Automatic Earth – The Burning Platform

Stuck In Reverse And Descending Into Trauma

Guest Post by Raúl Ilargi Meijer

John Vachon Rain. Pittsburgh, Pennsylvania Jun 1941 US Q3 GDP was revised up by the BEA to 3.89%, but that’s no longer what financial markets react to. They sit and wait for more QE somewhere on the planet to be doled out. Will Americans, if they see this at all, take those numbers, add them to the sweet drop in prices at the pump and spend what they save on more holiday purchases? I’m not saying I know, but I do see that US consumer confidence is down, as is global business confidence – the latter at a five year low.

The Case/Shiller index reports a “broad-based slowdown” for US home prices, and that in the rear view mirror that looks at Q3. So that’s not where those 3.89% came from, it wasn’t housing (wonder what it was). The Gallup Christmas survey lost 8% of exuberance in one month. What this adds up to is that Americans may not spend all of that saved gas money, and that means there’s a real danger of deflation coming to America too – as if Japanese and European attempts to export their own were not enough yet.

While the media continue to just about exclusively paint a picture of recovery and an improving economy, certainly in the US – Europe and Japan it’s harder to get away with that rosy image -, in ordinary people’s reality a completely different picture is being painted in sweat, blood, agony and despair. Whatever part of the recovery mirage may have a grain of reality in it, it is paid for by something being taken away from people leading real lives. US unemployment numbers are being massages three ways to Sunday, as is common knowledge, or should be; the amounts of working age people not working, and not being counted as unemployed either, is staggering.

But there’s a very large, and growing, number of people who do work, but find it impossible to sustain either themselves or their families on their wages. That’s how the recovery, fake as it even is, is paid for. And this will have grave consequences for many years, if not decades, to come.

If a government would come clean with its citizens, explain the overwhelming debt situation a nation is in, that everyone will have to do with less at least for a while, and then openly start restructuring the debts, those consequences would be much less damaging. But all governments choose to talk about only recovery and growth, and to let their people suffer the consequences of the policies enacted to achieve these goals, even if after 6-7 years of crisis and dozens of trillions in stimulus, we’re no closer to either. Quite the contrary. We’re not in ‘drive’, we’re stuck in ‘reverse’. We’re backing up. We’re moving backwards.

Lance Roberts at StreetTalkLive provides stats on how many Americans have been made dependent on some sort of handout:

The Dismal Economy: 148 Million Government Beneficiaries

.. the Federal Reserve has stopped their latest rounds of bond buying and are now starting to discuss the immediacy of increasing interest rates. This, of course, is based on the “hopes” that the economy has started to grow organically as headline unemployment rates have fallen to just 5.9%. If such activity were real then both inflation and wage pressures should be rising – they are not. According to the Congressional Budget Office study that was just released, approximately 60% of all U.S. households get more in transfer payments from the government than they pay in taxes.

Roughly 70% of all government spending now goes toward dependence-creating programs. From 2009 through 2013, the U.S. government spent an astounding 3.7 trillion dollars on welfare programs. In fact, today, the percentage of the U.S. population that gets money from the federal government grew by an astounding 62% between 1988 and 2011. Recent analysis of U.S. government numbers conducted by Terrence P. Jeffrey, shows that there are 86 million full-time private sector workers in the United States paying taxes to support the government, and nearly 148 million Americans that are receiving benefits from the government each month.

Yet Janet Yellen, and most other mainstream economists suggests that employment is booming in the U.S. Okay, if we assume that this is indeed the case then why, according to the Survey of Income and Program Participation conducted by the U.S. Census, are well over 100 million Americans are enrolled in at least one welfare program run by the federal government. Importantly, that figure does not even include Social Security or Medicare. (Here are the numbers for Social Security, Medicaid and Medicare: More than 64 million are receiving Social Security benefits, more than 54 million Americans are enrolled in Medicare and more than 70 million Americans are enrolled in Medicaid.) Furthermore, how do you explain the chart below? With roughly 45% of the working age population sitting outside the labor force, it should not be surprising that the ratio of social welfare as a percentage of real, inflation-adjusted, disposable personal income is at the highest level EVER on record.

Tyler Durden addresses deteriorating wages in America with a great metaphor:

The Mystery Of America’s “Schrodinger” Middle Class, Which Is Either Thriving Or About To Go Extinct

On one hand, the US middle class has rarely if ever had it worse. At least, if one actually dares to venture into this thing called the real world, and/or believes the NYT’s report: “Falling Wages at Factories Squeeze the Middle Class.” Some excerpts:

For nearly 20 years, Darrell Eberhardt worked in an Ohio factory putting together wheelchairs, earning $18.50 an hour, enough to gain a toehold in the middle class and feel respected at work. He is still working with his hands, assembling seats for Chevrolet Cruze cars at the Camaco auto parts factory in Lorain, Ohio, but now he makes $10.50 an hour and is barely hanging on. “I’d like to earn more,” said Mr. Eberhardt, who is 49 and went back to school a few years ago to earn an associate’s degree. “But the chances of finding something like I used to have are slim to none.” Even as the White House and leaders on Capitol Hill and in Fortune 500 boardrooms all agree that expanding the country’s manufacturing base is a key to prosperity, evidence is growing that the pay of many blue-collar jobs is shrinking to the point where they can no longer support a middle-class life.

In short: America’s manufacturing sector is being obliterated: “A new study by the National Employment Law Project, to be released on Friday, reveals that many factory jobs nowadays pay far less than what workers in almost identical positions earned in the past.

Perhaps even more significant, while the typical production job in the manufacturing sector paid more than the private sector average in the 1980s, 1990s and early 2000s, that relationship flipped in 2007, and line work in factories now pays less than the typical private sector job. That gap has been widening — in 2013, production jobs paid an average of $19.29 an hour, compared with $20.13 for all private sector positions. Pressured by temporary hiring practices and a sharp decrease in salaries in the auto parts sector, real wages for manufacturing workers fell by 4.4% from 2003 to 2013, NELP researchers found, nearly three times the decline for workers as a whole.

How is this possible: aren’t post-bankruptcy GM, and Ford, now widely touted as a symbol of the New Normal American manufacturing renaissance? Well yes. But there is a problem: recall what we wrote in December 2010: ‘Charting America’s Transformation To A Part-Time Worker Society:”

.. one of the most important reasons for lower pay is the increased use of temporary workers. Some manufacturers have turned to staffing agencies for hiring rather than employing workers directly on their own payroll. For the first half of 2014, these agencies supplied one out of seven workers employed by auto parts manufacturers. The increased use of these lower-paid workers, particularly on the assembly line, not only eats into the number of industry jobs available, but also has a ripple effect on full-time, regular workers. Even veteran full-time auto parts workers who have managed to work their way up the assembly-line chain of command have eked out only modest gains.

And that’s not some isolated incident, as the Guardian makes clear, it’s the same thing in Britain.:

Record Numbers Of UK Working Families In Poverty Due To Low-Paid Jobs

Insecure, low-paid jobs are leaving record numbers of working families in poverty, with two-thirds of people who found work in the past year taking jobs for less than the living wage, according to the latest annual report from the Joseph Rowntree Foundation. The research shows that over the last decade, increasing numbers of pensioners have become comfortable, but at the same time incomes among the worst-off have dropped almost 10% in real terms. Painting a picture of huge numbers trapped on low wages, the foundation said during the decade only a fifth of low-paid workers managed to move to better paid jobs. The living wage is calculated at £7.85 an hour nationally, or £9.15 in London – much higher than the legally enforceable £6.50 minimum wage.

As many people from working families are now in poverty as from workless ones, partly due to a vast increase in insecure work on zero-hours contracts, or in part-time or low-paid self-employment. Nearly 1.4 million people are on the controversial contracts that do not guarantee minimum hours, most of them in catering, accommodation, retail and administrative jobs. Meanwhile, the self-employed earn on average 13% less than they did five years ago, the foundation said. Average wages for men working full time have dropped from £13.90 to £12.90 an hour in real terms between 2008 and 2013 and for women from £10.80 to £10.30.

Poverty wages have been exacerbated by the number of people reliant on private rented accommodation and unable to get social housing, the report said. Evictions of tenants by private landlords outstrip mortgage repossessions and are the most common cause of homelessness. The report noted that price rises for food, energy and transport have far outstripped the accepted CPI inflation of 30% in the last decade. Julia Unwin, chief executive of the foundation, said the report showed a real change in UK society over a relatively short period of time. “We are concerned that the economic recovery we face will still have so many people living in poverty. It is a risk, waste and cost we cannot afford: we will never reach our full economic potential with so many people struggling to make ends meet.

And it’s even worse in Greece and Spain and Italy, all so northern Europe and the Brussels politicos can keep alive the idea that Germany and Holland are doing well, and overall growth is almost at hand. That southern Europe must suffer for that idea has been justified away for years now, and it’s not even an issue deemed worth discussing anymore.

And that attitude will blow up in their faces, it’s inevitable that it will. Very few people understand how dangerous the games are that our governments and central banks play. And when the effects do play out, they will be blamed on other causes. Debt and propaganda rule our world supreme.

Excellent writer and great friend Jim Kunstler shows how simple the entire facade is to fathom, and how the next step away from the mess we’re in is so painfully obvious: downscale.

Buy the All Time High

Wall Street is only one of several financial roach motels in what has become a giant slum of a global economy. Notional “money” scuttles in for safety and nourishment, but may never get out alive. Tom Friedman of The New York Times really put one over on the soft-headed American public when he declared in a string of books that the global economy was a permanent installation in the human condition. What we’re seeing “out there” these days is the basic operating system of that economy trying to shake itself to pieces. The reason it has to try so hard is that the various players in the global economy game have constructed an armature of falsehood to hold it in place — for instance the pipeline of central bank “liquidity” creation that pretends to be capital propping up markets.

It would be most accurate to call it fake wealth. It is not liquid at all but rather gaseous, and that is why it tends to blow “bubbles” in the places to which it flows. When the bubbles pop, the gas will tend to escape quickly and dramatically, and the ground will be littered with the pathetic broken balloons of so many hopes and dreams. All of this mighty, tragic effort to prop up a matrix of lies might have gone into a set of activities aimed at preserving the project of remaining civilized. But that would have required the dismantling of rackets such as agri-business, big-box commerce, the medical-hostage game, the Happy Motoring channel-stuffing scam, the suburban sprawl “industry,” and the higher ed loan swindle.

All of these evil systems have to go and must be replaced by more straightforward and honest endeavors aimed at growing food, doing trade, healing people, traveling, building places worth living in, and learning useful things.

All of those endeavors have to become smaller, less complex, more local, and reality-based rather than based, as now, on overgrown and sinister intermediaries creaming off layers of value, leaving nothing behind but a thin entropic gruel of waste. All of this inescapable reform is being held up by the intransigence of a banking system that can’t admit that it has entered the stage of criticality. It sustains itself on its sheer faith in perpetual levitation. It is reasonable to believe that upsetting that faith might lead to war.

But that’s not yet where we are, though Ferguson sure looks close to that war Jim talks about. Our leading classes will not let us downscale, no matter how much sense that makes for the ‘lower’ 95% of the population, because that would risk their leading positions. And so we’ll have to deal with a lot more misery before the whole edifice finally blows up, and we’ll end up with huge swaths of traumatized people. In a great article, Lynn Stuart Parramore describes how that works:

So Many People Are Badly Traumatized by Life in America: It’s Time We Admit It

Recently Don Hazen, the executive editor of AlterNet, asked me to think about trauma in the context of America’s political system. As I sifted through my thoughts on this topic, I began to sense an enormous weight in my body and a paralysis in my brain. What could I say? What could I possibly offer to my fellow citizens? Or to myself? After six years writing about the financial crisis and its gruesome aftermath, I feel weariness and fear. When I close my eyes, I see a great ogre with gold coins spilling from his pockets and pollution spewing from his maw lurching toward me with increasing speed. I don’t know how to stop him. Do you feel this way, too?

All along the watchtower, America’s alarms are sounding loudly. Voter turnout this last go-round was the worst in 72 years, as if we needed another sign that faith in democracy is waning. Is it really any wonder? When your choices range from the corrupt to the demented, how can you not feel that citizenship is a sham? Research by Martin Gilens and Benjamin I. Page clearly shows that our lawmakers create policy based on the desires of monied elites while “mass-based interest groups and average citizens have little or no independent influence.” Our voices are not heard.

When our government does pay attention to us, the focus seems to be more on intimidation and control than addressing our needs. We are surveilled through our phones and laptops. As the New York Times recently reported, a surge in undercover operations from a bewildering array of agencies has unleashed an army of unsupervised rogues poised to spy upon and victimize ordinary people rather than challenge the real predators who pillage at will. Aggressive and militarized police seem more likely to harm us than to protect us, even to mow us down if necessary.

Our policies amplify the harm. The mentally ill are locked away in solitary confinement, and even left there to die. Pregnant women in need of medical treatment are arrested and criminalized. Young people simply trying to get an education are crippled with debt. The elderly are left to wander the country in RVs in search of temporary jobs. If you’ve seen yourself as part of the middle class, you may have noticed cries of agony ripping through your ranks in ways that once seemed to belong to worlds far away.

[..] A 2012 study of hospital patients in Atlanta’s inner-city communities showed that rates of post-traumatic stress are now on par with those of veterans returning from war zones. At least 1 out of 3 surveyed said they had experienced stress responses like flashbacks, persistent fear, a sense of alienation, and aggressive behavior. All across the country, in Detroit, New Orleans, and in what historian Louis Ferleger describes as economic “dead zones” — places where people have simply given up and sunk into “involuntary idleness” — the pain is written on slumped bodies and faces that have become masks of despair. We are starting to break down.

When our alarm systems are set off too often, they start to malfunction, and we can end up in a state of hyper-vigilance, unable to properly assess the threats. It’s easy for the powerful to manipulate this tense condition and present an array of bogeymen to distract our attention, from immigrants to the unemployed, so that we focus our energy on the wrong enemy. Guns give a false sense of control, and hatred of those who do not look like us channels our impotent rage. Meanwhile, dietary supplements and prescription painkillers lure us into thinking that if we just find the right pill, we can shut off the sound of the sirens. Popular culture brings us movies with loud explosions that deafen us to what’s crashing all around us.

The 21st century, forged in the images of flames and bodies falling from the Twin Towers, has sputtered on with wars, financial ruin and crushing public policies that have left us ever more shaken, angry and afraid. At each crisis, people at the top have seized the opportunity to secure their positions and push the rest of us further down. They are not finished, not by a long shot.

Trauma is not just about experiencing wars and sexual violence, though there is plenty of that. Psychology researchers have discussed trauma as something intense that happens in your life that you can’t adequately respond to, and which causes you long-lasting negative effects. [..] trauma comes with a very high rate of interest. The children of traumatized people carry the legacy of pain forward in their brains and bodies, becoming more vulnerable to disease, mental breakdown, addiction, and violence. Psychiatrist Bessel van der Kolk, an expert on trauma, emphasizes that it’s not just personal.

Trauma occupies a space much bigger than our individual neurons: it’s political. If your parents lost their jobs, their home or their sense of security in the wake of the financial crisis, you will carry those wounds with you, even if conditions improve. Budget cuts to education and the social safety net produce trauma. Falling income produces trauma. Job insecurity produces trauma.

There’s much more at the link, and every word is worth reading. The mental consequences of the gutting of our societies by governments and the financial industry does not get nearly enough scrutiny. We act, or politicians and media do, as if millions of people losing their jobs, and over half of young people in certain nations never having had a chance of a job, is just a matter of numbers, of mere statistics.

And then all sorts of ‘experts’ claim it’s all just the price to pay for technological progress, that will make everything so much better for everyone some sunny day soon. But that sunny say will never come, the techno happy ideal version of the future has already died with the debt incurred to facilitate it. We need to take a step backwards, or we’ll continue to drive backwards. Or be driven, to be more precise, since we’ve handed over the steering wheel to people who have no intention of taking us where we want to, and should, go. They are only intent on taking us where they can squeeze us most.

Thing is, there’s precious little left to squeeze. And they know that much better than most of us do. That’s why it’s imperative that we should get rid of these clowns, or there’ll be a whole lot more trauma. We can organize our societies, and we can even organize ways to downscale them peacefully . But not with those at the helm who see us only as mere entities to draw blood from.

We need to be a whole lot more assertive about this; we shouldn’t want to be surrounded by traumatized friends and family members and neighbors There’s nothing good for us in that. It’ll be used against us in increased surveillance and clampdowns and all that comes with it.

We can have good jobs for everyone, all it takes is to have what we need, produced in our own communities and societies, instead of having it shipped over from China. It’s not rocket science. It’s just that there’s a certain segment in society, which unfortunately happens to be the most powerful one, that doesn’t want us to do that. They want more and bigger, not smaller and better.

Until we solve that issue, things will keep getting worse. And not just a little bit. We need to find leaders that actually represent us, our needs and desires and ideas, and we need to find ways to elect them. If we don’t, we face a very bleak future in which there won’t be much left for us to choose. Or enjoy. We live in a pivotal moment in time, but we don’t recognize it for what it is. We seem to think it’s all some minor hiccup. We are dead wrong.

The Most Destructive Generation Ever

Guest Post by Raúl Ilargi Meijer

Dorothea Lange Hoe culture in the South. Poor white, North Carolina July 1936

I’m afraid I got to delve into a particularly unpopular topics once again today. Blame it on Bloomberg. They ran a piece on the Silent Generation (people born between 1928-’45), which finds it self in a ‘sweet spot’ but refuses to spend enough. A funny problem: the by far richest group in the US doesn’t spend, while those who would like to spend, for instance to build a home and a family, are too poor to do it.

I know I’m not going to make myself popular with what I have to say about this, but then I’m not running for US President, or Miss Universe for that matter. Besides, people should be careful about taking things personal that are not.

My point is that the Silent Generation is by far the most destructive generation in human history, so it should be no surprise they’re also the richest ever. What’s more, the chance that there will ever be a more destructive generation is eerily close to zero, and that uniqueness warrants scrutiny.

My point is even more that the Silent Generation may and will claim innocence wherever they can, but there is no innocence left today. Today, they can all watch their TVs and look out the window and understand that this is not going to end well. Unless the Silent Generation make very substantial changes to their lifestyles and attitudes, they’re inviting a war with their own (grand)children.

It starts here: World population went from 2 billion in 1928 to 7+ billion today in 2014, as US population went from 120 million in 1928 to 320 million in 2014. In graphs, first the world:

And then the US:

That is huge. But there’s another factor at play that, interestingly, is both a cause and a consequence of the population numbers: energy use. Again, first the world:

And the US:

As should be clear, we’re looking at an exponential function multiplied by an exponential function. World population more than tripled, and all those extra people used 6-7-8 times more energy per capita then did prior generations. That’s 20-25 times more energy use in total. As I said, it should be no surprise that it should be no surprise that the Silent Generation is the richest ever.

But. But there’s one more graph that we should be careful not to leave out. if only because it’s interesting to see that the richest generation in human history, as they were coming of age, and while they were busy increasing their per capita energy use manifold, also started incurring more debt. Much more debt.

That last graph should make us wonder how rich they are exactly. Or, rather, how much of their alleged wealth will need to be serviced by their progeny. And then you have to ask what kind of wealth that is, exactly. Let’s turn to the Bloomberg article:

The Richest Elderly Generation Ever Doesn’t Like to Spend

Jon Burkhart was born during the Great Depression. [..] When he and his wife married in 1959, they lived in Texas and saved 10% of every paycheck. Thanks to well-timed equity and property investments, the 81-year-old now lives a much different life than the elderly he knew as a child. [..] The median net worth for the oldest Americans has climbed to near the top compared with other age groups from near the bottom just two decades ago .. This shift in buying power may not be a positive development for the economy as prime-age workers typically spend more than their elders.

The Silent Generation, born between 1928 and 1945, has benefited from improved health, a more generous social safety net, an exit from the job market ahead of the past recession and rebounding stock and home values. “They are in the sweet spot.” The median family net worth of Americans 75 and older was $194,800 last year adjusted for inflation, compared with $130,900 in 1989 ..Members of the Silent Generation are currently about ages 69 to 86. The title of richest ever will probably go unchallenged for now ..

Increased net worth of today’s elderly may not translate into a boon for consumer spending [..] household spending peaks at age 45 and then falls in every category except health care, dropping about 43% by the age of 75. The term Silent Generation was coined by Time Magazine in a 1951 article as the group was coming of age. It described the generation as “working fairly hard and saying almost nothing,” one that “does not issue manifestos, make speeches or carry posters.”

Not in 1951. They did not ‘not issue manifestos, make speeches or carry posters’ then. But they did in the 1960s, when they were in their late teens and up. It’s curious to see that those who did protest and wave banners and all, from Washington to Paris and beyond, concerned as they were with human rights, corruption and the environment, later became the wealthiest and most destructive people the world has ever witnessed, as a group, as a generation.

From 1962 through 1991, when mid-wave Silent Generation members were in their prime working years, gross domestic product grew an average of 3.5% a year. Since then, GDP has expanded 2.6% a year. The homes and financial assets they acquired as they aged saw outsized price gains over the decades. [..] Meanwhile the Federal Housing Finance Agency’s home price gauge has risen 472% since 1975.

For a large part of the ‘Silents’, rising home prices have been a substantial part of their wealth accumulation. Even when prices were falling in 2008, it didn’t matter much, because mortgages were long paid off.

Federal outlays on programs benefiting those 65 and older also became more generous over the decades. They rose to $27,975 in 2011 per capita adjusted for inflation from about $4,000 in 1960 [..] Consequently, 9.5% of Americans 65 and older were in poverty in 2013, lower than any other age group, according to the U.S. Census Bureau. That compares with 35% in 1959, when they had the highest poverty rate. Back then, “the poor people were old,” said Neil Howe, a demographer in Great Falls, Virginia. “That’s a really fascinating contrast with today.”

Ha! Yeah, fascinating, isn’t it?! Today, the poor people are young. But that’s a big problem, also for the older people. It’s sort of OK for now, just look at the average age of Senators and Congressmen and corporate shareholders. The old folk run the show, and they’re planning to hold on as long as they can,

“The Silents have done very well, and a lot of it has just been their location in history [..] They planned ahead, they were risk averse, they played by the rules and the system worked for them.”

That last bit sounds very cute, but a little too much so. The system didn’t just work for them, they were the system. They still are. They knew this in 1968, and so they can’t simply claim innocence after that. What happened is that they came from innocence, protested the system and then forgot all about it and themselves became the system.

Is it the population numbers, the energy use, or the debt increase that makes the Silent Generation so insidious? That is not even the most interesting issue, other than perhaps for historians. What’s far more intriguing is what the ‘Silents’ are going to do today and tomorrow, as they see their children and grandchildren sink.

Every parent used to want a better life for their sons and daughters than they had themselves. And there can be no doubt that most like nothing more then being fooled until they die by politicians’ promises of growth and recovery.

But one single honest look at younger generations should teach them that those promises are hollow and empty. Some can try and plead dementia, but even then.

I have no high hopes to see this resolved with grace and dignity and respect across generations, I think people across the board will be too reluctant to give up what they claim is theirs. If they are, though, that will mean the dissolution of entire societies, something that never happens in peaceful ways.

Debt, Propaganda And Now Deflation

Guest Post by Raúl Ilargi Meijer

Dorothea Lange Negro woman who has never been out of Mississippi July 1936

Looks I have to return to the deflation topic. I’m a bit hesitant about it, because the discussion always gets distorted by varying definitions and a whole bunch of semi-religious issues. The Automatic Earth has for many years said that an immense bout of deflation is inevitable because of global debt levels, and it’s all only gotten a lot worse since we first said that. Our governments and central banks have ‘fought’ deflation with more debt, and that was always the stupidest idea in human history. Or at least, most of us were stupid for believing it would work, or was even intended to.

Just so we don’t get into yet more confusion, i probably need to explain that the debt deflation we’re talking about here is not some subdivision like consumer inflation or price inflation or cookie inflation, those are just hollow and meaningless terms. Debt deflation is deflation caused by too much debt, and the deleveraging it must and will lead to. Deflation does not equal falling prices, those are merely an effect of it.

The reason this matters is that when you equate inflation and deflation with rising or falling prices, you’re not going to be able to know when you actually have deflation. Because prices can rise for all sorts of reasons. Inflation/deflation is the money/credit supply in an economy multiplied by the speed at which money is spent in that economy, the velocity of money.

It should be obvious that prices for some items can still rise, certainly initially, when deflation sets in. Producers that see less sales can try to raise prices for their remaining buyers. Basic necessities will always be needed. Governments can raise taxes. Rising/falling prices tell us only part of the story, and with a considerable time delay.

Ergo: rising/falling prices are a lagging factor, and if you look at them only, you will have missed the point where deflation has set in. What follows, obviously, is that you can’t measure deflation by looking at consumer prices (CPI) or production prices (PPI) numbers. You’d be way behind the curve. CPI and PPI tell you something, but they don’t tell what causes falling or rising prices. And that is a valuable thing to know.

I see even John Mauldin in this week’s The Last Argument of Central Banks talk about ‘good deflation’, but that doesn’t exist any more than cookie inflation, sorry, John. Prices for some items may fall due to innovation etc. while an economy booms, but if you call that deflation, you’ll miss what’s really deflation when it arrives.

Deflation is always bad. It either occurs when money/credit is so short that people can not get their hands on it no matter how hard and productive they work, and how much demand there is for their products, or it occurs when people are too poor, too much in debt or too reluctant to part with what they have.

In a deflation, people spend only what they absolutely must, provided even that they can afford to, which leads to large swaths of an economy being liquidated. Falling prices lead to falling wages lead to ever further falling prices lead to factory closings lead to more people who can’t afford to spend which leads to closings which leads to less spending which leads to faling prices etc. This continues until the debt has been deleveraged. Governments will lose tax revenue and raise taxes, but soon enough they will in quick succession disband and be replaced, rinse and repeat until even essential services can no longer be provided.

Until recently, a shrinking money/credit supply was very clearly not in the cards. Central banks have gone absolutely nuts in their stimulus plans, and this has artificially kept price levels up somewhat, though far less than they, and scores of ‘experts’ had hoped and expected. Now that game, too, is up. Japan went crazier than ever the other day out of fear that falling oil prices would sink consumer spending even more, but the US Fed has cut QE. That is an admission it has failed to do what it officially was supposed to, not the sign of triumph it’s made out to be, as in ‘the economy is doing so well, it doesn’t need our support anymore’.

Central banks have spent like maniacs, and consumer spending only keeps falling. Just ask Japan. And while you’re at it, ask them how entrenched deflation can become even in an economy that still has the benefit of growing world market to sell its products in. We won’t have any such benefit. The world has stopped growing, and there’s no massaging of numbers left strong enough to hide it. Not that it won’t be tried. As I said earlier this week, we now live in a world built on debt and propaganda.

Since QE and other ‘plans’ never reached the real economy, most nations’ money supplies have also either fallen or at best remained stagnant. We have the perfect set-up for deflation, and we therefore have deflation. It hasn’t reached the US yet, though we should be careful with that because the numbers being reported are notoriously flaky. But it has reached Europe and Asia. Which means the US is only a matter of time. And people, reluctantly, start taking notice. Steve Hochberg and Pete Kendall penned the following for Bob Prechter’s Elliott Wave:

Deflation Rearing its Ugly Head in Subtle and Not-So-Subtle Ways Around the Globe

According to the latest figures, deflation is now perched on China’s doorstep. In September, China’s consumer price index was up 1.6%, but its producer price index fell 1.8%. The CPI increase was its lowest since 2010. [..] in September, demand for electric power, a “bellwether for China economic activity,” fell 8.4% from the prior month, the second straight monthly decline.

“Deflation is the real risk in China,” stated the chief economist at a Hong Kong bank. In Europe, deflation is no longer a possible risk; it’s reality. In September, eleven of fifteen European Union members experienced lower goods prices, and the latest quarter-over-quarter Eurozone growth in real GDP is zero.

With Alice-in-Wonderland naiveté, U.S. financial media place the United States outside the risk of global deflation. Headlines talk of “Mild Inflation” and insist that the U.S. will gain “From Good Deflation.” On October 14, Bloomberg reported that consumer spending is strong enough “to steer the U.S. economy safely through the shoals of deteriorating global growth and the turbulent financial markets.” In early September, we stated that it was only a matter of time before economic weakness and deflation (which will be anything but good) jump the Atlantic and Pacific oceans and arrive in the U.S.

According to the U.S. Labor Department, real wages for full-time employees averaged $790 a week in the third quarter, about $1 less than in the third quarter of 2007. “There’s been no net gain for workers since 1999.” In recent months, spending has been uneven. Retail sales fell 0.3% in September. Most economists are baffled: “one of the great mysteries is why the U.S. has lacked inflation despite all the money being pumped into the economy.” A study by the St. Louis Fed finds that the answer is “a dramatic increase in the private sector’s willingness to hoard money instead of spend it.”

Note: the ‘hoarding meme’ is habitually used by economists, re: Bernanke and his Chinese savings glut, to point out situations which are more often than not characterized by people being too poor to spend, not sitting on anything at all. For economists, if people don’t spend, it must be because they save, never because they’re poor. I kid you not.

For years now, the Fed along with most economists have anticipated the imminent return of inflation, but it continues stubbornly subdued. This long-term chart above of the CPI shows a succession of lower highs since the early 1980s, as inflation turned into disinflation, which is on the cusp of leading to outright deflation. Some argue that the CPI is rigged to show milder levels of inflation, but the bottom graph shows the same steady move toward the zero line in the Personal Consumption Expenditures Index, an alternate inflation measure favored by the U.S. Fed.

When outright deflation hits, recognition of it will play an important role. Once its presence becomes widely observed, investors and the debt markets will belatedly take defensive action. Eventually, notes Conquer the Crash, “default and fear of default exacerbate the trend as it causes creditors to reduce lending. A downward ‘spiral’ begins feeding on pessimism just as the previous boom fed on optimism.”

Moving from theory to practice, we end up with our old friend Ambrose. Though he confuses inflation and consumer prices, and thinks they’re one and the same thing, he does have useful numbers:

Spreading Deflation Across East Asia Threatens Fresh Debt Crisis

Deflation is becoming lodged in all the economic strongholds of East Asia. It is happening faster and going deeper than almost anybody expected just months ago, and is likely to find its way to Europe through currency warfare in short order. Factory gate prices are falling in China, Korea, Thailand, the Philippines, Taiwan and Singapore. Some 82% of the items in the producer price basket are deflating in China. The figures is 90% in Thailand, and 97% in Singapore.

These include machinery, telecommunications, and electrical equipment, as well as commodities. Chetan Ahya from Morgan Stanley says deflationary forces are “getting entrenched” across much of Asia. This risks a “rapid worsening of the debt dynamic” for a string of countries that allowed their debt ratios to reach record highs during the era of Fed largesse. Debt levels for the region as a whole (ex-Japan) have jumped from 147% to 207% of GDP in six years.

These countries face a Sisyphean Task. They are trying to deleverage, but the slowdown in nominal GDP caused by falling inflation is always one step ahead of them. “Debt to GDP has risen despite these efforts,” he said. If this sounds familiar, it should be. It is exactly what is happening in Italy, France, the Netherlands, and much of the eurozone. Data from Nomura show that the composite PPI index for the whole of emerging Asia – including India – turned negative in September.

China itself is now one shock away from a deflation trap. Chinese PPI has been negative for 32 months as the economy grapples with overcapacity in everything from steel, cement, glass, chemicals, and shipbuilding, to solar panels. It dropped to minus 2.2% in October. The sheer scale of over-investment is epic.

The country funnelled $5 trillion into new plant and fixed capital last year – as much as Europe and the US combined – even after the Communist Party vowed to clear away excess capacity in its Third Plenum reforms. Old habits die hard. Consumer prices are starting to track factory prices with a long delay. Headline inflation dropped to 1.6% in October. This is so far below the 3.5% target of the People’s Bank of China that it looks increasingly like a policy mistake. Core inflation is down to 1.4%.

China has flirted with deflation before: during its banking crisis in the late 1990s, and again during the West’s dotcom recession from 2001-2002. Both episodes proved manageable. This time the level of debt is greater by orders of magnitude, with a large chunk in trusts, wealth products, and other parts of the shadow banking nexus, and a further $1.2 trillion in “carry trade” loans from Hong Kong.

Standard Chartered thinks total debt has reached 250% of GDP. This is roughly $26 trillion, the same size as the US and Japanese commercial banking systems put together, and therefore a headache for us all. Larry Brainard from Trusted Sources says China is sliding towards a European debt-compound trap. “It’s arithmetic.Deflation will kill you if you’re leveraged. It is just a question of how quickly. We don’t know how big the problem is because China is playing a game of three-card Monte and moving the debt to different buckets,” he said.

Asia is not yet in a full-blown currency war, but no country can stand idly by as neighbours dump toxic deflationary waste on their front lawn. Korea has threatened to force down the won, pari passu with the yen. The central bank of Taiwan has been intervening. These skirmishes are happening in a region of festering grievances and territorial disputes, with no Nato-style security structure – or for that matter EU-style soft governance – to damp down fires.

[Chinese] purchases of foreign bonds have dropped to zero, down from $35bn a month at the start of the year. The yuan has appreciated 22% against the yen since June, and 50% since mid-2012. It is up 12% against the euro since the early summer. China is in effect strapped to the rocketing dollar through its quasi-peg, increasingly a torture machine.

George Magnus from UBS says this cannot continue. “What is happening in the property market is the tip of the iceberg for the whole economy. China will have to resort to monetary reflation over the winter, and I think this will include a lower yuan. We are heading into a currency war,” he said.

We have the debt. And we recognize it. Still, the line politics and media feed us is that more debt can be a good thing, that we need more debt in order to attain what they like to call ‘escape velocity’ from the financial crisis caused by that same debt. Oil on fire.

We have the propaganda. We don’t always recognize it for what it is, but the, that’s the idea, isn’t it? It’s to make people think that things are not really what they really are. That we need to spend more public funds on saving banks, not saving people, or else armageddon. There’s hardly a news story left today that is not to an extent phrased by propaganda.

And now we have deflation. Which is not the falling prices, though they are a – delayed – symptom. Still, other symptoms are as valid, as nobody is spending. Mass unemployment in southern Europe is a symptom. West Texas oil at $74 dollars today is one. The Chinese economy, allegedly still growing at $7.5%, but at 250% debt-to-GDP, is another. Throw in 207% debt-to-GDP debt levels across southeast Asia.

With deflation becoming a daily topic in our propagandistic media, despite the fact that governments and central banks are vehemently allergic to it (for good reasons), rest assured that we are entering a next phase of the crisis. Just not one that they would like you to think we are. When debt starts being deleveraged for real, deflation cannot be avoided. And debt must be deleveraged, we can’t sit on it till Kingdom Come and keep adding more while we’re at it. That was never in the cards. And we’ve accumulated too much of it to ever outgrow it. We simply can’t sell or make enough iPhones to accomplish that. Or eat enough burgers, hard as we try.

Our world, our life, has been built on debt and propaganda for many years. They have kept us from noticing how poorly we are doing. But now a third element has entered the foundation of our societies, and it’s set to eat away at everything that has – barely – kept the entire edifice from crumbling apart. Deflation.

It’s time to check where your basic needs will come from when it becomes first harder and them impossible to obtain them from the sources you have been used to. And please, get out of debt. Debt during deflation is a cruel and unforgiving mistress. Think of deflation as a biblical plague.

Japan’s The Tinder That Set The World’s Bad News On Fire

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

NPC US Geological Survey fire, F Street NW, Washington DC May 18 1913

I can do this in just about random order, the idea should still shine through, and crystal clear at that. We’re on the verge not of a market correction, but of something much bigger. All it takes to know that is to connect a few dots. Ironically, the very same financial press that reports on the dots, refuses to connect them. Don’t they see it, or don’t they want to? It’s not even a very interesting question anymore: they’ll end up commenting only in hindsight.

What happens today in Japan is both a sign of what’s wrong with the entire global financial system, and at the same time the catalyst that will help bring that system to its knees. Japan goes where no man has gone before, because it’s further down the gutter than the rest. But they will all follow. Japan thinks it can escape collapse if the US does fine, and vice versa, and the same goes for China, Europe etc., but none of them can survive the big blow by themselves, let alone that one of them could lift any of the others up by the hair on their heads. It’s a desperate mirage. When you hear anyone say the US will lift up the world economy, switch your channel. Unless you’re already at Comedy Central.

Here’s the litany for the day: China prints $25 trillion and buys Portugal. Japan’s national debt is 750% of tax revenue. US first time homebuyers are at a 27 year low. 40.5% of Greek children grow up in poverty, as Greece is part of the eurozone that should take care of all citizens. In the UK 72% of 18-21-year olds make less than a living wage. US and Japanese QE leads to ‘consumers’ spending less, which is the exact opposite of what QE is supposed to be intended for. China is trapped in the newfangled currency war Japan’s QE has unleashed across Asia, and which will soon be exported across the globe.

The common denominator? Debt. Sovereign debt, personal debt, corporate debt. Japan doesn’t want to recognize it yet, but it’s caught in the same trap with everyone. The difference is that Japan fights debt with more debt, while other parties are starting to find a little more nuance in their approach. Does it matter? Not one bit. Other than Japan’s hole will be deeper than the others. Let’s just track through today’s news. Bloomberg:

Portugal Sees Chinese Do 90% of Bids at Property Auction

As bargain-hunters waited in a packed room at a property auction in Lisbon last month, one language dominated their chat: Mandarin. About 90% of the bidders for the government-owned apartments and stores on offer were Chinese, according to Jorge Oliveira, the official overseeing the asset sale. They ended up acquiring more than two-thirds of the 45 properties, he said. “A Portuguese investor bought a store to start a bakery and coffee shop, but most of the properties went to the Chinese,” Oliveira said in an interview after the sale. Portugal is the latest target for Chinese investors who have been acquiring buildings around the world as China allows freer movement of funds in and out of the country.

Why would you want to sell your assets to a country that simply prints the money it uses to purchase those assets? Why not print that kind of money yourself and buy theirs? China printed $25 trillion and we allow them to buy Lisbon and Madrid and Rome with that? How much worse can this get? Portugal is defenseless, because it’s adopted the euro, but Germany would never allow the Chinese money printers to buy Berlin. Need any more info on why the eurozone is such an abject and perverse failure? Guardian:

More Than One Fifth Of UK Workers Earn Less Than Living Wage

More than a fifth of UK workers earn less than the living wage, with bar staff and shop assistants among the most likely to live “hand to mouth” because of low pay, a report warns on Monday. Published to mark living wage week, the research also finds that younger workers, women and part-timers are more likely to be paid less than the living wage, a voluntary threshold calculated to provide a basic but decent standard of living. New living wage rates will be announced on Monday, with the current rate at £8.80 per hour in London and £7.65 elsewhere. The report by consultancy firm KPMG adds to evidence of low pay remaining prevalent in Britain, despite the economic recovery. The proportion of employees on less than the living wage is now 22%, up from 21% last year, the study found. In real terms, that was a rise of 147,000 people to 5.28 million. [..] It found 72% of 18-21 year olds were earning less than the living wage

22% of your working population on less than a living wage is an insane disgrace. Certainly when at the same time you’re telling everyone your economy is doing great. There’s no excuse for that. But it can get worse: if 72% of your young people can’t survive on what they work for, you’re murdering your nation’s future. And your housing market, just to name an example, people can’t start families, it all ties together. MarketWatch:

US Consumers Resisting Enticements To Increase Spending

The U.S. is adding jobs at the fastest rate since the end of the Great Recession and another strong month of hiring is expected in October, but Americans still aren’t spending like good times are here to stay. The lackluster pace of consumer spending — outlays fell in September for the first time in eight months – largely explains why the U.S. is only growing at a post-recession annual average of 2.2%. Yet most economists think that could change in the near future.

The US is adding jobs that don’t pay enough to get people spending who are still buried in debt, just like Europe, just like Japan. That clear enough? The US economy ‘grows’ despite the American people. But ‘most economists think that could change in the near future’. Get a job. CNBC:

Bank of Japan Bazooka To Spark Currency War

The Bank of Japan’s (BoJ) stimulus blitz raises the specter of currency wars as a rapidly weakening yen threatens the competitiveness of export-driven economies, say strategists. “Whenever you have these kinds of disruptive moves by central banks, there’s always going to be fall out effects,” said Boris Schlossberg at BK Asset Management. Markets were caught off guard by the BoJ’s announcement on Friday that it would expand purchases of exchange-traded funds (ETFs) and real estate investment trusts, extend the duration of its portfolio of Japanese government bonds (JGBs), and increase the pace of monetary base expansion.

“The hottest currency war today is Japan vs Korea. That’s probably the one to keep an eye on. The yen-won cross rate is very sensitive as Japan and Korea compete in a lot of key areas,” said Sean Callow at Westpac. The Japanese currency has fallen around 20% against the won since the BoJ launched its unprecedented stimulus program in April 2013. Currency strategists say the BoJ’s actions could encourage the Bank of Korea (BoK) to become more defensive against local currency strength through intervention in the foreign exchange market or a rate cut.

That’s the big one for now. It’s not just Japan and Korea, Thailand, Indonesia, Vietnam and quite a few others are in the same merry go round. And of course China, as the following MarketWatch piece identifies: “The move will be particularly problematic for China, as its slow-crawling managed rate to the U.S. dollar renders it is effectively defenseless when confronted by currency wars.”

China Faces Trap In Currency War

Last Friday, the Bank of Japan effectively tossed a grenade into the region’s currency markets with its surprise announcement of a new round of quantitative easing sending the yen to fresh lows. The move will be particularly problematic for China, as its slow-crawling managed rate to the U.S. dollar renders it is effectively defenseless when confronted by currency wars, in which countries try to steal growth from their trading partners through competitive devaluations. It also comes at a time when Beijing is already battling foes on two fronts: hot-money outflows and an economy flirting with deflation. The consensus is that the world’s largest trading nation will resist the temptation to enter the fray with a competitive devaluation or move to a market-based exchange rate. Yet Japan’s latest actions will hurt, as they hold Beijing’s feet to the fire.

As long as China holds its (semi) peg to the USD, it may wake up to some ugly surprises, certainly when USDJPY goes to 120 or beyond. But the, when that happens, China won’t be alone. The next piece by Pater Tenebrarum, h/t Durden, may be the best I’ve read on Japan‘s despair move on Friday:

The Experiment that Will Blow Up the World

In order to explain why the pursuit of Kuroda’s policy is edging ever closer to a catastrophic outcome, we have to delve a bit into the details of Japan’s monetary data. In spite of the BoJ’s “QE” reaching record highs, it mainly creates bank reserves and furthers carry trades. The economy sees no private credit growth so far. Commercial banks in Japan continue to shrink the stock of fiduciary media – this is to say, they are reducing outstanding credit, which makes more and more unbacked deposit money disappear. Hence, Japan’s money supply growth has recently declined to a mere 4.3% year-on-year.

“… the markets are pouncing on the yen because they are forward-looking: the BoJ is monetizing ever more government debt and this is expected to continue, because the public debtberg has become too large to be funded by any other means. In spite of the relatively low money supply growth this debt monetization has produced so far, it also creates the perverse situation that an ever greater portion of the government’s outstanding stock of debt consists actually of debt the government literally “owes to itself”.

Japan has debt levels that are unequalled not just in the world, but most likely in human history, and I’m not saying that to take anything away from the demise of Rome:

And then we get back home with the NAR and Lawrence Yun and all of its cheerleaders, who got their faces all full of mud and shit and sand, and will never admit to it. Zero Hedge:

Why Housing Is Dead: First-Time Buyers Collapse To 27-Year Lows

The Millennials (one of the biggest generations in US history) are just not getting with the status quo program. As we detailed previously, with lower credit scores, less disposable income, and a soaring number of people living with their parents; so it should be no surprise that The National Association of Realtors (NAR) today admitted that first-time homebuyers plunged to the lowest level in 27 years. The blame – of course – rather than low/no-growth fiscal policies, student debt servitude, and inequality-driving cheap-funding monetary policy, is price competition from ‘investors’ and too “stringent credit standards,” perfectly mirroring FHFA’s Mel Watt’s Einsteinian insanity desire to dramatically ease lending standards and slash minimum down-payments (as we noted previously). Perhaps NAR accidentally stumbles on the biggest reason no one is buying in their profiling: the typical first-time buyer was 31-years-old, while the typical repeat buyer was 53 – smack in the middle of the Millennial collapse.

We’ve been keeping the long lost idea of our long lost society alive by squeezing our own children wherever we can, and telling them that if they only work hard enough, they can be whoever they want to be. But they can’t, that notion is also long lost. When you keep home prices artificially high, homeowners don’t suffer as much, even if they bought at insanely high prices, but the suffering is switched to potential buyers, who remain just that, potential, while they live in their mom’s basements for years.

A surefire way to kill a society while everyone’s eagerly awaiting the growth that is just around the corner and will forever remain there. Take it from your kids. Take it from somewhere else in the world.

And that’s where we’re now passing a barrier: there’s no-one to take it from anymore. Not through sleight of hand or spin or propaganda. You can only keep a quarter of your people below living wage levels for so long. Japan can only wage a currency war on its neighbors for so long (not very long). Japan can only wage a consumer price war on its own people for so long.

Japan’s QE9 has set the world on fire. It didn’t need much of a spark to begin with, but it’s certainly got one now.

George W. Bushmeat and the Economics of Ebola

Via Automatic Earth

by Raúl Ilargi Meijer

Dorothea Lange 4 families, 15 children, from Texas Dust Bowl, in roadside camp, Calipatria, CA Mar 1937

Ebola was until a few weeks ago mostly a forgotten affliction in the western world. Something that flared up in the Congo or thereabouts, parts of the world we’re aware of only because of the horrors of machete attacks and other mayhem induced by our own secret services in order to keep ‘our’ access to their mind-boggling amounts of resources going, while their populations live in conditions many miles below squalor.

We have applied divide and rule in the Congo better, or more ferociously, depending on your point of view, than anywhere else, ever. Hardly a word about western cruelty seeps through to our own media. A true imperium success story.

But the present ebola epidemic is not taking place where the disease was mostly raging. It’s in western Africa now. Where immense segments of native forest have been cut down, which in turn brought long-time ebola carrying fruit bats closer to other animals, and in turn to humans long dependent on bushmeat for survival.

Somewhere in that chain of events it was probably inevitable that an epidemic would break out. Of ebola or any other of a long list of viral or bacterial diseases. It’s also inevitable that a next epidemic will follow.

Until recently, my own personal knowledge of ebola was limited to the idea that it was one of, if not the worst way for a human being to die. Intense internal bleeding will do that. Something I find sorely missing in western media coverage of the people dying by the side of the road in west Africa. How they’re dying, that is.

It’s treated in a very detached way, as if it doesn’t really concern us until it might spread our way. ‘Western’ cases get treated with experimental drugs, while 4000+ Africans so far have been left to perish by the side of dirt roads in excruciating pain.

The ones that did receive treatment were attended to by local doctors, and that has led to dozens of the best and bravest doctors in Sierra Leone and Liberia succumbing to ebola themselves, a major feat in countries where per capita access to a doctor is mostly a tenth or a hundredth of what it is where we live. Take away doctors out of that situation, and that’s not even including nurses, and you have a disaster on your hands.

I’m not an expert on ebola or infectious diseases in general by any means, but I can read, and I can think, and occasionally I manage to bo both simultaneously. And what I see so far is a sweet mix of complacency, denial, stupidity and human error.

There’s a lot of political interest in downplaying the danger ebola poses. There’s even more economic interest in doing that, but then the two are Siamese twins. As of today in America, and last week in continental Europe, that attitude has become a threat to potentially millions of people.

I saw someone comparing HIV deaths to Ebola deaths, with the intent to downplay the threat, 1 million HIV deaths, ‘only’ 4000 ebola deaths. But ebola’s just getting started, and it’s much more contagious. Which makes such comparisons as irrelevant as it makes them dangerous.

The first Ebola infection on US soil that was announced today developed in the exact same way the one in Spain last week did: a health care worker tending to a confirmed ebola case got him/herself infected. Both ’2nd generation’ cases have no idea how they were infected. The US nurse was allegedly wearing full-body protective gear all the time, while the Spanish nurse herself said she had no clue how she could have gotten the disease.

In the US case, we know that the first deadly victim, Thomas Duncan, had been in Liberia. He was sent home by several medical services after both reporting symptoms, and stating he’d been in ebola infected territory.The very same thing happened to the Spanish nurse, who was sent away from at least 3 clinics with a Tylenol prescription, after she had said she’d been attending to an ebola patient.

The patient she had been nursing was a priest who had been flown in from Africa after exhibiting symptoms. He was, however, the second Spanish priest in that situation. The first one reportedly died in the same hospital in Madrid as long ago as August.

Madrid got a lot of flack for the infected nurse: it was accused of not having its precautions properly in place. We should now review how well the Texas Presbyterian is doing in that regard. Given the fact that the Texas nurse diagnosed, or rather confirmed, today, was allowed to lead a normal personal life, socializing, shopping etc., until (s)he started exhibiting obvious symptoms, should make us feel queasy.

There will always be plenty political voices more than willing to declare that ‘there is no need to panic’ or ‘now is not the time to panic’, but we need to realize that what politicians and media say is inevitable based on economic grounds.

It might be worth contemplating to isolate western Africa from the rest of the world, halt flights etc., and meanwhile give them all the support we can, no matter what the cost. We choose instead to do everything related to support on the ground on the cheap, bleeding WHO coffers dry while we’re at it, and we let transportation options continue, because it would cost ‘too much’ not to. Money will rule our approach to ebola, like to everything else, until it’s too late.

Ironically, it was George W. Bushmeat government’s bio-terrorist anthrax and flu paranoia in the wake of 9/11 that injected a lot of money into America’s epidemiology protection layers. If not for those paranoid billions, I kid you not, G-d help us. His epitaph will read not only that he was an accomplishes portrait painter, he may well also have saved America from a much worse epidemic than it’s yet to get. America could sure use some of that paranoia right now.

And so could Europe, where everyone to a man solemnly declares that the chances of ebola appearing in their country are slim to none. And where dozens of flights arrive daily from west Africa. To paraphrase the CDC’s Mike Osterholm: the virus moves at virus time, we move at bureaucrat time.

The nurse is Madrid is reportedly healing, she’s been given the experimental ZMapp drug. We better get a million doses of that to Liberia and Sierra Leone. But we’ll probably fight over the economics of that until we need 10 million doses.

We’ve maybe grown so accustomed to living in a casino economy that we think the world is a crap table. But some things had better not be wagered on. Remember the Spanish Flu. Or should I say: Remember the Spanish Flu? Again, we tell ourselves no major epidemic could hurt us. We understand viruses as poorly as we do the exponential function. Which happen to have lots in common.

Judging from what we’ve seen so far, our health care systems are woefully unprepared for even single cases of ebola infection occurring on our soil. What’s going to happen when there’s dozens? Are we just going to say that there’s ‘only’ a 25% chance of that, based on some computer model? Or are we going to make sure we do what we can to keep ebola away from our lands?

There’s only one way to make sure: get into western Africa now, with all we have. Good for us, and good for our karma.

DO YOU WANT YOUR SONS DYING IN THE UKRAINE ON BEHALF OF BILLIONAIRES?

From Raúl Ilargi Meijer of The Automatic Earth

Jack Delano Workman at Chicago & North Western repair shops, Chicago, IL Dec 1942

These Clowns Are Dragging Us Into War

In 8 weeks, on October 26, there are – supposed to be – parliamentary elections in Ukraine. What’s that going to look like? Who’s going to vote? In the presidential elections a few months ago, most of east Ukraine did not vote. How many different ways are there to define democracy and still remain credible?

In an interview today on Russian Channel 1, Vladimir Putin commented on the upcoming elections: “All the participants in the electoral race will want to show how cool they are; Everyone will want to show they are strongmen or strongwomen, and as the political struggle sharpens it is hard to expect anyone to seek a peaceful resolution and not a military one.” That would seem to be an accurate prediction.

The EU yesterday (in yet another definition of democracy) picked its new president. They chose Polish PM Donald Tusk, which may seem a bit strange since Tusk doesn’t speak a word of either English or French, and he comes from a nation that is not even in the Eurozone, yet he will now now get to chair meetings that concern the euro. But Tusk is a hawk on Russia, and therefore suspiciously convenient to the inner core of Washington and Brussels’ control apparatus. He’s said more bad and ugly things about Russia and Putin than just about anyone recently, and that’s saying something.

The US and EU have worked for years to see their desire to take over Ukraine come to fruition. They’ve come a long way, but they wanted Crimea and the Donbass region most of all, and those they still don’t have. Still, they’ve so far shown themselves more than willing to assist first in killing thousands of eastern Ukrainians to get what they want, and now they are prepared to start a war over it.

The well-prepared, built-up step by step, storyline in the western press is the threat of Russia’s expansionary drift. Hence this Reuters piece:

Polish President Warns Germany Of Putin’s ‘Empire’ Ambitions

Polish President Bronislaw Komorowski said that Vladimir Putin is trying to build a new Russian empire for Moscow and that the region now had to choose whether it wanted “a Cossack Europe or a democratic one”. “Russia has carried out an invasion in Ukraine,” the Polish head of state told German public radio. Komorowski said Putin was quite open about his ambitions to “rebuild the empire”. The Polish president is an ally of Prime Minister Donald Tusk. “I hope Germans are sufficiently mindful of what a Soviet empire meant for Europe,” Komorowski told Deutschlandradio Kultur and Deutschlandfunk, warning against any reprise of the pre-World War Two “appeasement policy of yielding to Hitler”.

That’s the kind of thing where I go: Huh? Did I see that right? You try to scare the Germans by referring to a Russia that by now has been history for almost 25 years, a Russia that was instrumental in saving Europe from the Third Reich and lost 20-30 million people in the process, by reminding them of an 80-year old policy of appeasement to Hitler? The Germans?

When we look at what has actually happened over the past decade, and what we can prove when it comes to expansion drift, that is without a doubt a painfully hollow story. Since what we actually do know, what is not mere conjecture, is that it has instead been the west, through NATO, that has been in expansion mood.

Despite solid agreements not to move NATO’s borders eastward, the alliance has done nothing but move east, and is now planning to put even more troops and new army bases right on Russia’s doorstep. The narrative to justify this NATO expansion that breaches those former agreements, which we can see time and again, is that Russia is moving west, for which there is no proof, only accusations, and that NATO territory is inviolable, but Ukraine is not a NATO member.

No NATO territory is under threat of being violated, other than inside the narrative. Moreover, while voices in Europe increasingly claim that the threat to Ukraine is a threat to Europe (i.e. the EU), Ukraine is no more an EU member than it is a NATO member. Brussels seems to want it to be, but that’s where the narrative ends. So it’s simply being changed on the fly and has now become: “Ukraine is fighting a war on behalf of all Europe”, according Lithuanian leader Dalia Grybauskaite.

Which is where I think: really, Ukraine has killed over 2000 of its own citizens ‘on behalf of Europe’?

The entire conflict could be solved in a heartbeat if Kiev would simply tell the Donbass leadership that they can be autonomous. But that’s not what Poroshenko wants, or Yatsenyuk, and certainly not Washington and Brussels. Because the Donbass is by far the richest region in Ukraine. Which however happens to be home to people who don’t want to be ruled by the present Kiev leadership. Well, so you kill a bunch of them and instill fear in the rest, right?

Putin had something to say about that too, first in Agence France Presse’s version of his Channel 1 interview:

Putin Urges Ukraine ‘Statehood’ Talks

Russian President Vladimir Putin today sharply raised the stakes in the Ukraine conflict by calling for the first time for statehood to be considered for the restive east of the former Soviet state. Mr Putin’s defiant remarks came just hours after the EU gave Moscow – which the bloc accuses of direct involvement in the insurgency – a week to change course or face new sanctions. “We need to immediately begin substantive talks… on questions of the political organisation of society and statehood in southeastern Ukraine … ”

And then the way RT reported it:

Putin: Impossible To Say When Political Crisis In Ukraine Will End

The devastated infrastructure of the southeast requires full repair otherwise people might just freeze to death, he said. “It looks as if only Russia cares about that. The first most essential condition is to stop combat operations and begin reconstruction of the infrastructure, replenish inventories, do the necessary repairs and scheduled maintenance to be ready for the cold season.” [..]

Russian President Vladimir Putin has called on Kiev to start substantial talks on deescalating the crisis in eastern Ukraine. He added that it’s an illusion to expect that the rebels would calmly watch their homes being destroyed. “We have agreed on a plan, so its realization must be pursued,” Putin told Channel 1 TV, adding that the Ukrainian government “must immediately start substantial talks – not a technical discussion – on the political organization of society and the state in southeast Ukraine so that the interests of people who live there are protected.” The plan, according to Russia’s leader, puts negotiations at the center of the peace process.[..]

Commenting on the new batch of sanctions against Russia threatened by western countries, Putin advised his counterparts to think again about what they are advocating. “What are the so-called European values then? Support for an armed coup, suppression of opponents with armed forces – so these are ‘European values’? I believe our colleagues should be reminded of their own ideals … ”

In the meantime, the rumors and allegations don’t just continue, they get stronger. Evidence hasn’t been a factor is this game for a long time, and it is not now. Just today, I’ve seen 2 Russian ladies who say 100 Russian troops died in a battle earlier this month, Kiev claiming that Russian tanks ‘flattened’ an entire village, and Ukraine soldiers saying their comrades who were given safe passage after being trapped, were shot at.

It just never stops, or so it seems. We’ve been subject so far to a tsunami of allegations and accusations, and 99%+ of them have come with zero evidence. But now we risk being pulled into a outright war despite the lack of evidence. Really, it’s come to this: we’re asking for just one piece of evidence for all the accusations we’ve been made party to. Just the one!

Essentially, the western leadership is saying that if the ‘Donbass rebels’, and Russia, won’t let the Ukraine army do just what it wants in east Ukraine, there will be war. But it’s not our leaders who are going to be the boots on the ground. And because Obama has pledged no US military involvement in Ukraine – though CIA, Blackwater and who knows who else, are present anyway -, it will have to be European boots on the ground in Ukraine.

Perhaps prior to the official war declaration our politicians and media can tell us where the remains of the BUK rocket are that’s alleged to have downed MH17, where the contents are of the black boxes, and where the Air Traffic Control conversations with the pilots are which were allegedly confiscated by the Ukraine secret service on July 17.

It’s perhaps hard to remember due to the misinformation tsunami, but the MH17 has been a major driver of the western public’s anger vs Russia, and their acceptance of sanctions and other decisions, and now the threat of war. While it still may just as well not have been the Donbass rebels who shot that plane, but the Ukraine army, or Blackwater or the CIA. We simply don’t know.

The west says that the war in east Ukraine is caused by Russia’s support for the rebels. Just like the overriding narrative today is that the west reacts to what Russia does, while in reality it’s the other way around.

The entire Ukraine conflict could be resolved tomorrow morning if Kiev, and its western support, would pledge to stop waging war on the Donbass. And give it a separate status, either within Ukraine or in a separate state. After half a year+ of warfare, how else could you resolve this crisis? Only through more bloodshed, that’s how.

But our western leadership is simply too trigger happy for comfort. Based on only hints and allegations. There’s a NATO conference in Wales this week; Obama, Merkel, they’ll all be there. I suggest you just watch and listen what comes out of that. It won’t be pretty. Peace will not be a commonly used term there. While for all of us, and all the civilians in the Donbass, that’s all we want.

But these clowns are dragging us into war. And yes, maybe it would be a good idea for you to tell them that you don’t want them to. Before your kids, or their friends, their neighbors, start dying in some far away ugly theater they should never have been part of.

Is peace impossible in Ukraine today? No. Not at all. But it is as long as the west keeps its hopes for conquering the Donbass alive. It should have known that from the start, and perhaps it did, and started this crusade anyway, because the grand prize it’s after is Russia itself. Over our dead bodies.

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