USA and the Global Systemic Crisis 2008-2010 ~ A Collective Discussion

[101Armorer]

I begin this thread with great regret with just how much our once great nation has lost it's stable and secure ways..... and where it's heading in the coming near future. For those of us with some sense of awareness, who have been keeping some track of what's going on with America's economic situation, we are very intune to what we will witness before 2010, possibly sooner. None of us are able to accurately predict the future.... but common logic joined with factual information and open minded analyse by those who have a rational fixed radar on the current situations today, can tell that America and other countries are faced with a terrible economic collapse before 2010 due to this global systemic crises.

I wish to use this thread as a sounding board for what we, as regular ppl caught up in this dreadful coming event, will do to report and prepare for this. I will be posting at least 4 articles/reports on this matter for starters. Feel free to add what you wish. Even as negative this may appear to be, it's also reality. Reality is needed for survival and now is not the time to burry one's head in the sand. We already had 8 years of corrupt leadership that has done just that.


http://www.counterpunch.org/roberts03182008.html

The Collapse of American Power

By Paul Craig Roberts

March 18, 2008


Just as the government’s budget is in disarray, so is the US dollar which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve’s effort to stabilize the very troubled financial system with large injections of liquidity.

A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America’s life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subscribed.

The US has squandered $500 billion dollars on a war that serves no American purpose. Moreover, the $500 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war, or the lost US GDP from diverting scarce resources to war. Experts who are not part of the government’s spin machine estimate the cost of the Iraq war to be as much as $3 trillion.

The Republican candidate for President said he would be content to continue the war for 100 years. With what resources? When America’s creditors consider our behavior they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it, and a deluded country that believes that foreigners will continue to accumulate US debt until the end of time.

The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that “the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.” In everyday language, the US government cannot pass an audit.

Moreover, the GAO report pointed out that the accrued liabilities of the federal government “totaled approximately $53 trillion as of September 30, 2007.” No funds have been set aside against this mind boggling liability.

Just so the reader understands, $53 trillion is $53,000 billion.

Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office.

As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.

If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in WW II, or against a small landlocked European country that clings to its independence and is not a member of the EU?

Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12% of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.

The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist: the European Union. France, Germany, Italy, England and the other members of the EU still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.


Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US “superpower” cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.

The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.

When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners.

I sometimes wonder if the bankrupt “superpower” will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.

[101Armorer]

http://economictimes.indiatimes.com/...ow/2881608.cms

US economist calls financial crisis worst since 1930s

19 Mar, 2008,

WELLINGTON: The current financial crisis is the worst the world has seen since the Great Depression of the 1930s and the US Federal Reserve move to cut interest rates will not make much difference, the Nobel Prize winning economist Joseph Stiglitz said on Wednesday.

"It will have some impact - it will do a little bit to stem the blood - but it's not addressing the fundamental problems underlying the collapse of the financial sector," Joseph said.

Stiglitz, who won the Nobel Prize in economics in 2001, is a former chief of the World Bank and chaired former US president Bill Clinton's council of economic advisers. He is in New Zealand on a lecture tour.

He said the Federal Reserve's move to cut its funds rate by three-quarters of a percentage point was "just trying to ease the economy down rather than try to address the underlying problems."

Stiglitz said the main problem was the fact that an estimated 2 million Americans were going to lose their homes because they could not repay mortgages which exceed the value of their property as house prices fell dramatically.

"As people walk away from their mortgages there will be more and more defaults - that undermines the whole financial system," he said.

Stiglitz said the Bush administration was bailing out banks, but accused it of refusing to do anything to help poor people stay in their homes which would stabilise the housing market.

"It's very easy to do something about it," he said, suggesting the administration could give assistance to write down mortgages to about 90 per cent of the value of a house which would enable people to stay in their properties.


However, the Bush administration has unveiled plans designed to help homeowners in danger of losing their homes by allowing holders of sub-prime mortgages to borrowers with poor credit to more easily apply for refinancing. The government will also send out tax rebate cheques in May.

Stiglitz said it was ironic that former Federal Reserve head Alan Greenspan had said it was the world's worst economic problem in the last 50 years, adding, "He is the source of much of the problem."

He said mismanagement by the Federal Reserve over the last seven years was one of the major factors underlying the current problem.

"They had the regulatory authority to prevent some of these bad practices that we are now paying for and he chose not to do it."

[101Armorer]

http://www.leap2020.eu/GEAB-N-22-is-ava ... a1298.html


Global systemic crisis / September 2008 - Phase of collapse of US real economy
- Public announcement GEAB N°22 (February 16, 2008) -


According to LEAP/E2020, the end of the third quarter of 2008 will be marked by a new tipping point in the unfolding of the global systemic crisis. At that time indeed, the cumulated impact of the various sequences of the crisis (see table below) will reach its maximum strength and affect decisively the very heart of the systems concerned, on the frontline of which the United States, epicentre of the current crisis. In the United States, this new tipping point will translate into a collapse of the real economy, final socio-economic stage of the serial bursting of the housing and financial bubbles (1) and of the pursuance of the US dollar fall. The collapse of US real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down massively (2),...

A revealing harbinger: from March 2008 onward, the US government will stop a service publishing its economic indicators due to budget restrictions (3). Those who read the GEAB N°2 (02/2006) and included Alert certainly keep in mind our anticipation which connected the upcoming fall of the US dollar with the US Fed's decision to cease publishing the M3 indicator. This new decision is another clear sign that US leaders are now anticipating a very bleak economic outlook for their country.


In this 22nd issue of the GEAB, LEAP/E2020's experts try in particular to anticipate very specifically what will come out of the collapse of the US real economy for the United States themselves and for the other regions of the world. Meanwhile our team presents five sets of strategic and operational recommendations helping to protect oneself from the upcoming deterioration of the global systemic crisis.

On the occasion of the second anniversary of the publication of our famous “Global systemic crisis Alert” which toured the world in February 2006 (4), LEAP/E2020 wishes to remind that we are now resolutely stepping into an era with no historical precedent. Our researchers insisted on that many times in the last two years: any comparison with the previous crises of our modern economy would be fallacious. It is neither a “remake” of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis. It is truly a global systemic crisis, that is to say a crisis affecting the entire planet and questioning the very foundations of the international system upon which the world was organised in the last decades.

According to LEAP/E2020, it is also instructive to observe that, two years after the release of this « Alert » which at the time generated both the interest of millions of readers worldwide and the condescending irony of most « experts » and « managers » of the economic and financial spheres, everyone is now convinced that a crisis is truly happening, that it is really global, and for most people already that it could indeed be systemic. However, it is always a repeated astonishment for our team to see the degree of incapacity of these same experts and managers in understanding the specific nature of the phenomenon currently unfolding. According to them, this crisis would only be a usual crisis but bigger. As a matter of fact that's how the financial media reflect the dominant interpretations of the ongoing crisis. According to our team, this approach is not only intellectually lazy (5), it is also morally guilty, because it has for a main consequence to prevent their readers (whether they are simple citizens, private investors or public or private organisation managers) from preparing for the upcoming shocks (6).

For this reason, in opposition to all what can be read in the mainstream media always eager to conceal the truth and serve the interests of those who rule them, LEAP/E2020 wishes to remind that it is first and foremost in the United States that the systemic crisis is taking an unprecedented shape (the « Very Great US Depression » as our team decided to call it in January 2007 (7)) because it is around this country, and this country alone, that the world got progressively organised after the second World War. The various issues of the GEAB extensively described this situation. In short, it appears to be useful to make clear that neither Europe nor Asia have a negative saving rate, a full-scale housing crisis throwing millions of citizens out of their homes, a free-falling currency, abysmal public and trade deficits, an economic recession and, on top of all this, a number of costly wars to finance.

Neither Asia nor Europe (or more precisely ‘nor the Eurozone') will suffer the roughest, the most sustainable and the most negative impact of the ongoing crisis; but the United States will, as well as all the countries/economies strongly linked to the US (what our experts have decided to call “the American risk”) (8). A “decoupling” is indeed taking place between the US economy and the other large regions of the world. But “decoupling” does not mean “independence” and it is clear that, as anticipated by LEAP/E2020 for many months, Asia and Europe will be affected by the crisis. But « decoupling » entails that the evolution of the US economy and of the other large regions of the world are no longer synchronised, that Asia and Europe are now moving along courses no longer determined by the US economy.

The global systemic crisis is in fact the beginning of an economic « decoupling » between the US and the rest of the world, knowing that the non « decoupled » economies will be dragged down the US negative spiral.



US Self-Employment in a Steep Downturn - Source Bureau of Labor Statistics / Merril Lynch (shaded region represents period of US recession)


The cases of the housing (2006) and financial (2007) bubble-bursting are eloquent. Indeed, the large majority of operators (non-specialised in the concerned sector) discovered that « the party was over » a long time after the trend had reversed. During the entire reversal period (which usually lasts between 6 to 12 months at most), dominant stances kept repeating them that nothing was changing and that emerging worries had no reason to be; and later, that the problems would remain confined to the sector concerned and to the US only. All those who, in the US and elsewhere, listened to these arguments are bitterly regretful now that they are stuck with unmarketable houses (or about to be foreclosed) or now that they see the value of their assets crumble day after day (9).

Concerning stock markets, our team has anticipated since October 2007 that international stocks would plummet by 20 to 60 percent according to the region in the course of the year 2008. Today, we must re-evaluate our anticipations as we estimate that losses will be even greater than that. Indeed, on the one hand, stock markets have already lost between 10 and 20 percent since the beginning of the year (10), and, on the other hand, the collapse of the real economy in the US by the end of Summer 2008 will drag down all stock markets. According to LEAP/E2020, international stock markets will probably drop by 50 percent in average compared to 2007 (including in the emerging countries) (11).

This sort of re-evaluation is typical of the work of anticipation carried by LEAP/E2020. Month after month we try to distinguish which trends are growing and which are relenting in order to improve the accuracy of our evaluations. We do not strive to “be right” (12), not to “sell” or “promote” anything. We seek simply and without prejudice to describe in advance the consequences of the heavy trends at play in this 21st-century world, and to share with our readers what we think are the proper means to protect oneself from the most negative effects.

In this 22nd issue of the Global Europe Anticipation Bulletin, with the alert we sound about a collapse of US real economy from September 2008 onward, we are trying again to warn those concerned that this major event will generate many very severe socio-political troubles in the United States (13) whose economy is truly on a tumbling course (14), a situation extremely likely to entail very heavy consequences for the financial and monetary markets, and for the world's economy. We have not yet reached the heart of the crisis. According to LEAP/E2020, we will be there in the second semester of 2008.
----------
Notes:

(1) A very instructive film was recently nominated at the Sundance Film Festival: I.O.U.S.A., directed by Patrick Creadon. As it follows the journey of David Walker, US Comptroller General (and therefore responsible for controlling federal public spending), during a series of conferences on the state of public expenditures throughout the country, this film shows the very direct impact of the current crisis on American citizens and the United States. The release of this film illustrates the fact that, in just a few months time, this crisis left the mere circles of experts and boardrooms of financial institutions to enter into the daily life of the US citizens.

(2) In the past few days, the complete collapse of Municipal bonds (or « Munis ») illustrates the fact that the crisis is spreading to all the sectors of the US society. This collapse will freeze all public investment projects scheduled by local authorities in the US. It is one of the first big victims of the implosion of « bonds insurers » announced by LEAP/E2020 in the GEAB N°19. It also demonstrates the fact that large banks are now incapable of playing their role of financers of the country's economic activity. Sources: Financial Times, 02/13/2008 & Bloomberg, 02/14/2008

(3) Source: EconomicIndicators.Gov, Economics & Statistics Administration, US Department of Commerce

(4) See GEAB N°2, 02/15/2006

(5) The first reason that may prevent those « experts » to conceive the « unconceivable », is not a matter of intelligence but a « commercial » problem. Indeed it would compel them to review most of their intellectual principles (their work hypotheses) and their business base (their « clients » would not appreciate to learn that they were on the wrong track all these years).

(6) On this subject, it is worth noticing the very straightforward speech made by the head of the Bank of England, Mervyn King, who recently warned his fellow citizens that the current crisis would downgrade significantly their living standards. Unfortunately, no US leader, including among the Democrats, is able to produce such a speech, knowing that their fellow citizens are hit even harder than the British. Source: The Telegraph, 02/14/2008.

(7) See GEAB N°11, 01/15/2007.

(8) In this 22nd issue of the GEAB, the LEAP/E2020 team gives a set of recommendations helping investors to assess themselves the « American risk » of a country, sector or investment.

(9) The same goes for all those who chose to listen to similar arguments telling them, along the years 2006 and 2007, that it was impossible for the EURUSD exchange rate to go above 1.30, then 1.40, and now 1.50… while waiting 1.70 at the end of the year 2008.

(10) Only « dream merchants » can still imagine that stock markets could improve by the end of the year, while the crisis is speeding up.

(11) It is worth reminding that in January 2008, in just a month, global stock markets saw USD 5,200 billion-worth go up in smoke. Source: China Daily News, 02/10/2008

(12) Even if our anticipations undeniably proved to be right in the past two years concerning the global systemic crisis.

(13) See ‘Sequence 6 : 2nd quarter 2007 – 4th quarter 2009 : « Very Great Depression » in the US, social unrest and growing influence of the army on public management, GEAB N°18, 10/15/2007

(14) Predictions about the failure of dozens of US banks in the coming two years illustrate the scope of upcoming difficulties. Source: Reuters, 02/01/2008

[kath]

Guess it's you and me re 08. Well, if we're right, there won't be any internets to prove us right or wrong as we'll be toast! It sucks to bear bad tidings, doesn't it--and then, later, those folks say "Whoa! What are you doing about [whatever we warned them about a year previously]?" How many decades should one devote to trying to help others? I think mine are up.

[ShineOn]

How many decades should one devote to trying to help others?

As many as it takes...which obviously is going to take more decades than are available in this one lifetime.

[101Armorer]

Both of you are correct. Unfortunately, we've reached the end of the line, only to be at a point in our time where we will witness 'further' false reporting on our economy that strings this disaster out until the very last drop is squeezed out of our pockets, banks and treasury dept.

Watch for my next post about our pension funds. You'll be very shocked at it's current status!!! In the meantime, has anyone found information on our bank's insurance statuses?? What are those insurance groups reporting if anything at all? Aside from all the lies fed to us by BushCo, we have many indicators not being fed to us from the financial sector per plan. This too will completely cease to report to us to cover up this coming depression.

I already know the answer to this, but has anyone here come across any US Federal secure plan to prepare/protect this nation financially once a depression hits?

[101Armorer]

I won't be able to post my pension fund report until tomorrow, because I found this very disturbing and important news about our SS system and Medicare. I've suspected that in a short time, we'll see such programs start to faulter.... little by little... until something huge happens to our economy overnight that causes them to totally shut down. The report below states that our Medicare will run out of funds in 11 years, 2019. Our SS will do the same by 2041. I know this has generally been Repuke fear tactics to get us to fuck with SS.... but common sense here is, since our economy is actually in a collapse, while our programs will run out of money eventually. What I fear is... the report of 11 years is happy news. It could happen by 2010 or 2011... if not sooner. We all know that if we make war with Iran... we'll see deficits like never before! Our markets will more than likely crash. The clock is truly ticking on this horrible event as we type. This is no scare tactic by me... it's merely facing reality that's simply before us.




Cry Medicare
Josh Zumbrun 03.25.08, 6:02 PM ET


While the U.S. Federal Reserve is rushing to bandage up the housing crisis, the trustees of Medicare and Social Security ponder a much bigger and perennially ignored problem: the looming deficits facing government entitlement programs.

“The warnings have become a seasonal occurrence,” lamented Mike Leavitt, secretary of Health and Human Services (HHS), which administers Medicare. “Every spring we see the cherry blossoms and hear Medicare warnings. The cherry blossoms go away, and nothing changes with Medicare.”

Indeed, this year’s projections differed little from last year’s: Interest from Social Security’s trust fund will be needed to make payments by 2017, in 2027 the fund will need to spend its assets, and by 2041 it will be exhausted.

The projections for the Hospital Insurance Trust Fund need more immediate action. The program is expected to need interest payments this year to pay hospital bills for Medicare patients, start losing assets in 2010 and be completely insolvent by 2019.

The baby boomers became eligible for Social Security in January, and the Social Security Administration estimates an average of roughly 10,000 boomers per day for the next two decades will start collecting benefits.

In 2011, the same cohort becomes eligible for Medicare. The number of baby boomers will not change, and the projected dates of exhaustion are unchanged from last year’s annual report.

Except for one key difference. In 2008 there’s one less year to address the problem than in 2007.

Without sweeping reform--an unlikely prospect in an election year--the next president will see similar numbers in 2009. But by then Medicare will be only one year away from cannibalizing its trust fund.

Critics of the system suggest the situation is even more untenable. The trust funds for the entitlement programs consist of special-issue bonds from the U.S. Treasury. And when the Treasury has a financial obligation it’s the taxpayers that foot the bill.

If these assumptions are valid, then the burden of paying for these programs is already seeping into the tax bill as the Hospital Insurance Trust Fund begins to draw interest.

In the announcement’s sole optimistic note, HHS Secretary Leavitt said the Prescription Drug Benefit was going to cost $117 billion less than had been predicted last summer. Leavitt attributes the lower numbers to the competitive nature of the system: With beneficiaries able to pick between more than 45 providers in every state, the providers are forced to be efficient.

Last week, the Government Accountability Office released a report that reconciles Social Security’s projections with the Congressional Budget Office’s projections of future tax revenue. Thanks to the burden of Social Security and Medicare, the GAO’s assessment is grim.

[wyldberi]

Thanks for the work you're doing and presenting here, 101.

This is the advent of what we've seen coming for years. But who would have guessed the end of NAFTA would come so soon and so suddenly?

As for Social Security:

This is not an entitlement program. Perhaps Medicare is, but Social Security is supported by deductions from worker's paychecks. When instituted, the current crop of workers agreed to pay a pension to all the elderly then living, even though they had not contributed to the retirement program, themselves. From then on, as those first workers retired, they depended upon contributions by new workers to fund the program through their retirement years.

During the 1980's Regan's fear-based propagandists convinced the average person there was a problem with Social Security that needed to be fixed, lest the time come when there was no money in the system to fund retirement benefits. At that time the Social Security Employment Tax withheld from worker's paychecks was effectively doubled in order to fund a "reserve account" that would be used to pay retirement benefits when the babyboomers retired.

Well, that time has come. And what do we find out? The government never funded the reserve account. Instead, it put T-Bills into a filing cabinet. What happened to the cash? The Regan government stole the cash and used it to fund pet projects like the Star Wars Missle Defense Initiative, the build up of a peace-time Navy that was not needed, and lots of other pet projects that did one thing well: Filled the pockets of government contractors who were on the public dole, while the public got squeezed.

In effect, the increased revenue was used to fund government expenditures in an underhanded way that permitted the republicans to lie and tell us they were against raising taxes.

But here's the really nasty little secret I believe we're going to soon discover: When the real economic shit hits the proverbial fan, we'll witness the federal government repudiate the "entitlement" program of Social Security altogether, claiming since there are no jobs, there is no revenue coming into the system, and therefore the Roosevelt "experiment" is an utter failure that has to be abandoned.

Sorry folks. Hope you saved that last bullet for yourself.

[kath]

Forgive me for not rereading this thread, but if it hasn't already been mentioned, it should be: the rich are exempt from paying for Social Security, but can still collect it. If you earn over, I think it's $80k/annually, you no longer have to pay. This is fucking criminal: rob from the poor to give to the overly rich. Poverty level wages should be exempt, not high-end wages. But it's futile to wish that pigs fly--short of tornados on every (corporate) farm.

Still, since there is no long term hope, it's time to get ready (well, WAY past time) for the last depression. Even if everyone started a small business and stopped driving, grew food instead of lawns, and tried to make a go of it, TPTB would not tolerate it, because there will never be enough money or power to satisfy them, nor will there be enough dead bodies. They are a bloodthirsty cult, as long as it isn't their blood. If you think 9/11 was an inside job (or with their complicity), which it was, you ain't seen nothin' yet. Their goal is the eradication of 80% of the world's population, so they can have it all, save some peasants to wipe their asses. (Granted, it just isn't the U.S. "leaders," it's also those from other countries and banking entities.)

If this is not hell on earth, well, just wait, because it will get worse. The dumbed-down assholes who suddenly can't afford the teevee or, let's say, water and food, will be pissed. Too late. Greed will be the death of this planet, well, short of divine intervention (NOT holding my breath). I've been called a traitor since I objected to the destruction of the native Americans I learned of in 4th grade. From blood red sea to shining nukes....Amerika the greedy, imperialistic, evil POS, charading as a republic--deserves whatever karma tenfold.

Speaking of the last bullet, isn't it freaky that it's illegal to kill yourself? Guess they want to drain every possible penny (now worth 2.5 cents for the copper) and see us writhe in pain on the emergency room floor. Blow away a few dozen people at a fast food place and you at least get years of food and medical care, a roof over your head, before you get a few shots that put you to sleep forever.

[wyldberi]

The Social Security System is based on a regressive tax structure.

When it was first implemented, everyone paid the same tax, calculated to cover the expected payments needing to be made the following year. For most folks, wages earned by a common laborer and members of the so-call middle class did not differ in terms of actual dollars all that much. The dollar was worth more back then, so the quantity of dollars paid in wages was much closer (if that makes any sense.)

(The wealthy, however, quickly figured out ways of being paid that aren't classed as "wages" or "earnings" - so-called compensation packages today.)

But as the economy developed, the size of the gap between the lower end of the wage scale and the upper levels expanded.

During the presidential term of Ronald Regan, when the rates were revamped, if you look back through the records I believe you'll find that's when the system was rigged. As mentioned earlier, the tax rates were doubled to handle the the numbers of baby boomers. This was the point, I believe, when those in the higher tax brackets created a ruckus by pointing to the maximum benefit payment issued to eligible senior citizens and claimed the system was unfair. In response, a cap on wages was created. Since then, we all pay basically the same rate as everyone else, up to the first $80 thousand or $100 thousand of income, but once the cap is reached no income is taxed beyond that limit. But the truth is even the richest among us pays into the system on income levels below the limit, if they report any income at all, that is. And if they don't pay into the system, their monthly "benefit" amount is decreased.

This is the nature of a regressive tax: It hits one group of people harder than the other groups. A progressive tax structure tries to balance things out by taxing the entire population in proportion to their earning level. An even "more Progressive" tax taxes the higher levels at higher percentage rates to provide benefits to those at the lower end of the scale. I guess the rich/conservatives would call this a "regressive" tax, but I doubt any of them will be reading this, so their opinion doesn't count here.

The Personal Income Tax was progressive through most of the 1960's, reaching into the 90% level, because it was designed to avoid the undue accumulation of wealth that had led to the excesses of the 1910-1925 period and eventually the Republican Great Depression of Herbert Hoover, whose favorite slogan was: "Cut taxes."

[As a side note: I'm wondering if it would be fair to say that Social Security wage garnishments are no tax at all? Taxes are funds collected by a government to pay for specific investments: Infrastructure development, Defense spending, Government research projects, the Business of operating a government, etc. Funds collected for Social Security are very different in a fundamental way: The funds are not paid out to any contractor or supplier, they are held in trust, and then distributed with an unvoiced debt of gratitude, to individuals who contributed to the system throughout their careers and working lives so that the final years of those who had already retired might be lived with some measure of dignity and not in poverty. But that's quibbling over terms.)

Much of the current hype over the need to reform the Social Security System is based on two alarmist principles:

1) Social Security benefits are unfunded:
That is just not the case. What is the case is that over the years Congress has repeatedly dipped into the money you and I have paid in to Social Security to fund our personal retirement benefits and spent those funds on pet projects.

2) Medicare expenses will soon bankrupt the system:
Medicare is a completely seperate program from Social Security, and responsible in no small measure for the over-inflated cost of health care in this country.

As for the Greater bush Depression:

Have you ever stopped to think what would happen if there were no jobs and you had to grow your own food on your own land?

Do you honestly believe you would be able to continue living in your house, even if it is completely paid for and owned outright, if you fail to pay your local property taxes?

And that's going to be the situation we face. Without a vibrant economy funding a viable tax base, municipal services will be unavailable. Banks will be closing, and the money supply will eventually shrink. Barter will become the new currency, and how will you barter with the City government to come up with wages to pay for local law enforcement and fire protection? Where will the money come to pay the electric bill to operate the pumps and equipment required for water service and sewage treatment?

The presidential years of "bush the Younger" have placed all this in jeopardy.

I guess if I want to eat my last bullet and they want to charge me and drag my corpse to court they're welcome to do so. In that case I don't believe I'd mind much or raise any real objections.

[101Armorer]

Thanks for the work you're doing and presenting here, 101.

You're all welcome for what I will try to keep current in this thread. I feel that it's very important that we focus on what will become our extreme priority over other issues. Wars being one... our failing economy the other.

I am sorry that I was not able to post when I said I would, but I became a victim of crime before I could get it posted. I hope to today or within the next two days. It's odd that I have been writing about the coming rise in crime and choas recently, while we watch it unfold before our eyes. We have not been watching this close enough, and that's dangerous. We have entered a period in time about our history that reflects why security and safety will be almost impossible to achieve. We'll all fall victim to those all around us.

Suggestions by Kath are well warranted and deserving about growing out own foods. Here's the reality about this preparation. As we try to turn our yards into gardens for food, that source will fall under assault. Here's what we're not factoring in. Just as wylde suggested, when banks close and tax money is no longer available to operate our local civil services, we become extremely vulnerable to the elements. Including man. There is now a growing rash of house break-ins currently going on today. Theft is rampent. A sense of desperation is now setting in, but not completely full blown...yet. I'm afraid that is coming. So, as one tries to raise their own food, you'll need to be on guard 24/7 to protect everything what you have in your possession. You'll need your water source while more drought conditions are expected. You also be busy protecting your own life.

Here's what's more different that our last depression is.... there's more ppl and less self reliant ppl who are very vulnerable to attacks and assaults than there was in 1930. There's a lot less respect than what once was in 1930. There's more drugs and weapons than there was in 1930. Many ppl lived off their land and with a lot less in 1930. There were more farmers in 1930 working to provide food for those not farming their own. Ppl basically pitched in to help themselves and others in 1930. Ppl pulled more together in 1930. Today, it's completely different. More ppl with less knowledge for how to survive. More ppl will be desperate and crazed seeking to avenge others. That's what will be our largest enemy in this coming collapse. Ourselves.

Consider that approx 85-90% of our population are not givers from the heart. Out of those 10-15% who do give to others, mostly do so for a tax write off. We are a population of takers. When our sources for taking runs out, chaos will completely take over.... and in turn, it'll be our final demise. So, that's the problem with this coming economic collapse. The numbers are far out of balance. There's a huge offset of those able to survive on their own from those who can't. Those who can't provide for themselves will overtake those who can and ... continue to take. Simply because the numbers will be so great against those trying to survive on their own. The bullets eventually will run out.

I've yet to this day heard of any real plan by our govt to use if in case we have an economic collapse. Just as everything that's happened to far has been by design, I assume that this design also includes the collapse within it's own genocidal state of emergency/chaos. The cleansing of America.... and our Constituion. The attempt to restart civilizations under GOP/Neocon rule. A continuation of the GOP/Neocon NWO global blueprint(s). Global wars will more than likely alter the expected outcome(s) of such blueprint(s) for which the Neocons don't really care. It's world domination that's impoartant to them. Even while it costs most of America.

I wonder if the predicted end of time of Dec 2012 (mayans), is truly on schedule? In my opinion, it appears so.

I'll work to get my next report posted asap.

[101Armorer]

The Pension Report - March 16, 2008


http://www.leap2020.eu/GEAB-N-23-is-ava ... a1428.html

Global systemic crisis – End of 2008: Pension funds go off the rails
- Public announcement GEAB N°23 (March 16, 2008) -



According to LEAP/E2020, by the end of 2008, a formidable debacle will affect pension funds all over the world, endangering the entire system of capital-based pensions. This financial calamity will bear a particularly dramatic human dimension because it will come at the precise moment when the first wave of baby-boomers phase out of the labour force in the US, EU and Japan: pension fund revenues are collapsing at the very moment when they should be making their first large series of payments to pensioners. In this 23rd edition of the GEAB, our team anticipates the evolution of the upcoming pension fund crisis, details which countries are the most exposed (in particular in Europe) and provides a number of operational and strategic recommendations to face the situation.

Meanwhile, in the present issue (on subscription), LEAP/E2020 anticipates what the global systemic crisis (now obvious to everyone) will bring along in the next few months, as regards in particular to the negative side effects of the US Federal Reserve's bank loans currently contributing to weaken even more the US financial system, and as regards also to bank exposure in the US and in the most exposed European countries. Simultaneously our team analyses the effect of today's US economic and financial crisis on the probability and consequences of an attack on Iran by Israel and the US before the next US presidential election.

In any event, with the announcement of an emergency plan to save the US 5th largest private bank, Bear Stearns (1) (preluding to its being sold or its failing in the coming weeks), it turned out that a large financial institution indeed went bankrupt in the first quarter of 2008,as anticipated by our team in GEAB N°19 (2).

Meanwhile, the US dollar resumed plummeting against Euro, Yen, Yuan; gold soared over 1,000 USD per ounce, oil reached 110 USD per barrel, global stock markets lost 20 percent in three months, and the Fed's most recent attempt to stop the financial crisis through a 200 billion USD bank loan plan has already proved to fail... the bases of the financial and economic order that prevailed in the last decades are collapsing under our eyes, at an increasing pace… all the signs of a systemic crisis are gathered (3).

The whole world is now aware that we are faced to a crisis of unprecedented scope and nature. This level of awareness enables our team to refine some of their anticipations. About currencies for instance, our team undertook to review their estimation of the value of the US dollar against the three other strategic currencies - Euro, Yen and Yuan. LEAP/E2020 now estimates that the EURUSD exchange rate will reach 1.75 at the end of 2008 (instead of the 1.70 estimation made in 2006); the USDYEN rate should fall down to 90 and the USDYUAN down to 6 (4).

Faced to the extent of the Very Great US Depression currently unfolding (6), LEAP/E2020 is glad that the US authorities took into consideration the numerous protests (7) and decided to maintain the publication of US economic indicators on the website EconomicIndicators.Gov. In such difficult times, it is important that statistical information on the US economy remains easily available to everyone. The money of a great number of private and public, individual and collective operators depends on this transparency.

In the same sense, the Federal Reserve of Atlanta distributes for free a DVD entitled « Crisis Preparedness: Reconnecting the Financial Lifeline » and designed to help operators of all kinds to anticipate a crisis and get prepared to it (8). In the perspective of a collapse of the real economy in the US (expected to happen in September 2008 according to LEAP/E2020's anticipations (9)), these official advices take a special meaning. For instance, like we have been repeating for months, the DVD keeps saying that in the event of a severe crisis « Cash becomes king », whether the crisis is linked to a natural disaster or a human-made one, as shown by the fact that US insurers have already lost more money because of the subprime crisis than because of the Katrina hurricane, though the worse natural disaster in the history of the US (10).

Non-Borrowed reserves of US depository institutions (1950 – 02/2008) - Source Federal reserve of Saint Louis



To finish with, graphics such as the one above illustrate in a striking manner that the situation is infinitely worse that what the cleverest leader (and they are not many) can imagine. It shows that the US financial system, and that of a large part of the world, is lethally hurt. US banks have no more money; it is as simple and dramatic as that. Contagion will now enter a second phase of development, generating a new series of bank failures by this summer, as anticipated in GEAB N°20, entailing a dislocation of the global financial system in the second semester of 2008.
---------
Notes:

(1) Source: Reuters, 03/14/2008

(2) In GEAB N°19 we said it would take place in February ; it is on March 14th that this first large US bank defaulted. We remind that from now on, according to our November 2007 anticipations, more US, EU and Asian banks will follow.

(3) As a matter of fact, this CNN/Money title is very lucid: « Issue N°1: America's money ». Source: CNN/Money. That is indeed what it is all about: the pure and simple evaporation of thousands of billions of US Dollars illusively accumulated all those years on the accounts of financial institutions, companies, individuals and governments, scattered all over the world. That is exactly the problem detected in the first GEABs at the beginning of 2006.

(4) LEAP/E2020 wishes to stress the fact that in the case of a combined US/Israel attack on Iran this year, our US dollar index estimations for the end of 2008 presented in GEAB N°23 would be even worse. About the rumours suggesting that a concerted action of the central banks will put a stop to the plummeting of the US currency, they do not have any basis: a similar action can no longer be implemented because central banks now have diverging interests due to the decoupling of the world's largest economic regions, as anticipated by LEAP/E2020 many months ago. The collapse of the US Dollar is the result of a US economy in recession and a related devaluation by 50 percent against the other big currencies.

(5) Dollar Index currencies: Euro, Yen, Canadian Dollar, British Pound, Swiss Franc and Swedish Crown. If the Chinese Yuan was added to this list, the US dollar index would fall even more dramatically.

(6) Some websites are even specialised on this subject, such as Depression2.TV whose sub-title is clear: « Surviving the second great depression ».

(7) Excerpt of the announcement posted in the website EconomicIndicators.gov : « ... ESA (Economics and Statistics Administration) initially planned to discontinue the service due to cost concerns but given the feedback ESA received, the decision has been made to continue the site and improve its functionality... ».

(8) Source: Banking Information, Federal Reserve Bank of Atlanta (to order the DVD, here is the direct link)

(9) See GEAB N°22

(9) Source: Bloomberg, 03/14/2008

Dimanche 16 Mars 2008


In the same category:
From now on the GlobalEurope Anticipation Bulletin is also available in Spanish! - 14/03/2008
How to survive with a euro worth 1,50 USD and an oil-barrel worth 150 USD? - 07/03/2008
Parameters and teachings of the « multi-currency » process of follow-up of the US GDP - 28/02/2008
Special offer! Each new subscriber gets Special Edition 'GEAB/SUBPRIME CRISIS: Causes, development, consequences and strategic advice'... because an in-depth understanding is required to secure oneself - 12/08/2007
GEAB Archives Offer (1) - Six archive issues of your choice for 50 euros - 22/01/2007
Dollar crisis / Euro above 1.30 USD: A message from Franck Biancheri, Director of research at LEAP/E2020 - 27/11/2006
French prospectivist, Pierre Gonod, analyses LEAP's work of anticipation - 30/08/2006

[wyldberi]

Maurading bands of ravenous, unemployed office workers . . . who'd-a-thunk-it?



Seriously, I hadn't turned my attention in that direction yet, and hadn't heard any reports of rising crime rates. Living in California, in the Bay Area, we're a little behind the curve on the economic downturn. But that's not to say it ain't coming here -- the other day I heard the value of residential property in the Bay Area dropped something like 11% last month. That's huge, and people who don't have any appreciable equity are going to be clobbered by this situation eventually as the bubble of inflated housing costs continues to deflate.

I haven't got time to read 101's second post on the March 2008 Pension Report. But there are a couple of thoughts coming to me from what was said before that I wanted to put out there.

One of the strongest things that comes to mind is the reference to being self-sufficient. The 1930's saw people who had moved to cities for jobs returning to the family farms where they were able to weather the economic storm. As 101 emphasized, the family farms are mostly gone. As for immigrants who have arrived in this country here over the last 50 years, they have very little in the way of extended families upon which they can rely. We have, indeed, become a society of relatively isolated individuals.

But here's what was coming that seems more relevant. The interlocking world economy is dependent upon petroleum for transportation. As the scarcity of the commodity increases, the associated costs will rise. That will result in an eventual collapse of the "free market" system that is the neo-Con pride and joy.

As the bush Depression spreads, American orders for imported goods will fall very fast because the general population won't have any money to buy the junk and garbage with. While buying junk isn't such a bad thing to lose, since I have some physical limitations that makes doing physical labor nearly impossible, I don't have the option of raising my own crops, even if I had land to grow thing on. I'm dependent upon the "system" to provide useful employment so I can purchase food and other necessities. When the jobs go, there are serious repercussions for us all that most of us haven't considered.

So as America sinks, countries manufacturing the junk and garbage are going to take serious economic hits as well.

It's typical for the greedy mind be optimistic and ignore the potential downside of proposed courses of action. In Iraq, this led to greater-than-intended violence. They haven't been able to contain it, and since that's clear for anyone who cares to look at the evidence that exists despite the attempt to conceal reality, the neo-Cons have suffered a significant loss of power. Any serious person capable of critical thinking realizes the bullshit.

Another unintended downside the neo-Cons hadn't considered is the fact that they've killed the goose that lays the golden egg. For decades American consumerism was the most powerful force on the planet. The neo-Cons have stolen and thieved their way to the end of the line, and they don't have a plan on how to stuff the genie they let out of the bottle back inside.

As they move on to "plan B" I believe they're hoping their private security guards will be able to protect them in their protected security compounds and gated communities long enough that the steamroller of economic and social collapse will do away with any of the ordinary people who would otherwise rise up to take their revenge by hanging the culprits in the public square. But the good news is it's looking more and more like their global utopia is fading into the background.

[kath]

Crap, 101, I'm sorry to hear you became a crime victim. It sucks, does it not. You and wyld are correct re the problems inherent in trying to grow and protect food. My plan, sorry little thing that it is, in part includes planting things most people don't see as food, e.g., dandelions. I'm not yet at the point of trying to raise mealworms. Perhaps the only upside to rampant unemployment is that there's likely to be someone on the premises to "stand guard"--in my case, without a gun so I'm basically worthless, but, oh well. I'm also not the spring chicken I once was in terms of ability to lift, kick, run, etc. so that's not good, either. But I feel slightly advantaged in that my diet doesn't demand meat, and I have no chickens to steal.

This latest trick to further empower the UnFederal NonReserve is troubling, but just another step down the hole. (Obama wants to grant it even more power.) And, as always, the one with the gold rules. As I have no $, "they" can't take that from me. But as I have few needs and fewer wants, and have been living on the edge most of my life, I'm a bit more prepared than someone used to having, say, a maid to do their cooking. I'm close to a bus line that takes me most anywhere I need to go, and close enough to downtown that, in case of a nuke, I'll be toast before I know what hit. And I'm old enough and tired enough that I don't feel the potential loss as much as the younger folks must feel--hell, I've felt the impending doom all my life, so a relief from that would be welcome.

Thanks for all you do, 101. Knowledge is power, or at least potential control, and possible help in readying oneself for the onslaught. No one here can say they weren't warned.

One thing that might intervene is WR104--a star(?) aiming right for us. Another is the apparent increase in "indigo children" who, if nothing else, can soothe us and perhaps survive to remake what's left of the earth when we finish ravaging it. Short of the total destruction of CONgress and lobbyists, or yet another war (which WILL mean martial law), the slip sliding away won't be overnight, but over-months, possibly years, and perchance the peons will wake the fuck up. There are more of us than "them."

Get yer windup radios, print out important info (do as I say, not as I don't do!), and hang on. This is one hellofa time to be alive, witnessing the demise of all things we took for granted--like food and water. The culling has begun, though, of that there is no doubt.

[101Armorer]

One of the strongest things that comes to mind is the reference to being self-sufficient. The 1930's saw people who had moved to cities for jobs returning to the family farms where they were able to weather the economic storm. As 101 emphasized, the family farms are mostly gone. As for immigrants who have arrived in this country here over the last 50 years, they have very little in the way of extended families upon which they can rely. We have, indeed, become a society of relatively isolated individuals.

But here's what was coming that seems more relevant. The interlocking world economy is dependent upon petroleum for transportation. As the scarcity of the commodity increases, the associated costs will rise. That will result in an eventual collapse of the "free market" system that is the neo-Con pride and joy.

As the bush Depression spreads, American orders for imported goods will fall very fast because the general population won't have any money to buy the junk and garbage with. While buying junk isn't such a bad thing to lose, since I have some physical limitations that makes doing physical labor nearly impossible, I don't have the option of raising my own crops, even if I had land to grow thing on. I'm dependent upon the "system" to provide useful employment so I can purchase food and other necessities. When the jobs go, there are serious repercussions for us all that most of us haven't considered.

So as America sinks, countries manufacturing the junk and garbage are going to take serious economic hits as well.

Once again, Wyld, you write it well in what we understand.

For those who are catching up on 'Deliberate Assault on its own Nation 101", think back to when the last time our govt and Congress encouraged farming in America? What at least 30 years or more??? Our govt purposely shut down farming in America..... year after year!!! Until we have become almost entirely dependent on our food sources being shipped in from foreign locations. How damn stupid is that!!!?????

If our govt was serious about rebuilding itself... about thriving on our own capabilities to grow and market our own food, they would have offered incentives for Americans to farm again! NO???? I would think so!!!! We need to hear our sons and daughetrs speaking about farming... wanting tobe farmers.... to provide food for our nation. Instead.... it's like Wyld stated.... we're now individuals dependent on outside sources for most everything we need. We're paying the high price and at their mercy all at the same time!!!!

It would take years to return to having the minset of agriculture and a widespread desire for many Americans to farm again!!!

Just check this out. Corn is going to be 'in demand' and it's not by accident. I suggest that those who can, stock up on corn, because it's going to fall prey to these BushCon's manipulative scheme(s) that will cause our food sources to rise again, because of everything that depends on corn. Yes, this shortage of corn will also push the cost of other veggies up because it will simply create a larger demand on them also. Nice...huh?



http://www.chron.com/disp/story.mpl/ap/fn/5662307.html

March 31, 2008, 2:18PM

Analyst Predicts Corn Rationing in 2008

© 2008 The Associated Press

NEW YORK — A BB&T Capital Markets analyst said Monday corn rationing may be necessary this year, following a U.S. Department of Agriculture report predicting farmers would plant far fewer acres of corn in 2008.

According to the March Prospective Plantings Report, farmers intend to plant about 86 million acres of corn this year, down 8 percent from 2007, when the amount of corn planted was the highest since World War II.

Analyst Heather L. Jones said in a note to investors if the USDA estimate proves accurate, the year may produce just 200 million bushels of corn. That, she said, wouldn't be enough to meet demand, given current export and feed demand trends and higher ethanol demand. Both ethanol and animal feed are made with corn.

"That is an untenable inventory demand, in our opinion," she said. "Consequently, we believe demand must be rationed or there needs to be a big supply response from other growing regions of the world."

The plantings report caused nervousness among meat producers and food makers who spent last year struggling to offset higher corn costs. Even though acreage was high, demand for ethanol and need overseas pushed prices to record levels.

Jones said she expects corn prices to rise even more, especially if unfavorable weather damages any of the crop.

The report delivered some promising news for meat producers, who also use soybeans to make feed. Farmers estimated they will plant 74.8 million acres of soybeans, up 18 percent from 2007.

But that might not bring much relief, Jones said, since corn is still the primary feed ingredient.