic resources at an individual’s command. Turns out that Saez has done research on that subject, too. And he even created a revealing chart documenting the ups and downs of U.S. wealth over the past century. It reveals a very different picture of inequality in America:
5. and 6. The underwhelming Obama recovery. When you compare the current recovery to those of the past, it looks pretty anemic. And it doesn’t matter if you look at GDP growth or unemployment (via The Economist).
7. America’s debt picture is worse than you think. If you factor in the long-term impact of rising federal debt on U.S. interest rates and economic growth—raising borrowing costs and lowering tax revenue—you’ll find that federal debt could be almost 50 percent higher by 2035 than the estimates usually bandied about in the media.
The myth of renewable energy
by Dawn Stover - Bulletin of the Atomic Scientists
"Clean." "Green." What do those words mean? When President Obama talks about "clean energy," some people think of "clean coal" and low-carbon nuclear power, while others envision shiny solar panels and wind turbines.
And when politicians tout "green jobs," they might just as easily be talking about employment at General Motors as at Greenpeace. "Clean" and "green" are wide open to interpretation and misappropriation; that's why they're so often mentioned in quotation marks. Not so for renewable energy, however.
Somehow, people across the entire enviro-political spectrum seem to have reached a tacit, near-unanimous agreement about what renewable means: It's an energy category that includes solar, wind, water, biomass, and geothermal power.
As the US Energy Department explains it to kids: "Renewable energy comes from things that won't run out -- wind, water, sunlight, plants, and more. These are things we can reuse over and over again. … Non-renewable energy comes from things that will run out one day -- oil, coal, natural gas, and uranium."
Renewable energy sounds so much more natural and believable than a perpetual-motion machine, but there's one big problem: Unless you're planning to live without electricity and motorized transportation, you need more than just wind, water, sunlight, and plants for energy. You need raw materials, real estate, and other things that will run out one day. You need stuff that has to be mined, drilled, transported, and bulldozed -- not simply harvested or farmed. You need non-renewable resources:
• Solar power. While sunlight is renewable -- for at least another four billion years -- photovoltaic panels are not. Nor is desert groundwater, used in steam turbines at some solar-thermal installations.
Even after being redesigned to use air-cooled condensers that will reduce its water consumption by 90 percent, California's Blythe Solar Power Project, which will be the world's largest when it opens in 2013, will require an estimated 600 acre-feet of groundwater annually for washing mirrors, replenishing feedwater, and cooling auxiliary equipment.
• Geothermal power. These projects also depend on groundwater -- replenished by rain, yes, but not as quickly as it boils off in turbines. At the world's largest geothermal power plant, the Geysers in California, for example, production peaked in the late 1980s and then the project literally began running out of steam.
• Wind power. According to the American Wind Energy Association, the 5,700 turbines installed in the United States in 2009 required approximately 36,000 miles of steel rebar and 1.7 million cubic yards of concrete (enough to pave a four-foot-wide, 7,630-mile-long sidewalk).
The gearbox of a two-megawatt wind turbine contains about 800 pounds of neodymium and 130 pounds of dysprosium -- rare earth metals that are rare because they're found in scattered deposits, rather than in concentrated ores, and are difficult to extract.
• Biomass. In developed countries, biomass is envisioned as a win-win way to produce energy while thinning wildfire-prone forests or anchoring soil with perennial switchgrass plantings. But expanding energy crops will mean less land for food production, recreation, and wildlife habitat.
In many parts of the world where biomass is already used extensively to heat homes and cook meals, this renewable energy is responsible for severe deforestation and air pollution.
• Hydropower. Using currents, waves, and tidal energy to produce electricity is still experimental, but hydroelectric power from dams is a proved technology. It already supplies about 16 percent of the world's electricity, far more than all other renewable sources combined.
Maybe that's why some states with renewable portfolio standards don't count hydropower as a renewable energy source; it's so common now, it just doesn't fit the category formerly known as "alternative" energy. Still, that's not to say that hydropower is more renewable than solar or wind power.
The amount of concrete and steel in a wind-tower foundation is nothing compared with Grand Coulee or Three Gorges, and dams have an unfortunate habit of hoarding sediment and making fish, well, non-renewable.
All of these technologies also require electricity transmission from rural areas to population centers. Wilderness is not renewable once roads and power-line corridors fragment it.
And while proponents would have you believe that a renewable energy project churns out free electricity forever, the life expectancy of a solar panel or wind turbine is actually shorter than that of a conventional power plant. Even dams are typically designed to last only about 50 years. So what, exactly, makes renewable energy different from coal, oil, natural gas, and nuclear power?
Renewable technologies are often less damaging to the climate and create fewer toxic wastes than conventional energy sources.
But meeting the world's total energy demands in 2030 with renewable energy alone would take an estimated 3.8 million wind turbines (each with twice the capacity of today's largest machines), 720,000 wave devices, 5,350 geothermal plants, 900 hydroelectric plants, 490,000 tidal turbines, 1.7 billion rooftop photovoltaic systems, 40,000 solar photovoltaic plants, and 49,000 concentrated solar power systems.
That's a heckuva lot of neodymium.
Unfortunately, "renewable energy" is a meaningless term with no established standards. Like an emperor parading around without clothes, it gets a free pass, because nobody dares to confront an inconvenient truth: None of our current energy technologies are truly renewable, at least not in the way they are currently being deployed.
We haven't discovered any form of energy that is completely clean and recyclable, and the notion that such an energy source can ever be found is a mirage.
The only genuinely sustainable energy scenario is one in which energy demands do not continue to escalate indefinitely.
As a recent commentary by Jane C. S. Long in Nature pointed out, meeting ambitious targets for reducing greenhouse gases cannot be accomplished with "piecemeal reductions," such as increased use of wind power and biofuels.
Long did the math for California and discovered that even if the state replaced or retrofitted every building to very high efficiency standards, ran almost all of its cars on electricity, and doubled its electricity-generation capacity while simultaneously replacing it with emissions-free energy sources, California could only reduce emissions by perhaps 60 percent below 1990 levels -- far less than its 80 percent target.
Long says reaching that target "will take new technology." Maybe so, but it will also take a new honesty about the limitations of technology. Notably, Long doesn't mention the biggest obstacle to meeting California's emissions-reduction goal: The state's population is expected to grow from today's 40 million to 60 million by 2050.
There are now seven billion humans on this planet. Until we find a way to reduce our energy consumption and to share Earth's finite resources more equitably among nations and generations, "renewable" energy might as well be called "miscellaneous."
