ARE YOU SEEING WHAT I’M SEEING?

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Posted on 17th September 2012 by Administrator in Economy |Politics |Social Issues

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Is it just me, or are the signs of consumer collapse as clear as a Lowes parking lot on a Saturday afternoon? Sometimes I wonder if I’m just seeing the world through my pessimistic lens, skewing my point of view. My daily commute through West Philadelphia is not very enlightening, as the squalor, filth and lack of legal commerce remain consistent from year to year. This community is sustained by taxpayer subsidized low income housing, taxpayer subsidized food stamps, welfare payments, and illegal drug dealing. The dependency attitude, lifestyles of slothfulness and total lack of commerce has remained constant for decades in West Philly. It is on the weekends, cruising around a once thriving suburbia, where you perceive the persistent deterioration and decay of our debt fixated consumer spending based society.

The last two weekends I’ve needed to travel the highways of Montgomery County, PA going to a family party and purchasing a garbage disposal for my sink at my local Lowes store. Montgomery County is the typical white upper middle class suburb, with tracts of McMansions dotting the landscape. The population of 800,000 is spread over a 500 square mile area. Over 81% of the population is white, with the 9% black population confined to the urban enclaves of Norristown and Pottstown.

The median age is 38 and the median household income is $75,000, 50% above the national average. The employers are well diversified with an even distribution between education, health care, manufacturing, retail, professional services, finance and real estate. The median home price is $300,000, also 50% above the national average. The county leans Democrat, with Obama winning 60% of the vote in 2008. The 300,000 households were occupied by college educated white collar professionals. From a strictly demographic standpoint, Montgomery County appears to be a prosperous flourishing community where the residents are living lives of relative affluence. But, if you look closer and connect the dots, you see fissures in this façade of affluence that spread more expansively by the day. The cheap oil based, automobile dependent, mall centric, suburban sprawl, sanctuary of consumerism lifestyle is showing distinct signs of erosion. The clues are there for all to see and portend a bleak future for those mentally trapped in the delusions of a debt dependent suburban oasis of retail outlets, chain restaurants, office parks and enclaves of cookie cutter McMansions. An unsustainable paradigm can’t be sustained.

The first weekend had me driving along Ridge Pike, from Collegeville to Pottstown. Ridge Pike is a meandering two lane road that extends from Philadelphia, winds through Conshohocken, Plymouth Meeting, Norristown, past Ursinus College in Collegeville, to the farthest reaches of Montgomery County, at least 50 miles in length. It served as a main artery prior to the introduction of the interstates and superhighways that now connect the larger cities in eastern PA. Except for morning and evening rush hours, this road is fairly sedate. Like many primary routes in suburbia, the landscape is engulfed by strip malls, gas stations, automobile dealerships, office buildings, fast food joints, once thriving manufacturing facilities sitting vacant and older homes that preceded the proliferation of cookie cutter communities that now dominate what was once farmland.

Telltale Signs

 

 

I should probably be keeping my eyes on the road, but I can’t help but notice the telltale signs of an economic system gone haywire. As you drive along, the number of For Sale signs in front of homes stands out. When you consider how bad the housing market has been, the 40% decline in national home prices since 2007, the 30% of home dwellers underwater on their mortgage, and declining household income, you realize how desperate a home seller must be to try and unload a home in this market. The reality of the number of For Sale signs does not match the rhetoric coming from the NAR, government mouthpieces, CNBC pundits, and other housing recovery shills about record low inventory and home price increases.

The Federal Reserve/Wall Street/U.S. Treasury charade of foreclosure delaying tactics and selling thousands of properties in bulk to their crony capitalist buddies at a discount is designed to misinform the public. My local paper lists foreclosures in the community every Monday morning. In 2009 it would extend for four full pages. Today, it still extends four full pages. The fact that Wall Street bankers have criminally forged mortgage documents, people are living in houses for two years without making mortgage payments, and the Federal Government backing 97% of all mortgages while encouraging 3.5% down financing does not constitute a true housing recovery. Show me the housing recovery in these charts.

Existing home sales are at 1998 levels, with 45 million more people living in the country today.

New single family homes under construction are below levels in 1969, when there were 112 million less people in the country.

Another observation that can be made as you cruise through this suburban mecca of malaise is the overall decay of the infrastructure, appearances and disinterest or inability to maintain properties. The roadways are potholed with fading traffic lines, utility poles leaning and rotting, and signage corroding and antiquated. Houses are missing roof tiles, siding is cracked, gutters astray, porches sagging, windows cracked, a paint brush hasn’t been utilized in decades, and yards are inundated with debris and weeds. Not every house looks this way, but far more than you would think when viewing the overall demographics for Montgomery County. You wonder how many number among the 10 million vacant houses in the country today. The number of dilapidated run down properties paints a picture of the silent, barely perceptible Depression that grips the country today. With such little sense of community in the suburbs, most people don’t even know their neighbors. With the electronic transfer of food stamps, unemployment compensation, and other welfare benefits you would never know that your neighbor is unemployed and hasn’t made the mortgage payment on his house in 30 months. The corporate fascist ruling plutocracy uses their propaganda mouthpieces in the mainstream corporate media and government agency drones to misinform and obscure the truth, but the data and anecdotal observational evidence reveal the true nature of our societal implosion.

A report by the Census Bureau this past week inadvertently reveals data that confirms my observations on the roadways of my suburban existence. Annual household income fell in 2011 for the fourth straight year, to an inflation-adjusted $50,054. The median income — meaning half earned more, half less — now stands 8.9% lower than the all-time peak of $54,932 in 1999. It is far worse than even that dreadful result. Real median household income is lower than it was in 1989. When you understand that real household income hasn’t risen in 23 years, you can connect the dots with the decay and deterioration of properties in suburbia. A vast swath of Americans cannot afford to maintain their residences. If the choice is feeding your kids and keeping the heat on versus repairing the porch, replacing the windows or getting a new roof, the only option is survival.

US GDP vs. Median Household Income

All races have seen their income fall, with educational achievement reflected in the much higher incomes of Whites and Asians. It is interesting to note that after a 45 year War on Poverty the median household income for black families is only up 19% since 1968.

real household income

Now for the really bad news. Any critical thinking person should realize the Federal Government has been systematically under-reporting inflation since the early 1980’s in an effort to obscure the fact they are debasing the currency and methodically destroying the lives of middle class Americans. If inflation was calculated exactly as it was in 1980, the GDP figures would be substantially lower and inflation would be reported 5% higher than it is today. Faking the numbers does not change reality, only the perception of reality. Calculating real median household income with the true level of inflation exposes the true picture for middle class America. Real median household income is lower than it was in 1970, just prior to Nixon closing the gold window and unleashing the full fury of a Federal Reserve able to print fiat currency and politicians to promise the earth, moon and the sun to voters. With incomes not rising over the last four decades is it any wonder many of our 115 million households slowly rot and decay from within like an old diseased oak tree. The slightest gust of wind can lead to disaster.

Eliminating the last remnants of fiscal discipline on bankers and politicians in 1971 accomplished the desired result of enriching the top 0.1% while leaving the bottom 90% in debt and desolation. The Wall Street debt peddlers, Military Industrial arms dealers, and job destroying corporate goliaths have reaped the benefits of financialization (money printing) while shoveling the costs, their gambling losses, trillions of consumer debt, and relentless inflation upon the working tax paying middle class. The creation of the Federal Reserve and implementation of the individual income tax in 1913, along with leaving the gold standard has rewarded the cabal of private banking interests who have captured our economic and political systems with obscene levels of wealth, while senior citizens are left with no interest earnings ($400 billion per year has been absconded from savers and doled out to bankers since 2008 by Ben Bernanke) and the middle class has gone decades seeing their earnings stagnate and their purchasing power fall precipitously.

 

The facts exposed in the chart above didn’t happen by accident. The system has been rigged by those in power to enrich them, while impoverishing the masses. When you gain control over the issuance of currency, issuance of debt, tax system, political system and legal apparatus, you’ve essentially hijacked the country and can funnel all the benefits to yourself and costs to the math challenged, government educated, brainwashed dupes, known as the masses. But there is a problem for the 0.1%. Their sociopathic personalities never allow them to stop plundering and preying upon the sheep. They have left nothing but carcasses of the once proud hard working middle class across the country side. There are only so many Lear jets, estates in the Hamptons, Jaguars, and Rolexes the 0.1% can buy. There are only 152,000 of them. Their sociopathic looting and pillaging of the national wealth has destroyed the host. When 90% of the population can barely subsist, collapse and revolution beckon.

Extend, Pretend & Depend

As I drove further along Ridge Pike we passed the endless monuments to our spiral into the depths of materialism, consumerism, and the illusion that goods purchased on credit represented true wealth. Mile after mile of strip malls, restaurants, gas stations, and office buildings rolled by my window. Anyone who lives in the suburbs knows what I’m talking about. You can’t travel three miles in any direction without passing a Dunkin Donuts, KFC, McDonalds, Subway, 7-11, Dairy Queen, Supercuts, Jiffy Lube or Exxon Station. The proliferation of office parks to accommodate the millions of paper pushers that make our service economy hum has been unprecedented in human history. Never have so many done so little in so many places. Everyone knows what a standard American strip mall consists of – a pizza place, a Chinese takeout, beer store, a tanning, salon, a weight loss center, a nail salon, a Curves, karate studio, Gamestop, Radioshack, Dollar Store, H&R Block, and a debt counseling service. They are a reflection of who we’ve become – an obese drunken species with excessive narcissistic tendencies that prefers to play video games while texting on our iGadgets as our debt financed lifestyles ultimately require professional financial assistance.

What you can’t ignore today is the number of vacant storefronts in these strip malls and the overwhelming number of SPACE AVAILABLE, FOR LEASE, and FOR RENT signs that proliferate in front of these dying testaments to an unsustainable economic system based upon debt fueled consumer spending and infinite growth assumptions. The booming sign manufacturer is surely based in China. The officially reported national vacancy rates of 11% are already at record highs, but anyone with two eyes knows these self-reported numbers are a fraud. Vacancy rates based on my observations are closer to 30%. This is part of the extend and pretend strategy that has been implemented by Ben Bernanke, Tim Geithner, the FASB, and the Wall Street banking cabal. The fraud and false storyline of a commercial real estate recovery is evident to anyone willing to think critically. The incriminating data is provided by the Federal Reserve in their Quarterly Delinquency Report.

The last commercial real estate crisis occurred in 1991. Mall vacancy rates were at levels consistent with today.

The current reported office vacancy rates of 17.5% are only slightly below the 19% levels of 1991.

As reported by the Federal Reserve, delinquency rates on commercial real estate loans in 1991 were 12%, leading to major losses among the banks that made those imprudent loans. Amazingly, after the greatest financial collapse in history, delinquency rates on commercial loans supposedly peaked at 8.8% in the 2nd quarter of 2010 and have now miraculously plummeted to pre-collapse levels of 4.9%. This is while residential loan delinquencies have resumed their upward trajectory, the number of employed Americans has fallen by 414,000 in the last two months, 9 million Americans have left the labor force since 2008, and vacancy rates are at or near all-time highs. This doesn’t pass the smell test. The Federal Reserve, owned and controlled by the Wall Street, instructed these banks to extend all commercial real estate loans, pretend they will be paid, and value them on their books at 100% of the original loan amount. Real estate developers pretend they are collecting rent from non-existent tenants, Wall Street banks pretend they are being paid by the developers, and their highly compensated public accounting firm pretends the loans aren’t really delinquent. Again, the purpose of this scam is to shield the Wall Street bankers from accepting the losses from their reckless behavior. Ben rewards them with risk free income on their deposits, propped up by mark to fantasy accounting, while they reward themselves with billions in bonuses for a job well done. The master plan requires an eventual real recovery that isn’t going to happen. Press releases and fake data do not change the reality on the ground.

I have two strip malls within three miles of my house that opened in 1990. When I moved to the area in 1995, they were 100% occupied and a vital part of the community. The closest center has since lost its Genuardi grocery store, Sears Hardware, Blockbuster, Donatos, Sears Optical, Hollywood Tans, hair salon, pizza pub and a local book store. It is essentially a ghost mall, with two banks, a couple chain restaurants and empty parking spaces. The other strip mall lost its grocery store anchor and sporting goods store. This has happened in an outwardly prosperous community. The reality is the apparent prosperity is a sham. The entire tottering edifice of housing, autos, and retail has been sustained by ever increasing levels of debt for the last thirty years and the American consumer has hit the wall. From 1950 through the early 1980s, when the working middle class saw their standard of living rise, personal consumption expenditures accounted for between 60% and 65% of GDP. Over the last thirty years consumption has relentlessly grown as a percentage of GDP to its current level of 71%, higher than before the 2008 collapse.

If the consumption had been driven by wage increases, then this trend would not have been a problem. But, we already know real median household income is lower than it was in 1970. The thirty years of delusion were financed with debt – peddled, hawked, marketed, and pushed by the drug dealers on Wall Street. The American people got hooked on debt and still have not kicked the habit. The decline in household debt since 2008 is solely due to the Wall Street banks writing off $800 billion of mortgage, credit card, and auto loan debt and transferring the cost to the already drowning American taxpayer.

The powers that be are desperately attempting to keep this unsustainable, dysfunctional debt choked scheme from disintegrating by doling out more subprime auto debt, subprime student loan debt, low down payment mortgages, and good old credit card debt. It won’t work. The consumer is tapped out. Last week’s horrific retail sales report for August confirmed this fact. Declining household income and rising costs for energy, food, clothing, tuition, taxes, health insurance, and the other things needed to survive in the real world, have broken the spirit of Middle America. The protracted implosion of our consumer society has only just begun. There are thousands of retail outlets to be closed, hundreds of thousands of jobs to be eliminated, thousands of malls to be demolished, and billions of loan losses to be incurred by the criminal Wall Street banks.

The Faces of Failure & Futility

My fourteen years working in key positions for big box retailer IKEA has made me particularly observant of the hubris and foolishness of the big chain stores that dominate the retail landscape.  There are 1.1 million retail establishments in the United States, but the top 25 mega-store national chains account for 25% of all the retail sales in the country. The top 100 retailers operate 243,000 stores and account for approximately $1.6 trillion in sales, or 36% of all the retail sales in the country. Their misconceived strategic plans assumed 5% same store growth for eternity, economic growth of 3% per year for eternity, a rising market share, and ignorance of the possible plans of their competitors. They believed they could saturate a market without over cannibalizing their existing stores. Wal-Mart, Target, Best Buy, Home Depot and Lowes have all hit the limits of profitable expansion. Each incremental store in a market results in lower profits.

My trip to my local Lowes last weekend gave me a glimpse into a future of failure and futility. Until 2009, I had four choices of Lowes within 15 miles of my house. There was a store 8 miles east, 12 miles west, 15 miles north, and 15 miles south of my house. In an act of supreme hubris, Lowes opened a store smack in the middle of these four stores, four miles from my house. The Hatfield store opened in early 2009 and I wrote an article detailing how Lowes was about to ruin their profitability in Montgomery County. It just so happens that I meet a couple of my old real estate buddies from IKEA at a local pub every few months. In 2009 one of them had a real estate position with Lowes and we had a spirited discussion about the prospects for the Lowes Hatfield store. He assured me it would be a huge success. I insisted it would be a dud and would crush the profitability of the market by cannibalizing the other four stores. We met at that same pub a few months ago. Lowes had laid him off and he admitted to me the Hatfield store was a disaster.

I pulled into the Lowes parking lot at 11:30 am on a Saturday. Big Box retailers do 50% of their business on the weekend. The busiest time frame is from 11:00 am to 2:00 pm on Saturday. Big box retailers build enough parking spots to handle this peak period. The 120,000 square feet Hatfield Lowes has approximately 1,000 parking spaces. I pulled into the spot closest to the entrance during their supposed peak period. There were about 70 cars in the parking lot, with most probably owned by Lowes workers. It is a pleasure to shop in this store, with wide open aisles, and an employee to customer ratio of four to one. The store has 14 checkout lanes and at peak period on a Saturday, there was ONE checkout lane open, with no lines. This is a corporate profit disaster in the making, but the human tragedy far overrides the declining profits of this mega-retailer.

As you walk around this museum of tools and toilets you notice the looks on the faces of the workers. These aren’t the tattooed, face pierced freaks you find in many retail establishments these days. They are my neighbors. They are the beaten down middle class. They are the middle aged professionals who got cast aside by the mega-corporations in the name of efficiency, outsourcing, right sizing, stock buybacks, and executive stock options. The irony of this situation is lost on those who have gutted the American middle class. When you look into the eyes of these people, you see sadness, confusion and embarrassment. They know they can do more. They want to do more. They know they’ve been screwed, but they aren’t sure who to blame. They were once the very customers propelling Lowes’ growth, buying new kitchens, appliances, and power tools. Now they can’t afford a can of paint on their $10 per hour, no benefit retail careers. As depressing as this portrait appears, it is about to get worse.

This Lowes will be shut down and boarded up within the next two years. The parking lot will become a weed infested eyesore occupied by 14 year old skateboarders. One hundred and fifty already down on their luck neighbors will lose their jobs, the township will have a gaping hole in their tax revenue, and the CEO of Lowes will receive a $50 million bonus for his foresight in announcing the closing of 100 stores that he had opened five years before. This exact scenario will play out across suburbia, as our unsustainable system comes undone. Our future path will parallel the course of the labor participation rate. Just as the 9 million Americans who have “left” the labor force since 2008 did not willfully make that choice, the debt burdened American consumer will be dragged kicking and screaming into the new reality of a dramatically reduced standard of living.

Connecting the dots between my anecdotal observations of suburbia and a critical review of the true non-manipulated data bestows me with a not optimistic outlook for the coming decade. Is what I’m seeing just the view of a pessimist, or are you seeing the same thing?

A few powerful men have hijacked our economic, financial and political structure. They aren’t socialists or capitalists. They’re criminals. They created the culture of materialism, greed and debt, sustained by prodigious levels of media propaganda. Our culture has been led to believe that debt financed consumption over morality and justice is the path to success. In reality, we’ve condemned ourselves to a slow painful death spiral of debasement and despair.

“A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, and fails to understand that the measure of a civilization is its compassion, not its speed or ability to consume, condemns itself to death.” – Chris Hedges

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SUBPRIME AUTO NATION

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Posted on 7th September 2012 by Administrator in Economy |Politics |Social Issues

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Have you heard the news? Auto sales are booming. Total sales for the month of August were 1,285,202 vehicles, according to Autodata Corp, the highest monthly sales figure for any August since 2007, when 1.47 million autos were sold in the United States. Year to date auto sales have totaled 9.7 million and are on track to reach 14.5 million. Between 2006 and 2007, auto sales ranged between 16 million and 18 million. They crashed below 10 million in 2009. The Keynesians running our government have pulled out all the stops to restart this engine of consumer spending. First they wasted $3 billion of taxpayer funds on the Cash for Clunkers debacle. Almost 700,000 perfectly good cars were destroyed in order to keep union workers happy.  This Keynesian brain fart distorted the used car market for two years, raising prices for cars needed by the working poor. After that miserable failure, they realized the true secret to selling vehicles is to give them away to anyone that can scratch an X on a loan document, with 0% interest for 60 months, financed by Federal government controlled banking interests. Add in some massive channel stuffing and presto!!! – You’ve got an auto sales boom.

General Motors sales are up 3.7% over 2011. Ford Motors sales are up 6% over 2011. The Obama administration continues to tout their saving of the U.S. auto industry with their bailout in 2009 that saved unions and screwed bondholders. If this strong auto recovery is not an illusion, how do you explain the two charts below? General Motors stock is down 42% since 2011. The highly proclaimed success story called Ford Motors has seen their stock collapse by 50% since 2011. This is surely a sign of tremendous success and anticipation of soaring profits for these bastions of American manufacturing dominance.

Chart forGeneral Motors Company (GM)

Chart forFord Motor Co. (F)

This is America, land of the delusional and home of the vain. The appearance of success is more important than actual success. The corporate mainstream media dutifully reports the surge in auto sales is surely a sign the economy is recovering and the consumer has finished deleveraging and is ready to spend again. The government propaganda machine proclaims the surging auto sales are due to their wise and forward thinking policies (like the Chevy Volt). Luckily for them, there are millions of gullible Americans who believe the storyline and are easily convinced that driving a $30,000 new car, financed over seven years, makes them a success. The decades of Bernaysian marketing propaganda has worked its magic on the government educated, math challenged citizenry. There are only two things that matter to the non-thinking auto buyer (renter) - the monthly payment and what the next door neighbor and his coworkers will think. Buying a fuel efficient car they can afford, paying it off in three or four years, and driving it for ten years, while saving the monthly car payment, is what a practical, rational thinking person would do. The fact that only 20% of the 9.7 million vehicles sold this year have been small cars and the average sales price of new cars sold is now $31,000 proves Americans are still living in a delusional fantasyland of cheap gas and monthly payments for eternity.

As gas prices surpass $4 per gallon across the country, somehow 4.7 million of the 9.7 million vehicles sold in 2012 have been pickups, vans, crossovers or SUVs. Three of the top eight selling vehicles are pickups. Luxury vehicle sales are booming, with Mercedes, BMW, Porsche, Land Rover and Audi showing double digit percentage sales gains over 2011. We’ve entered a recession, gas prices are approaching all-time highs, job growth is pitiful, and Americans continue to buy luxury gas guzzlers on credit. This will surely end well.

The average payment on a new car in 2012 is $461. For used cars, the average monthly payment is $346. Today, 77% of new car purchases are financed. About half of all used vehicles involve financing. Of those cars financed, 89% are through a loan vs. 11% with a lease. A critical thinking person might wonder how a country with 4 million less employed people than we had in 2007, median household net worth down 35%, and real wages lower than they were in 2007, could be experiencing an auto boom. The answer is a government/corporate/banker/media effort to funnel taxpayer funds to deadbeats across the land in a fruitless attempt to create a facade of recovery. Our governing elite are convinced that more debt peddled to the masses is the path to recovery for an economy that imploded due to excessive debt peddled to the masses in the first place. Essentially, it comes down to who benefits from the peddling of debt. It isn’t the masses, as they become enslaved in the chains of debt and monthly payments in perpetuity. Debt peddling benefits Wall Street bankers, politicians, and mega-corporations selling crap to the masses.

The storyline being sold to the vegetative dupes (watching Honey Boo Boo) that occupy space in this delusional paradise we call America, by the corporate media, is that consumers have deleveraged and are ready to resume their “normal” pattern of spending money they don’t have on stuff they don’t need. Of course, the facts always seem to get in the way of a good yarn. Consumers have never deleveraged. Consumer credit outstanding is at an all-time high of $2.58 trillion. The decline from $2.55 trillion in 2008 to $2.4 trillion in 2010 was NOT deleveraging. It was the Wall Street Too Big To Fail banks taking a big dump on the American taxpayers. They passed their bad debts to you through TARP, the Federal Reserve buying their toxic “assets”, and ZIRP. 

Revolving credit (credit card) debt peaked at just above $1 trillion in 2008 and “declined” to $850 billion during 2010.  The media storyline is that you buckled down and paid off your credit cards, therefore depressing consumer spending and creating a recession. Sounds convincing except for the fact that it’s a load of bullshit. The Federal Reserve’s own data proves it to be false. Your friendly Wall Street banks have written off $213 billion of credit card debt since 2008 and passed the bill to the few remaining taxpayers in this country. For the math challenged, this means that consumers have actually INCREASED their credit card debt by $68 billion since 2008. The bad news for our Chinese crap peddling mega-retailers is that the significantly poorer average middle class American household is using their credit cards to pay their property tax bills, IRS bills, and utility bills in order to survive.  

Credit Card Charge-off in Dollars 2005 – 2011 — Not Seasonally Adjusted:

Year Dollar Amount
2011 $46,017,459,671
2010 $75,090,106,350
2009 $83,179,901,000
2008 $53,506,353,600
2007 $38,149,440,000
2006 $32,111,934,400
2005 $40,634,994,400
Year & Quarter Dollar Amount
2012Q1 $8,772,385,443

 

The category of debt that barely budged in the 2009 collapse was non-revolving credit. It stayed in the $1.5 trillion range in 2009 and has since surged to over $1.7 trillion in 2012. What could possibly have made this debt skyrocket by $200 billion when the GDP has only grown by 12% over the same time frame? You guessed it – your corporate fascist friends in Washington DC and on Wall Street. Non-revolving debt consists of auto loan debt of $663 billion and student loan debt of approximately $1 trillion. Student loan debt has shot up by $300 billion since 2008. This student loan debt is being distributed, like candy by a pedophile, from the Federal government in an effort to artificially hold down the unemployment rate.

Approximately $500 billion of the student loan debt is held directly by the Federal government, up from $100 billion in 2008. The Feds guarantee the majority of the remaining student loan debt. Can you think of a more subprime borrower than a 40 year old former construction worker getting a liberal arts degree from the University of Phoenix, sitting at his computer in his underwear scratching his balls, and paying with a $10,000 Federal student loan from you? This fraudulent attempt to obscure the true employment situation will end in tears for the borrowers and the American taxpayer. It’s tough to make a loan payment without a job. The student loan bailout is just over the horizon and will cost you at least $300 billion. Delinquencies are already off the charts.

        

When has offering low interest debt in ample portions to people without jobs, income or assets ever backfired before? The bankers and politicians that control this country seem to be a one-trick pony. They will never admit that debt is the problem and reducing it the solution. The real solution would make them poorer, so their solution is to pour gasoline on the fire with more debt at lower interest rates to more people. The addict will keep injecting more poison into their system until sudden death. The bankers and politicians know we are a car-centric society and appeal to our vanity and poor math skills to keep the game going.     

During the first quarter of this year, total U.S. car loans totaled $52.5 billion. That’s 49% higher than the same period in 2009. Also during the first quarter, the average amount financed on new vehicles rose by $589, to $25,995, and for used cars by $411, to $17,050. Furthermore, buyers are stretching out payments for longer terms: The average length of new- and used-vehicle loans jumped a full month during the first three months of this year, to 64 and 59 months, respectively. The surge in auto sales is being completely driven by doling out more loans for a longer time frame to deadbeat borrowers. Subprime auto loans now make up 45% of all car loans and the vast majority of all used car loans.  They have even created a category called Deep Subprime. Borrowers classified as “deep subprime” (i.e. those with Vantage scores below 600) account for 10.7% of auto loans. You can also classify them as loans that will never be repaid.

 

Two thirds of all car sales are for used cars, so the fact that 37% of all new cars are being sold to subprime borrowers is exacerbated by the ridiculous lending practices for used cars. The fine folks at Zero Hedge have provided the outrageous data and a chart that proves beyond a shadow of a doubt what awaits the American taxpayer – another bailout. Zero Hedge has already revealed the GM fake recovery by detailing their channel stuffing over the last two years. Now they’ve dug up more dirt on why car sales are surging. What could possibly go wrong providing loans for more than the value of the asset to people with a history of not paying their debts?

  • Subprime borrowers received 56.46% of loans on used cars in the quarter, up from 52.70% a year earlier.
  • The average loan-to-value on new cars was 109.55%
  • The average used car loan-to-value ratio rose to 126.62%
  • 77% of Subprime Auto Loans are for a period greater than five years

It’s amazing how many cars you can sell when you aren’t worried about getting paid. This is the beauty of a fiat currency, a printing press, and a taxpayer available to pick up the tab after the drunken party gets out of hand. The chart below provides the details of our superhighway to disaster. The percentage of used car loans to prime borrowers is now at an all-time low, while the percentage of loans to subprime borrowers is near all-time highs reached just prior to the 2008 crash. When lenders cared about being paid back in the early 2000′s, they rarely made loans longer than five years. Today, more than 77% of all subprime used car loans are longer than five years and average FICO scores are now well below 600. Just to clarify – if your FICO score is below 600 – YOU ARE A DEADBEAT.

When you start to connect the dots, things that didn’t seem to make sense begin to crystallize. This is all part of the master plan concocted by Bernanke, Geithner, Obama and the Wall Street Shysters. The auto section of my local paper now makes sense. Offers of 7 year financing at 0% interest and monthly lease offers of $150 to $200 for brand new cars now are understandable. The newer model BMWs, Cadillac Escalades, Volvos, and Jaguars I see parked in front of the low income luxury gated townhome community in West Philadelphia now makes sense. A pizza delivery guy driving a new Lexus is now explainable.   

The master plan is fairly simple. The Federal Reserve lends money to the Wall Street banks for 0% interest. These banks then turn around and provide credit card debt at 13% interest, new & used car loans to prime borrowers at 5% interest, and new & used car loans to subprime borrowers at 16%. When you can borrow for free, you can take a chance that a significant number of your borrowers will default. Essentially, Ben Bernanke is screwing the prudent savers and senior citizens by paying them 0.15% on their savings in order to subsidize the bankers that destroyed the country so they can make auto loans to the same people who took out the zero percent down interest only no doc mortgage loans in 2005. In addition, Wall Street knows the Bernanke Put is still in place. If and when these subprime loans explode in their faces again, Bennie, Timmy and Obamaney will come to the rescue with your tax dollars. Its heads you lose, tails you lose, again.    

 The chart below is like a who’s who of TARP recipients. The top 20 auto lenders control half the market. And look at the leader of the pack. Our friends at Ally Bank are the market share leader. You remember Ally Bank – they conveniently changed their name from GMAC (also known as Ditech – biggest subprime mortgage lender) after losing billions and being bailed out by you. They still owe you $11 billion and are 85% owned by the U.S. Treasury. No conflict of interest there. You have the biggest auto lender on earth controlled by the Obama administration. Do you think they have an incentive to make as many loans as humanly possible to help Obama create the illusion of an auto recovery? The only downside is for the American taxpayer when we have to eat billions more in Ally/GMAC losses. This insolvent excuse for a lending institution has been extremely aggressive in the subprime auto lending market and has forced the other wannabes – Wells Fargo, JP Morgan, Capital One and Bank of America – to lower their lending standards. Does this scenario ring a bell? 

top_20_car_lenders_market_share

We’ve become a subprime auto nation, addicted to easy debt, living lives of hope, delusion and minimum monthly payments. Storylines about economic recovery, fraudulent government statistics showing lower unemployment, feel good propaganda from the corporate mainstream media, and a return to easy money debt fueled spending does not constitute a real recovery. Until the bad debt is purged from the system and saving takes precedence over spending, the country will stagger and ultimately fall under the weight of its immense debt. We are lost in a blizzard of lies. This subprime fueled engine of recovery will propel the country into the same canyon of reality we entered in 2008. The crack up boom approaches.

 

survival seed vault

 

URBAN RIOTS SCENARIO

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Posted on 7th September 2012 by Yojimbo in Economy

Bracken: When The Music Stops – How America’s Cities May Explode In Violence

 

Illustration: Bracken’s CW2 Cube; click to enlarge

From Matt Bracken:

In response to recent articles in mainstream military journals discussing the use of the U.S. Army to quell insurrections on American soil, I offer an alternate vision of the future. Instead of a small town in the South as the flash point, picture instead a score of U.S. cities in the thrall of riots greater than those experienced in Los Angeles in 1965 (Watts), multiple cities in 1968 (MLK assassination), and Los Angeles again in 1992 (Rodney King). New Yorkers can imagine the 1977 blackout looting or the 1991 Crown Heights disturbance. In fact, the proximate spark of the next round of major riots in America could be any from a long list cribbed from our history.

We have seen them all before, and we shall see them all again as history rhymes along regardless of the century or the generation of humankind nominally in control of events. But the next time we are visited by widespread, large-scale urban riots, a dangerous new escalation may be triggered by a new vulnerability: It’s estimated that the average American home has less than two weeks of food on hand. In poor minority areas, it may be much less. What if a cascading economic crisis, even a temporary one, leads to millions of EBT (electronic benefit transfer) cards flashing nothing but zeroes? Or if the government’s refusal to reimburse them causes supermarket chains to stop accepting them for payment? The government can order the supermarkets to honor the cards, but history’s verdict is clear: If suppliers are paid only with worthless scrip or blinking digits, the food will stop.

STEP ONE: FLASH MOB LOOTING

In my scenario, the initial riots begin spontaneously across affected urban areas, as SNAP (supplemental nutrition assistance program) and other government welfare recipients learn that their EBT cards no longer function. This sudden revelation will cause widespread anger, which will quickly lead to the flash-mob looting of local supermarkets and other businesses. The media will initially portray these “food riots” as at least partly justifiable. Sadly, millions of Americans have been made largely, or even entirely, dependent on government wealth transfer payments to put food on their tables.

A new social contract has been created, where bread and circuses buy a measure of peace in our minority-populated urban zones. In the era of ubiquitous big-screen cable television, the internet and smart phones, the circus part of the equation is never in doubt as long as the electricity flows. But the bread is highly problematic. Food must be delivered the old-fashioned way: physically. Any disruption in the normal functioning of the EBT system will lead to food riots with a speed that is astonishing. This will inevitably happen when our unsustainable, debt-fueled binge party finally stops, and the music is over. Now that the delivery of free or heavily subsidized food is perceived by tens of millions of Americans to be a basic human right, the cutoff of “their” food money will cause an immediate explosion of rage. When the hunger begins to bite, supermarkets, shops and restaurants will be looted, and initially the media will not condemn the looting. Unfortunately, this initial violence will only be the start of a dangerous escalation.

The ransacked supermarkets, convenience stores, ATMs and gas stations will not be restocked during this period due to the precarious security situation. A single truck loaded with food or gasoline would be perceived to be a Fort Knox on wheels and subject to immediate attack unless heavily protected by powerfully armed security forces, but such forces will not be available during this chaotic period. Under those conditions, resupply to the urban areas cannot and will not take place. The downward spiral of social and economic dysfunction will therefore both accelerate and spread from city to city. These delays, in turn, will lead to more riots with the constant underlying demand that hungry people be fed, one way or another.

Catch-22, anyone? When these demands do not bring the desired outcome, the participants will ratchet up the violence, hoping to force action by the feckless state and national governments.

The “food riots” will be a grass-roots movement of the moment born out of hunger and desperation. It will not be dependent upon leaders or an underlying organization, although they could certainly add to the sauce. Existing cell phone technology provides all the organization a flash mob needs. Most of the mobs will consist of minority urban youths, termed MUYs in the rest of this essay. Which minority doesn’t matter; each urban locale will come with its own unique multi-ethnic dynamic.

Some locales will divide upon religious or political lines, but they will not be the dominant factors contributing to conflict. In the American context, the divisions will primarily have an ethnic or racial context, largely because that makes it easy to sort out the sides at a safe distance. No need to check religious or political affiliation at a hundred yards when The Other is of a different color.

We Americans are all about doing things the easy way, so, sadly, visible racial and ethnic features will form the predominant lines of division.

Would that it were not so, but reality is reality, even when it’s is a bitch.

Especially then.

NEXT STEP: FLASH MOB RIOTS

In order to highlight their grievances and escalate their demands for an immediate resumption of government benefits, the MUY flash mobs will next move their activities to the borders of their ethnic enclaves. They will concentrate on major intersections and highway interchanges where non-MUY suburban commuters must make daily passage to and from what forms of employment still exist. People making a living will still be using those roads to get to where they earn their daily bread.

The results of these clashes will frequently resemble the intersection of Florence and Normandie during the Rodney King riots in 1992, where Reginald Denny was pulled out of his truck’s cab and beaten nearly to death with a cinder block. If you don’t remember it, watch it on Youtube. Then imagine that scene with the mob-making accelerant of texting and other social media technology added to stoke the fires. Instead of a few dozen thugs terrorizing the ambushed intersections, in minutes there will be hundreds.

Rioters will throw debris such as shopping carts and trash cans into the intersection, causing the more timid drivers to pause. The mobs will swarm the lines of trapped cars once they have stopped. Traffic will be forced into gridlock for blocks in all directions. Drivers and passengers of the wrong ethnic persuasions will be pulled from their vehicles to be beaten, robbed, and in some cases raped and/or killed. It will be hyper-violent and overtly racial mob behavior, on a massive and undeniable basis.

Some of those trapped in their cars will try to drive out of the area, inevitably knocking down MUY pedestrians and being trapped by even more outraged MUYs. The commuters will be dragged out of their cars and kicked or beaten to death. Other suburban commuters will try to shoot their way out of the lines of stopped cars, and they will meet the same grim fate once they run out of bullets and room to escape.

The mob will be armed with everything from knives, clubs and pistols to AK-47s. A bloodbath will result. These unlucky drivers and their passengers will suffer horribly, and some of their deaths will be captured on traffic web cameras. Later, these terrible scenes will be released or leaked by sympathetic government insiders and shown by the alternative media, which continue to expand as the traditional media become increasingly irrelevant.

Implausible, you insist?

This grim tableau is my analysis of age-old human behavior patterns, adding flash mobs and 2012 levels of racial anger to the old recipe. Early-teenage MUYs today are frequently playing “The Knockout Game” on full bellies, just for kicks, and proudly uploading the videos. They and their older peers can be expected to do far worse when hunger and the fear of starvation enter their physical, mental, and emotional equations. The blame for their hunger will be turned outward against the greater society, and will be vented at first hand against any non-MUY who falls into their grasp while they are in the thrall of mob hysteria. These episodes of mass psychology we will refer to as “flash mob riots”, “wilding”, or some other new name.

THE OFFICIAL POLICE RESPONSE TO FLASH MOB RIOTS

To gear up for even a single “Florence and Normandie on steroids” flash mob street riot, city police departments will require an hour or longer to stage their SWAT teams and riot squads in position to react. Ordinary patrol cars in small numbers will not venture anywhere near such roiling masses of hysterical rioters, not even to perform rescues. Those citizens trapped in their cars cannot expect timely assistance from local or state authorities.

Even in the first days of widespread riots, when the police forces are well rested, it might take several hours to mount a response sufficient to quell the disturbance and restore order to even one major street intersection riot. In the meantime, scores of innocent commuters will have been attacked, with many of them injured or killed and left at the scene. It will be a law enforcement nightmare to quell the disturbance, mop up lingering rioters, restore security, and bring medical attention to the living and get medical examiners to the dead. And each jurisdiction will face potentially dozens of such scenes, thanks to the ability for MUYs to cross-communicate at will using their wireless devices.

The far more difficult challenge for the police is that by the time they are suited in riot gear, armed and geared up to sweep the intersection, it will probably be empty of rioters. The police, with their major riot squad reaction times measured in hours, will be fighting flash mobs that materialize, cause mayhem, and evaporate in only fractions of hours. This rapid cycle time is a clear lesson taken from massive riots by immigrant French Muslim MUYs in their own religious enclaves and bordering areas.

The American flash mob riot will exist almost entirely inside the law enforcement OODA (observe, orient, decide, act) loop. In other words, the rioters will have a much quicker reaction time than the police. Until fairly recently, superior police communications meant that they could use their radio networks as a force multiplier. With their networking advantage and cohesive reactions both within a department and among cooperating local agencies, police could act as shepherds guiding or dispersing a wayward stampeding flock.

Today, the mob has the greater advantage, immediately spreading word of every police preparation by text and Tweet, even in advance of the police movement. Attempts by the authorities to stop the flash mobs by blocking and jamming wireless transmissions will have limited success.

It is at this point that the situation spirals out of control.

The enraged mobs in urban America will soon recognize that their spontaneous street riots cannot be stopped by the police, and then they will grow truly fearsome. For the police, it will be a losing game of Whack-a-Mole, with riots breaking out and dispersing at a speed they cannot hope to match. The violence will spread to previously unaffected cities as an awareness of law enforcement impotence is spread by television and social media. After a few days, the police forces will be exhausted and demoralized. As the violence intensifies and spreads, and in the absence of any viable security arrangements, supermarkets and other stores will not be restocked, leaving the MUYs even more desperate and angry than before. The increasing desperation born of worsening hunger will refuel the escalating spiral of violence.

Nor will violent conflict be only between the inhabitants of the urban areas and the suburbs. The international record of conflict in tri-ethnic cities is grim, making the old bi-racial dichotomy formerly seen in America seem stable by comparison. In tri-ethnic cities the perceived balance of power is constantly shifting, with each side in turn feeling outnumbered and outmuscled. Temporary truces, betrayals and new alliances follow in rapid succession, removing any lingering sense of social cohesion.

The former Yugoslavia, with its Catholic, Orthodox and Muslim divisions, comes starkly to mind. The Lebanese Civil War between the Christians, Sunnis, Shiites and Druze raged across Beirut (at one time known as “The Paris of the Middle East”) for fifteen brutal years. Once a city turns on itself and becomes a runaway engine of self-destruction, it can be difficult to impossible to switch off the process and return to normal pre-conflict life. It’s not inconceivable that the United States could produce a dozen Sarajevos or Beiruts, primarily across racial instead of religious divides.

Vehicle traffic by non-minority suburban commuters through adjoining minority areas will virtually halt, wrecking what is left of the local economy. Businesses will not open because employees will not be able to travel to work safely. Businesses in minority areas, needless to say, will be looted. “Gentrified” enclaves of affluent suburbanites within or near the urban zones will suffer repeated attacks, until their inhabitants flee.

Radically disaffected minorities will hold critical infrastructure corridors through their areas hostage against the greater society. Highways, railroad tracks, pipe and power lines will all be under constant threat, or may be cut in planned or unplanned acts of raging against “the system.” As long as security in the urban areas cannot be restored, these corridors will be under threat. Even airports will not be immune. Many of them have been absorbed into urban areas, and aircraft will come under sporadic fire while taking off and landing.

In the absence of fresh targets of value blundering into their areas, and still out of food, MUYs will begin to forage beyond their desolated home neighborhoods and into suburban borderlands. “Safe” supermarkets and other stores will be robbed in brazen commando-like gang attacks. Carjackings and home invasions will proliferate madly. As I have discussed in my essay “The Civil War Two Cube,” so-called “transitional” and mixed-ethnic areas will suffer the worst violence. These neighborhoods will become utterly chaotic killing zones, with little or no help coming from the overstretched police, who will be trying to rest up for their next shift on riot squad duty, if they have not already deserted their posts to take care of their own families.

THE SUBURBAN ARMED VIGILANTE RESPONSE

In the absence of an effective official police response to the exploding levels of violence, suburbanites will first hastily form self-defense forces to guard their neighborhoods—especially ones located near ethnic borders. These ubiquitous neighborhood armed defense teams will often have a deep and talented bench from which to select members, and they will not lack for volunteers.

Since 9-11, hundreds of thousands of young men (and more than a few women) have acquired graduate-level educations in various aspects of urban warfare. In the Middle East these troops were frequently tasked with restoring order to urban areas exploding in internecine strife. Today these former military men and women understand better than anyone the life-or-death difference between being armed and organized versus unarmed and disorganized.

Hundreds of thousands if not millions of veterans currently own rifles strikingly similar to those they carried in the armed forces, lacking only the full-automatic selector switch. Their brothers, sisters, parents, friends, and neighbors who did not serve in the military are often just as familiar with the weapons, if not the tactics. Today the AR-pattern rifle (the semi-automatic civilian version of the familiar full-auto-capable M-16 or M-4) is the most popular model of rifle in America, with millions sold in the past decade. Virtually all of them produced in the past decade have abandoned the old M-16′s signature “carrying handle” rear iron sight for a standardized sight mounting rail, meaning that virtually every AR sold today can be easily equipped with an efficient optical sight. Firing the high-velocity 5.56×45 mm cartridge and mounted with a four-power tactical sight, a typical AR rifle can shoot two-inch groups at one hundred yards when fired from a steady bench rest. That translates to shooting eight- to ten-inch groups at four hundred yards.

Four hundred yards is a long walk. Pace it off on a straight road, and observe how tiny somebody appears at that distance. Yet a typical AR rifle, like those currently owned by millions of American citizens, can hit a man-sized target at that range very easily, given a stable firing platform and a moderate level of shooting ability.

And there are a far greater number of scoped bolt-action hunting rifles in private hands in the United States. Keep this number in mind: based on deer stamps sold, approximately twenty million Americans venture into the woods every fall armed with such rifles, fully intending to shoot and kill a two-hundred-pound mammal. Millions of these scoped bolt-action deer rifles are quite capable of hitting a man-sized target at ranges out to and even beyond a thousand yards, or nearly three-fifths of a mile. In that context, the 500-yard effective range of the average semi-auto AR-pattern rifle is not at all remarkable.

So, we have millions of men and women with military training, owning rifles similar to the ones they used in combat operations overseas from Vietnam to Afghanistan. Many of these Soldiers and Marines have special operations training. They are former warriors with experience at conducting irregular warfare and counter-terrorism operations in dangerous urban environments. They are the opposite of unthinking robots: their greatest military talent is looking outside the box for new solutions. They always seek to “over-match” their enemies, using their own advantages as force multipliers while diminishing or concealing their weaknesses. These military veterans are also ready, willing and able to pass on their experience and training to interested students in their civilian circles.

Let’s return to our hypothetical Florence and Normandie intersection, but this time with hundreds of rioters per city block, instead of mere dozens. Among the mobs are thugs armed with pistols and perhaps even AK-47s equipped with standard iron sights, and except in rare cases, these rifles have never been “zeroed in” on a target range. In other words, past a medium distance of fifty to a hundred yards, these MUY shooters will have little idea where their fired bullets will strike—nor will they care. Typically, most of the rioters armed with a pistol, shotgun or an iron-sighted rifle could not hit a mailbox at a hundred yards unless by luck. Inside that distance, any non-MUY could be at immediate risk of brutal death at the hands of an enraged mob, but beyond that range, the mob will pose much less danger.

Taking this imbalance in effective ranges of the firearms most likely to be available to both sides, certain tactical responses are sure to arise, and ranking near the top will be the one described next.

THE SNIPER AMBUSH: THE NEW TACTIC OF CHOICE

The sniper ambush will predictably be used as a counter to rampaging mobs armed only with short- to medium-range weapons. This extremely deadly trick was developed by our war fighters in Iraq and Afghanistan, taking advantage of the significant effective range and firepower of our scoped 5.56mm rifles. Tactics such as the sniper ambush may not be seen early in the civil disorder, but they will surely arise after a steady progression of atrocities attributed to rampaging MUYs.

Street intersection flash mob riots will not be the only type of violence exploding during periods of civil disorder. As mentioned earlier, the number and ferocity of home invasions will skyrocket, and they will be very hard to defend against. Neighborhood self-defense forces will be able to protect a group of homes if they are located on cul-de-sacs or in defensible subdivisions with limited entrances, turning them overnight into fortified gated communities. Individual homes and apartment buildings located in open grid-pattern neighborhoods with outside access from many directions will be much more difficult to defend, and the home invasions will continue.

Carjacking and other forms of armed robbery will proliferate to previously unimagined levels, leading to a total loss of confidence in the government’s ability to provide security across all social lines. Stray bullets striking pedestrians or penetrating houses will take a frightening toll, even in areas previously considered to be safe. The police will be exhausted by constant riot-squad duty, and will not even respond to reports of mere individual acts of violent criminality. They will simply be overwhelmed, and will be forced to triage their responses. The wealthy, powerful and politically well-connected will demand the lion’s share of remaining police resources, further diminishing the safety of average Americans.

In that context, neighborhood self-defense forces will form the nucleus of the armed vigilante direct action groups which will spring up next in the progression. Suburban anger will continue to build against the MUYs, who are perceived to be the originators of the home invasions and gang-level armed looting raids. Survivors of street ambushes, carjackings and home invasions will tell blood-curdling tales and show horrific scars.

The neighborhood defense teams will evolve into proactive suburban armed vigilante groups (SAVs) out of a desire to preemptively take the violence to their perceived enemies, instead of passively waiting for the next home invasion or carjacking. The SAV teams will consist of the more aggressive and gung-ho members of the self-defense forces, who met and compared notes. Often they will be young men with recent combat experience in the armed forces, who will apply their military training to the new situation. Major intersections and highway interchanges where ambush riots have previously occurred will be among the SAV targets. The SAV reaction times will be measured in minutes, compared to the hours required by major police department SWAT teams and riot squads.

A SAMPLE SNIPER AMBUSH SCENARIO

When word is received that a flash mob is forming at one of their pre-reconnoitered intersections or highway interchanges, the SAV team will assemble. Sometimes cooperating police will pass tactical intel to their civilian friends on the outside. Some clever individuals will have exploited their technical know-how and military experience to build real-time intel collection tools, such as private UAVs. Police will have access to urban security camera footage showing MUYs moving barricade materials into position—a normal prerequisite to a flash mob riot intended to stop traffic. Tip-offs to the vigilantes will be common, and where the networks are still functioning, citizens may still be able to access some video feeds. Sometimes, police will even join the SAV teams, incognito and off-duty, blurring the teams into so-called “death squads.”

The operation I will describe (and it’s only one of dozens that will be tried) uses two ordinary pickup trucks and eight fighters. Two riflemen are lying prone in the back of each truck, facing rearward, with removable canvas covers concealing their presence. Their semi-automatic, scoped rifles are supported at their front ends on bipods for very accurate shooting. A row of protective sandbags a foot high is between them and the raised tailgate.

In the cab are a driver and a spotter in the passenger seat who also serves as the vehicle’s 360-degree security. The two trucks don’t ever appear on the same stretch of road, but coordinate their movements using one-word brevity codes over small FRS walkie-talkie radios. Each truck has a series of predetermined elevated locations where the intersection in question will lie between 200 and 500 yards away. Each truck is totally nondescript and forgettable, the only detail perhaps being the non-MUY ethnicity of the suburbanite driver and spotter driving relatively near to a riot in progress.

By the time the two SAV pickup trucks arrive at their firing positions on different streets and oriented ninety degrees to one another, the flash mob riot is in full swing. A hundred or more of the rampaging youths are posturing and throwing debris into traffic in order to intimidate some cars into stopping. The riflemen in the backs of the pickups are waiting for this moment and know what to expect, trusting their spotters and drivers to give them a good firing lane. The spotters in each truck issue a code word on their radios when they are in final position. The tailgates are swung down, and the leader among the riflemen initiates the firing. All-around security is provided by the driver and spotter.

Lying prone and using their bipods for support, the shooters have five to ten degrees of pan or traverse across the entire intersection. Individual rioters are clearly visible in the shooters’ magnified optical scopes. Each of the four snipers has a plan to shoot from the outside of the mob toward the middle, driving participants into a panicked mass. The left-side shooters start on the left side and work to the middle, engaging targets with rapid fire, about one aimed shot per two seconds. Since the two trucks are set at ninety degrees to one another, very complete coverage will be obtained, even among and between the stopped vehicles.

The result is a turkey shoot. One magazine of thirty aimed shots per rifle is expended in under a minute, a coded cease-fire is called on the walkie-talkies, and the trucks drive away at the speed limit. The canvas covering the truck beds contains the shooters’ spent brass. If the trucks are attacked from medium or close range, the canvas can be thrown back and the two snipers with their semi-automatic rifles or carbines will add their firepower to that of the driver and spotter.

Back at the intersection, complete panic breaks out among the rioters as a great number of bullets have landed in human flesh. Over a score have been killed outright, and many more scream in pain for medical attention they will not receive in time. The sniper ambush stops the flash mob cold in its tracks as the uninjured flee in terror, leaving their erstwhile comrades back on the ground bleeding. The commuters trapped in their vehicles may have an opportunity to escape.

This type of sniper ambush and a hundred variations on the theme will finally accomplish what the police could not: put an end to mobs of violent rioters making the cities through-streets and highways impassible killing zones. Would-be rioters will soon understand it to be suicidal to cluster in easily visible groups and engage in mob violence, as the immediate response could come at any time in the form of aimed fire from hundreds of yards away. Even one rifleman with a scoped semi-auto can break up a medium-sized riot.

Many citizens will take to carrying rifles and carbines in their vehicles, along with their pistols, so that if their cars are trapped in an ambush they will have a chance to fight their way out. If their vehicle is stopped outside the immediate area of the flash mob, they will be able to direct accurate fire at the rioters from a few hundred yards away. Inside the fatal hundred-yard radius, unlucky suburbanite drivers and passengers pulled from their cars will still be brutally violated, but the occurrences of large mob-driven street ambushes will be much less frequent once long-range retaliation becomes a frequent expectation.

THE GOVERNMENT RESPONSE TO VIGILANTISM

Where they will be unable to respond swiftly or effectively to the outbreaks of street riots by MUY flash mobs, the police and federal agents will respond vigorously to the deadly but smaller vigilante attacks. These sniper ambushes and other SAV attacks will be called acts of domestic terrorism and mass murder by government officials and the mainstream media. A nearly seamless web of urban and suburban street cameras will reveal some of the SAV teams by their vehicles, facial recognition programs, and other technical means. Some early arrests will be made, but the vigilantes will adapt to increasing law enforcement pressure against them by becoming cleverer about their camouflage, most often using stolen cars and false uniforms and masks during their direct-action missions. Observe Mexico today for ideas on how this type of dirty war is fought.

Eventually, the U.S. Army itself might be called upon to put out all the social firestorms in our cities, restore order and security, pacify the angry masses, feed the starving millions, get vital infrastructure operating again, and do it all at once in a dozen American Beiruts, Sarajevos and Mogadishus.

Good luck to them, I say.

A few hundred “Active IRA” tied down thousands of British troops in one corner of a small island for decades. The same ratios have served the Taliban well over the past decade while fighting against the combined might of NATO. Set aside for a moment the angry starving millions trapped in the urban areas, and the dire security issues arising thereof. Just to consider the official reaction to vigilantism separately, it’s unlikely that any conceivable combinations of local and state police, federal law enforcement, National Guard or active-duty Army actions could neutralize or eliminate tens of thousands of former special operations troops intent on providing their own form of security. Millions of Americans are already far better armed and trained than a few hundred IRA or Taliban ever were. And the police and Army would not be operating from secure fire bases, their families living in total safety thousands of miles away in a secure rear area. In this scenario, there is no rear area, and every family member, anywhere, would be at perpetual risk of reprisal actions by any of the warring sides.

In this hyper-dangerous environment, new laws forbidding the carrying of firearms in vehicles would be ignored as the illegitimate diktat of dictatorship, just when the Second Amendment is needed more than ever. Police or military conducting searches for firearms at checkpoints would themselves become targets of vigilante snipers. Serving on anti-firearms duty would be seen as nothing but pure treason by millions of Americans who took the oath to defend the Constitution, including the Bill of Rights. Politicians who did not act in the security interest of their local constituents as a result of political correctness or other reasons would also be targeted.

A festering race war with police and the military in the middle taking fire from both sides could last for many years, turning many American cities into a living hell. Remember history: when the British Army landed in Northern Ireland in 1969, they were greeted with flowers and applause from the Catholics. The Tommys were welcomed as peacekeepers who would protect them from Protestant violence. That soon changed. Likewise with our tragic misadventure in Lebanon back in 1982 and 1983. Well-intended referees often find themselves taking fire from all sides. It’s as predictable as tomorrow’s sunrise. Why would it be any different when the U.S. Army is sent to Los Angeles, Chicago or Philadelphia to break apart warring ethnic factions?

For a long time after these events, it will be impossible for the warring ethnic groups to live together or even to mingle peacefully. Too much rage and hatred will have been built up on all sides of our many American multi-ethnic fault lines. The new wounds will be raw and painful for many years to come, as they were in the South for long after the Civil War. The fracturing of the urban areas, divided by no-man’s-lands, will also hinder economic redevelopment for many years because the critical infrastructure corridors will remain insecure.

Eventually, high concrete “Peace Walls” like those in Belfast, Northern Ireland, will be installed where the different ethnic groups live in close proximity. That is, if recovery to sane and civilized norms of behavior are ever regained in our lifetimes and we don’t slide into a new Dark Age, a stern and permanent tyranny, warlordism, anarchy, or any other dire outcome.

Dark Ages can last for centuries, after sinking civilizations in a vicious, downward vortex. “When the music’s over, turn out the lights,” to quote Jim Morrison of The Doors. Sometimes the lights stay out for a long time. Sometimes civilization itself is lost. Millions of EBT cards flashing zeroes might be the signal event of a terrible transformation.

It is a frightening thing to crystallize the possible outbreak of mass starvation and racial warfare into words, so that the mind is forced to confront agonizingly painful scenarios. It is much easier to avert one’s eyes and mind from the ugliness with politically correct Kumbaya bromides. In this grim essay, I am describing a brutal situation of ethnic civil war not differing much from the worst scenes from recent history in Rwanda, South Africa, Mexico, Bosnia, Iraq, and many other places that have experienced varying types and degrees of societal collapse. We all deplore the conditions that might drive us toward such a hellish outcome, and we should work unceasingly to return America to the path of true brotherhood, peace and prosperity. Race hustlers of every stripe should be condemned.

Most of us wish we could turn back the calendar to Norman Rockwell’s America. But we cannot, for that America is water long over the dam and gone from our sight, if not from our memories. John Adams said, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” If that is true, judging by current and even accelerating cultural shifts, we might already have passed the point of no return.

The prudent American will trim his sails accordingly.

Matt Bracken is the author of the Enemies Foreign And Domestic trilogy, along with his latest novel, Castigo Cay.

GOVERNMENT DRONES PROTECTING YOU TO DEATH

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Posted on 25th August 2012 by Administrator in Economy |Politics |Social Issues

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Another example of government protecting us from savages roaming the streets of Philly and other urban kill zones across the land. They take your taxes and then proceed to function like a drunken retard. A nineteen year veteran officer was gunned down in cold blood by two black animals last week. Now the best part. One of these animals was let out of prison by a government judge and told to stay in his grandma’s house under house arrest. He was supposed to have an electronic monitoring device on his ankle. Guess why he didn’t when he gunned down Moses Walker? The PA Dept of Probations needs a telephone land line for their bracelets to work. His granny didn’t have a land line. These clueless government drones ORDERED this fucking savage to have a land line installed. He had better things to do like killing and robbing. Government at its finest.

If you think government is going to protect you from anything or anyone, you are living in a delusional fantasyland.  

Chancier McFarland, left, and Rafael Jones , accused in Officer Moses Walker Jr.

How accused cop-killer slipped free

By Mark Fazlollah, Mike Newall, and Joseph A. Slobodzian

When a judge on July 25 sentenced alleged cop-killer Rafael Jones for violating his probation on a gun conviction, she ordered him confined to house arrest at his grandmother’s North Philadelphia rowhouse.

But the state Board of Probations and Parole failed to set up the electronic monitoring bracelet mandated by the judge, and Jones never returned to live at the house, his family said Friday.

The day he got out of prison, Aug. 8, Jones was hanging out at 18th and Susquehanna Streets – the corner where he was shot last winter – without the bracelet ordered by Common Pleas Court Judge Susan I. Schulman.

Ten days after that, police say, he and another man stalked and killed Officer Moses Walker Jr. in a pre-dawn robbery attempt.

On Friday, Jones, 23, was arraigned on murder, robbery, firearms, conspiracy and related charges in the shooting of Walker, a 19-year veteran of the force killed while walking home after his shift at the 22d District in North Philadelphia. As is police custom when an officer is killed, Walker’s handcuffs were placed on Jones’ wrists by Walker’s fellow officers from the 22d.

Jones was held without bail and a preliminary hearing was scheduled for Sept. 12 in Municipal Court.

Jones, a thin man with a shaved head, said nothing except to acknowledge his identity and the charges.

Police also issued an arrest warrant Friday for Jones’ alleged accomplice, Chancier McFarland, 19, of the 1400 block of North 23d Street in North Philadelphia.

The circumstances around Jones’ release remain unclear. Although Schulman on July 25 ordered him released to house arrest with electronic monitoring by the state, he did not leave the Curran-Fromhold Correctional Facility until Aug. 8.

On that date, Schulman e-mailed prison officials to release Jones “with instructions to report directly to state parole,” according to a city official who reviewed the e-mail.

Schulman’s e-mail order followed one from a Philadelphia prison system representative, said the official. That e-mail appeared to state that a monitoring system was being set up for Jones.

As a result, Jones walked out of prison that day unfettered, instructed only to report to his state probation officer. He apparently did report in the days after that, a source said, but there is no indication he was ever placed on electronic monitoring.

Jones’ grandmother Ada Banks said Friday afternoon that Jones’ probation officer contacted her before last month’s probation violation hearing, asking if Jones could come live with her.

Banks said she declined. Jones had been shot in the neighborhood earlier this year, she said Friday, and she worried that if he returned to her neighborhood, he would only find trouble.

“This is a house of peace,” she said, surrounded by some of her grandchildren, in front of her Bouvier Street home, just a block from the 22d District station, where the flag hangs at half-staff. “I didn’t need the drama.”

She said the probation officer was in a hurry and told her Jones could be released as soon as that day. Banks said she told the officer that Jones could live with his aunt in West Oak Lane. “He said, ‘I’m just going to tell the judge he’s being released to you, and when he comes to you send him to his aunt’s,” she said.

The probation officer said he would find Jones to get him fitted with the ankle bracelet, Banks said. That never happened, she said.

Banks was not at the July hearing, and her grandson did not stay with her again.

At the hearing, state parole agent Jose Rodriguez recommended that Jones be released on probation and put on electronic monitoring.

Rodriguez told the judge that officers are trained in fitting ankle bracelets and could outfit his home with equipment that would be monitored from Harrisburg – “We get either e-mail alerts, phone call alerts or – should he violate it, leave the house at an unauthorized time.”

But Rodriguez questioned whether Jones could live at his grandmother’s, based on the conversation with her.

Jones’ attorney, Rosemary Zeccardi, told the judge that Jones would be living with with his grandmother.

Neither Rodriguez nor Zeccardi could be reached for comment Friday. Schulman has declined to comment.

Based on the assurance in court, Schulman ordered that Jones serve six months’ house arrest at the grandmother’s home.

And she ordered Rodriguez to get police to detain Jones if he left the house for any reason other than looking for a job, completing his GED, or doing required community service work.

“There will be no other reasons for him to be out of the house,” she said. “None.”

Schulman, who in 2008 sentenced Jones to a four-year prison term for a gun conviction, noted Jones’ juvenile record and warned him that she was not impressed with his record since had finished his sentence in October.

Jones’ juvenile record goes back to age 12, when he was charged with throwing a rock through his mother’s front door. He was arrested at 15 for selling drugs and then caught in a stolen Jeep.

His first gun arrest was when he was 17, when officers said they caught him with a loaded .38-caliber revolver.

“To see that I am concerned about you would be an understatement,” Schulman told Jones.

Jeremy Brooks, Jones’ cousin, said he and Jones’ mother saw Jones hanging on the corner the night he was released.

“I pulled up and said, ‘It’s good to see you,’ ” Brooks said. “He said he was ‘laying back,’ trying to stay out of trouble.”

Jones’ family said the West Oak Lane home where he stayed did not have a phone line, a must for house arrest.

Sherry Tate, a state parole board spokeswoman, said even general information about how her department conducted house arrests and monitoring was confidential.

Police Commissioner Charles H. Ramsey, asked about the apparent failures between the state probation and justice systems, said, “Right now our focus is simple – getting the second person in custody so we can wrap this up.”

About Jones, he said: “Thank God we got him and he won’t be able to harm anyone else, and this time perhaps the system will put him away for the rest of his miserable life.”

30 BLOCKS OF STENCH & SECURITY MEASURES

48 comments

Posted on 25th July 2012 by Administrator in Economy |Politics |Social Issues

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The summer months generally lead to my best commuting months of the year. With school out and people on vacation, I generally make it to and from work in about 45 minutes. Except, of course, on Friday night when it took me 1 hour and 48 minutes to get home for no good reason. I had gone over a month without having to experience the 30 Blocks of Squalor, until last Tuesday. An accident on the Schuykill on this sweltering 100 degree day forced me to dodge the potholes and stray bullets along the Squalor. As I approached the 30 Blocks, I again thought there was nothing left to say after writing two dozen posts on this urban wasteland of woe. But as soon as I turned onto Chestnut Street there before my very eyes was a power boat on a trailer hitched to a GMC Jimmy parked in front of a $20,000 hovel. This is another one of those WTF moments. I don’t own a boat. How can someone who lives on the 30 Blocks of Squalor, where the median household income is $20,000, own a boat.

I’m sure some people are thinking, this is one of the hard working legitimate men who live on the Squalor. There must be a few. This possibility was put to rest when I noticed the license plate on the vehicle. It was the good old cardboard version. I bet you didn’t know that hand written cardboard license plates are legal in West Philly. Well not really, but the police are generally distracted by the murders, rapes, armed robberies, and drug cartels.

As I continued down the block I was thankful for my windows and air conditioning. It was Tuesday, trash day on the squalor. Or maybe not. It’s tough to tell the difference between trash day and a normal day in this neighborhood. The people who live on the Squalor clearly have no self respect, sense of community, or interest in cleaning up their streets. They can afford Satellite TV but can’t invest in trash cans. They throw their trash and debris to the curb in plastic bags, where the wild dogs that roam the streets tear them open.

The filth and stench along the Squalor is palpable. What kind of person throws garbage and empty bottles onto their own streets? Do you throw trash onto your front lawn or the street in front of your house? What does this filth say about this community? We know for a fact that more than 50% of the people along this roadway are not working. I also know there are dozens of churches in this section of Philadelphia. The houses along the Squalor haven’t seen a paint brush or hammer and nails in decades. Why can’t the pastors of these churchs lead an effort to pick up the trash and fix up the crumbling hovels? Would it be cruel and inhumane to require people collecting unemployment to do community service? Of course that would require black people to accept responsibility for their own community. It seems they would rather have murals painted showing black people doing noble service, rather than actually doing anything. The irony of mounds of trash amidst weed infested lots, below the murals of black people doing glorious things, is lost on the ignorant leaches that inhabit West Philly.

Someone commented on my last 30 Blocks article that West Philly has 10 community farms. Having driven the mean streets of West Philly for the last six years, I never noticed any farms. I guess I wasn’t looking hard enough. I vowed to keep my eyes peeled for one of these glorious community farms. I thought I’d spotted one, but it was just another weed infested vacant lot beneath a mural.

I resumed my search for one of these elusive West Philly community farms. Does crab grass growing amidst garbage, needles and gun casings count? After you cruise the streets of West Philly long enough you realize you have as much chance of finding a community farm as you do of finding a woman with a wedding ring, a man carrying a condom or paycheck in his pocket, or a teenager carrying a book. Slim to none, and Slim left town. 

For a moment I thought I had spotted two West Philly urban farmers tending to their crops, but alas it was just another mural of pretend people watering pretend flowers.

the urban garden Mobstr Street art

The only gardens you will find in West Philly are indoors. And the farmers don’t actually want you to find these gardens. The entreprenuers of West Philly can grow plants when it suits them, but tomatoes and cucumbers aren’t their specialty. The ROI just isn’t high enough. 

This may explain the $65,000 gold Jaguar that I saw parked in front of a $15,000 crumbling hovel. I sometimes wonder how liberal minded folks rationalize the fact that there are far more Mercedes, BMWs, Jaguars and Cadillac Escalades in neighborhoods with a median household income of $20,000 than there are in my upper middle class community where the median household income exceeds $80,000. How do they rationalize people in West Philly with Apple iPhones, Direst TV Satellite dishes, racing motorcycles, and wearing $100 sneakers when 50% are unemployed and 80% are on food stamps? Is it a matter of fairness? 

I’m sure my liberal friends will contend that some of these people earned those cars through education, hard work, saving, and picking themselves up by their boot straps. Now that is a funny statement. The few operating enterprises along the Squalor are run by Asians, Koreans, Mexicans, and white people with a death wish. The most successful businesses in this community are the maker of roll down steel security gates, window bar makers, plywood distributors, and Space Available sign makers. 

If graffiti was a business, it would be booming in West Philly. When you drive down Chestnut Street at 7:15 am you are struck by the desolation, decay, destruction, and despair. I grew up in a small town just outside of Philadelphia, only about 20 minutes from the 30 Blocks of Squalor. Not one business in my town needed roll down steel security gates. I never witnessed bars on any windows. West Philly looks like a prison.

Every store, business, and crappy restaurant has steel shutters and bars on their windows. Businesses with outside inventory like car repair places have high chain link fences with a big helping of barbed wire at the top. What does this say about this community? This block was a thriving middle class white neighborhood in the 1950s. The houses were well built, the neighborhood was clean and safe. You could leave your door unlocked at night. After 60 years of Democratic welfare policies, the place goes into lockdown at 5:00 pm and no one in their right mind would walk the streets after dark. Is society to blame for the 30 Blocks of Squalor? Where does personal responsibility enter the equation?

 This was going to complete another chapter in the 30 Blocks of Squalor saga, but the following day while resuming my regular route past the luxury townhouse gated Mantua Square low income housing mecca, I experienced another dose of squalor ignorance. As I drove down the street towards 37th street a big assed 15 year old piece of crap Buick came blasting out of a side street and I had to jam on my brakes to avoid being crushed by the ignorant piece of shit West Philly high school dropout driving it. He looked right in my eyes as he cut me off. I was just a honky in a Honda to this once and future prison inmate. You can be sure if we had collided, he would have kept going because he certainly didn’t have car insurance or a valid license. Those are just for sucker white people who play by the rules. If I had been hit, I wouldn’t have had to worry about a crowd of residents surrounding my car. The FSA doesn’t get up on weekdays until noon. The best shows don’t come on OWN or BET until the afternoon. I’m sure some TBP members would have found my foul mouthed tirade over the next three minutes humorous.

What won’t be humorous is when the EBT cards start getting declined in West Philly during the economic collapse on the horizon. If you think West Philly smells bad on a hundred degree day, imagine what it will smell like when it is burning.

Burning these neighborhoods to the ground will be an improvement. I might need to change my route to work, but it will be worth it. Burn baby burn.

 

 

 

TRUST US

94 comments

Posted on 16th July 2012 by Administrator in Economy |Politics |Social Issues

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The Roger Waters concert Saturday night at Citizens Bank Park was almost too spectacular to put into words. Fighter planes crashing into the stage and exploding, flying pigs, enormous hideous teachers towering over little children, Waters dressed as a Nazi and firing a machine gun into the audience, and a notable anti-corporate fascist state, anti-war theme. During the intermission literally hundreds of photos of humans killed in war since 1900 were projected onto the massive Wall with their birth date, death date and short biography. The pictures and stories were sent in by fans from all over the world. It was truly touching and personalized the human result of endless war.

Waters dedicated the show to  Jean Charles de Menezes, a Brazilian man shot in the head seven times at Stockwell tube station on the London Underground by the London Metropolitan police after he was misidentified as one of the fugitives involved in the previous day’s failed bombing attempts. These events took place two weeks after the London bombings of 7 July 2005, in which 52 people were killed. On the day of the shooting, the police were hunting four men believed to be involved in the failed bombing attempts the day before. Intelligence had linked the men to a block of flats in Tulse Hill, south London, the same building in which Menezes was living. Police put the communal entrance under surveillance, and on the morning of the shooting, saw Menezes leave the building. Plain clothes officers, armed with pistols, followed him as he took a bus to Brixton tube station, before boarding another to Stockwell tube station because the tube station at Brixton was closed. Specialist firearms officers were called to Stockwell. Just after Menezes entered a train, several officers wrestled him to the ground and fired seven bullets into his head at point blank range. The train was still at the platform with its doors open, having just been evacuated by officers.

File:Menezes.jpg

NO ONE WAS EVER CHARGED OR HELD ACCOUNTABLE FOR HIS WRONGFUL DEATH.

The entire show was visually overwhelming and a powerful statement. Roger Waters is the ultimate showman. He said that he hated performing live in his youth. He seems to have grown into it. He plays the evil dictator with panash.

The band he assembled was stellar. David Gilmour is irreplaceable, but the combination of G.E. Smith, David Kilminster, and Snowy White on guitar and Robbie Wyckoff handling Gilmour’s vocals was just fine as you will see in the videos taken by my son Kevin. The stage and Wall was immense, taking up the entire outfield. The gates opened at 7:00 for the 8:45 show. We arrived at 7:15. I wanted to soak in as much as possible, plus I wanted a Tony Lukes cheesesteak before the show. We chowed down on fine Philly fare and then bought four overpriced concert shirts. I wore my BurningPlatform.com shirt to the show. I didn’t run into anyone else with a TBP shirt.

The show opens with Outside the Wall and I was immediately amused by the graphic on the wall. It said:

If at first you don’t succeed, call in an airstrike.

I knew I was going to like this show. While the show progresses the roadies are building the wall.

The local children brought on stage to perform Another Brick in the Wall with Waters and fight back against the 50 foot teacher were thanked by Waters in one of his more sedate moments.

The show is a combination of concert and movie. The visuals and symbolism are stunning.

The Wall becomes a canvas for Waters’ art and visionary view of the world.

Waters is able to get his anti-war message across through the use of music, images, film, quotes and cartoons. His use of film showing soldiers hugging their children, interspersed with the words of a general and pictures of starving children is powerful, as you can see.

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” – Dwight D. Eisenhower

 Goodbye Blue Sky is a haunting song with visuals of birds flying and being replaced with thousands of bombers dropping blood red symbols like dollar signs, the hammer & sickle, Chinese star, Shell Oil sign, Mercedes sign, crosses and the Jewish star. The message was that our corporate fascist military state kills for profit.

One of the highlights of the concert for me was Waters performing a duet with himself from 1980 on the song Mother. As you can see from the video, people are losing faith in governments across the globe. The crowd was a mixture of old farts like myself, people in their 20′s and 30′s, and teens dragged to the concert by their old man. When Waters sings the line, “Do you trust the government?”, the stadium erupted with a thunderous NOOOOO!!!! See for yourself.

The guitar work by GE Smith on Comfortably Numb and Hey You is phenomenal. Waters doesn’t have much to do except strike the Wall near the end of this piece with the predictable outcome. 

The imposing fully built Wall stays in place for all of Act 2, which opens with Hey You. 

 At the end of the concert during the finale of Outside the Wall, the entire wall comes crashing down. The message I took away from the concert was that our civilization is under the control of corporate fascist warmongers. Profits at any human price is the mantra. The fact that Waters is still free to use his artistry to reaveal the truth to 40,000 people gives me hope. The fact that I can write about it and have thousands read the message gives me hope. The fact that my three Millenial sons get the message about government tyranny and corporate malfeasance gives me hope. If enough people see the light and begin to resist, we can tear down that wall.

Most of the videos and pictures were taken by my sons Kevin & Jimmy. Michael, my youngest, is now a Pink Floyd superfan.

Here is a link to the complete setlist, with accompanying videos:

http://www.setlist.fm/setlist/roger-waters/2012/citizens-bank-park-philadelphia-pa-5bdcb77c.html

 

WHO DESTROYED THE MIDDLE CLASS – PART 3

248 comments

Posted on 26th June 2012 by Administrator in Economy

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This is the 3rd and final chapter of my series about the destruction of the middle class. In Part 1 of this series I addressed where and how the net worth of the middle class was stolen. In Part 2, I focused on the culprits in this grand theft and in Part 3, I will try to figure out why they stole your net worth and what would be required to restore sanity to this world.

Dude, Why Did They Steal My Net Worth?

“I have no problem with people becoming billionaires—if they got there by winning a fair race, if their accomplishments merit it, if they pay their fair share of taxes, and if they don’t corrupt their society. Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me.” Charles FergusonPredator Nation

                       

It is clear to me that a small cabal of politically connected ultra-wealthy psychopaths has purposefully and arrogantly stripped the middle class of their wealth and openly flaunted their complete disregard for the laws and financial regulations meant to enforce a fair playing field. Why did they gut the middle class in their rapacious appetite for riches? Why did the scorpion sting the frog while crossing the river, dooming them both? It was his nature. The same is true for the hubristic modern robber barons latched on the backs of the middle class. Their appetite for ever greater riches will never be mollified. They will always want more. They promise not to destroy the middle class, as that will surely extinguish the last hope for a true economic recovery built upon savings, investment and jobs, but it is their nature to destroy. A card carrying member of the plutocracy and renowned dog lover, Mitt Romney, revealed a truth not normally discussed by those running the show:

“I’m not concerned about the very poor. We have a safety net there. I’m not concerned about the very rich, they’re doing just fine.”

The data from the Fed report confirms Romney’s assertion. The poorest 20% were the only household segment that saw an increase in their real median income between 2007 and 2010, while the richest 10% saw only a modest 5% decrease in their $200,000 plus, annual incomes. Meanwhile the middle class households experienced a brutal 8% to 9% decline in real income. Table 2 in Part 2 of this article reveals why the poorest 20% were able to increase their income. Transfer payments (unemployment, welfare, food stamps, SSDI) increased from 8.6% of their income in 2007 to 11.1% in 2010. Government transfer payments rose from $1.7 trillion in 2007 to $2.3 trillion today, a 35% increase in five years. I’m sure the bottom 20% are living high on the hog raking in that $13,400 per year. Think about these facts for just a moment. There are 23 million households in this country with a median annual household income of $13,400. That means half make less than that. There are 58 million households that have a median household income of $45,800, with half making less than that.

The reason Mitt Romney isn’t concerned about the very poor is because his only interaction with them is when they cut the lawn at one of his six homes. The truth is the bottom 20% are mostly penned up in our urban ghettos located in Detroit, Chicago, Philadelphia, NYC, LA, Atlanta, Miami, and the hundreds of other decaying metropolitan meccas. They generally kill each other and only get the attention of the top 10% if they dare venture into a white upper class neighborhood. They are the revenue generators for our corporate prison industrial complex – one of our few growth industries. They provide much of the cannon fodder for our military industrial complex. They are kept ignorant and incapable of critical thought by our Department of Education controlled public school system. The welfare state is built upon the foundation of this 20%. It is certainly true that the bottom 30 million households in this country, from an income standpoint, do receive hundreds of billions in entitlement transfers, but Table 2 clearly shows that 80% of their income comes from working. The annual $72 billion cost for the 46 million people on food stamps pales in comparison to the hundreds of billions being dispensed to the Wall Street banks by Ben Bernanke and Tim Geithner, and the $1 trillion per year funneled to the corporate arm dealers in the military industrial complex. The Wall Street maggots (i.e. J.P. Morgan) crawl around the decaying welfare corpse, extracting hundreds of millions in fees from the EBT system and the SNAP program as they encourage higher levels of spending.

This is all part of the diversion. Forty five years after the War on Poverty began, there are 49 million Americans living in poverty. That’s a solid good return on the $16 trillion spent so far. It’s on par with the 16 year zero percent real return in the stock market. We have produced a vast underclass of ignorant, uneducated, illiterate, dependent people who have become a huge voting block for the Democratic Party. Politicians, on the left, promise more entitlements to these people in order to get elected. Politicians on the right will not cut the entitlements for fear of being branded as uncaring. The Republicans agree to keep the welfare state growing and the Democrats agree to keep the warfare state growing -bipartisanship in all its glory. And the middle class has been caught in a pincer movement between the free shit entitlement army and the free shit corporate army. The oligarchs have been incredibly effective at using their control of the media, academia and ideological think tanks to keep the middle class ire focused upon the lower classes. While the middle class is fixated on people making $13,400 per year, the ultra-wealthy are bribing politicians to pass laws and create tax loopholes, netting them billions of ill-gotten loot. These specialists at Edward Bernays propaganda techniques were actually able to gain overwhelming support from the middle class for the repeal of estate taxes by rebranding them “death taxes”, even though the estate tax only impacts 15,000 households out of 117 million households in the U.S. The .01% won again.

Household Net Worth Survey of Consumer Finances Federal Reserve 2010

It is easy to understand how the hard working middle class is so easily manipulated by the corporate fascists into believing their decades of descent to a lower and lower standard of living is the result of the lazy good for nothings at the bottom of the food chain sucking on the teat of state with their welfare entitlements. I drive through the neighborhoods of West Philadelphia every day, inhabited by the households with a net worth of $8,500 and annual income of $13,400. They inhabit crumbling hovels worth less than $25,000, along pothole dotted streets strewn with waste, debris and rubbish. More than half the people in this war zone are high school dropouts, over 30% are unemployed, and drug dealing is the primary industry. When a drug dealer becomes too successful and begins to cut into the profits of the “legitimate” oligarch sanctioned drug industry, he is thrown into one of our thriving prisons. Marriage is an unknown concept. The life expectancy of males is far less than 79 years old. But something doesn’t quite make sense. Every hovel has a Direct TV satellite dish. The people shuffling around the streets all have expensive cell phones. There are newer model cars parked on the streets, including a fair number of BMWs, Mercedes, Cadillac Escalades and Volvos. How can this be when their annual income is $13,400 and they have $8,500 to their names?

This is where our friendly neighborhood Wall Street oligarchs enter the picture. These downtrodden people are not bright. They are easily manipulated and scammed. They believe driving an expensive car and appearing successful is the same as being successful. Therefore, they are easily susceptible to being lured into debt. Millions of these people represented the “subprime” mortgage borrowers during the housing bubble. The tremendous auto “sales” being reported by the mainstream media in an effort to boost consumer confidence about an economic recovery, are being driven by subprime auto loans from Ally Financial (85% owned by the U.S. Treasury/you the taxpayer) and the other government back stopped Wall Street banks. This is the beauty of credit. The mega-lenders reap tremendous profits up front, the illusion of economic progress is created, poor people feel rich for a while, and when it all blows up at a future date the middle class taxpayer foots the bill. Real wages for the 99% have been falling for three decades. You make poor people feel wealthy by providing them easy access to vast quantities of cheap debt. I’m a big fan of personal responsibility, but who is the real malignant organism in this relationship? The parasite banker class, like a tick on an old sleepy hound dog, has been blood sucking the poor and middle class for decades. They have peddled the debt, kept the poor enslaved, and have used their useful idiots in the media to convince millions of victims to blame each other through their skillful use of propaganda. They maintain their control by purposely creating crisis, promoting hysteria, and engineering “solutions” that leave them with more power and wealth, while stripping the average citizen of their rights, liberty, freedom and net worth (i.e. Housing Bubble to replace Internet Bubble, Glass-Steagall repeal, Patriot Act, TARP, NDAA, SOPA). Jesse cuts to the heart of the matter, revealing the darker side of our human nature:

“Sometimes when faced with problems that are confusing and troubling it is easier to think what someone tells you to think, particularly something that touches a deep and dark nerve in your nature, rather than carry the burden and ambiguity of struggling with the facts and thinking for yourself.  Repeating a party line is a shorthand way of avoiding real thought.  And the predators are always there to take advantage of it.  They welcome trouble and often foment crisis in order to advance their agendas.”

“Anyone can be misled by a clever person, and no one likes to readily admit that they have been had.  It is a sign of character and maturity to realize this, and admit you were deceived, and to demand change and reform. But some people cannot do this, even when the facts of the deception are revealed.  It seems as though the more incorrect that the truth shows them to be, the louder and more strident they become in shouting down and denying the reality of the situation.   And anyone who denies their perspective becomes ‘the other,’ someone to be feared and hated, shunned and eliminated, one way or the other.”

Until Debt Do Us Part

I sense signs of desperation amongst the plutocracy. Their propaganda machine is sputtering. Their storylines are growing tired. They have fended off the fury of the Tea Party movement by successfully high jacking it and neutralizing their impact under the thumb of the Republican establishment. The oligarchs called out their armed thugs to crush the OWS rage, while using their media mouthpieces to misrepresent the true purpose of the movement – Wall Street greed and criminality with Washington DC collusion. The Savings & Loan Crisis of the late 1980s resulted in 800 bankers being thrown into prison. After the greatest banker heist in history, not one banker has been thrown in jail. Obama and Holder have been neutered by their masters. The power elite openly brandish their glee at avoiding accountability for their crimes. They are desperately attempting to re-inflate the debt bubble, as debt is the lifeblood of these vampire squids. The key piece of their current propaganda campaign is to convince the people they have effectively deleveraged and their continuing austerity efforts are actually detrimental to economic recovery. It’s nothing but a confidence game to keep the Ponzi going. The Ponzi operators want to extract every last dime from the masses before the engineered collapse. The data does not confirm the deleveraging narrative. Total credit market debt in the United States is now at an all-time high and stands at 345% of GDP. In 1977 it stood at 155% of GDP and at 250% in 2000.

Total credit market debt is now $4 trillion higher than it was in 2007, prior to the financial collapse. It has gone up by $1 trillion in the last 12 months. Does this sound like deleveraging? The chart below details the truth the moneyed interests don’t want you to understand. The bastions of capitalism on Wall Street have dumped $3.4 trillion of their toxic debt and $1 trillion of mortgage and credit card debt onto the backs of middle class taxpayers and future unborn generations. They did this under the auspices of saving the economic system. Their sole purpose has been to save themselves from becoming part of the middle class. The transfer of wealth from the quarry (middle class) to the predators (moneyed interests) continues unabated.

The faux journalists in the mainstream media have been pounding the consumer deleveraging mantra. They babble on about the austere masses methodically paying down their debts. It’s a specious lie. The chart below shows that banks have written off $218 billion of credit card debt since 2008. It also shows outstanding revolving debt falling from $1.01 trillion to $819 billion, a $191 billion decrease. For the math challenged, like any Wall Street shill paraded on CNBC, this means consumers have added $27 billion of credit card debt since 2008. Does that sound like deleveraging? Households have also taken on $300 billion of additional student loan debt since 2008, buying into the government sponsored scam to keep the unemployment rate lower by offering the false hope of jobs with useless on-line degrees from the University of Phoenix. Does that sound like deleveraging?

Consumer Credit Card Debt and Charge-off Data (in Billions):

Outstanding Revolving Consumer   Debt Outstanding Credit Card Debt Qrtly Credit Card Charge-Off   Rate Qrtly Credit Card Charge-Off   in Dollars
Q1 2012 $819.4 $803.0 4.37% $8.8
2011 $864.9 $847.6
Q4 2011 $864.9 $847.6 4.53% $9.6
Q3 2011 $826.2 $809.7 5.63% $11.4
Q2 2011 $819.2 $802.8 5.58% $11.2
Q1 2011 $810.7 $794.4 6.96% $13.8
2010 $857.4 $840.2 $77.9
Q4 2010 $857.4 $840.2 7.70% $16.2
Q3 2010 $836.0 $819.2 8.55% $17.5
Q2 2010 $847.5 $830.5 10.97% $22.8
Q1 2010 $860.3 $843.1 10.16% $21.4
2009 $921.9 $903.4 $85.6
Q4 2009 $921.9 $903.4 10.12% $22.8
Q3 2009 $922.2 $903.7 10.1% $22.8
Q2 2009 $933.1 $914.4 9.77% $22.3
Q1 2009 $946.1 $927.2 7.62% $17.7
Q4 2008 $1,010.3 $990.1

(Source: CardHub.com, Federal Reserve)

They only people with the courage to tell it like it is are skeptics and outcasts from polite society inhabited by the power elite – people like Ron Paul, Michael Burry, and deceased critical thinkers like Frank Zappa and George Carlin. In one of his final appearances, Carlin brutally lashed out with a torrent of truth, only spoken by courageous people not worried about the consequences of their blunt honesty:

“Politicians are put there to give you that idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations, and they’ve long since bought and paid for the Senate, the Congress, the State Houses, and the City Halls. They’ve got the judges in their back pockets. And they own all the big media companies so they control just about all the news and information you get to hear. They’ve got you by the balls.

They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest. You know something, they don’t want people that are smart enough to sit around their kitchen table and figure out how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago. They don’t want that, you know what they want?

They want obedient workers, obedient workers. People who are just smart enough to run the machines and do the paperwork and just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. The table is tilted folks, the game is rigged. Nobody seems to notice, nobody seems to care. Good honest hard working people, white collar, blue collar, it doesn’t matter what color shirt you have on. Because the owners of this country know the truth, it’s called the American Dream, because you have to be asleep to believe it.”

Grotesque Casino of Corporate Fascism

“The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.” – Frank Zappa

average-income-americans

“Specifically, over the past 15 years, the global financial system – encouraged by misguided policy and short-sighted monetary interventions – has lost its function of directing scarce capital toward projects that enhance the world’s standard of living. Instead, the financial system has been transformed into a self-serving, grotesque casino that misallocates scarce savings, begs for and encourages speculative bubbles, refuses to restructure bad debt, and demands that the most reckless stewards of capital should be rewarded through bailouts that transfer bad debt from private balance sheets to the public balance sheet. What is central here is that the government policy environment has encouraged this result. This environment includes financial sector deregulation that was coupled with a government backstop, repeated monetary distortions, refusal to restructure bad debt, and a preference for policy cowardice that included bailouts and opaque accounting. Deregulation and lower taxes will not fix this problem, nor will larger stimulus packages.” John Hussman

None of the solutions put forth by Obama or Romney will fix the problems facing the country today. They are two handpicked figureheads representing the same owners. Both political parties are responsible for the grotesque casino that passes for our financial system. These political hacks have been in alternating control of our government system for the last 150 years. They don’t want to come up with real solutions to the problems they created. The owners want obedient slaves, distracted by technology and shallow entertainment, subjugated by debt used to buy things they want but don’t need, believing waging wars in distant lands keeps us safe, and favoring the imprisonment of petty thieves and drug users while the grand thieves run the country and control our currency. Keeping the willfully ignorant masses in the dark and confused is a vital part of the plan. Debt is the ingredient that enriches the issuers and keeps the dupes in check.  Wall Street bankers, Federal Reserve governors, captured financial “experts”, journalists paid by corporations, economists with an ideological agenda and bought off politicians all repeating the same theme with the same unquestioning, strident conviction is a sure sign that we are being played. The never ending series of titanic bailouts of Wall Street did not avert a catastrophic economic collapse. They protected the corporate fascists from experiencing the consequences of their monstrous predatory actions over the last few decades. And it was all done for money. Simple human greed and an insane desire by a few psychotic men to control and manipulate others for their own selfish pleasure is what has turned this country into a corporate fascist state bereft of its soul and original founding principles, as stated by Ron Paul:

“We’re not moving toward Hitler-type fascism, but we’re moving toward a softer fascism: Loss of civil liberties, corporations running the show, big government in bed with big business. So you have the military-industrial complex, you have the medical-industrial complex, you have the financial industry, you have the communications industry. They go to Washington and spend hundreds of millions of dollars. That’s where the control is. I call that a soft form of fascism — something that’s very dangerous.”

The soft form of fascism easily transforms into the hard form as those in control exhibit their supremacy with displays of military potency in our cities (Boston, St. Louis, Pittsburgh, Chicago), passage of liberty stripping legislation like the Patriot Act and NDAA, along with announcements about thousands of drones patrolling our skies over the next five years. When propaganda begins to lose its effectiveness, brute force is the next step. Whenever I write about the slow methodical disintegration of our once great republic into a dysfunctional banana republic controlled by bankers, mega-corporations and arms dealers; the apologists for the empire scoff and cynically ask for my solutions. I, along with many other rational thinking realists, have proposed solutions, but they don’t have a snowballs chance in Syria of ever even being debated by the existing ruling class. The unholy alliance between bankers, corporate interests and politicians must be broken. These proposals would go a long way towards breaking that alliance:

Political System

  • Since politicians cannot be trusted to exhibit courage or intelligence when it comes to public policy, a balanced budget amendment to the Constitution needs to be passed, with a five to ten year      implementation period to ameliorate the pain.
  • Term limits of 6 years for Congressmen and Senators. Serving in Congress should not be a career. It is a duty to the country. The purpose of Congress is to represent the existing generations of citizens and ensure that future generations have a country that offers opportunity to live a better life than their parents.
  • The entire election process would be scraped. It would be transformed into a 3 month publicly financed election. No money from corporations, unions, or individuals would be allowed. Multiple candidates      would have an opportunity to debate on public TV. The two party domination of our political process must be broken.
  • Corporations are not people. Extreme wealth does not give someone the right to buy elections. Rich oligarchs operating in the shadows and spending billions on negative advertising is not how a republic should elect their representatives.  Lobbyists, special interests and PACs and would be eliminated from the political process.
  • The President could no longer issue Executive Orders, undercutting the legislative process.
  • Every bill before Congress would immediately be put online. The constituents of every Congressmen and Senator would be allowed to voice their opinion by voting yes or no online.
  • Every bill that is proposed by a Congressman must have a funding mechanism. If the proposal increases costs to the American taxpayer, something else must be cut to pay for the new proposal. This would be unnecessary if a balance budget amendment was passed.
  • No American troops could be committed to war in a foreign country without a full vote of Congress as required by the U.S. Constitution.
  • A cost benefit analysis would be conducted regarding every department and agency in the Federal Government by the GAO. Those failing to meet minimum requirements would be drastically reduced or eliminated.
  • The education of children would be delegated to localities, without Federal mandates. Every child in America would receive vouchers for grade school, high school and college. They could choose any      school to attend – public or private. If the private school cost more than the voucher, the family would pay the difference. Excellent schools would flourish, poor schools would be forced to improve or they would close. Teacher tenure would be eliminated. Teaching excellence would be rewarded.

Economic Policy

  • The first thing to be done is to abolish the Federal Reserve. It is owned by and operated for the benefit of the biggest banks in the world. Its sole purpose has been to enrich the few at the expense of the many through its insidious use of inflation and debt issuance. It has been around for less than 100 years and has debased the USD by 96%. The U.S. Treasury has the authority to issue the currency of the country. It did so from 1789 until 1913.
  • The 2nd thing to do would be to reinstitute the Glass-Steagall Act because Wall Street cannot be trusted to manage their risk properly. This would separate true banking activities from the high risk gambling that brought the economic system to its knees. Privatizing the profits and socializing the losses is unacceptable.
  • The FASB would be directed to make all banks and financial corporations value their assets at their true market value. This would reveal the mega Wall Street banks and corporations like GE to be insolvent. An orderly bankruptcy of all insolvent financial firms involving the sell-off of their legitimate assets to well-run risk adverse banks that didn’t screw up would ensue. Bondholders and stockholders would realize their losses for awful investment decisions. The economic system would be purged of its bad debt.
  • The currency of the US would be backed by hard assets. A basket of gold, silver, platinum, uranium, and some other limited hard commodities would back the USD. If politicians attempted to spend too much, the price of this basket would reflect their inflationary schemes immediately.
  • The 16th Amendment would be repealed and the income tax would be scrapped. It would be replaced with a national consumption tax. The more you consume, the more taxes you pay. Wages, savings and investment would be untaxed. The tax code is the source for much of politicians’ power. Its demise would further reduce Washington DC control over our lives.
  • A downsizing of the US Military from $1 trillion to $500 billion annually would be initiated through the withdrawal of troops from Afghanistan, Iraq, Germany, Japan and hundreds of other bases throughout the world. Policing the world is bankrupting the empire.
  • All corporate, farm, education, and social engineering subsidies would be eliminated. All Federal employees would have their pay slashed by 10% and the workforce would be reduced by 20% over 5 years. Federal health benefits and pension benefits would be set at average private industry levels.
  • The Social Security System would be completely overhauled. Anyone 50 or older would get exactly what they were promised. The age for collecting SS would be gradually raised to 72 over the next 15 years. Those between 25 and 50 would be given the option to opt out of SS. They would be given their contributions to invest as they see fit if they opt out. Anyone entering the workforce today would not pay in or receive any benefits. The wage limit for SS would be eliminated and the tax rate would be reduced from 6.2% to 3%.
  • The Medicare system is unsustainable. It would be converted from a government program to private market based program. The Federal mandates, rules and regulations would be eliminated. Senior citizens would be given healthcare vouchers which they would be free to use with any insurance company or doctor based on price and quality. Insurance companies would compete for business on a national basis. Doctors would compete for business. The GAO would have their budget doubled and they would audit Medicare fraud & Medicaid fraud and prosecute the criminals without impunity.
  • The healthcare bill would be repealed. Insurance companies would be allowed to compete with each other on a national basis. Tort reform would be implemented so that doctors could do their jobs without fear of being destroyed by slimy personal injury lawyers. Doctors would need to post their costs for various procedures. Price and quality would drive the healthcare market.
  • The entitlement state would be dismantled. The criteria for collecting welfare, SSDI, food stamps and unemployment benefits would be made much stricter. Unemployed people collecting government payments would be required to clean up parks, volunteer at community charity organizations, pick up trash along highways, fix and paint houses in their neighborhoods and generally keep busy in a productive manner for society.
  • A free market method for stabilizing the housing market would be for banks to voluntarily reduce the mortgage balances of underwater homeowners in exchange for a PAR (Property Appreciation Right). The homeowner would agree to pay off the PAR to the Treasury (and administered through the IRS) out of future price appreciation on the existing home or subsequent property. The homeowner would be excluded from taking on any home equity loans or executing any “cash out” refinancing until the PAR was satisfied. The maximum PAR obligation accepted by the Treasury would be based on the value of the home and the income of the homeowner.

I’m sure there are many more solutions which non-captured, intelligent, reasonable citizens could put forth to save this country. None of these ideas would be acceptable to the country’s owners. They would reduce their wealth and power. What these oligarchs do not realize is that we are in the midst of a Fourth Turning. Those who experienced the last one have died off. The existing social order will be swept away. It is likely to be violent and bloody. Good people and bad people will die. When the Crisis reaches its climax we will have the opportunity to implement good solutions. There is also the distinct possibility that our increasingly ignorant populace will turn to a messianic psychopath that promises them renewed glory. Decades of delusional decisions will lead to a future that will not be orderly or controllable.

 

 “The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery. If the suffering becomes great enough, change will inevitably come, but it may not be orderly or as controllable as the moneyed interests often like to think.” – Jesse

Parts 1 & 2 can be accessed here:

PART 1

PART 2

GoldMoney. The best way to buy gold & silver

Money in America — Part Eight

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Posted on 4th June 2012 by Novista in Economy |Politics |Social Issues

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In our last dramatic episode, we saw America ready for war … with British help, looked at a war economy from the vantage point of Main Street, and touched on post-war conditions.

 

World War Two loose ends

The behind-the-scenes activities of the British Security Coordination (officially know as the British Passport Control Office in NYC) not only derailed the ‘isolationist’ element of the American public, it also succeeded in deposing Vice President Henry Wallace as FDR’s running mate in 1944.

One factor was Wallace’s vision of a post-war world which conflicted with Churchill and others, hoping to retain their stature as a world power. Recall that Great Britain insisted on returning to a gold standard at the pre-WW1 value of the pound. During WW2 years, they feared the growth and ambition of their American cousins. Perhaps the most significant area of disagreement was the role of civil aviation and who would claim the lion’s share of world domination.

Juan Trippe’s Pan American had received a $260 million war contract to build some 16 airfields in South America for military use. One provision of this contract granted the reversion of “$38 millions worth of work” to Pan Am and exclusive use of these facilities after the war. The final cost was estimated upwards of one billion dollars …

Pan Am also had their Boeing 314s (the Clipper flying boat) taken over by the government as they were the only existing aircraft that could carry large payloads across an ocean. The airline had other contracts, ferrying bombers and other aircraft, and flew all up more than 90 million miles for the U.S. Government.

Perhaps one of the factors that drew Churchill’s approval of Harry Truman was that the latter disliked Pan Am’s monopoly in South America.

Most of this aviation war work fell under the auspices of the Army Air Transport Command. What started in wartime as a very small scale operation ended up larger than the entire United States commercial airline establishment. The British were right to worry about their future.

(A slight digression)

The Tokyo Skytower, world’s largest freestanding tower, opened on 21 May 2012. This is a significant rhyme … and Skytower’s “curves and arches reflect[ing] a traditional Samurai sword” katana imagery offers interesting symbolism.

Although the first skyscraper was built in Chicago in 1884-5, the great push for really big building occurred even as the Great Depression unfolded.

  • NYC – Chrysler Building, 1930, Empire State building, 1931.
  • Chicago – Palmolive building, Carbide and Carbon building, and Medinah Club building, 1929.
  • Cincinnati – AT&T building, 1929, Carew Tower, 1930, and Times-Star building, 1933.
  • Kansas City, Missouri – Power and Light building, 1931, and Jackson Country Courthouse, 1934.
  • Hartford, Conn. – Southern New England Telephone building, 1931.
  • Providence, RI – County Courthouse, 1930.
  • Philadelphia, PA – Lewis Tower, 1929, and Ritz-Carlton , 1931.
  • Pittsburgh, PA – Gulf Building, 1932.

Just a few examples then and here we are now in another similar era with tall, taller, tallest buildings springing up around the globe. Do you feel lucky, punk?

The Post-War Economy

In a fine example of linear thinking, the pundits looked forward by looking backward. Some remembered the Bonus Army. Others anticipated a new depression … “the greatest and swiftest disappearance of markets in all history” … “insecurity, instability, and maladjustment” … “the infections of a postwar disillusionment” … “a declining birthrate” …

Fearing a thinning population and collapsing economy, the U.S. Government began planning a massive campaign, involving two hundred organizations, to provide work relief on the scale of the original New Deal.

It wasn’t necessary.

The Fourth Turning, pg. 146

With vast examples of wartime spending, many economists feared the subsequent drop in military spending would see the economy revert to depression hard times. Not so – a dozen years of thwarted consumer demand assisted strong economic growth. The 1940 GNP of $200 billion in 1940 went to $300 billion by 1950. And a decade later, GNP surpassed $500 billion.

Rebuilding Europe via the Marshall Plan aid and U.S. exports certainly was a factor. And an ‘Iron Curtain’ descending over eastern Europe supplanted the Nazi menace with a Soviet one and the Cold War was underway. Cue the MIC.

Also, the union movement threw off the government shackles imposed by the war effort. 1945 ended with automobile, electrical and steel strikes.

A gathering of elites from allied nations had met at Bretton Woods in 1944 and established a regulated method of exchange rates, referenced to the U.S. gold backed dollar – and thus the US$ became the world reserve currency.

Whether or not it’s true that the U.S. held 80% of world gold reserves then, “he who owns the gold makes the rules.” As of 2010, the total of gold reserves was 30,807 tonnes and the U.S. is said to have 8,133.tonnes, even if it’s now “only tradition” …

“After World War II, the United States held over 20,000 tons of gold in its reserves much of it having come from Europe to pay for war supplies and arms.”

Alex Stanczyk – Beijing China Jan. 7th, 2012 speech

Businessmen, industrialists, entrepreneurs, all demonized in the 30s and co-opted in the 40s saw a ‘sea change’ in attitudes. Having assisted in victory, albeit via government spending, the post-war years saw new attitudes welcoming progress. And innovation. An industrial conference certainly embraced innovation – and even depression-era experiments like television quickly became a reality that grew. Radar and microwaves turned from war to civilian use. The potential of computers was discussed; the only one willing to take a chance was Thomas J. Watson, who said he would probably lose money but it was worth exploring.

As quickly as Detroit factories had converted to war work, they changed back even faster. The first 1946 civilian cars rolled off the lines before year’s end.

In the farm sector, increased productivity led to agricultural overproduction. Small farms were losing competitive ability and the 1947 farm workforce of 7.9 million people declined over the next forty years to less than half that. Farming grew to become Big Agra.

Nothing goes up forever – business eased off from expansionary investment. President Truman responded to an eleven month slump beginning in November 1948, shortly after his “Fair Deal” economic reforms. Coincidentally the Federal Reserve had initiated a period of monetary tightening. Also, there was the new, improved threat of the Cold War – and Truman reinstituted the draft. Economists had forecast a much worse period, deflation, gloom and doom. The GNP declined 1.5%, consumerism had lessened and unemployment went up to 7.9%. A little deficit spending wouldn’t hurt …

The face of the urban workplace environment changed, too. By the 1950s more service works would be counted than those who produced goods. By 1956, more white-collars were employed than blue-collars. Unions won their first long-term employment contracts, with generous benefits …

Business activity has expanded greatly since the spring of 1946 in response to the stimulation of a large postwar civilian demand for goods and services. As a result of this increased activity, as well as of advancing prices and a sharp reduction in corporate taxes, business profits after taxes reached new high levels by the end of 1946. In this period expenditures by business for plant, equip- ment, and inventories have been in unprecedented volume. In order to finance the great increase in assets, business in general has invested the largest annual volume of retained earnings in history, has drawn upon its large wartime accumulation of cash and Government securities, has borrowed from banks, and has floated new issues of securities.

Federal Reserve Bulletin, May 1947

The Fed also noted that the dollar volume of sales in 1946 was 75 percent greater that the previous peacetime peak year of 1929. Wartime profits for business contributed to unusually high levels of plants and equipment spending – aided by a large volume of investment funds. Banks with large holdings of short-term Treasuries could sell or pledge against advances from the Federal Reserve and thus increase their loan portfolios. Special tax credits adjustment wartime taxes for business reduced the 1946 tax liabilities.

Wartime financing by the twelve Federal Reserve Banks, after statutory dividends to the member banks in 1947 yielded a net earning of 60 million dollars. About 90 percent was paid into the Treasury.

 

The Rise of Suburbia

William Levitt addressed the problem of affordable home ownership first in New York and four other locations. A generation accustomed to ‘government issue’ found the identical ‘cookie-cutter’ houses acceptable, especially since they were cheaper than renting. Assembly-line production techniques in building houses for the first time proved effective.

Levitt & Sons and other builders were guaranteed by the V.A. and FHA which benefitted veterans significantly. The first homes were offered in March, 1949, even as the administration fought deflation.

The typical blue collar family had an option for better living also.

http://tigger.uic.edu/~pbhales/Levittown/Life%20magazine%20images%201949-/Bernard%20Levey%20family%20in%20front%20of%20original%20Cape%20Cod.jpg

Levittown, New York was the model of an ideal American suburb. It would take decades for these modest homes to morph into McMansions all across the nation – but once a paradigm shift has begun, it must stay the course.

The symbiosis of automobiles for Everyman as well as tidy little suburban homes was irresistible. Those hordes who once escaped the family farm for city life now expanded inexorably into something that was neither. The average new car cost $1,510 in 1950 and a gallon of gas to put in it set you back 18 cents. That Cape Cod house style averaged $8,450 and it came with modern kitchen appliances!

A middle-class wage averaged $3,210 and one of the biggest discretionary expenses was a B&W TV at $249.95, and it was made in America.

The sprawl continued over the years: inner suburbs, outer suburbs, exurbs, and by the 1990s, suburbs mingled with commercial centres, industrial parks, and corporate headquarters.

The Treasury-Federal Reserve Accord

The Federal Reserve System formally committed to maintaining a low interest rate peg on government bonds in 1942 after the United States entered World War II. It did so at the request of the Treasury to allow the federal government to engage in cheaper debt financing of the war. To maintain the pegged rate, the Fed was forced to give up control of the size of its portfolio as well as the money stock. Conflict between the Treasury and the Fed came to the fore when the Treasury directed the central bank to maintain the peg after the start of the Korean War in 1950.

http://www.richmondfed.org/publications/research/special_reports/treasury_fed_accord/background/

Actually, Truman wanted that peg maintained for his U.N. police action. The Fed argued the low peg produced an excessive monetary expansion causing inflation. The Accord, eliminated the obligation of the Fed to monetize the debt of the Treasury at a fixed rate. This agreement became essential to the independence of central banking …

Thus, 1951 ushered in “the modern Federal Reserve System”.

Sociologically, all you need to know about the decade of the 50s was written in William H. Whyte’s “The Organization Man.” Americans inspired to win World War 2 returned to an empty suburban life, conformity, and the pursuit of the dollar. Kurt Vonnegut would have agreed. His first novel, “Player Piano”, reflected the corporate culture of uniformity, team work, collectivism and stability that he experienced at General Electric.

And there was McCarthy and reds under the bed. The Rosenberg trial. HUAC. The ever-present threat of the Cold War and mushroom clouds. Captain America and Mickey Spillane taking out Commies. A new chapter in ‘War is the health of the state’ …

The business magazine Steel had applauded Truman’s policies: “the firm assurance that maintaining and building our preparations for war will be big business in the United States for at least a considerable period ahead.”

In 1950, the U.S. Budget was $40 billion with $12 billion for the military. By 1955, that year’s budget was $62 billion with $40 billion for the military. When John F. Kennedy was elected in 1960, it was 49% of about $91 billion total. Very soon after his inauguration, JFK asserted the country was spending too much for war and intended to cut back the size of the active military. Then he reversed course, adding $9 billion to the ‘defense’ kitty. A curious observation has been made about the Nixon-Kennedy debates: those who felt JFK won were primarily television viewers; the radio audience leaned toward Nixon. The 1960 election was incredibly close.

Of course, news of Soviet buildups, the “bomber gap” and the “missile gap” turned out to be exaggerated. Nonetheless, the 1970 military budget had grown to $80 billion – half of that to about 15 industrial corporations.

The fear factor card never gets old, continually played and believed. From an Iranian threat, the panic of “Reds” only 90 miles away to Bay of Pigs to the Cuban missile crisis and then an assassination to wonder about. On and on.

But by 1964, the American High had worn out and the greatest antiwar movement ever experienced in America had its effect – enter the Second Turning, the Consciousness Revolution. Perhaps the prelude to this season shift was the founding of the AARP in 1958 – another type of looking ahead from the previous generation.

After the ‘death of Camelot’ (smothered by glitz, hype and myth) America embraced the Great Society with good intentions and no ability to do simple arithmetic. The 1964 election saw the biggest Democratic landslide since 1938. Liberals would eliminate poverty – and any slight failures were blamed on the excessive spending on the Vietnam War.

And along came Nixon

Aside from health problems, LBJ also faced dissension within the ranks, from an antiwar movement, complete with Hollywood celebrities – and depressing polling results indicated the pragmatic decision to “not seek … not accept the nomination of my party for another term.” Following his earlier remarks in that speech, suspending bombing in North Vietnam and being in favor of peace talks, this decision was unexpected.

With LBJ’s withdrawal from a race that was looking promising for antiwar Eugene McCarthy likely to win large numbers of convention delegates, Hubert Humphrey announced his candidacy. So did Robert Kennedy. The latter’s ambition ended with another lone nut with a gun … McCarthy was overshadowed by Humphrey. The 1968 Democratic Convention in Chicago, complete with antiwar riots and police brutality seen by “the whole world” had some influence in the outcome of the election. The failed Paris peace talks … for whatever reason … added to the shift to the Republican brand.

Nonetheless, the end result was squeaky close with but 0.7% in favor of Nixon.

Nixon assumed office after about eight years of expansion. By the end of 1969, attempts to handle the budget deficits of the Vietnam War and Federal Reserve monetary tightening via raised interest rates spawned an eleven month recession. Confidence grew with the Christmas present of the end of a mild (0.6%) recession and 1971 started looking bright.

Meanwhile, what had begun at Bretton Woods was slowly unraveling. With a little bit of coercion, the U.S. Dollar had been accepted as the world reserve currency and a fixed-exchange system would reign.

Everything worked well in the post-war era. The Marshall Plan and other aid was designed to assist growth of nations, such as Japan, as targets for export of U.S. goods – and thus able to absorb U.S. Dollars. The U.S. was producing half of the world’s manufactured goods. Initially holding half of the world’s reserves, and a creditor nation. But by 1970, U.S. Reserves were down to 16%, the Deutsche Mark and yen were undervalued with neither country willing to revalue – this being the justification for weaker currency being good for exports. Trade imbalances were worsening.

And then there was de Gaulle. With the U.S. insisting on the FDR gold price fix of $35/oz., an open market for gold made the pegged convertability between central banks a problem.: the U.S. had to keep running deficits to keep the system liquid and other countries were tempted to buy gold at the Bretton Wood price and sell on the open market for the artifically maintained strength of the U.S. Dollar.

In about 1967, de Gaulle realized the reserve currency was unsustainable and intended returning France to a gold standard. Having been a party to the establishment of the London Gold Pool in 1961, he responded to his prime minister’s later analysis:

“The international monetary system is functioning poorly because it gives advantages to the country issuing the reserve currency. Such a country can have inflation by making others pay for it.”

George Pompidou

France pulled out and the London Gold Pool collapsed in 1968. By 1971, U.S. Reserves were only around $10 billion and foreign banks held $80 billion in dollars.

In early 1971, de Gaulle sent a French battleship with a hoard of dollars to convert to gold at the Federal Reserve Bank of New York. The British ambassador to Washington conveyed the August 11 instruction of his government, conversion of $3 billion dollars into gold, to be stored in the underground vault of said bank. Other foreign governments had gold stored there also.

On August 16, 1971, Nixon abandoned the gold standard, asserting that the United States would no longer redeem dollars.

 

Fiat on!

And it’s been downhill ever since.

 

Epilogue to come …