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Heading for Economic Collapse


By Stephen Lendman - Posted on 24 June 2012

  Heading for Economic Collapse

 

by Stephen Lendman

 

The late Bob Chapman predicted it years ago. So does Paul Craig Roberts. It could "destroy Western civilization," he believes.

 

Untenable political and financial decisions put US and European economies on a collision course with disaster. Bailouts and market manipulation delay the inevitable. 

 

A tipping point approaches. Only its timeframe is unknown.

 

Money power runs world economies. Wall Street and giant European banks run Western societies. 

 

"Financial deregulation converted the financial system (into) a gambling casino....," says Roberts. Zero interest rates destroy household savings. Media scoundrels suppress ugly truths.

 

Western governments letting banking crooks scam the system for profits "is a system that is headed for catastrophic failure."

 

Bad news keeps getting worse. Public acknowledgement arrives late. Moody's June 21 downgrade of 15 major banks conceded what's been known for years. 

 

Giant Western banks are zombies. They're insolvent. Taxpayer funded bailouts alone keep them operating. Moody's warned last winter than downgrades were coming. So-called stress tests suppress more than they revealed.

 

Ellen Brown calls the "derivatives casino....a last-ditch attempt to prop up a private pyramid scheme." It's slowly crumbling under its own weight.

 

JPMorgan Chase is considered America's most stable bank. Brown calls it bankrupt. Evidence, she says, shows it's acknowledged $2 billion loss perhaps exceeds $30 billion.

 

Roberts explained that America's five largest banks hold $226 trillion in derivative bets. For example, JPMorgan's total assets approach $2 trillion. Its derivatives holdings exceed $70 trillion. Its risk capital is about $136 billion.

 

Its "derivative bets are 516 times larger than the capital that covers the bets."

 

Goldman Sachs "takes the cake," says Roberts. Its $44 trillion in derivatives speculation "is covered by only $19 billion in risk capital."

 

In other words, its bets are "2,295 times larger than" cash on hand covering them.

 

Derivatives bets by America's five largest banks exceed US GDP over 15-fold. Corrupt politicians allowing it assure eventual economic collapse.

 

Banking executives are serial liars. After Moody's downgrades, Citigroup and Bank of America officials said its action failed to reflect "safeguards" in place for years.

 

Roberts destroyed their argument. So did Brown and other independent analysts.

 

Moody's and other rating agencies long ago lost credibility. They failed to acknowledge the sub prime crisis until headlines revealed it. 

 

They bogusly call toxic assets safe in return for large fees and big profits. 

 

They're called lagging, not leading indicators. They're many days and dollars short. They're part of the dirty game that scams ordinary people.

 

RBC Capital Markets analyst Gerard Cassidy said Moody's "action is five years too late."

 

Stanford University Professor Anat Admati called its downgrades bad news at a time bank "balance sheets are very fragile."

 

Credit Agricole Securities analyst Mike Mayo said America doesn't have a coherent solution to its banking crisis. Will actions like Moody's make it safer, he asked? 

 

Saying the jury is still out, he doubts it. He also called Thursday's downgrades "unfortunate four years after (a) crisis" that's deepening, not improving.

 

Evidence shows troubled global banking conditions. Central bank liquidity injections alone prevent collapse. They're running their course. Each new round helps less than previous ones. Ahead they'll be ineffective at a price too great to bear.

 

They've bailed out banks at the expense of economic growth. Recovery is more distant than earlier. Speculators alone profited. Good times they alone enjoyed are ending.

 

Economic data show it. The closely watched Markit Eurozone purchasing managers composite index matched May's 46 read. It showed production contracting at the steepest level since June 2009.

 

Its flash measure dropped from 45.1 in May to 44.8 in June. It reflected a 37-month low. Markit's chief economist, Chris Williamson, said the flash reading "rounded off the weakest quarter for three years."

 

China's flash PMI fell to 48.1 in June. Manufacturing contracted for the eighth consecutive month. The Fed slashed 2012 and 2013 US growth. Growing numbers of companies are cutting revenue and profit estimates.

 

Germany's ZEW confidence index plunged to -16.9 from 10.8 in May. It's the largest monthly decline since the 1998 LTCM/Russian debt default crisis.

 

Moreover, its Ifo business confidence index hit a two-year low, and Italy's consumer confidence plunged to its lowest level since 1996.

 

US initial jobless claims are rising. On June 21, they reached a 2012 high.

 

Slowdown is gaining speed. Economic underpinnings look wobbly. In June alone, about 70% of economic reports showed weakness. 

 

The Fed's Operation Twist extension underwhelmed analysts. Officially it's called the Maturity Extension Program. It exchanges short-term debt for longer term holdings. In theory, it's to lower interest rates on 10-year Treasuries. In early June 22 trading, they stood at 1.63%, a near record low.

 

Housing remains in Depression. In the week ending June 15, mortgage purchase applications plunged 8.5%. Companies keep cutting planned capex expenditures. According to the latest Architectural Billings Index, commercial construction keeps contracting.

 

Down 22% from their highs, commodity prices entered bear market territory. Oil prices hit an 18-month low. It signals weak demand. Brent fell 8% in one week. It's down 30% from its earlier high.

 

US factory output reached an 11-month low. Eurozone business activity dropped for the fifth straight month. At a 48.5 read in June, Germany's PMI shows contraction. The Fed's June Philadelphia manufacturing index contracted sharply to -16.6 after dropping 5.8 points in May.

 

The Jolts (Job Opening/Labor Turnover) survey showed job openings plunged 325,000 in May. It was the steepest drop since Lehman's September 2008 collapse. Only twice before in the past decade did it decline that much. All major categories were affected.

 

New hires decreased for the second straight month. They're lowest since July 2011. Again all categories showed weakness. 

 

Layoffs keep increasing. Cuts rose in three of the past four months.

 

Data revisions are mostly negative. Peak levels were reached months ago. The full impact of how weak things are has yet to hit home. So-called recovery is illusion, not reality.

 

Europe's economic condition is grim. Bailing out Spain gets harder. Economist Jack Rasmus estimates its banks need at least $300 billion, not the publicly announced $78.75 billion. 

 

He added that hundreds of billions more are needed to rescue Spain's regional and central governments. At issue is who'll supply it. Sick economies can't solve their own problems. 

 

Eurozone ones look to Germany for help. It bears the greatest burden when it's economy is weakening. 

 

Italy's troubled economy combined with its 12-month 29% of GDP sovereign financing burden means it can't contribute much.

 

Europe's PIIGS (Portugal, Ireland, Italy, Greece and Spain) combined with troubled France have a combined public debt of 200% of Germany's GDP. Its own debt to GDP ratio is 80%. 

 

Simple math says it can't backstop the Eurozone. Bailouts can't continue forever. Debt burdened economies head for collapse. Adding more hastens the timeframe. 

 

Troubled Eurozone economies are so weak that cross-border bank-to-bank lending dried up. ECB chairman Mario Draghi calls inter-bank lending "dysfunctional." It's "not working," he said. As it goes, so does business lending altogether.

 

Rasmus said these developments show deepening crisis conditions. He blames wrongheaded policy measures. 

 

Austerity when stimulus is needed hit hard. Government revenues are down. So is consumption. Business spending keeps falling. Debt keeps rising. A looming train wreck approaches.

 

Why should households and economies bear the burden of bailing out crooked banks? Why are too big to fail ones allowed to exist? Why do ordinary people put up with politicians scamming them for personal gain? Why do they elect new bums in place of old ones?

 

When conditions exceed threshold levels too painful to bear, maybe they'll react the way they should have years ago. 

 

A Final Comment

 

On June 19, the Global Europe Anticipation Bulletin (GEAB) issued a "red alert." Global conditions are "negative, even catastrophic," it said.

 

The second half of 2012 may "mark a major inflection point of the global system crisis...."

 

Day of reckoning time approaches. Putting off "the inevitable comes at a high price...."

 

"The shock of the autumn (of) 2008 will seen like a small summer storm compared to what('s)" coming. The "world system" will be "shake(n)."

 

GEAB predicts a conversion of geopolitical and economic shocks. They include more Middle East wars, Afpak chaos, "Gulf countries swept away in the turmoil," America's economy in free fall, major bank insolvencies, and money printing madness ended because it no longer works.

 

Early summer perhaps is the calm before the storm. If GEAB is right, it won't be pleasant on arrival.

 

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. 

 

His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"

 

http://www.claritypress.com/Lendman.html

 

Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

 

http://www.progressiveradionetwork.com/the-progressive-news-hour

Throughout class history, endless class myths and lies have been created by all class systems to hide its enslavement of humanity and its class, deformed Human nature.   When Patriarchy, with its class hierarchies established its class mechanism, it did so by deforming, usurping, social power, primitive communism, deforming both Human nature and its social historical mechanism that was linked to an automated, de facto, social control over wealth and labor, through an independent, indivisible social agency, the social Matriarchy, with its social, egalitarian kinships.  Both the downfall of women and humanity to property/class relations signalled the enslavement of civil societies through class deformed hierarchies and its mercenaries defending parasitic ruling classes. Humanity and its Human Nature have been both enslaved and deformed throughout the milleniums of class history.  The agricultural revolution produced social surplus wealth that could have produced a more vibrant social power, beyond primitive communism, instead, was usurped, co opted, corrupted into class power, slavery, enslavement by its Patriarchs.   Patriarchy had to invent false explanations, class myths, to hide their class despotism, to justify the downfall of social power, downfall of Matriarchy and women into enslaving, property relations.


The Bible and the three great Patriarchal class religions produced religious class myths, false explanations, to explain the downfall of social control, social power, which once existed before class history and Patriarchy usurped, inverted social power into class power.   The religious class myth of the Garden of Eden hints of a social harmony, state of affairs, before the Patriarchal class mechanism came into existence, which of course is the social Matriarchy with its primitive communism. That partial truth, the essence of a class myth, is then inverted into another reality, class deformed myth, conflating, falsely,  the downfall of social power to the original sin of women and phallic serpent symbols.  However, the class deformed Human Nature, defined as "original sin", belonged not to the Social Matriarchy, its social kinships, social egalitarianism and social control, but to its usurpers, Patriarchs, who needed a religious class myth to hide their class tyranny, enslavement of women, then all of humanity.  This is exactly how all class myths are reproduced by all class systems, with its degenerating class cycles, including Late Capitalism into Fascist Totalitarianism.   All class systems make false social claims, produce class deformed language, class deformed terminologies, to falsely claim a social outcome, whether it is the paternal claims of the Patriarchy and its "divine right of Kings", preaching false social unity, that is class tyranny, enslavement of humanity.


All utopian attempts to reclaim this lost social power, lost social control, lost social historical mechanism, once part of the social Matriarchy, can be seen in the social theories of Plato to Marx and the global revolt, today, against the class system of global Capitalism.   Central to the destruction of all class myths, religious or secular, is to reclaim the conditions and definitions on what constitutes a social principle, social control of wealth and labor as the means of social production. It is pretty evident, when comparing through a social paradigm that more social power equals real democracy and not the other way around.    False arguments, class arguments which falsely claim that parasitical control, class control of wealth and labor and the means of production represents "Job/Wealth creation" is argued by all class ideologues, all class parties, both liberalism and conservatism.    Social wealth in the hands of parasitic ruling classes is "socialism for the rich", which inverts social power into totaltiarian power, the definition of Fascism.    These constrained, enslaved, class deformed market are all about EXCLUSION, not INCLUSION, where the combined power of the class state and monopoly power of corporate trading companies, or today's global corporations produces fascist austerity, fascist Capitalism, Fascist dictatorship.   A partially developed middle class, made divisible by class hierarchies and their class mercenaries produced crippled class republics, crippled middle classes by parasitic ruling classes, who eventually through class degeneration, concentration of wealth at the top, produces A ZERO SUM GAME, negation of crippled democracies, negation of middle classes, first in the colonial world, then finally Western middle class societies, itself.   Obama now embraces Global Fascist Capitalism just as the republicans and Western class alliances:


TPP is Treason. WAKE UP! Globalization Goes For Check- Mate.


http://www.opednews.com/articles/TPP-is-Treason-WAKE-UP-G-by-Brett-Redmayne-Tit-120624-217.html


excerpt:


George Orwell cried last night. Had not he warned them. Hadn't they read his books, once taught in high schools across America. He was so clear. Yet, so few listened. Now, the plot was almost over. They, the Pigs, were about to win. Unless......


"We have to stop them before it gets to Congress", warned Brooke Harper, referring to the Trans Pacific Partnership (TTP), the proposed pan-pacific treaty likely the most insidious piece of corporate global legislation ever to be secretly slipped through the halls of Congress. It was a secret until two weeks ago. Now, opposition must rise quickly. The consequences for American, and world, society are, indeed, terminal.


Ms. Harper, who represents Global Trade Watch, an organization based in Wash. DC, has just arrived in San Diego to rally the Southern California area activists in preparation for the upcoming TPP, eight day, negotiations to be held at the Hilton/ San Diego Bayfront in San Diego, July 2-10, 2012. This is round thirteen.


  A crowd of about forty, representing activist groups from the San Diego area, listened as Harper explained the depth of the threat posed by TPP. They had gathered at Canvass for a Cause, a community hall in the City Heights area. What they heard was chilling and went far beyond the fringes of what our current broken American democracy has become.


 


 


Pres. Barack Obama is traitor. This underhanded legislation/ treaty secretly sells- out the American people's legal rights in favor of his corporate puppet masters. The concept, inception, and mechanism of the TPP treaty comes, solely, from the Obama administration. In doing so, our one time constitutional scholar president attempts to create a new, world- wide, corporate dynasty. TPP gives up legal sovereignty and jurisdiction of the United States, and its laws, to a foreign power. This is the very definition of treason.


If Americans don't stop TPP corporations will, literally, be able to circumvent the existing laws of the EPA, FDA, unions, collective bargaining agreements, patent protections and access, banking regulations and many other American regulations and rights. All will be negated solely by the arbitrary diktats of corporations being currently, and secretly, included in the language of the TPP treaty. Should state, local, or federal governmental agencies attempt to enforce American laws in favor of their citizens a separate corporate court will have supreme jurisdiction over that American governmental agency. This "Tribunal" has the power to override existing American regulation.   Federal agencies, State Gov'ts, City authority, citizen's property, and competing American corporate interests will be considered as the Defendant before the court.   These defendants will have been charged, by the plaintiff corporation, with the new crime of a "Technical Barrier to Trade."


Should the defendant chose not to comply with the Tribunal's diktat, or refuse to pay Tribunal ordered financial compensation, the judgment will be enforced by our federal gov't against American interests...."  (THIS IS CALLED GLOBAL FASCISM, FASCIST CAPITALISM)


 


 


The Secular class myth of Free markets was created when the Social Enlightenment, like the Social Matriarchy was turned upside down, classic inverted totalitarianism through co option, corruption, false substitution and false conflation by turning Adam Smith up side down as well.  Smith's social wealth theory was based on social control over wealth and labor, i.e. social means of production, against monopoly wealth, against the Feudal totalitarian state and its MERCANTILISM, which produced class deformed markets.   The failure of the Social Enlightenment to create a social agency, social middle classes around the world, made independent, indivisible, inclusive, not exclusive, based on social patriotism, not class patriotism allowed the mercenary, class hierarchies and its generic Patriarchal class mechanism to continue to enslave Humanity, women and minorities, especially.   Had the Social Enlightenment followed through its social agenda for social control of wealth and labor through independent middle classes, it would have replicated the social, historical class mechanism, social control of the Social Matriarchy, this time not as primitive communism, but as social classes in harmony with Nature itself, producing social priorities, but always in harmony with the LAW OF NATURE, social symmetry, economic balance, inclusive, universal, international as the Social Enlightenment's social principles were, and later all socialist movements, not co opted, corrupted, by class shills, class opportunists.


This then must be the social agenda of the Arab revolution, of the Occupy movement throughout the world, rejecting all class parties, all class politicians for social parties, social agendas that make it their goal to create a global social agency of independent, indivisible middle layers in harmony with Nature itself, free from class deforming hierarchies, class deformed markets, enslaving, parasitical class systems by creating the social principle of MORE THAN THE SUM OF ITS PARTS, not the rigged class systems, ZERO SUM GAME, which has degenerated all class parties, democrats and Obama into fascists themselves.   These class politicians in Congress, in the judicial branch and executive have all become totalitarians, by embracing Fascism and calling it Free markets, Freedom.   This class myth must be de constructed at every turn, to move humanity out of its enslavement from class systems, still with us throughout milleniums.   CLASS STATES ARE ALL FAILURES, CLASS HISTORY, TOO, and permanent War is a degenerating function of class Empires that degenerated from crippled class republics.  We must stop this drift to global Fascism, Fascist capitalism and Permanent military fascism.  We must dismantle class Emires, class hierarchies and its Patriarchal class mechanism to change the Patriarchal story, HIS STORY/HISTORY into a completely new, reclaimed version of the social Matriarchy and Social Enlightenment.....SOCIAL HISTORY, WITH OUR SOCIAL HUMAN NATURE:


Fear Not the Apathy


http://www.opednews.com/articles/Fear-Not-the-Apathy-by-David-Glenn-Cox-120623-915.html


excerpt:


"It is interesting to down right frightening to look at the state of
American politics in this election year of our lord. We have two, count
em, two wholly lackluster Presidential candidates both running in an
epic spectacle of absurdities.
Our reformer has ignored us and laughed
at us and he thinks we don't know, but we do. I was reading a story
about Obama's drone missile program and the very first reader comment
asked, "Police state much?"

There is a vibe, a feeling, reflected in the lens of my own life; you
don't care so much about what you don't own. The American people get it
and respond accordingly, as someone who doesn't own nor has any stake in
the electoral process. Suddenly, Obama has become the Jon Lovitz'
character who can't say no, "Gay marriage? Yeah, I'm for that, I was
always for that! Immigration reform? Sure, we need immigration reform,
yes; I'm in favor of that!" The candidate assumes we own neither
calendar nor sense enough to smell election year stunting from a
president who's spent the bulk of the last three years keeping most of
John McCain's campaign promises.

On the other side we have Willard (Mitt) Romney, a campaign that should
carry as its slogan, "No really, were serious." A cocktail party on the
Fiesta deck of the Titanic. We've seen the trade offs to extend Bush tax
cuts and jobs bills which was sixty percent tax breaks. What's more,
the American people see this economy and in this economy they see two
candidates promising them only more of the same or worse. There are two
kinds of people in this economy, those who have lost their jobs and
those who haven't lost their jobs yet.

In Willard (Mitt) Romney we have the personification of all American
evil. In an era of economic struggle the Republicans choose to nominate
T.J. Money bags, the man off the monopoly box. A campaign dynamic
operating under the premise everything is Obama's fault, we'd rather go
back to doing it the way that caused the problem. It's the vision thing;
Romney has no vision because he only sees the America visible from the
veranda of the country club. A banker, a bully, a child of the super
rich, a draft dodger and elite educrat promising the American people
nothing but a smile.

Romney is possibly the worst presidential candidate since Thomas Dewey
and Dewey almost won. Dewy also had an uncomfortable look about him and a
disconnected manner which could turn people off, so much so, that Dewey
had as much to do with losing the Presidency as Truman did in winning
it. Dewy was a cold fish as is our Willard, Dewy was an empty suit as is
Willard. Only times have changed in America, the same tired old
platitudes have a grinding irritation to them now.
And after three years
of economic hard times with no sign of relief on the horizon puts an
even a finer point on it. There's just nothing here get excited about
unless your primary interest in life is Bibles, bullets, babies or
bumping uglies.

With Barack Obama we've been through the wash cycle once, we know when
Obama says create jobs he means more corporate tax cuts. In Ronald
Reagan's first administration they pushed through eight different tax
cuts while the Obama administration has pushed for twenty two. Obama is a
corporate Fascist, a corporate whore. His reelection for a second term
will prompt an immediate sharp right turn and this time when his
administration says "Fuck the UAW" they'll mean it..."


 


REJECT ALL EMPTY SUITS, ALL CORPORATE WHORES, CORPORATE FASCISTS, ALL CLASS POLITICIANS AND FORM INTERNATIONAL, GLOBAL MIDDLE CLASSES THAT BECOME INDEPENDENT, INDIVISIBLE, ONCE CLASS HIERARCHIES AND ITS PATRIARCHAL CLASS MECHANISM IS DISSOLVED, NEGATED BY THIS SOCIAL AGENCY.

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