Princes of the Yen

In this outstanding documentary, loosely based on Professor Richard Werner‘s book with the same title, we can not only better understand the post WWII japanese economic history, but also comprehend how “independent” central banks were introduced in Asia, first in Japan with the legal modifications induced by the 1989-1990 japanese stock market crash and, later, with the 1997 Asian Crisis, also in the “tiger” economies of South East Asia.

The documentary convincingly argues and documents, that modern central banking serves purposes and objectives that often have very little to do with the welfare of their own nations and a lot to do with projects of economic and social engineering and financial colonization by western financial institutions, most of them based in America. The often perverse role played by the International Monetary Fund (IMF) is compellingly explained.

One of the strengths of the documentary is to explain with precision how the transformation of the social and economic structures of whole countries, and of successful ones by the way, are planned years, in the case of Japan, decades, in advance, how are economic crisis artificially created and how, when crisis finally break out, “independent central banking” and fire sale of domestic assets to foreign investors are systematically imposed on nations that lose their economic independence…forever.

The documentary ends with a warning to Europeans about the true nature of Europe’s own “independent” central bank: the European Central Bank (ECB).

0,1% > 90%

The increase in inequality in the western world is a theme that is increasingly discussed. Occasionally you come into a statistic that in a very simple way explains the degree of inequality that has been “achieved”. The Economist publishes this chart where it is easily visible that the top 0.1% of the USA population in terms of wealth owns as many assets as the bottom 90%. As the chart ends in in 2013, you can safely assume that the situation is now worse (or “better”)?

“The authors examine the share of total wealth held by the bottom 90% of families relative to those at the very top. In the late 1920s the bottom 90% held just 16% of America’s wealth—considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929. From the beginning of the Depression until well after the end of the second world war, the middle class’s share of total wealth rose steadily, thanks to collapsing wealth among richer households, broader equity ownership, middle-class income growth and rising rates of home-ownership. From the early 1980s, however, these trends have reversed. The top 0.1% (consisting of 160,000 families worth $73m on average) hold 22% of America’s wealth, just shy of the 1929 peak—and almost the same share as the bottom 90% of the population.

Fracking Fraud

In Shale Fraud Created by Wall Street, The Burning Platform (TBP) analyzes and exposes some key facts about the “fracking revolution” that are usually hidden from the public due to, according to TBP, the hype fostered by Wall Street. As Shale Bubble reports, “the Reality is that the so-called shale revolution is nothing more than a bubble, driven by record levels of drilling, speculative lease & flip practices on the part of shale energy companies, fee-driven promotion by the same investment banks that fomented the housing bubble, and by unsustainably low natural gas prices. Geological and economic constraints – not to mention the very serious environmental and health impacts of drilling – mean that shale gas and shale oil (tight oil) are far from the solution to our energy woes”. USA energy independence will certainly not come from fracking.

Excerpts:

KEY FINDINGS, SHALE GAS

      • High productivity shale gas plays are not ubiquitous: Just six plays account for 88% of total production.
      • Individual well decline rates range from 80-95% after 36 months in the top five U.S. plays.
      • Overall field declines require from 30-50% of production to be replaced annually with more drilling – roughly 7,200 new wells a year simply to maintain production.
      • Dry shale gas plays require $42 billion/year in capital investment to offset declines. This investment is not covered by sales: in 2012, U.S. shale gas generated just $33 billion, although some of the wells also produced liquids, which improved economics.

KEY FINDINGS, TIGHT OIL (SHALE OIL)

      • More than 80 percent of tight oil production is from two unique plays: the Bakken and the Eagle Ford.
      • Well decline rates are steep – between 81 and 90 percent in the first 24 months.
      • Overall field decline rates are such that 40 percent of production must be replaced annually to maintain production.
      • Together the Bakken and Eagle Ford plays may yield a little over 5 billion barrels – less than 10 months of U.S. consumption.

KEY FINDINGS, THE FINANCIAL PICTURE

    • Wall Street promoted the shale gas drilling frenzy which resulted in prices lower than the cost of production and thereby profited [enormously] from mergers & acquisitions and other transactional fees.
    • Industry is demonstrating reticence to engage in further shale investment, abandoning pipeline projects, IPOs and joint venture projects.
    • Shale gas has become one of the largest profit centers in some investment banks, in direct parallel with the decline of natural gas prices.
    • Due to extreme levels of debt, stated proved undeveloped reserves (PUDs) may have been out of compliance with SEC rules at some shale companies because of the threat of collateral default for some operators.

Sovereign Default History

 

Today Argentina defaulted on its external debt for the 8th. time since 1800 AD. The Economist publishes this chart ranking countries on the criteria of how many times they have defaulted on their external debt in the last 214 years. Curiously both Germany and Portugal have defaulted 4 times. Nothing seems to last (or have been) forever.

 

Breakfast inflation

One of the least discussed and at the same time most important aspects of this economic crisis is the discrepancy between official inflation measures used by the FED, the Consumer Price Index( CPI) and, specially, Personal Consumer Expenditures (PCE), and the real inflation experienced by real people. One example of this last real inflation is the cost of a breakfast as measured by the Breakfast Beverage Index, that is at its highest level in 2 years. If you want to learn more about how inflation is mismeasured and misrepresented in the USA, visit Shadowstats.

Source: Bloomberg

All guns, not much butter

When thinking about the USA it is easy to fall for the idea that it is the wealthiest country in the world and that it would be difficult for people to hunger there. Reality is different. As the article published by Zerohedge illustrates, 21% of the USA population can’t afford food. In contrast, the USA accounts for 42% of the world’s military spending. Guns, but not much butter.military_spending_big.png

 

 

 

Brave New 1984

Zerohedge publishes a review of the 2 most well known dystopian books of the twentieth century, Brave New World from Aldous Huxley, published in 1932 and 1984 from George Orwell, published in 1949. The article by Zerohedge extensively quotes 2 previous articles, “Orwell, Huxley and the Emerging Totalitarianism” by Emmet Scott and  “2011: A Brave New Dystopia” by Chris Hedges. Chris Hedges appears most insightful when he states that “It turns out that Orwell and Huxley were both right. Huxley saw the first stage of our enslavement. Orwell saw the second.”

Some excerpts:

“The two greatest visions of a future dystopia were George Orwell’s “1984” and Aldous Huxley’s “Brave New World.” The debate, between those who watched our descent towards corporate totalitarianism, was who was right. Would we be, as Orwell wrote, dominated by a repressive surveillance and security state that used crude and violent forms of control? Or would we be, as Huxley envisioned, entranced by entertainment and spectacle, captivated by technology and seduced by profligate consumption to embrace our own oppression? It turns out Orwell and Huxley were both right. Huxley saw the first stage of our enslavement. Orwell saw the second.”

“We have been gradually disempowered by a corporate state that, as Huxley foresaw, seduced and manipulated us through sensual gratification, cheap mass-produced goods, boundless credit, political theater and amusement. While we were entertained, the regulations that once kept predatory corporate power in check were dismantled, the laws that once protected us were rewritten and we were impoverished. Now that credit is drying up, good jobs for the working class are gone forever and mass-produced goods are unaffordable, we find ourselves transported from “Brave New World” to “1984.” The state, crippled by massive deficits, endless war and corporate malfeasance, is sliding toward bankruptcy. It is time for Big Brother to take over from Huxley’s feelies, the orgy-porgy and the centrifugal bumble-puppy. We are moving from a society where we are skillfully manipulated by lies and illusions to one where we are overtly controlled. “

“The corporate state does not find its expression in a demagogue or charismatic leader. It is defined by the anonymity and facelessness of the corporation. Corporations, who hire attractive spokespeople like Barack Obama, control the uses of science, technology, education and mass communication. They control the messages in movies and television. And, as in “Brave New World,” they use these tools of communication to bolster tyranny. Our systems of mass communication, as Wolin writes, “block out, eliminate whatever might introduce qualification, ambiguity, or dialogue, anything that might weaken or complicate the holistic force of their creation, to its total impression.””

“The façade is crumbling. And as more and more people realize that they have been used and robbed, we will move swiftly from Huxley’s “Brave New World” to Orwell’s “1984.” The public, at some point, will have to face some very unpleasant truths. The good-paying jobs are not coming back. The largest deficits in human history mean that we are trapped in a debt peonage system that will be used by the corporate state to eradicate the last vestiges of social protection for citizens, including Social Security. The state has devolved from a capitalist democracy to neo-feudalism. And when these truths become apparent, anger will replace the corporate-imposed cheerful conformity. The bleakness of our post-industrial pockets, where some 40 million Americans live in a state of poverty and tens of millions in a category called “near poverty,” coupled with the lack of credit to save families from foreclosures, bank repossessions and bankruptcy from medical bills, means that inverted totalitarianism will no longer work.”

“The noose is tightening. The era of amusement is being replaced by the era of repression. “

A United Europe? Think twice

In a revealing article published today by Die Welt, some of the elements of this year’s wish list of the representatives of the global elite, meeting this week in Davos for their yearly fest, are, if indirectly, mentioned.

As expressed by Axel Weber, president of UBS, in this year’s list there is the desire that in the event of a second banking crisis in Europe (assuming the first one was ever finished) the european banking system would be recapitalized, bailed out, with public money. More importantly, perhaps, another element of the list would be advancing the agenda for the “United States of Europe”.

After a few paragraphs of platitudes of what some of the Davos participants think about the present economic situation in the world, “good but more reforms are needed” etc. etc. we come to the meaty part of the article, where Mr. Weber expresses his opinion about both the process of rehabilitation of the european banking system and of the potential results in the upcoming elections for the European Parliament on May 25th.

On the issue of the european banking system, fears Axel Weber:

“….fürchtet er, dass die Sanierung der Banken die nächste Bankenkrise provozieren könnte: Die Bilanzen von 130 Banken in Europa werden demnächst von der EZB streng geprüft. Im November sollen die Ergebnisse veröffentlicht werden.”

“Das kann zu einer gewissen Unsicherheit führen”, says Weber. “Wir werden nicht erst im November, sondern schon einige Wochen vorher sehen, dass Spieler gegen die möglichen Verlierer der Bilanzprüfungsübung wetten und sie abstoßen….Und es werden wieder die Staaten sein, die den Banken frisches Kapital geben müssten”

That is, the capital needs resulting from the results of the stress test that the ECB will impose on 130 european banks later this year might require european states to recapitalize them, again, with public money.

On the issue of the upcoming European Parliament Elections on May 25th, according to Mr. Weber:

“EU-skeptische Kräfte könnten eine entscheidende Kraft werden. Dabei ist die Entscheidungsfindung in der EU ohnehin schon kompliziert”

That is, Euro-sceptic parties might become a decisive force in the new European Parliament, complicating even more the decision making process in the EU.

On the one side, we are warned, a new banking crisis is possible, given the still very weak capital situation of most european banks. If that came to pass, then it would be expected that governments would bail banks out again (with tax-payers money).

Even more important, in our view, is the unease that the Davos mandarins feel about the upcoming European Paliament Elections on May 25. It is feared that anti-Euro, anti-EU parties, perhaps channeling a deep public feeling of having been betrayed by traditional political parties, might win enough seats in the next European Parliament to block, or at least delay the march towards a sort of “United States of Europe”, towards the TTIP, Transatlantic Trade and Investment Partnership, a sort of “free trade” agreement between the EU and the USA, and toward other globalist dreams, “dreams” presented as the solution to most, if not all, the problems that Europe faces.

This kind of statements reveal, we think, the fear that these elections, even for a parliament with very limited powers, might signal an inflection point in what has become a non democratically sanctioned path towards levels of european integration that many citizens in the European Union, for different reasons, reject.

The Davos elites know what they want: a centralized Europe. The reasons why seem obvious: a distant and highly centralized bureaucracy that controls all of the continents’ economic and political policies is much easier to manipulate than a set of independent states, each with its own agenda. This objective will be presented under the soothing aspect of a democratic continent “finally” united, but what really lies behind such an entity might not be so benign. Citizens feel it, and elites fear citizens acting on their justified fears.

Perhaps it would not be a bad idea to remember Aldous Huxley‘s admonition in Brave New World Revisited when talking about the best way to resist tyranny: decentralize.

“Under the relentless thrust of accelerating over-population and increasing over-organization, and by means of ever more effective methods of mind-manipulation, the democracies will change their nature; the quaint old formselections, parliaments, Supreme Courts and all the restwill remain. The underlying substance will be a new kind of non-violent totalitarianism. All the traditional names, all the hallowed slogans will remain exactly what they were in the good old days. Democracy and freedom will be the theme of every broadcast and editorialbut Democracy and freedom in a strictly Pickwickian sense. Meanwhile the ruling oligarchy and its highly trained elite of soldiers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.”

“Or take the right to vote. In principle, it is a great privilege. In practice, as recent history has repeatedly shown, the right to vote, by itself, is no guarantee of liberty. Therefore, if you wish to avoid dictatorship by referendum, break up modern society’s merely functional collectives into self-governing, voluntarily co-operating groups, capable of functioning outside the bureaucratic systems of Big Business and Big Government.”

A  United Europe?  Think twice.

Reverse Robin Hood explained

In this article published by Zerohedge we can find a cogent explanation of the present process of wealth redistribution from poor to rich, a phenomenon felt everywhere. Whether this process is an intended one, a sort of conspiracy, or just “collateral damage” of unsound monetary and economic policies, is for the reader to decide. This is, in words of Stanley Druckenmiller, one of the most successful hedge fund managers, “the biggest redistribution of wealth from the middle class and poor to the rich ever”. Don’t miss the charts, they are self explanatory. As a summary, the aim of achieving this wealth redistribution is achieved thru several mechanisms:

A – “the rich hold assets, the poor have debt”

B – QE has resulted in a loss of purchasing power for the US dollar. Faced with this problem, consumers in the middle class are taking on more non-housing debt in order to maintain the same standard of living. In addition, the US government – which continues to run a deficit year after year – continues to accumulate debt. Due to these facts, total debt outstanding – aka credit market instruments for all sectors – is at all time highs. More debt means more interest payments and lower savings rates. These trends do not bode well for the middle class consumer.

C – On the other hand, QE has been great for the rich. QE has inflated the prices of assets such as property, bonds, stocks, and non-home real estate.

D – Taxes as a percentage of real disposable income have more than doubled since 1980. This trend has not been kind to the bottom 90%.

E – Median household income has been in a downtrend since the late 90s.

F – The entitlement problem is only going to get worse as more baby boomers leave the work force. Future generations will have to pay for the debt that the old and rich continue to take on.

In conclusion, QE, taxes, income disparity, and entitlements are contributing to “the biggest redistribution of wealth from the middle class and the poor to the rich ever” If things continue the way they are going, then millennials and future generations will pay the price:

TYReads “One hundred years is long enough. End the Fed”

On the 100th anniversary of the creation of the Federal Reserve (FED), designed in secrecy by a group of Wall Street bankers and voted into existence by the American Congress on december 23 1913, Ron Paul publishes this article arguing that its creators have succeeded beyond their wildest dreams, and that the FED has taken total control of the american economy, and not for the good.

To illustrate Ron Paul’s message we include 2 charts. In the first one we can see the loss in purchasing power of the US Dollar from around 1900 until today. In the second one we can see the percentage silver content in the Roman Denarius from around 180 AD to 280 AD, after the government of the Antonines, when Rome went into rapid decline.

devaluation_dollar1

devaluation_denarius

The article:

After 100 Years Of Failure, It’s Time To End The Fed!

A week from now, the Federal Reserve System will celebrate the 100th anniversary of its founding. Resulting from secret negotiations between bankers and politicians at Jekyll Island, the Fed’s creation established a banking cartel and a board of government overseers that has grown ever stronger through the years. One would think this anniversary would elicit some sort of public recognition of the Fed’s growth from a quasi-agent of the Treasury Department intended to provide an elastic currency, to a de facto independent institution that has taken complete control of the economy through its central monetary planning. But just like the Fed’s creation, its 100th anniversary may come and go with only a few passing mentions.

Like many other horrible and unconstitutional pieces of legislation, the bill which created the Fed, the Federal Reserve Act, was passed under great pressure on December 23, 1913, in the waning moments before Congress recessed for Christmas with many Members already absent from those final votes. This underhanded method of pressuring Congress with such a deadline to pass the Federal Reserve Act would provide a foreshadowing of the Fed’s insidious effects on the US economy—with actions performed without transparency.

Ostensibly formed with the goal of preventing financial crises such as the Panic of 1907, the Fed has become increasingly powerful over the years. Rather than preventing financial crises, however, the Fed has constantly caused new ones. Barely a few years after its inception, the Fed’s inflationary monetary policy to help fund World War I led to the Depression of 1920. After the economy bounced back from that episode, a further injection of easy money and credit by the Fed led to the Roaring Twenties and to the Great Depression, the worst economic crisis in American history.

But even though the Fed continued to make the same mistakes over and over again, no one in Washington ever questioned the wisdom of having a central bank. Instead, after each episode the Fed was given more and more power over the economy. Even though the Fed had brought about the stagflation of the 1970s, Congress decided to formally task the Federal Reserve in 1978 with maintaining full employment and stable prices, combined with constantly adding horrendously harmful regulations. Talk about putting the inmates in charge of the asylum!

Now we are reaping the noxious effects of a century of loose monetary policy, as our economy remains mired in mediocrity and utterly dependent on a stream of easy money from the central bank. A century ago, politicians failed to understand that the financial panics of the 19th century were caused by collusion between government and the banking sector. The government’s growing monopoly on money creation, high barriers to entry into banking to protect politically favored incumbents, and favored treatment for government debt combined to create a rickety, panic-prone banking system. Had legislators known then what we know now, we could hope that they never would have established the Federal Reserve System.

Today, however, we do know better. We know that the Federal Reserve continues to strengthen the collusion between banks and politicians. We know that the Fed’s inflationary monetary policy continues to reap profits for Wall Street while impoverishing Main Street. And we know that the current monetary regime is teetering on a precipice. One hundred years is long enough. End the Fed.