Ally Financial – Page 2 – The Burning Platform

THE FOURTEEN YEAR RECESSION

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte

“A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men … [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”– Woodrow Wilson

When you ponder the implications of allowing a small group of powerful wealthy unaccountable men to control the currency of a nation over the last one hundred years, you understand why our public education system sucks. You understand why the government created Common Core curriculum teaches children that 3 x 4 = 13, as long as you feel good about your answer. George Carlin was right. The owners of this country (bankers, billionaires, corporate titans, politicians) want more for themselves and less for everyone else. They want an educational system that creates ignorant, obedient, vacuous, obese dullards who question nothing, consume mass quantities of corporate processed fast food, gaze at iGadgets, are easily susceptible to media propaganda and compliant to government regulations and directives. They don’t want highly educated, critical thinking, civil minded, well informed, questioning citizens understanding how badly they have been screwed over the last century. I’m sorry to say, your owners are winning in a landslide.

The government controlled public education system has flourished beyond all expectations of your owners. We’ve become a nation of techno-narcissistic, math challenged, reality TV distracted, welfare entitled, materialistic, gluttonous, indebted consumers of Chinese slave labor produced crap. There are more Americans who know the name of Kanye West and Kim Kardashian’s bastard child (North West) than know the name of our Secretary of State (Ketchup Kerry). Americans can generate a text or tweet with blinding speed but couldn’t give you change from a dollar bill if their life depended upon it. They are whizzes at buying crap on Amazon or Ebay with a credit card, but have never balanced their checkbook or figured out the concept of deferred gratification and saving for the future. While the ignorant masses are worked into a frenzy by the media propaganda machine over gay marriage, diversity, abortion, climate change, and never ending wars on poverty, drugs and terror, our owners use their complete capture of the financial, regulatory, political, judicial and economic systems to pillage the remaining national wealth they haven’t already extracted.

The financial illiteracy of the uneducated lower classes and the willful ignorance of the supposedly highly educated classes has never been more evident than when examining the concept of Federal Reserve created currency debasement – also known as inflation. The insidious central banker created monetary inflation is the cause of all the ills in our warped, deformed, rigged financialized economic system. The outright manipulation and falsity of government reported economic data is designed to obscure the truth and keep the populace unaware of the deception being executed by the owners of this country. They have utilized deceit, falsification, propaganda and outright lies to mislead the public about the true picture of the disastrous financial condition in this country. Since most people are already trapped in the mental state of normalcy bias, it is easy for those in control to reinforce that normalcy bias by manipulating economic data to appear normal and using their media mouthpieces to perpetuate the false storyline of recovery and a return to normalcy.

This is how feckless politicians and government apparatchiks are able to add $2.8 billion per day to the national debt; a central bank owned by Too Big To Trust Wall Street banks has been able to create $3.3 trillion out of thin air and pump it into the veins of its owners; and government controlled agencies report a declining unemployment rate, no inflation and a growing economy, without creating an iota of dissent or skepticism from the public. Americans want to be lied to because it allows them to continue living lives of delusion, where spending more than you make, consuming rather than saving, and believing stock market speculation and home price appreciation will make them rich are viable life strategies. Even though 90% of the population owns virtually no stocks, they are convinced record stock market highs are somehow beneficial to their lives. They actually believe Bernanke/Yellen when they bloviate about the dangers of deflation. Who would want to pay less for gasoline, food, rent, or tuition?

Unless you are beholden to the oligarchs, that sense of stress, discomfort, feeling that all in not well, and disturbing everyday visual observations is part of the cognitive dissonance engulfing the nation. Anyone who opens their eyes and honestly assesses their own financial condition, along with the obvious deterioration of our suburban sprawl retail paradise infrastructure, is confronted with information that is inconsistent with what they hear from their bought off politician leaders, highly compensated Ivy League trained economists, and millionaire talking heads in the corporate legacy media. Most people resolve this inconsistency by ignoring the facts, rejecting the obvious and refusing to use their common sense. To acknowledge the truth would require confronting your own part in this Ponzi debt charade disguised as an economic system. It is easier to believe a big lie than think critically and face up to decades of irrational behavior and reckless conduct.

What’s In Your GDP

“The Gross Domestic Product (GDP) is one of the broader measures of economic activity and is the most widely followed business indicator reported by the U.S. government. Upward growth biases built into GDP modeling since the early 1980s, however, have rendered this important series nearly worthless as an indicator of economic activity. The popularly followed number in each release is the seasonally adjusted, annualized quarterly growth rate of real (inflation-adjusted) GDP, where the current-dollar number is deflated by the BEA’s estimates of appropriate price changes. It is important to keep in mind that the lower the inflation rate used in the deflation process, the higher will be the resulting inflation-adjusted GDP growth.” – John Williams – Shadowstats

GDP is the economic statistic bankers, politicians and media pundits use to convince the masses the economy is growing and their lives are improving. Therefore, it is the statistic most likely to be manipulated, twisted and engineered in order to portray the storyline required by the oligarchs. Two consecutive quarters of negative GDP growth usually marks a recession. Those in power do not like to report recessions, so data “massaging” has been required over the last few decades to generate the required result. Prior to 1991 the government reported the broader GNP, which includes the GDP plus the balance of international flows of interest and dividend payments. Once we became a debtor nation, with massive interest payments to foreigners, reporting GNP became inconvenient. It is not reported because it is approximately $900 billion lower than GDP. The creativity of our keepers knows no bounds. In July of 2013 the government decided they had found a more “accurate” method for measuring GDP and simply retroactively increased GDP by $500 billion out of thin air. It’s amazing how every “more accurate” accounting adjustment improves the reported data. The economic growth didn’t change, but GDP was boosted by 3%. These adjustments pale in comparison to the decades long under-reporting of inflation baked into the GDP calculation.

As John Williams pointed out, GDP is adjusted for inflation. The higher inflation factored into the calculation, the lower reported GDP. The deflator used by the BEA in their GDP calculation is even lower than the already bastardized CPI. According to the BEA, there has only been 32% inflation since the year 2000. They have only found 1.4% inflation in the last year and only 7.1% in the last five years. You’d have to be a zombie from the Walking Dead or an Ivy League economist to believe those lies. Anyone living in the real world knows their cost of living has risen at a far greater rate. According to the government, and unquestioningly reported by the compliant co-conspirators in the the corporate media, GDP has grown from $10 trillion in 2000 to $17 trillion today. Even using the ridiculously low inflation BEA adjustment yields an increase from $12.4 trillion to only $15.9 trillion in real terms. That pitiful 28% growth over the last fourteen years is dramatically overstated, as revealed in the graph below. Using a true rate of inflation exposes the grand fraud being committed by those in power. The country has been in a never ending recession since 2000.

Your normalcy bias is telling you this is impossible. Your government tells you we have only experienced a recession from the third quarter of 2008 through the third quarter of 2009. So despite experiencing two stock market crashes, the greatest housing crash in history, and a worldwide financial system implosion the authorities insist we’ve had a growing economy 93% of the time over the last fourteen years. That mental anguish you are feeling is the cognitive dissonance of wanting to believe your government, but knowing they are lying. It is a known fact the government, in conspiracy with Greenspan, Congress and academia, have systematically reduced the reported CPI based upon hedonistic quality adjustments, geometric weighting alterations, substitution modifications, and the creation of incomprehensible owner’s equivalent rent calculations. Since the 1700s consumer inflation had been estimated by measuring price changes in a fixed-weight basket of goods, effectively measuring the cost of maintaining a constant standard of living. This began to change in the early 1980s with the Greenspan Commission to “save” Social Security and came to a head with the Boskin Commission in 1995.

Simply stated, the Greenspan/Boskin Commissions’ task was to reduce future Social Security payments to senior citizens by deceitfully reducing CPI and allowing politicians the easy way out. Politicians would lose votes if they ever had to directly address the unsustainability of Social Security. Therefore, they allowed academics to work their magic by understating the CPI and stealing $700 billion from retirees in the ten years ending in 2006. With 10,000 baby boomers per day turning 65 for the next eighteen years, understating CPI will rob them of trillions in payments. This is a cowardly dishonest method of extending the life of Social Security.

If CPI was calculated exactly as it was computed prior to 1983, it would have averaged between 5% and 10% over the last fourteen years. Even computing it based on the 1990 calculation prior to the Boskin Commission adjustments, would have produced annual inflation of 4% to 7%. A glance at an inflation chart from 1872 through today reveals the complete and utter failure of the Federal Reserve in achieving their stated mandate of price stability. They have managed to reduce the purchasing power of your dollar by 95% over the last 100 years. You may also notice the net deflation from 1872 until 1913, when the American economy was growing rapidly. It is almost as if the Federal Reserve’s true mandate has been to create inflation, finance wars, perpetuate the proliferation of debt, artificially create booms and busts, enrich their Wall Street owners, and impoverish the masses. Happy Birthday Federal Reserve!!!

When you connect the dots you realize the under-reporting of inflation benefits the corporate fascist surveillance state. If the government was reporting the true rate of inflation, mega-corporations would be forced to pay their workers higher wages, reducing profits, reducing corporate bonuses, and sticking a pin in their stock prices. The toady economists at the Federal Reserve would be unable to sustain their ludicrous ZIRP and absurd QEfinity stock market levitation policies. Reporting a true rate of inflation would force long-term interest rates higher. These higher rates, along with higher COLA increases to government entitlements, would blow a hole in the deficit and force our spineless politicians to address our unsustainable economic system. There would be no stock market or debt bubble. If the clueless dupes watching CNBC bimbos and shills on a daily basis were told the economy has been in fourteen year downturn, they might just wake up and demand accountability from their leaders and an overhaul of this corrupt system.

Mother Should I Trust the Government?

We know the BEA has deflated GDP by only 32% since 2000. We know the BLS reports the CPI has only risen by 37% since 2000. Should I trust the government or trust the facts and my own eyes? The data is available to see if the government figures pass the smell test. If you are reading this, you can remember your life in 2000. Americans know what it cost for food, energy, shelter, healthcare, transportation and entertainment in 2000, but they unquestioningly accept the falsified inflation figures produced by the propaganda machine known as our government. The chart below is a fairly comprehensive list of items most people might need to live in this world. A critical thinking individual might wonder how the government can proclaim inflation of 32% to 37% over the last fourteen years, when the true cost of living has grown by 50% to 100% for most daily living expenses. The huge increases in property taxes, sales taxes, government fees, tolls and income taxes aren’t even factored in the chart. It seems gold has smelled out the currency debasement and the lies of our leaders. This explains the concerted effort by the powers that be to suppress the price of gold by any means necessary.

Living Expense	Jan-00	Mar-14	% Increase
Gallon of gas	$1.27	$3.51	176.4%
Barrel of oil	$24.11	$100.00	314.8%
Fuel oil per gallon	$1.19	$4.07	242.0%
Electricity per Kwh	$0.084	$0.134	59.5%
Gas per therm	$0.712	$1.078	51.4% native advertising
Dozen eggs	$0.97	$2.00	106.2%
Coffee per lb	$3.40	$5.20	52.9%
Ground Beef per lb.	$1.90	$3.73	96.3%
Postage stamp	$0.33	$0.49	48.5%
Movie ticket	$5.25	$10.25	95.2%
New car	$20,300.00	$31,500.00	55.2%
Annual healthcare spending per capita	$4,550.00	$9,300.00	104.4%
Average private college tuition	$22,000.00	$37,000.00	68.2%
Avg home price (Case Shiller)	$161,000.00	$242,000.00	50.3%
Avg monthly rent (Case Shiller)	$635.00	$890.00	40.2%
Ounce of gold	$279.00	$1,334.00	378.1%

Mother, you should not trust the government. There is no doubt they have systematically under-reported inflation based on any impartial assessment of the facts. The reality that we remain stuck in a fourteen year recession is borne out by the continued decline in vehicle miles driven (at 1995 levels) due to declining commercial activity, the millions of shuttered small businesses, and the proliferation of Space Available signs in strip malls and office parks across the land. The fact there are only 8 million more people employed today than were employed in 2000, despite the working age population growing by 35 million, might be a clue that we remain in recession. If that isn’t enough proof for you, than maybe a glimpse at real median household income, retail sales and housing will put the final nail in the coffin of your cognitive dissonance.

The government and their media mouthpieces expect the ignorant masses to believe they have advanced their standard of living, with median household income growing from $40,800 to $52,500 since 2000. But, even using the badly flawed CPI to adjust these figures into real terms reveals real median household income to be 7.3% below the level of 2000. Using a true inflation figure would cause a CNBC talking head to have an epileptic seizure.

The picture is even bleaker when broken down into the age of households, with younger households suffering devastating real declines in household income since 2000. I guess all those retail clerk, cashier, waitress, waiter, food prep, and housekeeper jobs created over the last few years aren’t cutting the mustard. Maybe that explains the 30 million increase (175% increase) in food stamp recipients since 2000, encompassing 19% of all households in the U.S. Luckily the banking oligarchs were able to convince the pliable masses to increase their credit card, auto and student loan debt from $1.5 trillion to $3.1 trillion over the fourteen year descent into delusion.

When you get your head around this unprecedented decline in household income over the last fourteen years, along with the 50% to 100% rise in costs to live in the real world, as opposed to the theoretical world of the Federal Reserve and BLS, you will understand the long term decline in retail sales reflected in the following chart. When you adjust monthly retail sales for gasoline (an additional tax), inflation (understated), and population growth, you understand why retailers are closing thousands of stores and hurdling towards inevitable bankruptcy. Retail sales are 6.9% below the June 2005 peak and 4% below levels reached in 2000. And this is with millions of retail square feet added over this time frame. We know the dramatic surge from the 2009 lows was not prompted by an increase in household income. So how did the 11% proliferation of spending happen?

The up swell in retail spending began to accelerate in late 2010. Considering credit card debt outstanding is at exactly where it was in October 2010, it seems consumers playing with their own money turned off the spigot of speculation. It has been non-revolving debt that has skyrocketed from $1.63 trillion in February 2010 to $2.26 trillion today. This unprecedented 39% rise in four years has been engineered by the government, using your tax dollars and the tax dollars of unborn generations. The Federal government has complete control of the student loan market and with their 85% ownership of Ally Financial, the largest auto financing company, a dominant position in the auto loan market. The peddling of $400 billion of subprime student loan debt and $200 billion of subprime auto loan debt has created the illusion of a retail recovery. The student loan debt has been utilized by University of Phoenix MBA wannabes to buy iGadgets, the latest PS3 version of Grand Theft Auto and the latest glazed donut breakfast sandwich on the market. It’s nothing but another debt financed bubble that will end in tears for the American taxpayer, as hundreds of billions will be written off.

The fake retail recovery pales in comparison to the wolves of Wall Street produced housing recovery sham. They deserve an Academy Award for best fantasy production. The Federal Reserve fed Wall Street hedge fund purchase of millions of foreclosed shanties across the nation has produced media proclaimed home price increases of 10% to 30% in cities across the country. Withholding foreclosures from the market and creating artificial demand with free money provided by the Federal Reserve has temporarily added $4 trillion of housing net worth and reduced the number of underwater mortgages on the books of the Too Big To Trust Wall Street banks. The percentage of investor purchases and cash purchases is at all-time highs, while the percentage of first time buyers is at all-time lows. Anyone with an ounce of common sense can look at the long-term chart of mortgage applications and realize we are still in a recession. Applications are 35% below levels at the depths of the 2008/2009 recession. Applications are 65% below levels at the housing market peak in 2005. They are even 35% below 2000 levels. There is no real housing recovery, despite the propaganda peddled by the NAR, CNBC, and Wall Street. It’s a fraud.

It is the pinnacle of arrogance and hubris that a few Ivy League educated economists sitting in the Marriner Eccles Building in the swamps of Washington D.C., who have never worked a day in their lives at a real job, think they can create wealth and pull the levers of money creation to control the American and global financial systems. All they have done is perfect the art of bubble finance in order to enrich their owners at the expense of the rest of us. Their policies have induced unwarranted hope and speculation on a grand scale. Greenspan and Bernanke have provoked multiple bouts of extreme speculation in stocks and housing over the last 15 years, with the subsequent inevitable collapses. Fed encouraged gambling does not create wealth it just redistributes it from the peasants to the aristocracy. The Fed has again produced an epic bubble in stock and bond valuations which will result in another collapse. Normalcy bias keeps the majority from seeing the cliff straight ahead. Federal Reserve monetary policies have distorted financial markets, created extreme imbalances, encouraged excessive risk taking, and ruined the lives of working class people. Take a long hard look at the chart below and answer one question. Was QE designed to benefit Main Street or Wall Street?

The average American has experienced a fourteen year recession caused by the monetary policies of the Federal Reserve. Our leaders could have learned the lesson of two Fed induced collapses in the space of eight years and voluntarily abandoned the policies of reckless credit expansion, instead embracing policies encouraging saving, capital investment and balanced budgets. They have chosen the same cure as the disease, which will lead to crisis, catastrophe and collapse.

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises

THE RETAIL DEATH RATTLE

“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” ― Emile Gauvreau

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

Source: WSJ

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000’s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.

The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980’s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.” – Aldous Huxley

2013 – DENSE FOG TURNS INTO TOXIC SMOG

In mid-January of this year I wrote my annual prediction article for 2013 – Apparitions in the Fog. It is again time to assess my inability to predict the future any better than a dart throwing monkey. As usual, sticking to facts was a mistake in a world fueled by misinformation, propaganda, delusion and wishful thinking. I was far too pessimistic about the near term implications of debt, civic decay and global disorder. Those in power have successfully held off the unavoidable collapse which will be brought about by their ravenous unbridled greed, and blatant disregard for the rule of law, the U.S. Constitution and rights and liberties of the American people. The day to day minutia, pointless drivel of our techno-narcissistic selfie showbiz society, and artificially created issues (gay marriage, Zimmerman-Martin, Baby North West, Duck Dynasty) designed to distract the public from thinking, are worthless trivialities in the broad landscape of human history.

The course of human history is determined by recurring cyclical themes based upon human frailties that have been perpetual through centuries of antiquity. The immense day to day noise of an inter-connected techno-world awash in inconsequentialities and manipulated by men of evil intent is designed to divert the attention of the masses from the criminal activities of those in power. It has always been so. There have always been arrogant, ambitious, greedy, power hungry, deceitful men, willing to take advantage of a fearful, lazy, ignorant, selfish, easily manipulated populace. The rhythms of history are unaffected by predictions of “experts” who are paid to spin yarns in order to sustain the status quo. There is no avoiding the consequences of actions taken and not taken over the last eighty years. We are in the midst of a twenty year period of Crisis that was launched in September 2008 with the worldwide financial collapse, created by the Federal Reserve, their Wall Street owners, their bought off Washington politicians, and their media and academic propaganda machines.

I still stand by the final paragraph of my 2013 missive, and despite the fact the establishment has been able to fend off the final collapse of their man made credit boom for longer than I anticipated, they have only insured a far worse outcome when the bubble bursts:

“So now I’m on the record for 2013 and I can be scorned and ridiculed for being such a pessimist when December rolls around and our Ponzi scheme economy hasn’t collapsed. There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.”

The core elements of this Crisis have been visible since Strauss & Howe wrote The Fourth Turning in 1997. All the major events that transpire during this Crisis will be driven by one or more of these core elements – Debt, Civic Decay, and Global Disorder.

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

My 2013 predictions were framed by these core elements. After re-reading my article for the first time in eleven months I’ve concluded it is lucky I don’t charge for investment predictions. Many of my prognostications were in the ballpark, but I have continually underestimated the ability of central bankers and their Wall Street co-conspirators to use the $2.8 billion per day of QE to artificially elevate the stock market to bubble level proportions once again. If I wasn’t such a trusting soul, I might conclude the .1% financial elite, who run this country, created QEternity to benefit themselves, their .1% corporate CEO accomplices and the corrupt government apparatchiks who shield their flagrant criminality from the righteous hand of justice.

Even a highly educated Ivy League economist might grasp the fact that Ben Bernanke’s QEternity and ZIRP, sold to the unsuspecting masses as desperate measures during a crisis that could have brought the system down, have been kept in place for five years as a means to drive stock prices and home prices higher. The emergency was over by 2010, according to government reported data. The current monetary policy of the Federal Reserve would have been viewed as outrageous, reckless, and incomprehensible in 2007. It is truly a credit to the ruling elite and their media propaganda arm that they have been able to convince a majority of Americans their brazen felonious disregard for the wellbeing of the 99% is necessary to sustain the .1% way of life. Those palaces in the Hamptons aren’t going to pay for themselves without those $100 billion of annual bonuses.

Do you think the 170% increase in the S&P 500 has been accidently correlated with the quadrupling of the Federal Reserve balance sheet or has Bernanke just done the bidding of his puppet masters? Considering the .1% billionaire clique owns the vast majority of stock in this corporate fascist paradise, is it really a surprise the trickle down canard would be the solution of choice from these sociopathic scoundrels? Of course QE and ZIRP have impacted the 80% who own virtually no stocks in a slightly different manner. Do you think the 100% increase in gasoline prices since 2009 was caused by Bernanke’s QEternity?

Do you think the 8% decline in real median household income since 2008 was caused by Bernanke’s QE and ZIRP policies?

Do you think the $10.8 trillion stolen from grandmothers and risk adverse savers was caused by Bernanke’s ZIRP?

Was the $860 billion increase in real GDP (5.8% over five years) worth the $8 trillion increase in the National Debt and $3 trillion increase in the Federal Reserve balance sheet? Was it moral, courageous and honorable of the Wall Street plantation owners to syphon the remaining wealth of the dying middle class peasants and leaving the millennial generation and future generations bound in chains of unfunded debt to the tune of $200 trillion?

My assessment regarding unpredictable events lurking in the fog was borne out by what happened that NO ONE predicted, including: the first resignation of a pope in six hundred years, the military coup of a democratically elected president of Egypt – supported by the democratically elected U.S. president, the rise of an alternative currency – bitcoin, the bankruptcy of one of the largest cities in the U.S. – Detroit, a minor terrorist attack in Boston that freaked out the entire country and revealed the Nazi-like un-Constitutional tactics that will be used by the police state as this Crisis deepens, and revelations by a brilliant young patriot named Edward Snowden proving that the U.S. has been turned into an Orwellian surveillance state as every electronic communication of every American is being monitored and recorded. The Democrats and Republicans played their parts in this theater of the absurd. They proved to be two faces of the same Party as neither faction questions the droning of innocent people around the globe, mass spying on citizens, Wall Street criminality, trillion dollar deficits, a rogue Federal Reserve, or out of control unsustainable government spending.

My predictions for 2013 were divided into the three categories driving this Fourth Turning Crisis – Debt, Civic Decay, and Global Disorder. Let’s assess my inaccuracy.

Debt

The debt ceiling will be raised as the toothless Republican Party vows to cut spending next time. The political hacks will create a 3,000 page document of triggers and create a committee to study the issue, with actual measures that slow the growth of annual spending by .000005% starting in 2017.

The government shutdown reality TV show proved to be the usual Washington D.C. kabuki theater. They gave a shutdown and no one noticed. It had zero impact on the economy. More people came to the realization that government does nothing except spend our money and push us around. The debt ceiling was raised, the sequester faux “cuts” were reversed and $20 billion of spending will be cut sometime in the distant future. Washington snakes are entirely predictable. I nailed this prediction.

The National Debt will increase by $1.25 trillion and debt to GDP will reach 106% by the end of the fiscal year.

The National Debt increased by ONLY $964 billion in the last fiscal year, even though the government stopped counting in May. The temporary sequester cuts, the expiration of the 2% payroll tax cut, the fake Fannie & Freddie paybacks to the U.S. Treasury based upon mark to fantasy accounting, and the automatic expiration of stimulus spending combined to keep the real deficit from reaching $1 trillion for the fifth straight year. Debt to GDP was 104%, before our beloved government drones decided to “adjust” GDP upwards by $500 billion based upon a new and improved formula, like Tide detergent. I missed this prediction by a smidgeon.

The Federal Reserve balance sheet will reach $4 trillion by the end of the year.

The Federal Reserve balance sheet stands at $4.075 trillion today. Ben is very predictable, and of course “transparent”. This was an easy one.

Consumer debt will reach $2.9 trillion as the Feds accelerate student loans and Ally Financial, along with the other Too Big To Control Wall Street banks, keep pumping out subprime auto loans. By mid-year reported losses on student loans will soar and auto loan delinquencies will show an upturn. This will force a slowdown in consumer debt issuance, exacerbating the recession that started in 2012.

Consumer debt outstanding currently stands at $3.076 trillion despite the fact that credit card debt has been virtually flat. The Federal government has continued to dole out billions in loans to University of Phoenix wannabes and to the subprime urban entitlement armies who deserve to drive an Escalade despite having no job, no assets and a sub 650 credit score, through government owned Ally Financial. It helps drive business when you don’t care about being repaid. Student loan delinquency rates are at an all-time high, as there are no jobs for graduates with tens of thousands in debt. Auto loan delinquencies have begun to rise despite the fact we are supposedly in a strongly recovering economy. The slowdown in debt issuance has not happened, as the Federal government is in complete control of the non-revolving loan segment. My prediction has proven to be accurate.

The Bakken oil miracle will prove to be nothing more than Wall Street shysters selling a storyline. Daily output will stall at 750,000 barrels per day and the dreams of imminent energy independence will be annihilated by reality, again. The price of oil will average $105 per barrel, as global tensions restrict supply.

Bakken production has reached 867,000 barrels per day as more and more wells have been drilled to offset the steep depletion rates of the existing wells. The average price per barrel has been $104, despite the frantic propaganda campaign about imminent American energy independence. Tell that to the average Joe filling their tank and paying the highest December gas price in history. My prediction was too pessimistic, but the Bakken miracle will be revealed as an over-hyped Wall Street scam in 2014.

The home price increases generated through inventory manipulation in 2012 will peter out as 2013 progresses. The market has been flooded by investors. There is very little real demand for new homes. Young households with heavy student loan debt and low paying jobs will continue to rent, since the oligarchs refused to let prices fall to a level that would spur real demand. Mortgage delinquencies will rise as job growth remains stagnant, leading to an increase in foreclosures. Rent prices will flatten as apartment construction and investors flood the market with supply.

Existing home sales peaked in the middle of 2013 and have been in decline as mortgage rates have jumped from 3.25% to 4.5% since February. New home sales remain stagnant, near record low levels. The median sales price for existing home sales peaked at $214,000 in June and has fallen for five consecutive months by a total of 8%. First time home buyers account for a record low of 28% of purchases, while investors account for a record high level of purchasers. Mortgage delinquencies fell for most of the year, but the chickens are beginning to come home to roost as delinquent mortgage loans rose from 6.28% in October to 6.45% in November. Rent increases slowed to below 3% as Blackrock and the other Wall Street shysters flood the market with their foreclosure rental properties. My housing prediction was accurate.

The disconnect between the stock market and the housing and employment markets will be rectified when the MSM can no longer deny the recession that began in 2012 and will deepen in the first part of 2013. While housing prices languish 30% below their peak levels of 2006, the stock market has prematurely ejaculated back to pre-crisis levels. Declining corporate profits, stagnant consumer spending, and increasing debt defaults will finally result in a 20% decline in the stock market, with a chance for losses greater than 30% if Japan or the EU begin to crumble.

And now we get to the prediction that makes me happy I don’t charge people for investment advice. Facts don’t matter in world of QE for the psychopathic titans of Wall Street and misery for the indebted peasants of Main Street. The government data drones, Ivy League educated Wall Street economists, and the obedient corporate media propaganda apparatus declare that GDP has grown by 2% over the last four quarters and we are not in a recession. If you believe their bogus inflation calculation then just ignore the collapsing retail sales, stagnant real wages, and rising gap between the uber-rich and the rest of us. Using a true measure of inflation reveals an economy in recession since 2004. Whose version matches the reality on the ground?

Corporate profits have leveled off at record highs as mark to fantasy accounting fraud, condoned and encouraged by the Federal Reserve, along with loan loss reserve depletion and $5 billion of risk free profits from parking deposits at the Fed have created a one-time peak. The record level of negative earnings warnings is the proverbial bell ringing at the top.

I only missed my stock market prediction by 50%, as the 30% rise was somewhat better than my 20% decline prediction. Bernanke’s QEternity, Wall Street’s high frequency trading supercomputers, record levels of margin debt, a dash of delusion, and a helping of clueless dupes have taken the stock market to another bubble high. My prediction makes me look like an idiot today. I’m OK with that, since I know facts and reality always prevail in the long-run. As John Hussman sagely points out, today’s idiot will be tomorrow’s beacon of truth:

“The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There’s no calling the top, and most of the signals that have been most historically useful for that purpose have been blazing red since late-2011. My impression remains that the downside risks for the market have been deferred, not eliminated, and that they will be worse for the wait.”

Japan is still a bug in search of a windshield. With a debt to GDP ratio of 230%, a population dying off, energy dependence escalating, trade surplus decreasing, an already failed Prime Minister vowing to increase inflation, and rising tensions with China, Japan is a primary candidate to be the first domino to fall in the game of debt chicken. A 2% increase in interest rates would destroy the Japanese economic system.

Abenomics has done nothing for the average Japanese citizen, but it has done wonders for the ruling class who own all the stocks. Abe has implemented monetary policies that make Bernanke get a hard on. Japanese economic growth remains mired at 1.1%, wages remain stagnant, and their debt to GDP ratio remains above 230%, but at least he has driven their currency down 20% versus the USD and crushed the common person with 9% energy inflation. None of this matters, because the .1% have benefitted from a 56% increase in the Japanese stock market. My prediction was wrong. The windshield is further down the road, but it is approaching at 100 mph.

The EU has temporarily delayed the endgame for their failed experiment. Economic conditions in Greece, Spain and Italy worsen by the day with unemployment reaching dangerous revolutionary levels. Pretending countries will pay each other with newly created debt will not solve a debt crisis. They don’t have a liquidity problem. They have a solvency problem. The only people who have been saved by the actions taken so far are bankers and politicians. I believe the crisis will reignite, with interest rates spiking in Spain, Italy and France. The Germans will get fed up with the rest of Europe and the EU will begin to disintegrate.

This was another complete miss on my part. Economic conditions have not improved in Europe. Unemployment remains at record levels. EU GDP is barely above 0%. Debt levels continue to rise. Central bank bond buying has propped up this teetering edifice of ineptitude and interest rates in Spain, Italy and France have fallen to ridiculously low levels of 4%, considering they are completely insolvent with no possibility for escape. The disintegration of the EU will have to wait for another day.

Civic Decay

Progressive’s attempt to distract the masses from our worsening economic situation with their assault on the 2^nd Amendment will fail. Congress will pass no new restrictions on gun ownership and 2013 will see the highest level of gun sales in history.

Obama and his gun grabbing sycophants attempted to use the Newtown massacre as the lever to overturn the 2^nd Amendment. The liberal media went into full shriek mode, but the citizens again prevailed and no Federal legislation restricting the 2^nd Amendment passed. Gun sales in 2013 will set an all-time record. With the Orwellian surveillance state growing by the day, arming yourself is the rational thing to do. I nailed this prediction.

The deepening recession, higher taxes on small businesses and middle class, along with Obamacare mandates will lead to rising unemployment and rising anger with the failed economic policies of the last four years. Protests and rallies will begin to burgeon.

The little people are experiencing a recession. The little people bore the brunt of the 2% payroll tax increase. The little people are bearing the burden of the Obamacare insurance premium increases. The number of employed Americans has increased by 1 million in the last year, a whole .4% of the working age population. The number of Americans who have willingly left the labor force in the last year because their lives are so fulfilled totaled 2.5 million, leaving the labor participation rate at a 35 year low. The anger among the former middle class is simmering below the surface, as Bernanke’s policies further impoverish the multitudes. Mass protests have not materialized but the Washington Navy yard shooting, dental hygenist murdered by DC police for ramming a White House barrier, and self- immolation of veteran John Constantino on the National Mall were all individual acts of desperation against the establishment.

The number of people on food stamps will reach 50 million and the number of people on SSDI will reach 11 million. Jamie Dimon, Lloyd Blankfein, and Jeff Immelt will compensate themselves to the tune of $100 million. CNBC will proclaim an economic recovery based on these facts.

The number of people on food stamps appears to have peaked just below 48 million, as the expiration of stimulus spending will probably keep the program from reaching 50 million. As of November there were 10.98 million people in the SSDI program. The top eight Wall Street banks have set aside a modest $91 billion for 2013 bonuses. The cost of providing food stamps for 48 million Americans totaled $76 billion. CNBC is thrilled with the record level of bonuses for the noble Wall Street capitalists, while scorning the lazy laid-off middle class workers whose jobs were shipped to China by the corporations whose profits are at all-time highs and stock price soars. Isn’t crony capitalism grand?

The drought will continue in 2013 resulting in higher food prices, ethanol prices, and shipping costs, as transporting goods on the Mississippi River will become further restricted. The misery index for the average American family will reach new highs.

The drought conditions in the U.S. Midwest have been relieved. Ethanol prices have been flat. Beef prices have risen by 10% since May due to the drought impact from 2012, but overall food price increases have been moderate. The misery index (unemployment rate + inflation rate) has supposedly fallen, based on government manipulated data. I whiffed on this prediction.

There will be assassination attempts on political and business leaders as retribution for their actions during and after the financial crisis.

There have been no assassination attempts on those responsible for our downward financial spiral. The anger has been turned inward as suicides have increased by 30% due to the unbearable economic circumstances brought on by the illegal financial machinations of the Wall Street criminal banks. Obama and Dick Cheney must be thrilled that more military personnel died by suicide in 2013 than on the battlefield. Mission Accomplished. The retribution dealt to bankers and politicians will come after the next collapse. For now, my prediction was premature.

The revelation of more fraud in the financial sector will result in an outcry from the public for justice. Prosecutions will be pursued by State’s attorney generals, as Holder has been captured by Wall Street.

Holder and the U.S. government remain fully captured by Wall Street. The states have proven to be toothless in their efforts to enforce the law against Wall Street. The continuing revelations of Wall Street fraud and billions in fines paid by JP Morgan and the other Too Big To Trust banks have been glossed over by the captured mainstream media. As long as EBT cards, Visas and Mastercards continue to function, there will be no outrage from the techno-narcissistic, debt addicted, math challenged, wilfully ignorant masses. Another wishful thinking wrong prediction on my part.

The deepening pension crisis in the states will lead to more state worker layoffs and more confrontation between governors attempting to balance budgets and government worker unions. There will be more municipal bankruptcies.

Using a still optimistic discount rate of 5%, the unfunded pension liability of states and municipalities totals $3 trillion. The taxpayers don’t have enough cheese left for the government rats to steal. The crisis deepens by the second. State and municipal budgets require larger pension payments every year. The tax base is stagnant or declining. States must balance their budgets. They will continue to cut existing workers to pay the legacy costs until they all experience their Detroit moment. With the Detroit bankruptcy, I’ll take credit for getting this prediction right.

The gun issue will further enflame talk of state secession. The red state/blue state divide will grow ever wider. The MSM will aggravate the divisions with vitriolic propaganda.

With the revelations of Federal government spying, military training exercises in cities across the country, the blatant disregard for the 4^th Amendment during the shutdown of Boston, and un-Constitutional mandates of Obamacare, there has been a tremendous increase in chatter about secession. A google search gets over 200,000 hits in the last year. The divide between red states and blue states has never been wider.

The government will accelerate their surveillance efforts and renew their attempt to monitor, control, and censor the internet. This will result in increased cyber-attacks on government and corporate computer networks in retaliation.

If anything I dramatically underestimated the lengths to which the United States government would go in their illegal surveillance of the American people and foreign leaders. Edward Snowden exposed the grandest government criminal conspiracy in history as the world found out the NSA, with the full knowledge of the president and Congress, has been conspiring with major communications and internet companies to monitor and record every electronic communication on earth, in clear violation of the 4^th Amendment. Government apparatchiks like James Clapper have blatantly lied to Congress about their spying activities. The lawlessness with which the government is now operating has led to anarchist computer hackers conducting cyber-attacks on government and corporate networks. The recent hacking of the Target credit card system will have devastating implications to their already waning business. I’ll take credit for an accurate prediction on this one.

Global Disorder

With new leadership in Japan and China, neither will want to lose face, so early in their new terms. Neither side will back down in their ongoing conflict over islands in the East China Sea. China will shoot down a Japanese aircraft and trade between the countries will halt, leading to further downturns in both of their economies.

The Japanese/Chinese dispute over the Diaoyu/Senkaku islands has blown hot and cold throughout the year. In the past month the vitriol has grown intense. China has scrambled fighter jets over the disputed islands. The recent visit of Abe to a World War II shrine honoring war criminals has enraged the Chinese. Trade between the countries has declined. An aircraft has not been shot down, but an American warship almost collided with a Chinese warship near the islands, since our empire must stick their nose into every worldwide dispute. We are one miscalculation away from a shooting war. It hasn’t happened yet, so my prediction was wrong.

Worker protests over slave labor conditions in Chinese factories will increase as food price increases hit home on peasants that spend 70% of their pay for food. The new regime will crackdown with brutal measures, but the protests will grow increasingly violent. The economic data showing growth will be discredited by what is happening on the ground. China will come in for a real hard landing. Maybe they can hide the billions of bad debt in some of their vacant cities.

The number of worker protests over low pay and working conditions in China doubled over the previous year, but censorship of reporting has kept these facts under wraps. In a dictatorship, the crackdown on these protests goes unreported. The fraudulent economic data issued by the government has been proven false by independent analysts. The Chinese stock market has fallen 14%, reflecting the true economic situation. The Chinese property bubble is in the process of popping. China will never officially report a hard landing. China is the most corrupt nation on earth and is rotting from the inside, like their vacant malls and cities. China’s economy is like an Asiana Airlines Boeing 777 coming in for a landing at SF International.

Violence and turmoil in Greece will spread to Spain during the early part of the year, with protests and anger spreading to Italy and France later in the year. The EU public relations campaign, built on sandcastles of debt in the sky and false promises of corrupt politicians, will falter by mid-year. Interest rates will begin to spike and the endgame will commence. Greece will depart the EU, with Spain not far behind. The unraveling of debt will plunge all of Europe into depression.

Violent protests flared in Greece and Spain throughout the year. They did not spread to Italy and France. The central bankers and the puppet politicians have been able to contain the EU’s debt insolvency through the issuance of more debt. What a great plan. The grand finale has been delayed into 2014. Greece remains on life support and still in the EU. The EU remains in recession, but the depression has been postponed for the time being. This prediction was a dud.

Iran will grow increasingly desperate as hyperinflation caused by U.S. economic sanctions provokes the leadership to lash out at its neighbors and unleash cyber-attacks on Saudi Arabian oil facilities and U.S. corporations. Israel will use the rising tensions as the impetus to finally attack Iranian nuclear facilities. The U.S. will support the attack and Iran will launch missiles at Saudi Arabia and Israel in retaliation. The price of oil will spike above $125 per barrel, further deepening the worldwide recession.

Iran was experiencing hyperinflationary conditions early in the year, but since the election of the new president the economy has stabilized. Iran has conducted cyber-attacks against Saudi Arabian gas companies and the U.S. Navy during 2013. Israel and Saudi Arabia have failed in their efforts to lure Iran into a shooting war. Obama has opened dialogue with the new president to the chagrin of Israel. War has been put off and the negative economic impacts of surging oil prices have been forestalled. I missed on this prediction.

Syrian President Assad will be ousted and executed by rebels. Syria will fall under the control of Islamic rebels, who will not be friendly to the United States or Israel. Russia will stir up discontent in retaliation for the ouster of their ally.

Assad has proven to be much tougher than anyone expected. The trumped up charges of gassing rebel forces, created by the Saudis who want a gas pipeline through Syria, was not enough to convince the American people to allow our president to invade another sovereign country. Putin and Russia won this battle. America’s stature in the eyes of the world was reduced further. America continues to support Al Qaeda rebels in Syria, while fighting them in Afghanistan. The hypocrisy is palpable. Another miss.

Egypt and Libya will increasingly become Islamic states and will further descend into civil war.

The first democratically elected president of Egypt, Mohammed Morsi, was overthrown in a military coup as the country has descended into a civil war between the military forces and Islamic forces. It should be noted that the U.S. supported the overthrow of a democratically elected leader. Libya is a failed state with Islamic factions vying for power and on the verge of a 2^nd civil war. Oil production has collapsed. I’ll take credit for an accurate prediction on this one.

The further depletion of the Cantarell oil field will destroy the Mexican economy as it becomes a net energy importer. The drug violence will increase and more illegal immigrants will pour into the U.S. The U.S. will station military troops along the border.

Mexican oil production fell for the ninth consecutive year in 2013. It has fallen 25% since 2004 to the lowest level since 1995. Energy exports still slightly outweigh imports, but the trend is irreversible. Mexico is under siege by the drug cartels. The violence increases by the day. After declining from 2007 through 2009, illegal immigration from Mexico has been on the rise. Troops have not been stationed on the border as Obama and his liberal army encourages illegal immigration in their desire for an increase in Democratic voters. This prediction was mostly correct.

Cyber-attacks by China and Iran on government and corporate computer networks will grow increasingly frequent. One or more of these attacks will threaten nuclear power plants, our electrical grid, or the Pentagon.

China and Iran have been utilizing cyber-attacks on the U.S. military and government agencies as a response to NSA spying and U.S. sabotaging of Iranian nuclear facilities. Experts are issuing warnings regarding the susceptibility of U.S. nuclear facilities to cyber-attack. If a serious breach has occurred, the U.S. government wouldn’t be publicizing it. Again, this prediction was accurate.

I achieved about a 50% accuracy rate on my 2013 predictions. These minor distractions are meaningless in the broad spectrum of history and the inevitability of the current Fourth Turning sweeping away the existing social order in a whirlwind of chaos, violence, financial collapse and ultimately a decisive war. The exact timing and exact events which will precipitate the demise of the establishment are unknowable with any precision, but there is no escape from the inexorable march of history. While most people get lost in the minutia of day to day existence and supposed Ivy League thought leaders are consumed with their own reputations and wealth, apparent stability will morph into terrifying volatility in an instant. The normalcy bias being practiced by an entire country will be shattered in a reality storm of consequences. The Crisis will continue to be driven by the ever growing debt levels, civic decay caused by government overreach, and global disorder driven by resource shortages and religious zealotry. The ultimate outcome is unpredictable, but the choices we make will matter. History is about to fling us towards a vast chaos.

“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us that much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.” – Strauss & Howe – The Fourth Turning

THE SUBPRIME FINAL SOLUTION

The MSM did their usual spin job on the consumer credit data released earlier this week. They reported a 5.4% increase in consumer debt outstanding to an ALL-TIME high of $3.051 trillion. In the Orwellian doublethink world we currently inhabit, the consumer taking on more debt is seen as a constructive sign. Consumer debt has grown by 5.8% over the first nine months of 2013, after growing by 6.1% in 2012 and 4.1% in 2011. The storyline being sold by the corporate MSM propaganda machine, serving the establishment, is that consumers’ taking on debt is a sure sign of economic recovery. They must be confident about the future and rolling in dough from their new part-time jobs as Pizza Hut delivery men. Plus, they are now eligible for free healthcare, compliments of Obama, once they can log-on.

Of course, buried at the bottom of the Federal Reserve press release and never mentioned on CNBC or the other dying legacy media outlets is the facts and details behind the all-time high in consumer credit. They count on the high probability the average math challenged American has no clue regarding the distinction between revolving and non-revolving credit or who controls the distribution of such credit. It is fascinating examining the historical data on the Federal Reserve website and realizing how far we’ve fallen as a society in the last 45 years.

http://www.federalreserve.gov/releases/g19/HIST/cc_hist_sa_levels.html

Revolving credit is a fancy term for credit card debt. Imagine our society today without credit cards. That sounds outrageous to the debt addicted populace inhabiting our suburban wasteland and urban badlands. What is truly outrageous is the fact we have allowed ourselves to be duped into $846 billion of revolving credit card debt charging an average interest rate of 13% by Wall Street bankers who have used the American Dream of a better life as the bait to lure a dumbed down easily manipulated populace into believing that material possessions purchased with high interest debt represented advancement rather than servitude. Debt accumulation is seen as a badge of honor. Keeping up with the Joneses is all that matters. Our shallow culture has no notion about the concept of deferred gratification or saving to pay for your wants.

A shocking fact (to historically challenged government educated drones) revealed by the Federal Reserve data is that credit card debt did not exist prior to 1968. How could people live their lives without credit cards? It must have been a nightmare. You mean to tell me when people wanted new clothes, jewelry, a TV, or to eat out at a restaurant, they actually had to save up the cash to do so? What kind of barbaric system would make you live within your means? The Depression era adults had somehow survived for over two decades after WWII without buying cheap foreign crap they didn’t need with money they didn’t have using a piece of plastic with a Wall Street bank logo emblazoned on the front.

1968 marked a turning point for America. LBJ’s welfare/warfare state had begun the downward spiral of a once rational country. We chose guns and butter, with the bill being charged to the national credit card. It was fitting that Wall Street introduced the credit card in 1968.

There were 200 million Americans in 1968 and $2 billion of credit card debt outstanding, or $10 per person.
By 1980 there were 227 million Americans and $54 billion of credit card debt outstanding, or $238 per person.
By 1990 there were 249 million Americans and $230 billion of credit card debt outstanding, or $924 per person.
By 2000 there were 281 million Americans and $650 billion of credit card debt outstanding, $2,313 per person.
By July of 2008 credit card debt outstanding peaked at $1.022 trillion and the population was 304 million, with credit card debt per person topping out at $3,361 per person.

Over the course of 40 years, the population of this country grew by 52%. Credit card debt grew by 51,000%. Credit card debt per person grew by 33,600%. This was a case of credit induced mass hysteria and it continues today. Have the American people benefitted from this enslavement in chains of debt? I’d venture to answer no. Who benefitted? The corporate fascist oligarchy of Wall Street banks, mega-corporations sourcing their crap from Chinese slave labor factories, and politicians in the back pockets of the bankers and corporate CEOs benefitted.

The evil oligarch scum grew too greedy and blew up the worldwide financial system in 2008. Since July 2008 credit card debt has declined by $175 billion, with the majority of the decrease from banks writing off bad debt and passing it along to the American taxpayer through their TARP bailout and 0% money from their puppet Bernanke. It bottomed out at $834 billion in April 2011 and has only grown by a miniscule $13 billion in the last 29 months, and only $1.7 billion in the last twelve months. The muppets have refused to cooperate by running up those credit cards. Not having jobs, paying 40% more for health insurance due to Obamacare, and real inflation exceeding 5% on the things they need to live, have caused some hesitation among the delusional masses. Even a government educated, math challenged, iGadget addicted moron realizes their credit card is the only thing standing between them and living in a cardboard box on a street corner.

Your owners have been forced to implement Plan B. The monster they have created is like a shark. The debt must keep growing or the monster will die. In 2008, the oligarchs were staring into the abyss. Their wealth, power and control were in grave jeopardy. Rather than accept the consequences of their actions like men and allowing the economy to return to normalcy, these weasels have doubled down by accelerating the debt production and dropping it from helicopters to subprime borrowers across the land, like unemployed construction workers named Gus getting a degree in liberal arts from the University of Phoenix while sitting in their basement in boxer shorts. The Federal Reserve Black Hawks are hovering over the inner cities dropping Bennie Bucks on the very same people they put in McMansions with no doc negative amortization subprime mortgages in 2005, so they can occupy Cadillac Escalades for a couple years before defaulting again. The appearance of normalcy is crucial to the evil oligarchs as they attempt to pillage the remaining loot in this country.

Before the credit card was rolled out in 1968, there was non-revolving debt strictly related to auto loans made by banks and credit unions. The Federal government was nowhere to be found in the mix as banks and consumers made economic decisions based upon risk and reward. There were $110 billion of loans outstanding to a population of 200 million, or $550 per person. The Federal government stuck their nose into the free market with the creation of Sallie Mae in the 1970’s. But they were still a miniscule portion of total consumer debt at $115 billion in 2008, or only 11% of total consumer debt outstanding. The chart below from Zero Hedge reveals what has happened since the oligarchs crashed the financial system with their vampire squid blood sucking tentacles syphoning the lifeblood from the American middle class. Non-revolving debt has increased from $1.65 trillion in July 2008 to $2.2 trillion today, solely due to Obama and his minions doling out subprime auto and student loan debt to anyone that can scratch an X on a loan document.

If middle class consumers were unwilling to borrow and spend, the oligarchs were going to use their control over the government to dole out billions to subprime borrowers in a final, ultimately futile, attempt to keep this Ponzi scheme going for a while longer. The subprime game worked wonders in the final phase of the housing bubble. And now the losses will fall solely on the 50% of Americans who actually pay taxes. It wasn’t a mistake the Federal government took complete control of the student loan market in 2009. It isn’t a mistake the only TARP recipient the Feds have not attempted to disengage from happens to be the largest issuer of subprime auto loans in the world – Ally Financial (aka GMAC, Ditech, ResCap).

In 2008 there was $730 billion of student loan debt outstanding, of which the Federal government was responsible for $120 billion. Five short years later there is $1.2 trillion of student loan debt outstanding and the Federal government (aka YOU the taxpayer) is responsible for $716 billion. Using my top notch math skills, I’ve determined that student loan debt has risen by $470 billion, while Federal government issuance of student loan debt has expanded by $600 billion. The rational risk adverse lenders have reduced their exposure to the most subprime borrowers on earth, undergrads at the University of Phoenix and thousands of other “for profit” educational black holes across the country. Only an organization who didn’t care about getting repaid would lend billions to borrowers without a job, hope of a job, or intellectual ability to hold a job. A critical thinking person might wonder why student loan debt would rise by almost $500 billion in 5 years when college enrollment has grown by only 2 million. That comes to $250,000 per additional student.

The Federal government couldn’t possibly have distributed $500 billion to anyone with a pulse as a way to manipulate the national unemployment rate lower, because anyone in school is not considered unemployed. Do you think the $500 billion was spent on tuition and books? Or do you think those “students” used it to buy iGadgets, HDTVs, weed and Twitter stock? With default rates already at all-time highs and accelerating skyward and $146 billion of loans already in default, you don’t need a PhD from the University of Phoenix (where default rates exceed 30%) like Shaq to realize the American taxpayer is going to get it good and hard once again.

My personal observations during my daily trek through the slums of West Philly would befuddle someone who didn’t understand the oligarch scheme to create an artificial auto recovery by distributing auto loans to deadbeats, the SNAP army, and hip hop nitwits. As I maneuver quickly through the West Philly badlands in my four year old paid off compact car praying I don’t get caught in gang crossfire, I see an inordinate number of brand new BMWs, Mercedes, Lexus, Cadillacs, and Jaguars parked in front of $20,000 dilapidated fleapits that tend to collapse during heavy rain storms. The real unemployment rate in these garbage strewn, disintegrating neighborhoods exceeds 50%. The median household income is less than $20,000. Over 40% of the adult population hasn’t graduated high school and 63% of the population lives below the poverty level. These people put the “sub” in subprime. How can anyone in this American version of third world Baghdad afford to drive a $40,000 vehicle? The answer is they can’t. But you the taxpayer, out of the goodness of your heart and without your knowledge, have loaned them the money so they can cruise around West Philly in Jay Z or Kanye style.

Bernanke’s ZIRP creates the environment for mal-investment and reckless lending. With the Federal government owned Ally Financial leading the charge, the miraculous auto sales recovery is nothing but a bad loan driven illusion. With the Federal government pushing subprime loans like a West Philly drug dealer, the Too Big To Trust Wall Street cabal have followed suit providing financing to deadbeats with FICO scores of 500, no job, but a nice smile. When you can borrow from the Fed at 0% and loan money to SNAP nation at 18%, with a Bernanke unspoken promise to bail them out when the inevitable defaults come as a complete shock, this is why you see thousands of luxury automobiles parked in the urban kill zones across America.

Zero Hedge documented the new subprime bubble in a story earlier this week. As auto dealers allow losers with sub-500 FICO scores to drive off their lots with new cars, ZH summarized the next taxpayer bailout:

“No Car, no FICO score, no problem. The NINJAs have once again taken over the subprime asylum.”

Someone with a 500 FICO score has defaulted on multiple debt obligations in the recent past. The issuance of hundreds of billions of subprime debt can give the appearance of economic growth for a short period of time, just like it did from 2004 through 2007. Then it all collapsed in a heap because the debt eventually must be repaid. Cash flow is required to service debt. Maybe the West Philly subprime Mercedes drivers can trade their SNAP cards for cash to make their car loan payments, since they don’t have jobs. Even the captured MSM is being forced to admit the truth.

While surging light-vehicle sales have been one of the bright spots in the U.S. economy, it’s increasingly being fueled by borrowers with imperfect credit. Such car buyers account for more than 27 percent of loans for new vehicles, the highest proportion since Experian Automotive started tracking the data in 2007. That compares with 25 percent last year and 18 percent in 2009, as lenders pulled back during the recession. Issuance of bonds linked to subprime auto loans soared to $17.2 billion this year, more than double the amount sold during the same period in 2010, according to Harris Trifon, a debt analyst at Deutsche Bank AG. The market for such debt, which peaked at about $20 billion in 2005, was dwarfed by the record $1.2 trillion in mortgage bonds sold that year.

When has packaging subprime loans, getting them rated AAA by a trustworthy ratings agency, and selling them to little old ladies and pension funds, ever caused a problem before? With subprime auto loan issuance accounting for 50% of all car loans and an average loan to value ratio of 114.5%, what could possibly go wrong? Think about that for one minute. The government and Wall Street banks are loaning deadbeats $33,000 of your money to buy a $30,000 car, despite the fact the high school dropout borrower doesn’t have a job and has a history of defaulting on their obligations.

Can you really blame the borrowers? For the second time in the last decade the rich folk have generously offered to let them experience the good life, with debt that is never expected to be repaid. The people in West Philly live in rat infested, rundown, leaky shacks waiting for the 1st of the month to get their EBT card recharged. They have nothing, so they have nothing to lose. When the MAN offered to loan them $300,000 in 2005 so they could buy their very own McMansion, what did they have to lose? They got to live in a fancy house for a few years until they were booted out by the bank and left in exactly the same spot they were before the MAN came along. These people don’t even know what a FICO score means.

Now the MAN has knocked on their hovel door again and offered to put them in a brand spanking new Cadillac Escalade with no money down, requiring no proof of employment, and no prospects of repaying the loan. Hallelujah, there is a God!!! They get to tool around West Philly for a year or two impressing their fellow SNAP recipients until the repo man shows up and absconds with their wheels. They will be left right where they were, hoofing it with their $200 Air Jordans. Anyone with an ounce of brains (eliminates Cramer & Bartiromo) can see this will end exactly as all easy money, Federal Reserve propagated, and government sanctioned scams end.

“Perhaps more than any other factor, easing credit has been the key to the U.S. auto recovery,” Adam Jonas, a New York-based analyst with Morgan Stanley, wrote in a note to investors last month. The rise of subprime lending back to record levels, the lengthening of loan terms and increasing credit losses are some of factors that lead Jonas to say there are “serious warning signs” for automaker’s ability to maintain pricing discipline.

In the last year 99% of all consumer debt issued was doled out by government drones, with no interest in getting repaid, to subprime deadbeats, with no interest in repaying. It’s a match made in subprime heaven with your tax dollars. As an Ivy League educated Wall Street banker CEO once said:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

Chuck “Doing the Boogie Woogie” Prince – FORMER CEO of Citicorp – July 2007

You see it is always about liquidity, also known as Bernanke Bucks or QEternity. Without Bernanke and his Federal Reserve sycophants printing $2.8 billion of new money every single day, shoveling it into the grubby hands of his Wall Street bank bosses and a corrupt fetid festering pustule of a government running trillion dollar deficits and showering your money on loafers and welfare queens, this subprime final solution would not be possible. This is an exact replay of the subprime mortgage debacle, except the oligarchs have cut out the middleman. Holding the American people hostage for the $700 billion TARP bailout proved to be messy, with 90% of Americans against the “Save a Corrupt Criminal Banker” scheme. This time, there will not be a vote in Congress when the hundreds of billions in subprime student loans and subprime auto loans go bad and become the responsibility of the few remaining American taxpayers. What’s another few hundred billion among friends when our annual deficits soar past $1 trillion, our national debt approaches $20 trillion, and our unfunded entitlement liabilities exceed $200 trillion?

When the music stopped in 2008, Chuck Prince bopped away with a $40 million severance package and you were left to sweep the confetti off the floors, pick up the empty champagne bottles and caviar plates, scrub the vomitorium, and pay for all the damages that occurred during the sordid subprime orgy of greed, lust, gluttony, envy and sloth. Somehow the distracted, techno-narcissistic, easily duped zombies have been lured into the subprime web of deceit again. We have only ourselves to blame as the corporate fascist oligarchs implement their final solution for the American middle class and our once proud nation – a bullet to the back of the head.

SUSTAINABLE?

Our beloved leaders and their insistence on democratizing the world at the point of a few hundred tomahawk missiles has had predictable consequences. West Texas crude oil hit $109 a barrel today, the highest level since February 2012 when we were saber rattling over the imminent threat of Iran. Gas prices breached $3.90 per gallon then and again in September of 2012 when West Texas crude hit only $99 per barrel. The price at the station near my house has jumped by 8 cents in the last few days to $3.71 per gallon. The national price of $3.62 is headed higher. If and when the missiles start flying, the sky is the limit depending on what Syria, Russia and Iran do. There already appears to be a disconnect, as WTI has surged by 23% since April, but national gas prices are only up 4%. Some of this is due to demand destruction as the high prices and declining economy have led to a collapse in vehicle miles driven and fuel usage.

Some of the disconnect may be explained by the price of Brent crude. It is pretty much flat versus last year, while WTI has gone up 12%. The West and Midwest are most influenced by the price of WTI, while the East is impacted by Brent. The price of Brent hit $116 today, up 16% since April. That is close to the one year high reached in February, when U.S. gas prices hit their high for the year of $3.70 per gallon. Last year ended up with the highest average price for a gallon of gas in U.S. history and that was with falling prices from September through December. The average price in 2013 is only slightly lower than 2012 and we are about to experience much higher prices from September through December. Throw in a hurricane or two and we’ll really be partying. Prices in Chicago and Los Angeles are already above $3.90 per gallon.

There is nothing like high energy prices to kick the ass of this economy. We are already in recession, as the consumer is up to their eyeballs in debt and getting gouged by higher taxes, healthcare costs, tuition costs, and food costs. These soaring oil prices will make everything more expensive, as our economy is dependent upon shipping shit by truck. One of the storylines peddled by the MSM has been the fantastic auto recovery. Thank God Obama saved GM!!!

Again we have a disconnect. The number of vehicle miles driven continues to decline. Why would auto sales be soaring if people are driving less and young people can’t afford cars? The chart below makes the point. We’ve got record high energy prices and a decade long decline in miles driven, but somehow we have a booming auto industry. It couldn’t possibly be driven by cheap credit doled out to subprime auto buyers? Obama and his minions at Ally Financial, along with Bennie and his Wall Street cohorts wouldn’t be using those free Bennie bucks to create the illusion of an auto recovery? Would they?

Do you think the auto recovery is sustainable with rising interest rates, rising gas prices, falling stock prices, increasing bad debt on auto loans, and a recession? If you do, I have some prime real estate in Damascus I’d like to sell you.

TRYING TO STAY SANE IN AN INSANE WORLD – PART 2

In Part 1 of this article I detailed the insane solutions proposed and executed since 2008 by our owners as they attempt to retain and further expand their ill-gotten wealth, acquired through fraud, deceit, swindles, and the brilliant manipulation and exploitation of the masses through Bernaysian propaganda techniques. Madness has engulfed the entire world, with a concentration of power in the hands of a few psychopathic financial elite wielding an inordinate and dangerous expanse of power over the lives of the common man. They are a modern day version of Al Capone, except their weapons of choice aren’t machine guns, but a printing press, peddling debt, creating derivatives of mass destruction, and peddling heaping doses of disinformation. The contemporary criminal class wears Hermes suits, Rolex watches and diamond studded pinky rings, drops $500 to dine at Masa in NYC, travels by chauffeured limo, lives in $10 million NYC penthouse suites, occupies luxurious corner offices in hundred story glass towers, and spends weekends hobnobbing with the other financial elite at their villas in the Hamptons. They have nothing but utter contempt for the lowly peasants who depend upon a weekly paycheck to make ends meet. Why work when you can steal $1 or $2 billion from farmers with no consequences?

The willfully ignorant masses are kept at bay by the selling them a false dichotomy of Republicans versus Democrats, conservatives versus liberals, and capitalism versus socialism. The ruling class distracts the public with fake wars on poverty, drugs and terror, while using these storylines to further enrich themselves and keep the public alarmed and frightened. We’ve been “fighting” the wars on poverty and drugs for over four decades and poverty is at record levels, while drugs are easier to obtain than candy in a candy store. The war on terror is nothing more than a corporate arms dealer welfare plan. The end of the Cold War put a real crimp in the bottom lines of Lockheed Martin and the rest of the peddlers of death. 9/11 and the subsequent undeclared wars in Iraq, Afghanistan, Libya and now Syria, with Iran on the horizon, have been a godsend to the bottom lines of the corporations Eisenhower warned about in 1961. In reality, the politicians are interchangeable and bought off by corporate and special interests. The people are sold a fable, and controlled opposition is the fairy tale. They perpetuate the welfare/warfare state that enriches Wall Street, the military industrial complex, the healthcare service complex, politically connected mega-corporations and the corporate media propaganda complex. The American people are given the illusion of choice by their keepers. The system is rigged. The real decisions are made by unelected secretive men who operate in the shadows and use their wealth to direct the decision making of the politicians, government bureaucrats, and corporate entities that benefit from those decisions. Edward Bernays described a society that existed in the 19^th Century, 20^th Century, and has now grown to immense proportions in the 21^st Century:

“Political campaigns today are all sideshows…A presidential candidate may be ‘drafted’ in response to ‘overwhelming popular demand,’ but it is well known that his name may be decided upon by half a dozen men sitting around a table in a hotel room…The conscious manipulation of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.” – Edward Bernays

The manipulation of the masses has been perfected by the ruling class through decades of corporate mass media messaging the purposeful dumbing down of the populace through government public school education that teaches children how to feel rather than how to think. The conscious manipulation of the masses has been designed to produce obedient non-thinking consumers of corporate products, educated to believe the accumulation of material goods with debt constitutes wealth, to fear whatever the government tells them to fear, and never look up from their iGadgets long enough to actually think for themselves. We are bombarded with Orwellian memes designed to keep us sedated and pliant, as the ruling class pillages the national wealth and expands their power and control over our lives.

Conform; Stay Asleep; Do Not Question Authority; Obey; Consume; Reproduce; Submit; Watch TV; Buy; Follow; Doubt Humanity; No New Ideas; Feel, Don’t Think; Fear; Accumulate; Honor Apathy; Believe Experts; Surrender; Spend; No Independent Thought; Win; Want More; Hate; Succumb To Desire; Yield To Power; Choose Safety Over Liberty; Choose Security Over Freedom

This insane world was created through decades of bad decisions, believing in false prophets, choosing current consumption over sustainable long-term savings based growth, electing corruptible men who promised voters entitlements that were mathematically impossible to deliver, the disintegration of a sense of civic and community obligation and a gradual degradation of the national intelligence and character.

Are You Sane?

“A sane person to an insane society must appear insane.” – Kurt Vonnegut – Welcome to the Monkey House

Vonnegut and Huxley’s social commentary reveals a basic truth that societies and human beings have been prone to bouts of madness over the course of decades and centuries. Humans are a weak species, susceptible to the vagaries of greed, lust, gluttony, wrath, sloth, envy and pride. The seven deadly sins are in full bloom today, as the American empire descends through Dante’s inferno of reality TV, celebrity worship, religious zealotry, adulation of wealthy titans, military conquest and worship of false idols. Over the centuries humans have gone mad over tulips, farm land, stocks, and real estate. The easily duped American populace has been victimized by multiple bubbles bursting since the creation of the Federal Reserve in 1913. The contention that a central bank run by private banking interests would promote a safer financial system and a stable currency is laughable. The Federal Reserve and the bankers who control it have created three stock bubbles, the largest housing bubble in history, a bond bubble and the mother of all debt bubbles, while destroying 95% of the dollar’s purchasing power in the last 100 years.

There is a common denominator in all the bubbles created over the last century – Wall Street bankers and their puppets at the Federal Reserve. Fractional reserve banking, control of a fiat currency by a privately owned central bank, and an economy dependent upon ever increasing levels of debt are nothing more than ingredients of a Ponzi scheme that will ultimately implode and destroy the worldwide financial system. Since 1913 we have been enduring the largest fraud and embezzlement scheme in world history, but the law of diminishing returns is revealing the plot and illuminating the culprits. Bernanke and his cronies have proven themselves to be highly educated one trick pony protectors of the status quo.

Greenspan’s easy money policies, manufacturing of negative real short term interest rates, regulatory malfeasance and unspoken promise to bail out Wall Street whenever their excessive risk taking threatened to burn down the financial system, led to 50% stock market crash in 2000/2001, a 40% plunge in national home prices, and another 55% stock market crash in 2008/2009. While Ivy Leaguers Bernanke, Paulson, Hubbard, Krugman, and Bush were too obtuse or too blinded by their ideology to recognize the fraudulent housing and stock market bubbles, honest clear thinking men like Robert Shiller, John Hussman, and Ron Paul recognized the bubbles well in advance and understood the consequences to the average American.

“Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss.” – Ron Paul – 2003

What Ron didn’t realize was the peddlers and packagers of fraudulent mortgage debt on Wall Street would walk away unscathed when the bubble they created popped. Trillions of net worth was vaporized due to the policies, solutions, and programs designed and implemented by Bernanke and his Wall Street co-conspirators. The losses should have been borne by those who made the loans. Instead they were borne by the American taxpayer and future unborn generations. David Stockman, in his no holds barred book about the Wall Street and K Street crony capitalist criminals, rails against the Federal Reserve led rescue of the profligate destroyers of capital markets:

“At the end of the day, this trillion-dollar infusion of capital and liquidity from the public till had a single overarching effect: it nullified in its entirety the impact of Mr. Market’s withdrawal of a similar magnitude of funding from the wholesale money market. So the very monetary distortion – the availability of cheap overnight funding in massive quantities – upon which the Wall Street financial bubble had been built had now been recreated at the lending windows of the Fed, FDIC, and the US Treasury.

The opposite path of liquidating the Wall Street bubble was eschewed, of course, not only because it would have meant massive losses to speculators in the stock and bonds of Goldman Sachs, Morgan Stanley, JP Morgan, and the remaining phalanx of the walking wounded. Crony capitalism also triumphed because in muscling the system during the white heat of crisis, Wall Street had plenty of intellectual cover. The fact is, mainstream economists of both parties were trapped in a Keynesian dead end, proclaiming that the solution to the crushing national debt load which had actually triggered the financial crisis was to pile on more of the same.

Accordingly, banks which were “too big to fail” couldn’t be busted up, since they were allegedly needed to shovel more credit onto already debt saturated household and business balance sheets. Likewise, speculators who should have suffered epochal losses during the meltdown were resuscitated by Fed-engineered zero interest rates in the money market, thereby quickly reviving the same massively leveraged “carry trades” in commodities, currencies, equities, derivatives, and other risk assets which had brought on the crisis in the first place.” – David Stockman – The Great Deformation – The Corruption of Capitalism in America

The working middle class was forced at gunpoint to bail out billionaire bankers who had been fraudulently inducing feeble minded dupes and trailer trash to purchase $500,000 McMansions with negative amortization no doc subprime mortgages, while bullying appraisers into inflating appraisals, buying off the rating agencies, selling the toxic derivatives to their clients, and then shorting the very same derivatives. They subsequently committed foreclosure fraud by robo-signing legal documents. Describing these modern day Shylocks as heartless, cruel, lecherous, avaricious demons understates the vileness and contemptibility of their nature. Ben Bernanke and Hank Paulson blatantly lied to the depraved, gutless members of Congress and to the easily hoodwinked fearful American public about the threat of our financial system collapsing unless the Wall Street banks were saved. This false storyline is still peddled today and believed by millions of willfully ignorant crony capitalist devotees. The financial system wasn’t going to collapse. The stock prices of JP Morgan, Goldman Sachs, Citigroup, Bank of America, AIG, Morgan Stanley, GE, and Wells Fargo were collapsing. The wealth of the financial elites that run the country was in peril. The depositors in these banks wouldn’t have lost a penny, but the shareholders and bond holders would have been wiped out. The personal wealth of Dimon, Mack, Lewis, Prince, Immelt, Blankfein and the other titans of finance took precedence over the rule of law and the negative consequences of excessive risk taking and control fraud.

True free market capitalism embraces the concept of creative destruction. Poorly run companies fail and are replaced by well-run companies. Bankruptcy law worked perfectly during the liquidation of Washington Mutual. The orderly liquidation of the Too Big to Trust Wall Street banks would have resulted in billions of bad debt being discharged, with the losses being borne by the executives who mismanaged the banks and the investors who were foolish enough to fund the disastrous schemes perpetrated by those executives. The FDIC would have kept depositors whole. The privatization of illicit bank profits from 2002 through 2007 and the socialization of the 2008 through 2010 bank losses are proof that we are experiencing a warped, immoral, crony capitalism that enriches the well-connected and impoverishes the working middle class. Our political, economic and financial systems have been captured by corporate and special interests. This corruption will prove fatal, as the vested interests destroy the system through their myopic greed. We’ve allowed a small cadre of malevolent men to gamble away the nation’s future with impunity from all laws, regulations and any sense of morality, under the guise of capitalism. These men and the nation will pay a high price for these transgressions. The punishment will fit the crimes.

“People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” – John Kenneth Galbraith – The Age of Uncertainty

The chart below reveals the criminal plan as implemented by Bernanke, the Obama administration and the Wall Street banks. Instead of allowing insolvent financial institutions to fail, $700 billion of taxpayer funds were syphoned from the economy and handed to them. Bernanke has since stuffed their coffers with another $2.4 trillion he printed out of thin air. The purpose of this insane transfer of national wealth from the people to the parasites was not to help Main Street. Forcing the FASB to allow these criminal bankers to mark to unicorn rather than mark to market, buying their toxic mortgages, and providing billions in free money was done to cover-up the fact they are insolvent. Their balance sheets and the Federal Reserve balance sheet are choking on bad debt. The ongoing foreclosure/rent to own scam was designed to drive up home prices and allow the bankers to exit their toxic mortgages with a profit. The criminally insane bankers have used the trillions in excess funds to syphon off billions in stock market gains, with assurances from Ben that QE to infinity will always be there. They know if their gambling leads to losses, Ben will come to the rescue.

The purpose of banks was supposed to be to lend money to businesses and consumers so they could make long-term investments that helped expand the economy. These Wall Street cretins didn’t loan money to people and businesses in the real world. It was much easier to generate risk free returns and program their HFT supercomputers to buy, buy, buy. By driving real interest rates below zero for the last four years, Bernanke has stolen $400 billion per year from senior citizens living on the edge and transferred it to bloodsucking bankers. Anyone with money in a bank account is losing money. This was designed to force muppets back into the stock market where they will be fleeced for the third time in the last thirteen years.

Bernanke’s rescue measures have been a smashing success for the .1%. Wall Street is generating record levels of profits and paying out record levels of bonuses to themselves for a job well done. The stock market is at an all-time high, while the middle class is eviscerated by relentless inflation in energy, food, healthcare, clothing, tuition, rent and taxes. Reality does not match the propaganda touted by the financial elite. Ask the 47.7 million people on food stamps.

The economic recovery narrative propagated by Wall Street paid economists, Wall Street controlled media pundits, and Wall Street bought off politicians is nothing but unmitigated bullshit. True unemployment, that doesn’t falsely exclude the unemployed who have thrown in the towel, is north of 20%, with youth unemployment exceeding 40%. The “solutions” implemented by our owners have led to a 10% collapse in the median household income since 2008. If the middle class is seeing their real incomes decline, while their living expenses are rising by 5% per year, how can the economy be recovering? It can’t. Bernanke’s banker welfare program and Obama’s $1 trillion deficits, along with accounting fraud and under-reporting of inflation, have produced the illusion of recovery.

Dimitri Orlov summarizes our modern financial system and sets the table for the coming collapse:

“The main tools of modern finance are mystification, obfuscation and hypnosis. What is different now is that all the governments have already shot all of their magic bailout bullets. The guilty parties are still at large, richer than they were before this crisis and probably thinking that the next crisis will make them even richer.” – Dimitri Orlov – The Five Stages of Collapse

The questions that must be answered are: How did we allow this to happen? Are we blameless? Can our course be reversed?

Time to Look in the Mirror

“The America of my time line is a laboratory example of what can happen to democracies, what has eventually happened to all perfect democracies throughout all histories. A perfect democracy, a ‘warm body’ democracy in which every adult may vote and all votes count equally, has no internal feedback for self-correction. It depends solely on the wisdom and self-restraint of citizens… which is opposed by the folly and lack of self-restraint of other citizens. What is supposed to happen in a democracy is that each sovereign citizen will always vote in the public interest for the safety and welfare of all. But what does happen is that he votes his own self-interest as he sees it… which for the majority translates as ‘Bread and Circuses.’

‘Bread and Circuses’ is the cancer of democracy, the fatal disease for which there is no cure. Democracy often works beautifully at first. But once a state extends the franchise to every warm body, be he producer or parasite, that day marks the beginning of the end of the state. For when the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, they will do so, until the state bleeds to death, or in its weakened condition the state succumbs to an invader—the barbarians enter Rome.” – Robert A. Heinlein

Robert Heinlein has been dead for twenty five years. He wrote these words decades ago. His vision of a state bleeding to death is being played out as we speak. Ben Franklin had an inkling the Republic we were given would not be sustained. The success of our nation hinged upon the wisdom, self-restraint, morality, and civic mindedness of its citizens. Our form of governance was never perfect. Nothing is perfect. Adam Smith’s free market capitalism was based upon true competition, but with an underlying moral code. The rule of law meant something. Those who stole, cheated or broke the law were punished. Bankers and their usurious machinations were frowned upon. They were tolerated as a necessary evil, but they certainly weren’t admired and celebrated. When their greedy schemes to loot the populace went too far, a courageous leader would step forth and rout out the vipers and thieves:

“You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.” – Andrew Jackson

Bankers gained more power after the Civil War as oil was discovered, the country grew rapidly, and the robber barons built their fortunes on debt and the backs of the poor. But still, there were leaders like Teddy Roosevelt who stood up to the banking and corporate interests. The die was finally cast in 1913 with the introduction of the income tax, the creation of the Federal Reserve and allowing the people to directly elect their Senators. A century of central banking has led to: a century of war; a century of currency debasement; a transformation from a hard-working, saving, producing society into an irresponsible, debt based spending, consuming society; and the degradation of our society into a mob of egotistical techno-narcissists, who have chosen bread and circuses over freedom, liberty and self-reliance. At first it happened gradually, but accelerated rapidly once Nixon removed the last vestiges of control over greedy bankers, corrupt politicians, and gluttonous voters. The transformation from an industrious nation of savers into a slothful nation of consumers has reached its zenith. Financialization Nation has been built on a pyramid of debt. The youth of today have been left with an un-payable debt burden and as Bill Bonner points out, the endgame will likely be violent and bloody:

“That’s a heavy burden. It is especially disagreeable when someone else ran up the debt. Then you are a debt slave. That is the situation of young people today. They must face their parents’ debt. Even serfs in the Dark Ages had it better. They had to work only one day out of 10 for their lords and masters. As it stands, young people in the U.S., Europe and Japan are expected to work their whole lives to pay for things their parents and grandparents consumed decades earlier.

Let’s see. Deny a young person work and you deny him a career. Deny him a career and you deny him a way to support a family. Deny him a family life and who knows what happens? Will today’s young people accept their lot… and remain in docile debt servitude their whole lives? Or will they rise up and burn T-bonds in public spaces… rampage down Wall Street… and perhaps hang Ben Bernanke in front of the New York Federal Reserve?” – Bill Bonner

The pyramid of debt was built brick by brick over the last century, as an unelected, secretive, unaccountable cabal of private banker pharaohs has controlled the currency of the nation and worked on behalf of the vested corporate and banking interests that control the country. Shortly after its devious creation in 1913, they enabled Woodrow Wilson to wage a war he promised to keep the nation out of. The central bank’s easy money policies during the 1920s led to an unsustainable credit driven boom in stocks, bonds and real estate. As usual, their belated monetary tightening was too late to avoid the 1929 Crash. Federal Reserve and government intervention after the crash prolonged the Depression for over a decade. The Crash of 1929 proved once again that bankers could not be trusted. Their insatiable greed and reckless thirst for more and more riches required checks on their ability to destroy our economic system. The 38 page 1933 Glass-Steagall Act made sure commercial banking was kept separate from investment banking (gambling), keeping the productive activity of helping businesses grow isolated from the parasitic activity of speculation. This clear, concise, understandable law kept bankers from destroying the lives of millions for 66 years, until a bipartisan screw job repealed the law and unleashed the kraken upon the unsuspecting public. Bernanke’s QE to infinity driven stock market gains over the last few years are reminiscent of another historic time, and this story also hasn’t reached its ultimate climax.

“A major boom in real stock prices in the U.S. after ‘Black Tuesday’ brought them halfway back to 1929 levels by 1930. This was followed by a second crash, another boom from 1932 to 1937, and a third crash. Speculative bubbles do not end like a short story, novel, or play. There is no final denouement that brings all the strands of a narrative into an impressive final conclusion. In the real world, we never know when the story is over.” – Robert Shiller

The destruction of Europe, Russia and Japan during World War II and the Bretton Woods system that made the USD supreme across the world kept the economic peace for the next quarter century. A confluence of events in the late 1960s and early 1970s set the stage for the ultimate collapse of our faith based monetary system. LBJ’s Great Society welfare programs and our disastrous foray into Southeast Asia began the insane welfare/warfare dynamic that has required more and more debt to sustain. Nixon realized the debt expansion needed to pay for an ever expanding state could never be achieved with the Bretton Woods/gold pegged currency system. In 1971 Nixon unilaterally canceled the direct convertibility of the USD to gold. It ushered in the era of freely floating currencies, relentless inflation, financial bubbles, debt accumulation, consumerism, and the rise of the corporate/fascist propaganda state. Using government supplied CPI statistics, the dollar had lost 75% of its purchasing power between 1913 and 1971. Since 1971 it has lost 83% of its remaining purchasing power. And Ben Bernanke has the guts to publicly state his worries about the ravages of deflation.

The years 1913 and 1971 will be seen by future historians as infamous dates when marking the decline of the great American empire. Prior to 1971, the New York Stock Exchange barred the public listing of investment banks. After the exchange repealed this ban, the large investment banks (Lehman Brothers, Morgan Stanley, Merrill Lynch, Goldman Sachs, Bear Stearns) converted from partnerships, where the senior employees owned the company and were responsible for all of its liabilities, profits and losses, into publicly owned corporations, where executives’ incentives become aligned with outside shareholders, who demanded short-term profits and higher stock prices at the expense of long term sustainability. The partnership structure provided a mechanism of restraint, self-control, fiscal responsibility and cautiousness. If the bank failed, the partners’ net worth would be wiped out. Their incentives were for the long-term sustainability of the business and they were discouraged from taking undue risks that might produce huge short term profits, but might also destroy the firm. Shame and a sense of responsibility to fellow partners was a strong deterrent to obscene risk taking. The unholy combination of allowing investment banks to go public and repealing Glass Steagall in 1999, created a greed driven uncontrollable Too Big To Control brutish monstrosity consuming the world in its desire for more. It will only be stopped when it chokes to death while gorging on what’s left of the middle class.

The citizens, formerly known as the hard working American middle class, must accept their share of responsibility for the desperate circumstances we face. Some are guiltier than others, but we only need look in the mirror to find the culprits in allowing the bankers, politicians, military industrial complex, mass media and vested corporate interests to gain control over our country. The introduction of the credit card by Wall Street bankers as a must have for every citizen in the early 1970s coincided with the inflationary demons unleashed from Pandora’s Box by Nixon and the Federal Reserve, along with the peak of cheap U.S. oil production. Thus began four decades of real wages declining and consumer debt soaring. A nation of people that believed in saving before purchasing were given the freedom to spend money they didn’t have. The statistics paint a picture of a society gone mad:

Credit card debt grew from $5 billion in 1971 to $856 billion today, a 17,000% increase in forty-two years. GDP rose from $1.2 trillion to $16.6 trillion, a mere 1,400% increase. Real GDP only grew by 300%. Wages have grown from $600 billion to $7 trillion, a 1,200% increase. Real disposable personal income per capita grew from $17,200 to $36,800, a 200% increase.
Non-revolving debt (auto, student loan) grew from $127 billion in 1971 to $1.98 trillion today, a 1,600% increase.
There are over 600 million credit cards in circulation within the U.S. and Americans charged over $2.1 trillion last year.
Over 40% of Americans carry a balance on their credit card from month to month, with an average balance of $8,200 and an average interest rate of 13%.
40% of all low and middle income households must rely on their credit cards to pay basic living expenses like rent, mortgage, utilities, groceries, real estate taxes, income taxes, along with their “needed” iPhones, HDTVs, bling, stainless steel appliances, and tattoo artwork.
Wall Street banks have written off over $300 billion in credit card debt since 2008 (and passing the bill to taxpayers), while bilking their customers out of $60 billion per year in late fees and overdraft fees.

Despite the storyline of austerity, consumer credit outstanding has reached an all-time high of $2.84 trillion because Bernanke and his Wall Street puppeteers require perpetual debt expansion to keep their Ponzi scheme alive. Federal government dispensation of loans to subprime student borrowers has helped mask the true unemployment rate and Federal government doling out of subprime auto loans through Ally Financial and their crony Wall Street partners has created a fake auto recovery. The Blackrock/Wall Street “rent to own” faux housing recovery was designed by our owners to lure clueless math challenged dupes back into the housing market. Our entire economy is nothing but a confidence game at this point.

The four decade long orgy of debt couldn’t have ensued if our currency had remained linked to the barbaric relic – gold. The apologists and lackeys for the vested interests scorn and ridicule the notion of our economic system being burdened with any checks or balances. This is where the interests of those in power and those being ruled have coincided, as a fiat based monetary system allowed unlimited spending to keep the welfare/warfare state growing, enriching the crony capitalists, deepening the power of the state, and providing the masses with foreign made trinkets, baubles, corporate logoed clothing, techno-gadgets, and pimped out financed wheels. The concepts of self-restraint, discipline, saving for a rainy day, prudence, discretion, and deferred gratification are rarely displayed in modern day America. In a case of mass delusion, Americans have convinced themselves to live for today, recklessly ignore their futures, irresponsibly spend money they don’t have on things they don’t need, neglect their civic duty towards future generations, choose ignorance over knowledge, and vote for spineless politicians who promise them entitlements that are mathematically impossible to honor. The public’s foolish attitude towards debt accumulation matches the arrogance of our gutless intellectually dishonest leaders.

“When people pile up debts they will find difficult and perhaps even impossible to repay, they are saying several things at once. They are obviously saying that they want more than they can immediately afford. They are saying, less obviously, that their present wants are so important that, to satisfy them, it is worth some future difficulty. But in making that bargain they are implying that when the future difficulty arrives, they’ll figure it out. They don’t always do that.” – Michael Lewis – Boomerang

The manner in which our leaders are governing the country and citizens are living their lives can only be considered normal in relation to residing in a profoundly abnormal society. The American Dream of having the opportunity for upward mobility through educating yourself, working hard, accumulating wealth methodically by spending less than you earn, and reaching your full potential as a caring loving human being has been replaced by a perverted nightmare where we run on a hamster wheel for our entire lives trying to achieve the new American dream of accumulating throw away material goods, working to make the payments for McMansions, SUVs, stainless steel appliances, and iGadgets you rent from bankers, while driving yourself into an early grave by consuming mass quantities of processed poison and the stress created by trying to achieve the lifestyle sold to us by Madison Ave. maggots, Wall Street shysters and the mainstream media propagandists. The corporate fascists tell you what to believe, which “enemy” to fear, how you should look, what to eat, what drug to take for the illnesses caused by the food they lured you to eat, the kind of house you need to impress your friends and family, and the car you need to drive to impress your neighbors. As George Carlin aptly pronounced: “It’s called the American Dream because you’d have to be asleep to believe it.” – either asleep or insane.

“Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for – in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.” – Ellen Goodman

Our profoundly abnormal society of materialistic zombies, who mindlessly obey the commands and marketing messages of the financial elite, has staked their futures and the future of the country on the wisdom and brilliance of an Ivy League academic who never worked a day in the real world, didn’t spot the largest fraudulent housing bubble in world history, and whose unlawful acts as Federal Reserve chairman have enriched the banking whores who destroyed the country and impoverished what remains of the dying middle class. It’s the height of insanity for the American people to trust these crooked high priests of finance to cure a disease they spread with their immoral, traitorous policies over the last century. Bernanke and his lackeys, in a desperate last gasp gamble to prolong their fiat currency pillaging of the peasants, have rolled the dice with QE to infinity, accounting fraud, and further enrichment of their corporate masters.

“Viewed as a religious cult, modern finance revolves around the miracle of the spontaneous generation of money in a set of rituals performed by the high priests of central banking. People hang on the high priests’ every word, attempting to divine the secret meaning behind their cryptic utterances. Their interventions before the unknowable deity of global finance assure them of economic recovery and continued prosperity, just as a shaman’s rain dance guarantees rain or ritual sacrifice atop a Mayan pyramid once promised a bountiful harvest of maize.” – Dimitri Orlov – The Five Stages of Collapse

Bernanke will eventually roll craps. When he does, the collapse will be epic and 2008 will seem like a walk in the park. In Part 3 of this article I will speculate on the timing, scope and consequences of the coming collapse. It’s not going to be a happy ending, especially for the existing social order.

“STRONG” RETAIL SALES???

The markets are attempting to rally on the “unexpectedly positive” retail sales numbers for April. The bullshit is getting so deep in this country, you have to wear hip boots. Even though I’m a trusting soul and know the MSM and our Wall Street economist “experts” will tell me what I need to know, I decided to go directly to the report. Here is a link in case you want the actual data:

http://www.census.gov/retail/marts/www/marts_current.pdf

Here are my observations about the “strong” retail sales:

Through the beauty of seasonal adjustments the actual 2.7% decrease in retail sales in April versus March becomes a .09% increase, which is rounded up to .1% by the MSM. The government drones would never use seasonal adjustments to make numbers look better than they really are. Right?
Even with seasonal adjustments, retail sales only went up $377 million. The subprime financing scam being run by the Obama owned Ally Financial and the other government subsidized Wall Street shysters resulted in a $783 million increase in auto sales. Therefore, retail sales excluding this government use of your tax dollars actually declined by $406 billion.
The MSM is crowing about the lower gasoline sales which are benefitting the American consumer. If you look at the 4 month trend versus last year, you see that retail sales at gasoline stations is down 1.1% versus last year. Let me remind you that last year was the highest average price for gasoline in history, so a 1.1% decline is not exactly a windfall to the consumer. Do you see the MSM reporting the facts on this chart?

The first four months of retail sales in 2013 have sucked. Overall, they are up 3.3%. Subtracting the government boosted auto sales and the increase is 2.5%. Even using the government manipulated CPI yields basically flat retail sales with 2012. Using a real inflation rate of 5% reveals that real retail sales are declining by 2.5% in the first four months of 2013.
If there is a real housing recovery how could retail sales of furniture, electronics and building materials be languishing in the -0.7% to 3.6% range? How can general merchandise sales (Wal-Mart, Target) be 3.4% below last year?

The fact is that real retail sales are falling. The Obama tax increases and Obamacare insurance premium increases have sucked the life out of the consumer. Gas prices have risen 10 cents per gallon in the last two weeks. The busy driving season is coming. The Middle East is a powderkeg. Hurricane season isn’t far off. Companies are cutting the hours of their employees. The savings rate is already at 2.7%. Consumers are reducing credit card debt. There are 10,000 people per day turning 65. Sounds like a recipe for strong retail sale growth. Right?

Maybe a government drone economist could chime in and explain the extreme wide variation in seasonal adjustments over the last ten years. Shouldn’t seasonal adjustments for the same month be fairly consistent over time? Inquiring minds want to know.

CONSUMER REVOLVING CREDIT AT 2005 LEVELS

I find it fascinating that the horrible consumer credit data was released at 3:00 pm by the Federal Reserve and the “journalists” at the Wall Street Journal owned Marketwatch did not feel it warranted a headline on their site. You see the stock market is above 15,000 and they need to convince the sheep that this is great news for them. Therefore, they wouldn’t want any negative news to derail their 15,000 Dow storyline.

The blatant manipulation of our financial markets by Wall Street and their cronies in Washington DC is completely revealed by the data reported today. Revolving credit card debt tells the story. We already know that real wages have been falling since the mid 2000’s. We know there are 2 million less full-time jobs than there were in 2007. We know that payroll tax increases and Obamacare premium increases have sucked the life out of the consumer. Not only is credit card debt lower than it was 6 months ago, but it is lower than it was in May 2005. It isn’t lower because consumers are paying it down. It is lower because they can’t take on any more debt.

So riddle me this. If they aren’t buying Chinese shit with credit cards and their disposable income is declining, how does a country that depends on consumers to generate 71% of its GDP by spending on shit happen to be in an economic recovery?

Government sanctioned fraud, financed by you the taxpayer. Total consumer credit did hit a new all-time high in March. Since 2009, credit card debt has declined by $71 billion. Over this same time frame non-revolving debt has increased by $458 billion. That sure sounds like a disconnect to me. Using your credit card is a personal choice and can be restricted by the credit card issuer through reduced credit lines. Why would consumers be cutting back on credit card debt by 8% and increasing their use of non-revolving credit by 30%?

Easy answer – Obama and his government minions. They have doled out hundreds of billions in student loans to dullards going to the University of Phoenix to keep the unemployment rate on a downward track and they happen to still own 80% of Ally Financial (GMAC, Ditech, Rescap). Obama and his minions have used Ally Financial as their little engine of growth for GM and the rest of the auto industry. While automaker profits continue to fall, Ally Financial is giving auto loans to deadbeat subprime borrowers accounting for 45% of all vehicle sales in the country.

When has subprime lending created problems in the past? Is there a more subprime borrower than a University of Phoenix dropout or a Cadillac Escalade owner in West Philly? The economy is in the shitter. The average person can’t afford a pot to piss in. The government is using your money to create the illusion of recovery. There will be hundreds of billions in loan writeoffs for this government sanctioned fraud. You will foot the bill, so work harder and pay more taxes. It’s your duty to comrade Obama.

March Consumer Credit Increase Driven Entirely (And Then Some) By Student And Car Loans

Submitted by Tyler Durden on 05/07/2013 15:18 -0400

The March consumer credit headline was a disappointment, increasing by just $7.97 billion, on expectations of a $15.6 billion increase, with the February total revised lower to $18.14 billion. So far so bad. It gets worse when one peeks beneath the surface and finds that discretionary consumer credit in the form of credit card and other revolving loans posted its first decline of 2013, dropping by $1.7 billion, the biggest decline since December’s 2.1 billion. So what rose: why debt for purchases of Government Motors and student loans of course, which increased by $9.676 billion in March. In other words: the student bubble keeps getting bigger, more and more GM cars are being bought on subprime credit, while the vast majority of Americans can’t even afford to charge toilet paper purchases as the discretionary deleveraging continues.

In the last year, of the $157 billion in total debt issued, $152.6 billion, or 97.5%, is in the form of non-revolving credit. Consumer credit created? A whopping 2.5% of the total or $4 billion.

Finally, who is the primary source of all this free credit? Why Uncle Sam of course (and all US taxpayers by implication, when the student and second subprime car bubble pops of course).

IF AUTO SALES ARE BOOMING THEN WHY……..

GM and Ford reported “strong” sales for March, up 6.4% and 5.7% respectively. The current annual rate of auto sales has “surged” to 15.2 million. Last year sales rose to 14.5 million from only 12.7 million in 2011. This sure sounds like a tremendous recovery led by great new models from our “saved” GM and wonderful iconic Ford Motors. The MSM was crowing about the results today, except the details tell a different story. GM’s car sales FELL 3% in March. The surge in sales was due to fleet sales going up 12%. It couldn’t possibly be the Federal government buying vehicles, could it? Cadillac sales surged as subprime loans in West Philly to the FSA reached record levels. There were 1,478 Volts sold in the whole country – so there will be 15.2 million vehicles sold in the country and the Obama Volt will account for less than 20,000 of these sales or .0013 of all car sales. Ford car sales FELL 0.2%. Their increase was also driven by fleet sales and truck sales. How dense is the average American? Gasoline prices are above $4.00 per gallon in many cities and they continue to buy low gas mileage trucks and SUVs.

The auto market is completely dependent upon 7 year 0% financing for good credits and subprime lending for 45% of sales and this is all they can achieve?

If sales have been so awesome for the last two years, why are their stocks and their profits in decline? Inquiring minds want to know.

If auto sales were 12.7 million in 2011 and they are pacing at 15.2 million in 2013, why has GM stock dropped from $38 to $28, a 26% decline? I thought Obama saved GM and they were doing awesome. Vehicle sales are up 20% since 2011 and GM still managed to earn $3 billion less in 2012 than they earned in 2011. This doesn’t even take into account the massive channel stuffing that has artificially boosted their sales figures.

It seems that selling vehicles to your dealers and to deadbeats through Ally Financial doesn’t generate profits. But who needs profits when a storyline will do.

If Ford Motor is doing so well why is their stock at $13 today when it was at $19 in 2011? For the math challenged, that is a 32% drop when auto sales are up 20% since 2011. Is the MSM reporting that Ford sales dropped by $2 billion in 2012 and their net income from operations dropped by $1 billion? Are we really having a strong auto recovery if the two biggest US automakers are making significantly less profit?

The MSM is not in the truth business. They are in the propaganda business. The storyline of auto recovery is false. The reported sales increases are due to channel stuffing and easy money from Bennie. The 45% of sales from subprime loans will bite the taxpayer in the ass when Ally Financial reports billions in losses over the next few years. You own Ally Financial. So it goes.

IT’S ALWAYS THE BEST TIME TO BUY

“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” – David Lereah, NAR mouthpiece/economist – August 2005

“The steady improvement in home sales will support price appreciation despite all the wild projections by academics, Wall Street analysts, and others in the media.” – David Lereah, NAR mouthpiece/economist – January 10, 2007

“Buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country. We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth.” – Lawrence Yun – NAR mouthpiece/economist – February 21, 2013

I really need to stop being so pessimistic. I’m getting richer by the day. My home value is rising at a rate of 1% per month according to the National Association of Realtors. At that rate, my house will be worth $1 million in less than 10 years. My underwater condo (figuratively – not literally) in Wildwood will resurface and make me rich beyond my wildest dreams. Larry Yun, the brilliant economic genius employed by the upstanding and truth telling NAR, reported that median home prices soared by 12.3% in January (down 3.7% from December) over the prior year and there is virtually no inventory left to sell – with a mere 1.75 million homes in inventory – the lowest level since 1999. The median sales price of $173,600 is up “dramatically” from last year’s $154,500 level. I’m sure the NAR meant to mention that home prices are still down 25% from the 2005 high of $230,000. Every mainstream media newspaper, magazine, and news channel is telling me the “strong” housing recovery is propelling the economy and creating millions of new jobs. Keynesian economists, Wall Street bankers, government apparatchiks and housing trade organizations are all in agreement that the wealth effect from rising home prices will be the jumpstart our economy needs to get back to the glory days of 2005. Who am I to argue with such honorable men with degrees from Ivy League schools and a track record of unquestioned accuracy as we can see in the chart below?

Mr. Lereah added to his sterling reputation with his insightful prescient book Why the Real Estate Boom Will Not Bust—And How You Can Profit from It, which was published in February 2006. I understand Ben Bernanke has a signed copy on his nightstand. According to David, he voluntarily decided to leave the NAR in mid-2007 as home prices began their 40% plunge over the next four years. He then admitted in an interview with Money Magazine in 2009 that he was nothing but a shill for the real estate industry, no different than a whore doing tricks for $20. Except he was whoring himself for millions of dollars and contributing to the biggest financial fraud in world history:

“I was pressured by executives to issue optimistic forecasts — then was left to shoulder the blame when things went sour. I was there for seven years doing everything they wanted me to. I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it. It was easy to do during boom times, harder when times weren’t good. I never thought the whole national real estate market would burst.”

After Mr. Lereah slithered away from his post he was replaced by the next snake – Lawrence Yun. He proceeded to put the best face possible on the greatest housing collapse in recorded history, assuring the public it was the best time to buy during the entire slide. Five million foreclosures later he’s still telling us it’s the best time to buy. Why shouldn’t we believe the National Association of Realtors and the mainstream media that report their propaganda as indisputable fact? These noble realtooors only have the best interests of their clients at heart. Remember when they warned people about the dangers of liar loans, negative amortization loans, appraisal fraud, nefarious mortgage brokers, criminal bankers, corrupt ratings agencies and the fact that home prices had reached a high two standard deviations above the normal trend? Oh yeah. They didn’t make a peep. They disputed and ridiculed Robert Shiller and anyone else who dared question the healthy “strong” housing market storyline. In late 2011 this superb, above board, truth telling organization admitted what many financial analysts and “crazy” bloggers had been pointing out for years. They were lying about home sales. Their data was false. Between 2007 and 2010, the NAR reported 2.95 million more home sales than had actually occurred. This was not a rounding error. This was not a flaw in their methodology, as they claimed. It was an outright fraudulent attempt to convince the public that the housing market was not in free fall. These guys make the BLS look accurate and above board.

We are now expected to believe their monthly reports as if they are gospel. The mainstream media continues to report their drivel about the lowest inventory level in 14 years without the slightest hint of skepticism.

The Incredible Shrinking Inventory

We are told by good old Larry Yun that there are only 1.74 million homes left for sale in this country and at current sales rates we’ll run out of inventory in 4.2 months. Oh the horror. You better buy now, before it’s too late. We must be running out of houses. Someone call Bob Toll. We need more houses built ASAP, before this becomes a crisis. But there seems to be problem with this storyline. Existing home sales are falling. Even using the NAR seasonally manipulated numbers, sales in January were lower than in November. In a country with 133 million housing units, there were 291,000 existing home sales in January. If there is an inventory shortage, why have new home sales fallen every month since May of 2012? There were a total of 10,000 completed new homes sold in December in the entire country. Housing starts plunged by 8.5% in January. Does this happen when you have a strong housing market? Do you believe the NAR inventory figure of 1.74 million homes for sale? The last time the months of supply was this low was early 2005 – during the good old days.

Let’s examine a few facts to determine the true nature of this shocking inventory shortage. According to the U.S. Census Bureau:

There are 133 million housing units in the United States
There are 115 million occupied housing units in the country, with 75 million owner occupied and 40 million renter occupied.
For the math challenged this means that 13.5%, or 18 million housing units, are vacant.
Only 4.3 million are considered summer homes, and 3.9 million are available for rent. That leaves 9.8 million homes completely vacant.
The Census Bureau specifically identifies 1.6 million of these vacant housing units as up for sale.

So, with 9.8 million vacant housing units in the country and 1.6 million of these identified as for sale, the NAR and media mouthpieces have the balls to report only 1.74 million homes for sale in the entire U.S. This doesn’t even take into account the massive shadow inventory stuck in the foreclosure pipeline. Of the 75 million owner-occupied housing units in the country, 50 million have a mortgage. Of these houses, a full 10.9% are either delinquent or in the foreclosure process. This totals 5.4 million households, with 1.9 million of these households already in the foreclosure process. The number of distressed households is still double the long-term average, even with historically low mortgage rates, multiple government mortgage relief programs (HARP), and Fannie, Freddie and the FHA guaranteeing 90% of all mortgages. Do you think the NAR is including any of these 5.4 million distressed houses in their inventory numbers?

Then we have the little matter of a few home occupiers still underwater on their mortgages. After this fabulous two year housing recovery touted by shills and shysters, only 27.5% of ALL mortgage holders are underwater on their mortgage. This means 13.8 million households are in a negative equity position. Those with 5% or less equity are effectively underwater since closing costs usually exceed 6% of the house’s value. That adds another 2.2 million households to the negative equity bucket. Do you think any of these 16 million households would be selling if they could?

The negative equity position of millions of homeowners gets at the gist of the effort to re-inflate the housing bubble. By artificially pumping up home prices, the Wall Street titans and their co-conspirators at the Federal Reserve and Treasury Department are attempting to repair insolvent Wall Street bank balance sheets, lure unsuspecting dupes back into the housing market, reignite the economy through the old stand-by wealth effect, and of course enrich themselves and their crony capitalist friends. The artificial suppression of home inventory has been working wonders, as 2 million homeowners were freed from negative equity in 2012. If they can only lure enough suckers back into the pool, all will be well. Phoenix must have an inordinate number of chumps with home prices rising by 22.5% in 2012 as investors and flippers poured into the market with cheap debt and big dreams. Of course everything is relative, as prices are still down 44% from the peak and 40% of mortgages remain underwater. I strongly urge everyone without a functioning brain to pour their life savings into the Phoenix housing market. Larry Yun says it’s a can’t miss path to riches.

Despite the propaganda, hyperbole, and cheerleading from the corporate media, the fact remains that national homeowner’s equity is barely above its all-time low of 38%, down from 62% in 2000 and 70% in 1980. The NAR shills, Federal Reserve drug pushers, Wall Street shysters, and pliant media lured the middle class into the false belief that housing was an asset class that could make you rich. Homes became the major portion of middle class net worth. As prices were driven higher from 2000 through 2006, the middle class took the bait hook line and sinker and borrowed billions against their ever increasing faux housing wealth. This set up the impending collapse of middle class net worth, created by the 1%ers on Wall Street, in Washington DC, and in corporate executive suites across the land. The median American household lost 47% of its wealth between 2007 and 2010. Average household wealth, which is skewed dramatically by the richest Americans, declined by only 18%. Real estate only accounts for 30% of the net worth of the rich. For the middle 60%, housing has risen from 62% to 67% of total wealth since 1983. Middle class families’ saw their cash cushion fall from 21% in 1983 to 8% before the crash. They were convinced that living on Wall Street peddled debt was the path to prosperity. After the crash, the middle class has been left with no cash, underwater mortgages, declining real wages, less jobs, and a mountain of credit card debt. Delusions have been crushed. But an on-line degree from the University of Phoenix funded by a Federal student loan of $20,000 will surely revive the fortunes of the average unemployed middle class worker.

Despite the destruction of middle class hopes, dreams, and net worth, the ruling plutocracy has decided the best way to revive their fortunes is to lure the ignorant masses into more student loan debt, auto debt and mortgage debt.

Don’t Look Behind the Curtain

“The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives that they do not even struggle or suffer or develop symptoms as the neurotic does. They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.” – Aldous Huxley – Brave New World Revisited

What is normal in a profoundly abnormal, manipulated, propaganda driven society? The NAR and Federal government issue their public relations announcements every month and attempt to spin straw into gold. The media then fulfill their assigned role by touting the results as unequivocal proof of an economic recovery. This is all designed to revive the animal spirits of the clueless public. Statistics in the hands of those who have no regard for the truth can be manipulated to portray any storyline that serves their corrupt purposes. When I see a story about the housing market referencing a percentage increase as proof of a recovery I know it’s time to check the charts. You see, even a fractional increase from an all-time low will generate an impressive percentage increase. So let’s go to the charts in search of this blossoming housing recovery.

The media, NAHB, and certain bloggers look at this chart and declare that new home sales are up 20% from 2011 levels. Sounds awesome. I look at this chart and note that 2011 was the lowest number of new home sales in U.S. history. I look at this chart and note that new home sales are 75% below the peak in 2005. I look at this chart and note that new home sales are lower today than at the bottom of every recession over the last fifty years. I look at this chart and note that new home sales are lower today than they were in 1963, when the population of the United States was a mere 189 million, 40% less than today’s population. Do you see any signs of a strong housing recovery in this chart?

The housing cheerleaders look at the chart below and crow about a 75% increase in housing starts. I look at this chart and note that housing starts in 2009 were the lowest in recorded U.S. history. I look at this chart and note that total housing starts are down 60% and single family starts are down 70% from 2006 highs. I look at this chart and note the “surge” in housing starts is completely being driven by apartment construction, because the student loan indebted youth can’t afford to buy houses. I look at this chart and note that housing starts are 40% below 1968 levels. Do you see any signs of a strong housing recovery in this chart?

Those trying to lure the gullible non-thinking masses into paying inflated prices for the “few” houses available for sale declare that existing home sales are up 50% in the last two years. Of course, the 3.3 million low in 2010 was the lowest level in decades. Existing home sales are still 30% below the 2005 high of 7.2 million and the abnormal structure of these home sales is dramatically different than the normal sales of yesteryear.

The wizards behind the curtain don’t want you to understand how the 50% increase in existing home sales has been achieved. They just want you to be convinced that a return to normalcy has happened and it’s the best time to buy. The NAR wizards and the media wizards don’t publicize the composition of these skyrocketing sales. At the end of the NAR “buy a home before it’s too late” monthly press release you find out that distressed homes (foreclosed & short sales) now make up 23% of all home sales and have accounted for well over 30% of all home sales since 2010. Another 28% of home sales are all-cash sales to investors looking to turn them into rental units or flip them for a quick buck. Lastly, 30% of homes are being bought by first time home buyer pansies who have been lured into the market by 3.5% down payment loans through the FHA, with the future losses born by middle class taxpayers who had no say in the matter. Prior to the housing crash, normal buyers who just wanted a place to live, accounted for 90% of all home purchases. Today they make up less than 30% of home buyers. Does this chart portray a normal market or a profoundly abnormal market? Does it portray a healthy housing recovery based upon sound economic fundamentals?

The answer is NO. The contrived elevation of home sales and home prices has been engineered by the very same culprits who crashed our financial system in the first place. This has been planned, coordinated and implemented by a conspiracy of the ruling oligarchy – the Federal Reserve, Wall Street, U.S. Treasury, NAR, and the corporate media conglomerates. Ben’s job was to screw senior citizens and drive interest rates low enough that everyone in the country could refinance, attract investors & flippers into the market, and propel home prices higher. Wall Street has been the linchpin to the whole sordid plan. They were tasked with drastically limiting the foreclosure pipeline, therefore creating a fake shortage of inventory. Next, JP Morgan, Blackrock, Citi, Bank of America, and dozens of other private equity firms have partnered with Fannie Mae and Freddie Mac, using free money provided by Ben Bernanke, to create investment funds to buy up millions of distressed properties and convert them into rental properties, further reducing the inventory of homes for sale and driving prices higher. Only the connected crony capitalists on Wall Street are getting a piece of this action. The Wall Street big hanging dicks have screwed the American middle class coming and going. The NAR and media are tasked with what they do best – spew propaganda, misinform, lie, cheerlead and attempt to create a buying frenzy among the willfully ignorant masses. The chart below reveals the truth about the strong sustainable housing recovery. It doesn’t exist. Mortgage applications by real people who want to live in a home are no higher than they were in 2010 when home sales were 33% lower than today. Mortgage applications are lower than they were in 1997 when 4 million existing homes were sold versus the 5 million pace today. The housing recovery is just another Wall Street scam designed to bilk the American middle class of what remains of their net worth.

The multi-faceted plan to keep this teetering edifice from collapsing is being executed according to the mandates of the financial class:

Distribute hundreds of billions in student loans to artificially suppress the unemployment rate, while the BLS adjusts millions more out of the labor force – CHECK
Have Ally Financial (80% owned by Obama) and Wall Street banks dole out subprime auto loans to millions and offer 7 year financing at 0%, while GM (Government Motors) channel stuffs its dealers, to create the appearance of an auto recovery – CHECK
Drive mortgage rates down, restrict home supply through foreclosure market manipulation, shift the risk of losses to the taxpayer, and allow Wall Street to control the housing market – CHECK
Have the corporate mainstream media continuously spout optimistic, positive puff pieces designed to convince an ignorant, apathetic public that the economy is improving, jobs are being created, and housing has recovered – CHECK

Free money, government subsidies, no regulation, Wall Street hubris, get rich quick schemes, media propaganda, and an ignorant public – what could possibly go wrong?

Here is what could and will go wrong. Everyone in the country that could refinance to a mortgage rate of 4% or lower has done so. Contrary to Bernanke’s rhetoric that “QE to Infinity” would lower mortgage rates, they have just risen to a six month high as the 10 Year Treasury rose 60 basis points from its 2012 low. If mortgage rates just rose to a modest 5% the housing market would come to a grinding halt as no one would trade a 3.5% mortgage for a 5% mortgage. As I’ve detailed earlier, there are 3.9 vacant housing units available for rent. Almost half of the new housing units under construction are apartments. The Wall Street shysters are converting millions of foreclosed homes into rental units. This avalanche of rental properties will depress rents and destroy the modeled ROI calculations of the brilliant Wall Street Ivy league MBAs. These lemmings will all attempt to exit their “investments” at the same time. The FHA is already broke. The mounting losses from their 3.5% down payment to future deadbeats program will force them to curtail this taxpayer financed debacle. There will be few first time home buyers, as young people saddled with a trillion dollars of student loan debt are incapable of buying a home.

These are the facts. But why trust facts when you can believe Baghdad Ben and the NAR? It’s always the best time to buy.

“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.” – Ben Bernanke – May 17, 2007

APPARITIONS IN THE FOG

After digesting the opinions of the shills, shysters and scam artists, I am ready to predict that I have no clue what will happen during 2013. The weekend weather last week was a perfect analogy for attempting to forecast the future. The professional highly educated meteorologists predicted sunny warm weather, just as the PhD Wall Street paid economist mouthpieces assure the multitudes 2013 will be the year when zero interest rates and $1.2 trillion deficits will finally lead to sunny economic skies. Instead, the weekend was overcast and damp. As I was writing this article and watching the miraculous Baltimore Ravens comeback against Denver, I received a two minute warning from my wife. I had to pick up my son and his buddies at the Montgomery Mall. As I pulled the car out of the garage, I backed out into fog that was thicker than pea soup. I’ve driven the roads to the Montgomery Mall hundreds of times, but the fog was so thick I couldn’t see ten feet ahead. I drove hesitantly, wondering what might be just over the horizon or what might dart out from a side street. I see 2013 as a year of maneuvering through thick fog with startling apparitions lurking to surprise us and force a deviation in our normal course. As I proceeded cautiously through the murky mist there were few cars on the roads and the strip centers and fast food joints resembled haunted houses and grave yards. I expected to see Dracula, Frankenstein’s monster, and Wolfman panhandling on the corners.

The fog of uncertainty is engulfing the nation, making consumers hesitant to spend and businesses reluctant to hire or invest. It was like being in a commercial real estate horror film, with SPACE AVAILABLE, NOW LEASING, and STORE CLOSING signs startling me everywhere I turned. The trip took a spooky turn as I passed branches of those zombie banks – Bank of America and Citigroup. They don’t even know they’re already dead. I finally arrived at the Mall passing thousands of empty parking spaces with a few cars huddled close to the zombie starring in Night of the Retailing Dead – Sears. In the miasma, the few visitors appeared to be automaton like consumers programmed to shuffle through the mall and buy things they don’t need with money they don’t have. To say the road ahead for this country in 2013 is foggy would be an epic understatement. Let’s hope it doesn’t have a Nightmare on Elm Street like ending.

Virtually all of the mainstream media, Wall Street banks and paid shill economists are in agreement that 2013 will see improvement in employment, housing, retail spending and, of course the only thing that matters to the ruling class, the stock market. Even among the alternative media, there seems to be a consensus that we will continue to muddle through and the day of reckoning is still a few years off. Those who are predicting improvements are either ignorant of history or are being paid to predict improvement, despite the overwhelming evidence of a worsening economic climate. The mainstream media pundits, fulfilling their assigned task of purveying feel good propaganda, use the 10% stock market gain in 2012 as proof of economic recovery. The facts prove otherwise:

Real GDP, using a dramatically understated inflation rate, has barely grown by 1% in 2012. Using a true measure of inflation, the GDP was -2% during 2012. Even this pitiful growth was generated by 0% interest rate deals for subprime auto loans through Ally Financial (85% owned by you the taxpayer) and 7 year 0% home furnishing financing deals through GE Capital and the other government subsidized Too Big To Control Wall Street banks. The Federal government chipped in by guaranteeing FHA subsidized 3% down payment loans on houses and handing out billions in loans to students so they can find themselves, keep the unemployment rate down, get drunk, and if they graduate – enter debt servitude for decades.

The number of people who have left the workforce since last December (2.2 million) almost matched the number of newly employed (2.4 million), as the labor participation rate has collapsed to a three decade low of 63.6%. The propagandists attempt to peddle this dreadful condition as a function of Baby Boomers retiring. This is obliterated by the fact the 55 to 69 age bracket has added 4 million jobs since Obama became president, while the younger age brackets have lost 3 million jobs. The working age population has grown by 13 million since 2007 and there are 4 million less people employed.

Another 1.5 million Americans were forced onto food stamps during 2012, bringing the total increase to 17 million since Obama assumed office. With 47.5 million depending on assistance to feed them, a full 20% of all households in the U.S. are dependent on this program, costing taxpayers $76 billion, versus $34 billion in 2008. Another 4.8 million have joined the ranks of the disabled since 2009, with a dramatic surge when the 99 week unemployment benefits began to run out. These trends are surely signs of recovery.

Real average hourly earnings were flat in 2012, and have fallen 1.5% since Obama became president. The average middle class worker is making less than they were forty years ago. Using a true measure of inflation would reveal the true devastation wrought on the middle class. As the things we need (food, energy, shelter, education, healthcare) have grown more expensive and the things we are brainwashed to buy (iGadgets, HDTVs, luxury autos, bling) by the masters of propaganda have been made easily accessible through credit, the middle class has enslaved themselves in chains of debt. The declining average wages since 1973 have forced families to have both spouses work outside the home, with the consequence of more divorces, children raised by strangers, and the proliferation of depressed human beings. The lost real income has been replaced by credit card, auto, mortgage, and student loan debt.

The reason Bernanke, Geithner, Obama, Wall Street, corporate titans, and media pundits focus their attention on the stock market is because they are looking out for their fellow 1%ers. The working middle class, once the backbone of this country, own virtually no stocks. The 88% stock market increase since March 2009 hasn’t benefitted the middle class one iota. The Federal Reserve engineered stock market recovery has benefitted moneyed bankers and wealthy corporate executives, the very people who collapsed the worldwide financial system and received the bailouts when they should have gone to jail.

Those who continue to tout a non-existent economic recovery have focused on the manufactured stock market and housing recovery, extrapolating those trends without understanding how it has been achieved. A master plan implemented through the collusion of the Federal Reserve, Treasury Department, Executive branch, Wall Street cabal, and corporate media conglomerates has created the illusion of recovery. Make no mistake about it, those in power held clandestine meetings and had covert discussions that will never see the light of day in transcripts or recordings. They developed a strategy to save themselves, their fellow cronies, and the corporate interests that run this country. They threw the middle class, senior citizens, and young people under the bus in their sordid determination to retain their power, wealth and control. Their multi-faceted scheme has been rolled out as follows:

Reduce interest rates to 0% so Wall Street banks could borrow for free and reinvest in Treasuries, therefore earning risk free profits so they could rebuild their non-existent capital. The Wall Street banks also used the free money to generate trading profits using their HFT supercomputers, with only the occasional glitch (JP Morgan London Whale $9 billion slipup, Corzine blowing up his firm and stealing $1.2 billion from ranchers & farmers). The ability to borrow at 0% has spurred these financial institutions to make 0% loans to subprime auto buyers and offer 7 year 0% interest deals on behalf of furniture, electronics, and appliance retailers. This Keynesian solution is supposed to spur demand and generate new jobs. The reality is that Bernanke’s ZIRP has transferred $400 billion of annual interest income from savers and senior citizens to the Wall Street bankers, while setting the table for more massive bad debt write-offs when the millions of subprime borrowers default.
The Federal Reserve and the Treasury Department forced the FASB to scrap mark to market accounting, allowing the Wall Street banks to fraudulently value their worthless assets. The Federal Reserve than tripled their balance sheet from $900 billion to $2.95 trillion by purchasing almost $1 trillion of toxic mortgage debt from the Wall Street banks at full face value of the debt. The Fed purchased Treasuries to artificially lower mortgage rates and attempt to spur a housing recovery.
The Wall Street banks have purposely manipulated the foreclosure process and restricted the inventory of foreclosures available to purchase. In conjunction with Fannie Mae and Freddie Mac, large inventories of foreclosed properties have been sold in bulk to connected Wall Street firms at above market prices and positioned as rental properties. The FHA has done their part by guaranteeing 3% down payment mortgages and putting taxpayers on the hook for the billions in losses to come. Fannie and Freddie have already lost $200 billion of taxpayer money since 2008 on behalf of the Wall Street banks. The concerted effort to restrict the supply of homes available for sale resulted in the price of homes sold rising in 2012. Those in power are attempting to resuscitate the millions of heavily indebted underwater home occupiers at the expense of the young and frugal who would buy when home prices dropped to a clearing level. The same people who created the first housing bubble are attempting to re-inflate it as a solution to our economic woes.
Despite the fact that individual investors have pulled billions out of the stock market over the last three years, the stock market has managed to approach all-time highs. This has been the lynchpin of their plan. The sole purpose of every QE initiated by Bernanke has been to elevate the stock market. Academics like Bernanke and Krugman sell the “wealth effect” storyline to the masses as a way to spur consumer spending. The only wealth effect is to shift the wealth of the working middle class to the ruling class who own the stocks and control the markets. As each QE has further enriched the 1%, the inflationary impact on energy, food, and clothing has destroyed the lives of millions in the middle class who own virtually no stocks. The gap between the uber-rich ruling class and the peasants has never been wider.

The master plan has succeeded in delaying the worst of the Crisis, further enriching the oligarchs, further impoverishing the middle class, fanning the flames of revolution across the globe, provoking foreign adversaries, inciting anger among the populace and darkening the mood of the country. Those predicting a return to the peaceful autumn like days of the late 90s reveal their ignorance of history. Winter is here and there are many dark days ahead before Spring is discernible. The linear thinking crowd who hang their hats on never ending progress spurred by technological innovation and a limitless supply of cheap resources are denying reality. Delusion and hope for a better tomorrow is not a strategy. We have entered the 5^th year of this ongoing Crisis. Fourth Turnings do not fizzle out; they build to a societal earth shattering crescendo (American Revolution, Civil War, Great Depression/WWII). Economic, financial, social and global conditions do not progress during a twenty year Crisis period, driven by the generational configuration that arises once every 80 years. An epic struggle between good and evil, rich and poor, government and governed, young and old, nation and nation, awaits us over the next fifteen years. No matter what happens in 2013, it will be driven by the core elements of this Crisis – Debt, Civic Decay, and Global Disorder.

Until Debt Do Us Part

The storyline of austerity and deleveraging perpetuated through the mainstream media mouthpieces is unequivocally false, as consumer debt has reached an all-time high of $2.77 trillion, driven by a surge in subprime auto loans and subprime student loans. The reason for the surge in these loans, while credit card debt lingers 15% below the 2008 peak, is because the Federal Government is doling out these loans with your tax dollars. Ally Financial (aka GMAC, aka Ditech) is under the complete control of the Federal Government and doesn’t care about future losses. The taxpayers won’t notice another $1 billion in losses. There are Cadillac Escalades, Silverados and RAM pickups to peddle to morons without money.

Could there be a more subprime borrower than a 20 year old majoring in African literature or a 40 year old former construction worker enrolled at the University of Phoenix with 500,000 other schmoes? The Federal government assumed control over the student loan market in 2009 and has proceeded to blow a new bubble. They have driven tuition higher and enabled millions of barely functioning morons to enter college, where they will not only fail, but also be burdened by un-payable levels of non-dischargeable debt. Now the government solution is to pass those bad debts onto you the taxpayer while encouraging even more debt for students. Here is an assessment of the new “Pay as you Earn” program from your owners:

“(BusinessWeek) We have one example of someone who might look similar to an MBA student. He starts out with a starting salary of $90,000 and by the end of 20 years is making $243,360. Under the old IBR program, he’ll have paid $409,445 by year 25 and be forgiven $23,892 of his loan balance. Under the new IBR repayment plan he’ll pay less than half of that, or $202,299, and be forgiven $208,259 by year 20. The old IBR plan was punitive if you borrowed a lot of money, made you pay more over time and trapped you, so there were serious consequences to doing that. It was a downside and a pretty big risk, which is why you didn’t see people borrowing without regard to how much it will cost. The new plan essentially eliminates any downside or risk for that type of behavior, and cuts payments in half and then some.”

The enslavement of our children in student loan debt and handing them the bill for $200 trillion of unfunded entitlement liabilities will be the spark that ignites the worst part of this Crisis.

Those in power realized very quickly that without continued credit growth, their entire corrupt, repugnant, fiat currency based debt system would implode and they would lose all of their fraudulently acquired wealth. That is why total credit market debt is at an all-time high of $56 trillion, and 350% of GDP. The National Debt of $16.5 trillion is now 103% of GDP, well beyond the Rogoff & Reinhart level of 90% that always leads to economic crisis and turmoil.

As Wall Street bankers acted like lemmings leading up to the 2008 financial collapse the famous July 2007 quote from Charles Prince, CEO of Citigroup, summed it up nicely:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”

Now central bankers across the globe are dancing an Irish Jig. Every major central banker in the world is lemmingly following Bernanke’s lead and printing money at hyper-speed. The Europeans have surpassed the Japanese in their quest to become the first casualty in the coming debt collapse. Bernanke, in his quest to not be outdone, has committed to taking his balance sheet to 25% of GDP within the next year. Japan has vowed not to be outdone. The currency debasement race is gathering steam. The devastation, anger, resentment and ultimately war caused by these bankers will engulf the world when it reaches its apocalyptic ending.

Will the grain of sand that collapses the pile be a debt ceiling crisis as postulated by Strauss & Howe?

“An impasse over the federal budget reaches a stalemate. The president and Congress both refuse to back down, triggering a near-total government shutdown. The president declares emergency powers. Congress rescinds his authority. Dollar and bond prices plummet. The president threatens to stop Social Security checks. Congress refuses to raise the debt ceiling. Default looms. Wall Street panics.” – The Fourth Turning – Strauss & Howe – 1996

I don’t think so. The Democrats and Republicans are playing their parts in this theater of the absurd. Neither party has any desire to cut spending, reduce our debt, or secure the future of unborn generations. In 2013, I see the following things happening related to our debt crisis:

The debt ceiling will be raised as the toothless Republican Party vows to cut spending next time. The political hacks will create a 3,000 page document of triggers and create a committee to study the issue, with actual measures that slow the growth of annual spending by .000005% starting in 2017.
The National Debt will increase by $1.25 trillion and debt to GDP will reach 106% by the end of the fiscal year.
The Federal Reserve balance sheet will reach $4 trillion by the end of the year.
Consumer debt will reach $2.9 trillion as the Feds accelerate student loans and Ally Financial, along with the other Too Big To Control Wall Street banks, keep pumping out subprime auto loans. By mid-year reported losses on student loans will soar and auto loan delinquencies will show an upturn. This will force a slowdown in consumer debt issuance, exacerbating the recession that started in 2012.
The Bakken oil miracle will prove to be nothing more than Wall Street shysters selling a storyline. Daily output will stall at 750,000 barrels per day and the dreams of imminent energy independence will be annihilated by reality, again. The price of oil will average $105 per barrel, as global tensions restrict supply.
The home price increases generated through inventory manipulation in 2012 will peter out as 2013 progresses. The market has been flooded by investors. There is very little real demand for new homes. Young households with heavy student loan debt and low paying jobs will continue to rent, since the oligarchs refused to let prices fall to a level that would spur real demand. Mortgage delinquencies will rise as job growth remains stagnant, leading to an increase in foreclosures. Rent prices will flatten as apartment construction and investors flood the market with supply.
The disconnect between the stock market and the housing and employment markets will be rectified when the MSM can no longer deny the recession that began in 2012 and will deepen in the first part of 2013. While housing prices languish 30% below their peak levels of 2006, the stock market has prematurely ejaculated back to pre-crisis levels. Declining corporate profits, stagnant consumer spending, and increasing debt defaults will finally result in a 20% decline in the stock market, with a chance for losses greater than 30% if Japan or the EU begin to crumble.

Japan is still a bug in search of a windshield. With a debt to GDP ratio of 230%, a population dying off, energy dependence escalating, trade surplus decreasing, an already failed Prime Minister vowing to increase inflation, and rising tensions with China, Japan is a primary candidate to be the first domino to fall in the game of debt chicken. A 2% increase in interest rates would destroy the Japanese economic system.
The EU has temporarily delayed the endgame for their failed experiment. Economic conditions in Greece, Spain and Italy worsen by the day with unemployment reaching dangerous revolutionary levels. Pretending countries will pay each other with newly created debt will not solve a debt crisis. They don’t have a liquidity problem. They have a solvency problem. The only people who have been saved by the actions taken so far are bankers and politicians. I believe the crisis will reignite, with interest rates spiking in Spain, Italy and France. The Germans will get fed up with the rest of Europe and the EU will begin to disintegrate.

Civic Decay Accelerates

“History offers no guarantees. If America plunges into an era of depression or violence which by then has not lifted, we will likely look back on the 1990s as the decade when we valued all the wrong things and made all the wrong choices.” – Strauss & Howe – The Fourth Turning

The liberal minded Op-Ed writers that decry the incivility of dialogue today once again show their ignorance for or contempt for American history. They call for compromise and coming together. They should see Spielberg’s Lincoln to understand the uncompromising nature of Fourth Turnings and how conflicts are resolved. They should watch documentary film of Dresden, Hiroshima, and Guadalcanal during World War II. Compromise and civility do not compute during a Fourth Turning. It is compromise that has brought us to this point. Avoiding tough decisions and delaying action occur during the Unraveling. We’ve known the entitlement issues confronting our nation for over a decade and chose to do nothing. The time for delay and inaction is long gone. The pressing issues of the day will be resolved through collapse, confrontation and bloodshed. It’s the way it has always been done and the way it shall be. The current conflict over banning guns is just a symptom of a bigger disease. Government, at the behest of the owners, has been steadily assuming more power and control over the everyday lives of citizens who just want to be left to live their lives. Government has used propaganda, fear and misinformation to convince large swaths of the populace to voluntarily sacrifice their freedom and liberty for the promise of safety and security. Warrantless surveillance, imprisonment without charges, molestation by TSA agents, military exercises in cities, drones in our skies, cameras watching our every move, overseas torture, undeclared wars, cyber-attacks on sovereign countries, and now the threat of disarmament of the people have all contributed to the darkening skies above. A harsh winter lies ahead.

Civic decay is being driven by two main thrusts. Lack of jobs and destruction of middle class wealth by the oligarchs is resulting in the anger and dismay overwhelming the country. The chart below reveals the truth about our economy and the fraudulent nature of BLS reported data, skewed to paint a false picture. The 25 to 54 year old age bracket captures Americans in their peak earnings years. In 2007 this age bracket had 83% of its members in the labor force and 100.5 million of them employed. Today, according to the BLS, only 81.4% are in the labor force and there are 6.3 million less employed. The BLS has the gall to report that since 2009, even though the number of employed people in this age bracket has declined by 1 million, the number of unemployed people has dropped by 1.5 million people. To report this drivel is beyond laughable. The horrific labor market situation is confirmed by the fact that despite a 3.6 million person increase in this age demographic since 2000, there are 7.8 million more people not employed.

The reduced earnings and savings of the people in this demographic is having profound and long-lasting impact on our society. Household formation, retirement savings, tax revenues, and self-worth are all negatively impacted. The mood of desperation and anger is materializing in this age bracket. The resentment of these people when they see the well-heeled Wall Street set reaping stock market gains and bonuses while they make do on food stamps, extended unemployment and the charity of friends and family is palpable. More than 100% of the employment gains since 2010 have gone to those over the age of 55, further embittering the 25 to 54 workers. There is boiling anger beneath the thin veneer of civility between Millenials, GenXers, and Boomers. The chasm between the ultra-rich and the masses widens by the day and is leading to a seething animosity. The country has lost 2.4 million construction jobs and 2 million manufacturing jobs since 2007, but we’ve added 250,000 fry cook jobs and 440,000 University of Phoenix jobs stimulated by $500 billion in student loans. The complete transformation of a producing society to a consumption society has been accomplished.

When the average person sees Wall Street bankers not only walk away unscathed from the crisis they aided, abetted and created through their fraudulent inducements and documentation, but be further enriched at taxpayer expense, their hatred and disgust with high financers like Corzine, Dimon and Blankfein burns white hot. The mainstream media propaganda machine tries to convince the average Joe that stock market highs and record corporate profits are beneficial to him, even though the gains and profits have been spurred by zero interest rates, fraudulent accounting and outsourcing their jobs to third world slave labor factories. A critical thinking human being (this rules out 95% of the adult population) might question how corporate profits could surpass pre-collapse levels when the economy has remained stagnant.

Shockingly, the entire profit surge was driven by Wall Street. Accounting entries relieving billions of loan loss reserves, earning hundreds of millions in risk free interest courtesy of Bernanke, and falsely valuing your loan portfolio can do wonders for profits. We’ve added 6.9 million finance jobs in the last 20 years as this industry has sucked the lifeblood out of our nation. A country that allows bankers to syphon off 35% of all the profits in the country without producing any benefits to society is destined to fail, with the dire consequences that follow.

My civic decay expectations for 2013 are as follows:

Progressive’s attempt to distract the masses from our worsening economic situation with their assault on the 2^nd Amendment will fail. Congress will pass no new restrictions on gun ownership and 2013 will see the highest level of gun sales in history.
The deepening recession, higher taxes on small businesses and middle class, along with Obamacare mandates will lead to rising unemployment and rising anger with the failed economic policies of the last four years. Protests and rallies will begin to burgeon.
The number of people on food stamps will reach 50 million and the number of people on SSDI will reach 11 million. Jamie Dimon, Lloyd Blankfein, and Jeff Immelt will compensate themselves to the tune of $100 million. CNBC will proclaim an economic recovery based on these facts.
The drought will continue in 2013 resulting in higher food prices, ethanol prices, and shipping costs, as transporting goods on the Mississippi River will become further restricted. The misery index for the average American family will reach new highs.
There will be assassination attempts on political and business leaders as retribution for their actions during and after the financial crisis.
The revelation of more fraud in the financial sector will result in an outcry from the public for justice. Prosecutions will be pursued by State’s attorney generals, as Holder has been captured by Wall Street.
The deepening pension crisis in the states will lead to more state worker layoffs and more confrontation between governors attempting to balance budgets and government worker unions. There will be more municipal bankruptcies.
The gun issue will further enflame talk of state secession. The red state/blue state divide will grow ever wider. The MSM will aggravate the divisions with vitriolic propaganda.
The government will accelerate their surveillance efforts and renew their attempt to monitor, control, and censor the internet. This will result in increased cyber-attacks on government and corporate computer networks in retaliation.

Global Disorder Spreads

“Eventually, all of America’s lesser problems will combine into one giant problem. The very survival of the society will feel at stake, as leaders lead and people follow. The emergent society may be something better, a nation that sustains its Framers’ visions with a robust new pride. Or it may be something unspeakably worse. The Fourth Turning will be a time of glory or ruin.” – Strauss & Howe – The Fourth Turning

The entire world resembles a powder-keg in a room full of monkeys with matches. As economic conditions worsen around the world the poor, destitute and unemployed increasingly have begun to revolt against their banker masters. Money printing, reporting fraudulent economic data and pretending to make debt payments with newly issued debt does not employ anyone or put food in the mouths of the people. With worldwide unemployment surpassing 200 million, food and energy prices surging, peasants in the Far East treated like slave laborers, politicians stealing from the people to enrich their banker owners, and young people losing hope for a better tomorrow, the likelihood of strikes, protests, armed revolution, and war is high.

The world is about to find out the downside to globalization, as turmoil in Europe or Asia will swiftly impact those in the rest of the world that are interconnected through trade and financial instruments. The trillions of derivatives that link financial institutions across the world will ignite like a string of firecrackers once a spark reaches the fuse. Treaties and alliances between countries will immediately enlarge localized military conflicts into world-wide confrontations. Dwindling supplies of cheap oil and potable water, a changing climate (whether cyclical or human activity based) that is creating droughts, floods and super-storms on a more frequent basis, and religious zealotry set the stage for resource wars and religious wars around the globe and particularly in the Middle East. Fourth Turnings always intensify and ultimately lead to total war, with no compromise and clear winners and losers. The proxy wars that have been waged for the last 60 years will look like kindergarten snack time when the culmination of this Fourth Turning war results in death on a scale that would be considered incomprehensible today. And it will happen within the next fifteen years. The climactic war is still a few years off, but here is what I think will happen in 2013:

With new leadership in Japan and China, neither will want to lose face, so early in their new terms. Neither side will back down in their ongoing conflict over islands in the East China Sea. China will shoot down a Japanese aircraft and trade between the countries will halt, leading to further downturns in both of their economies.
Worker protests over slave labor conditions in Chinese factories will increase as food price increases hit home on peasants that spend 70% of their pay for food. The new regime will crackdown with brutal measures, but the protests will grow increasingly violent. The economic data showing growth will be discredited by what is happening on the ground. China will come in for a real hard landing. Maybe they can hide the billions of bad debt in some of their vacant cities.
Violence and turmoil in Greece will spread to Spain during the early part of the year, with protests and anger spreading to Italy and France later in the year. The EU public relations campaign, built on sandcastles of debt in the sky and false promises of corrupt politicians, will falter by mid-year. Interest rates will begin to spike and the endgame will commence. Greece will depart the EU, with Spain not far behind. The unraveling of debt will plunge all of Europe into depression.
Iran will grow increasingly desperate as hyperinflation caused by U.S. economic sanctions provokes the leadership to lash out at its neighbors and unleash cyber-attacks on Saudi Arabian oil facilities and U.S. corporations. Israel will use the rising tensions as the impetus to finally attack Iranian nuclear facilities. The U.S. will support the attack and Iran will launch missiles at Saudi Arabia and Israel in retaliation. The price of oil will spike above $125 per barrel, further deepening the worldwide recession.
Syrian President Assad will be ousted and executed by rebels. Syria will fall under the control of Islamic rebels, who will not be friendly to the United States or Israel. Russia will stir up discontent in retaliation for the ouster of their ally.
Egypt and Libya will increasingly become Islamic states and will further descend into civil war.
The further depletion of the Cantarell oil field will destroy the Mexican economy as it becomes a net energy importer. The drug violence will increase and more illegal immigrants will pour into the U.S. The U.S. will station military troops along the border.
Cyber-attacks by China and Iran on government and corporate computer networks will grow increasingly frequent. One or more of these attacks will threaten nuclear power plants, our electrical grid, or the Pentagon.

So now I’m on the record for 2013 and I can be scorned and ridiculed for being such a pessimist when December rolls around and our Ponzi scheme economy hasn’t collapsed. There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.

“Washington has become our Versailles. We are ruled, entertained, and informed by courtiers — and the media has evolved into a class of courtiers. The Democrats, like the Republicans, are mostly courtiers. Our pundits and experts, at least those with prominent public platforms, are courtiers. We are captivated by the hollow stagecraft of political theater as we are ruthlessly stripped of power. It is smoke and mirrors, tricks and con games, and the purpose behind its deception.”– Chris Hedges

Every day more people are realizing the con-job being perpetuated by the owners of this country. Will the tipping point be reached in 2013? I don’t know. But the era of decisiveness and confrontation has arrived. The people will learn there are consequences to our actions and inaction. The existing social order will be swept away. Are you prepared?

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences…” – Winston Churchill

OBAMA SAID GM WAS A SUCCESS STORY

Have you heard Obama and his minions bursting with pride over their “successful” saving of GM? The storyline perpetuated by the MSM and political hacks is that General Motors has been reborn and his doing fantastic. After the taxpayers ate all of their debt in bankruptcy, these marketing geniuses are on track to make 35% less income on flat revenue in 2012 versus 2011. The stock is down 45% since January 2011. Has Obama and the big fans of government bailouts mentioned this on CNBC lately?

Not only are their financial results horrific, they’re also fraudulent and supported by government debt, with the future losses going to you. GM has been channel stuffing for the last two years. They record sales when they force their dealers to take delivery of their Volts. The dealers don’t have any demand for these piece of shit GM lemons, but GM keeps reporting “strong” sales. They’ve stuffed 67% more automobiles down the gullets of their dealers in a fraudulent effort to appear successful. The dealers have reached capacity. Maybe Obama can create a car lot on the White House grounds for his union pals at GM.

Who could ever forget our friends at GMAC/Ditech? They were the automobile and housing subprime loan specialists in the good old days of the 2003 – 2008. You bailed them out to the tune of $20 billion. They decided to change their name for some reason. They are known as Ally Bank and are still 85% owned by YOU/Obama. As you can witness in the mean streets of West Philly, any lowlife subprime dirtbag can get a loan from Ally Financial these days. If I was a non-trusting soul, I might think that Obama and his buddy Geithner have given a wink and a nod to Ally and the other Wall Street shyster banks to open the flood gates on loans to people who won’t pay YOU back.

So keep supporting the huge GM success story. I love fairy tales.

THE AUTO RECOVERY IS A TAXPAYER FINANCED SCAM

The two stories below tell me all I need to know about the great auto recovery. I bet you didn’t know that GM and the rest of the automakers record their sales when the vehicles are shipped to their dealers. Zero Hedge has been all over the channel stuffing being done by Government Motors for the last two years as they now have 60% more vehicles sitting on dealer lots than two years ago, even though sales are up less than 20%. And now we see that Obama is doing his union bretheren a favor and buying GM cars like they’re going out of style. You the American taxpayer are subsidizing GM, just as you took the $50 billion hit when Obama screwed bondholders using your money.

Lastly, we know for a fact that Ally Financial (aka GMAC) is still 85% owned by you. It is dishing out subprime auto loans like SNAP cards in West Philly. Moody’s is already warning about the coming disastrous losses that will be experienced by YOU the taxpayer when all these crap loans go bad. But that doesn’t matter to Obama. There is an election to be won. The losses to the American taxpayer will come in 2013 and 2014. Don’t expect the MSM to fill you in on the government scam. They are part of the scam, as their ad revenue is dependent on car ads. What a great country.

GM Finds Creative New Ways To “Stuff Channels”, Get Backdoor Taxpayer Bailouts

Submitted by Tyler Durdenon 07/06/2012 12:53 -0400

Zero Hedge readers know that we have long followed channel stuffing trends at GM, whose month-end dealer inventory hit a record (for the post-reorg company which is completely different from the pre-bankruptcy entity) of 713K cars stuck in various dealer “channels” at the end of March 2012, and since then has been stagnant at just about 700K, with the most recent June number coming at 701K, an increase of 6K over May. It would be great to assume that the company has given up on cheap ways to cheat investors and the taxpaying public into believing it is doing better. It would also be wrong. As it turns out, GM has merely turned to more backdoor methods of stuffing channels, and getting money from its biggest shareholders, which still happens to be Joe Sixpack (and “superpriority” labor unions of course) by way of the US Treasury, with 32% of the common stock.

The NLPC explains:

It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.

As a reminder, this is how GM’s general channel stuffing looked like for all its vehicles:

However there is a rather important data subset here:

According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.

This is how pickup truck channel stuffing looked in the period that the company has released the data, or since December 2011. Not pretty.

And while we all know by now that the tried and true mechanism to channel stuff is a staple when it comes to fooling the buyside as to its business efficacy, the fact that its biggest shareholder has become a key marginal client of GM should make one’s head spin at the Ponziness of the transaction:

The government’s increased spending on GM vehicle purchases presents yet another conflict of interest as Treasury refuses to sell taxpayers’ stake in GM and Obama campaigns on the auto bailouts. It does not appear that any members of Congress (from either party) are questioning the increased spending. Also ignored was the Department of Energy’s gifting of $2.7 million of taxpayer money to GM to reduce energy consumption in its door manufacturing process by 50%. The DOE seems to be one of the main conduits to funnel taxpayer funds to cronies of the Administration. The $2.7 million contribution to GM comes after additional millions of dollars were spent by the DOE on advisory fees paid to legal firms that helped smooth the way for the GM bankruptcy process (as reported here); another move that went unquestioned.

And there is more:

GM claimed that sales increases did not rely on incentive spending, which appeared to remain in check, but one analyst during GM’s sales conference call questioned whether the company’s “stair step” incentive spending was accurately depicted. This incentive spending kicks in after dealerships report final sales figures for the month and may be yet another deceptive way for GM to fudge its numbers. Not mentioned was GM card rewards programs that do not get counted as incentive spending.

Why is GM forced to succumb to such increasingly more deceptive practices? Why simple presidential election politics of course: when a failed company like GM is destined to symbolize the “success” of one’s administration, there aren’t many straws one can latch on to.

The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how “successful” GM is. One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM.

The article goes on to quote Kelley Blue Book’s Alec Gutierrez who stated “They’re (GM) likely going to have a relatively high days supply of trucks moving forward and they’re already placing some pretty aggressive cash incentives on the hood. It’s going to eat into their profit margins…”

GM’s earnings announcement comes on August 2nd. The main headwinds will be weak European operations and growing pension liabilities. The headline number for earnings should be viewed skeptically and an eye kept on the share price reaction after the conference call. Expect Government Motors to put a positive spin on its financial health as the stakes are now at their highest. The long-term health of GM remains in question and the true financial picture may not surface until well after voters decide who will be running our country. Eventually we will see just how successful GM really is.

At the end of the day, all of this is noise. If China retaliates in kind to the recen escalation by Obama vis-a-vis alleged Chinese deceptive trade practices, the GM will soon be able to kiss half of its top line, and who knows how much of its margin and bottom line goodbye. Because when half of your sales go to the one country which America’s non-existent (and unionized) manufacturing base loves to hate, the last thing you want is to bite the hand the pays the bills. Yet this is precisely what is going on as the politics of this country become so misguided that in the pursuit of a few extra votes, the administration is willing to sacrifice what little clout and momentum the recently bankrupted automaker may have generated.

In the meantime, looks for channel stuffing and direct government purchases to soar to unseen levels in the weeks and months heading into the presidential election as GM (and its 40% stock price drop since the IPO) will certainly be a key debate point between the Democrats and the GOP.

Moody’s: Hot US subprime auto lending market has parallels to the 1990s

Global Credit Research – 28 Jun 2012

New York, June 28, 2012 — The subprime auto lending market in the US is developing a resemblance to its condition in the early- and mid-1990s, when overheated competition among lenders led to poor underwriting that drove up losses, says Moody’s Investors Service in a new report. As in that earlier period, capital is pouring into the sector and the issuance of subprime auto asset-backed securities (ABS) is booming.

“It is too early to predict whether today’s subprime lending market will deteriorate as it did in the 1990s, but the early similarities between then and now suggest that losses will climb if competition intensifies,” says Moody’s Vice President Peter McNally, author of the report “US Subprime Auto Lending Market Harkens Back to 1990s.”

Over the last two years, because of the sector’s profitability, a large amount of private equity investment has gone into the subprime auto lenders, many of which are relatively small, specialty finance companies, says Moody’s.

Moody’s says the interest of investors from outside the subprime auto market niche and the potential for increased competition carry the risk that losses could increase if a race for profits and market share lowers underwriting standards. The growth in the market can lead to capacity issues, says Moody’s McNally. “When losses rise quickly, inexperienced lenders have trouble servicing a loan portfolio that requires more attention.”

In the 1990s, the number of small lenders boomed, leading to intense competition for loans that in turn led to weak underwriting and high losses on securitized loans. Net losses in subprime auto ABS, according to Moody’s, jumped from under 3% in early 1995 to over 10% in December 1997.

For the past several years subprime auto loan performance has been strong, with the net loss rate currently below 4%. However, the credit quality of pools securitized in 2011 and 2012 indicate that credit has loosened since 2010, says Moody’s.

Issuance of subprime auto ABS is on pace this year to exceed the robust issuance of 2011, which comprised 24 deals, totaling $14.3 billion.

Moody’s notes several differences between today’ s market and the overheated market of the 1990s.

One credit positive for today’s market is that most lenders no longer practice gain on sale accounting, whereby lenders capitalized securitization gains and credited them to equity, which made their balance sheets look stronger than they were.

Another is that the market is not yet overcrowded with new lenders. Moody’s counts 13 active securitizers at the moment, compared with 34 issuers in 1997.

An important credit negative is that transactions are no longer backed by monoline guarantors. These bond insurers absorbed losses on transactions that would have otherwise defaulted in the 1990s and took over transaction servicing from failing lenders.

PONDERING THOSE “GREAT” AUTO SALES

You gotta love these stories. The lady in this article sums it up perfectly:

“Even I wouldn’t make a loan to me at this point.”

But that isn’t stopping Ally Financial and the rest of the Wall Street slimeball banks from dishing out car loans and credit cards to anyone with a pulse. There is no doubt in my mind that these banks are doing this because Bernanke and Obama have told them to do so. The Fed has let them know they have their back. When these loans go bad the Federal Reserve will step in and buy up the bad debt and hide it on their balance sheet. This is the plan stan. It will not work. The brand new cars all over West Philly will be repossesed in the next 24 months and the bad debt will skyrocket. And you will be picking up the tab. Again.

Lenders Again Dealing Credit to Risky Clients

By JESSICA SILVER-GREENBERG and TARA SIEGEL BERNARD

Published: April 10, 2012

Annette Alejandro just emerged from bankruptcy and doesn’t have a job, and her car was repossessed last year. Still, after spending her days job hunting, she returns to her apartment in Brooklyn where, in disbelief, she sorts through the piles of credit card and auto loan offers that have come in the mail.

“Even I wouldn’t make a loan to me at this point,” Ms. Alejandro said.

In the depths of the financial crisis, borrowers with tarnished credit like Ms. Alejandro were almost entirely shut out by traditional lenders. It was hard enough for people with stellar credit to get loans.

But as financial institutions recover from the losses on loans made to troubled borrowers, some of the largest lenders to the less than creditworthy, including Capital One and GM Financial, are trying to woo them back, while HSBC and JPMorgan Chase are among those tiptoeing again into subprime lending.

Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year earlier, according to Equifax’s credit trends report released in March. These borrowers accounted for 23 percent of new auto loans in the fourth quarter of 2011, up from 17 percent in the same period of 2009, Experian, a credit scoring firm, said.

Consumer advocates and lawyers worry that the financial institutions are again preying on the most vulnerable and least financially sophisticated borrowers, who are often willing to take out credit at any cost.

“These people are addicted to credit, and banks are pushing it,” said Charles Juntikka, a bankruptcy lawyer in Manhattan.

The banks, for their part, are looking to make up the billions in fee income wiped out by regulations enacted after the financial crisis by focusing on two parts of their business — the high and the low ends — industry consultants say. Subprime borrowers typically pay high interest rates, up to 29 percent, and often rack up fees for late payments.

Some former banking regulators said they worried that this kind of lending, even in its early stages, signaled a potentially dangerous return to the same risky lending that helped fuel the credit crisis.

“It’s clear that we are returning to business as usual,” said Mark T. Williams, a former Federal Reserve bank examiner.

The lenders argue that they have learned their lesson and are distinguishing between chronic deadbeats and what some in the industry call “fallen angels,” those who had good payment histories before falling behind as the economy foundered.

A spokesman for Chase, Steve O’Halloran, said the bank “seeks to be a careful, responsible lender,” adding that it “is constantly evaluating the risks and costs of funding loans.”

Regulators with the Office of the Comptroller of the Currency, which oversees the nation’s largest banks, said that as long as lenders adhered to strict underwriting standards and monitored risk, there was nothing inherently dangerous about extending credit to a wider swath of people.

In fact, an increase in lending is a sign that the economy is improving, economists say. While unemployment remains high, consumers have been reducing their debts. Delinquencies on credit card accounts and auto loans are down sharply from their heights in the crisis. “This is a natural loosening of credit standards because the banks feel they can expand again,” said Michael Binz, a managing director at Standard & Poor’s.

And lenders miss many potential customers if they focus just on people with perfect credit.

“You can’t simply ignore this segment anymore,” said Deron Weston, a principal in Deloitte’s banking practice.

The definition of subprime borrowers varies, but is generally considered those with credit scores of 660 and below.

The push for subprime borrowers has not extended to the mortgage market, which remains closed to all but the most creditworthy.

Capital One is one lender that has been courting borrowers with damaged credit, even those who have just emerged from bankruptcy, with pitches like, “We want to win you back as a customer.”

Pam Girardo, a spokeswoman for Capital One, said, “Our strategy is to provide reasonable access to credit with appropriate guardrails in place to ensure consumers stay on track as they rebuild their credit.”

Ms. Alejandro, 46, was one of the borrowers fresh out of bankruptcy courted by Capital One. So far, she has turned it down.

David W. Nelms, chief executive of Discover Financial Services, the sixth-largest credit card lender in the United States, told investors this month that the company planned to extend credit to a broader group of borrowers. But, he added, Discover is not “suddenly going to go into the subprime business.”

Credit card lenders extended $12.5 billion in loans to subprime borrowers last year, up 54.7 percent from 2010, according to Equifax and Moody’s, but still below the $41.6 billion in 2007.

Lenders are ramping up their advertising, according to Synovate, a market research firm. Others are developing credit cards specifically aimed at borrowers with damaged credit. Capital One, for instance, introduced a credit card last year that allows these borrowers to lower their interest rate after making timely payments for a year.

Auto loans are particularly attractive for lenders since they were largely untouched by many of the new regulations. The new Consumer Financial Protection Bureau said it had not yet decided whether it would oversee the largest nonbank auto lenders.

At the same time, the market for securities made up of bundles of auto loans is heating up. Last year, investors scooped up $11.7 billion in auto loan securities, up from $2.17 billion in 2008. The pace of securitization in credit cards is slower, with lenders selling roughly 30 percent of their card portfolios to investors, down from 60 percent before the financial crisis, according to S&P.

Steve Bowman, the chief credit and risk officer for GM Financial, an auto lender, said he expected subprime auto loans to continue to grow. Unlike mortgage lenders, Mr. Bowman argued, auto lenders understand how to manage risk while still making loans to borrowers with poor credit.

But Moody’s was already sounding the alarm last year that some very risky borrowers were getting auto loans. The market, Moody’s wrote in a report in March 2011, could be growing “too much too fast.”

Ms. Alejandro is not the only borrower with bad credit to question why anyone would offer a loan. The offer, of course, does not necessarily translate into the issuing of a card.

Shauna Ames, 41, an office manager from St. Paul, said she got a credit card offer from Capital One even though the company had won a lawsuit against her for $5,485 in overdue credit card debt last September. Ms. Ames, who had filed for bankruptcy, said she was surprised at the offer. “I still can’t believe it,” she said.

Ms. Girardo, the Capital One spokeswoman, said the bank doesn’t solicit customers that it has previously sued. “We believe we can establish long-term relationships with products that are predicated on consumer success,” she said.

YOU AIN’T SEEN NOTHING YET – PART TWO

This is Part Two of a three part series trying to make sense of the Crisis period we entered in 2008. Click here to read: PART ONE

Catalyst of Change

“As late as December 1773, November 1859, and October 1929, the American people had no idea how close it was. Then sudden sparks (the Boston Tea Party, John Brown’s raid and execution, Black Tuesday) transformed the public mood, swiftly and permanently. Over the next two decades or so, society convulsed. Emergencies required massive sacrifices from a citizenry that responded by putting community ahead of self. Leaders led, and people trusted them. As a new social contract was created, people overcame challenges once thought to be insurmountable – and used the Crisis to elevate themselves and their nation to higher plane of civilization.” – Strauss & Howe – The Fourth Turning

Anyone who hasn’t sensed a mood change in this country since the 2008 financial meltdown is either ignorant or in denial. Millions of Americans fall into one of these categories, but many people realize something has changed – and not for the better. The sense of pure financial panic that existed during September and October of 2008 had not been seen since the dark days of 1929. Our leaders used the initial terror and fear to ram through TARP and stimulus packages that rewarded the perpetrators of the financial collapse rather than helping the middle class who lost 8 million jobs, destroyed by Wall Street criminality. The stock market plunged by 57% from its 2007 high by March 2009. What has happened since September 2008 has set the stage for the next downward leg in this Crisis. The rich and powerful have pulled out all the stops and saved themselves at the expense of the many. Despite overwhelming proof of unabashed mortgage fraud, rating agency bribery, document forgery on a grand scale and insider trading based on non-public information, the brazen audacity of Wall Street oligarchs is reminiscent of the late stages of the Roman Empire.

“Crime, once exposed, has no refuge but in audacity.”
― Tacitus, Annals

The actions of the governing elite have provoked the darkening mood creeping across the land. The rise of the Tea Party in 2009 was fueled by anger over the bank bailouts, out of control federal spending and ever increasing taxes. The anger spilled over into town hall meetings, as Congressmen felt the wrath of public dissatisfaction. The fury propelled Tea Party Republicans to being elected in large numbers in 2010. But the movement was hijacked by the Republican establishment and defanged. As 2011 progressed, with Wall Street continuing to pillage the American middle class, the Occupy Movement spread to cities across America and around the world. The movement, led by Millenials, claims that mega-corporations and Wall Street manipulate the world in an unbalanced way that disproportionately benefits a super wealthy minority and is undermining democracy. They have shone a light upon the fact the 1% has used their wealth and power to plunder the national treasury, while impoverishing the 99%. The audacity of the 1% was on display for all to see when former Goldman Sachs CEO and former U.S. Senator Jon Corzine absconded with $1.2 billion of his customers’ money and continues to hide it in the vaults of his fellow robber baron Jamie Dimon at J.P. Morgan. To this day, no one has been jailed for this heist or any of the thousands of other crimes committed by the Wall Street titans. These psychopaths will not be satisfied until nothing remains of our country but a barren desert.

“They have plundered the world, stripping naked the land in their hunger… they are driven by greed, if their enemy be rich; by ambition, if poor… They ravage, they slaughter, they seize by false pretenses, and all of this they hail as the construction of empire. And when in their wake nothing remains but a desert, they call that peace.” – Tacitus, The Agricola and the Germania

A few weeks ago I watched The Grapes of Wrath movie for the first time in many years. The novel was written by John Steinbeck during the last Fourth Turning. It is as powerful today as it was in the 1941. It perfectly captures the mood of the country during the Great Depression. The message of the working class being exploited and manipulated by wealthy landowners resounds today. The Joads only sought an opportunity for a job, their own land, simple human dignity, and the chance for a better future. Wall Street has replaced the wealthy landowners as the exploiters of the working class. Steinbeck saw the Federal Government as a solution during the 1930s, but they are a major part of the problem today, as politicians have been captured by corporate and special interests. Their solutions do not benefit the average middle class American.

The feelings about our government and political system is reflected in Suzanne Collins’ Hunger Games novel, which captures the vein of government brutality, oppression of the working class, excessive wealth inequality, and the vapid shallowness of our American Idol culture. The Hunger Games was written in 2008 and the movie version has become a worldwide sensation. The immense divide between the wealthy ruling class, living an obscenely decadent lifestyle, and the exploited working class on the verge of starvation, is portrayed in a cruelly sadistic manner. The fact that it is appealing to Millenials and all generations says much about the changing of attitudes in the last four years. Hunger Games will be viewed as the modern day Grapes of Wrath by future generations.

There is no denying the darkening disposition of the country, except by those whose job it is to deny the reality of our deteriorating situation. Those whose power and wealth are dependent upon a citizenry being kept in the dark and convinced the way out of this mess is to resume spending borrowed money, have pulled out all the stops since the initial catalyst for this Fourth Turning struck with its full fury in 2008. The frantic efforts by those in power to prop up the status quo were predictable. If our leaders had dealt with the initial crisis in a realistic manner, many wealthy powerful men would have gone broke. They have been able to temporarily fend off a full-fledged catastrophe as predicted by Strauss & Howe:

“At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where, during the Unraveling, America will have neglected, denied, or delayed needed action. Anger at “mistakes we made” will translate into calls for action, regardless of the heightened public risk. It is unlikely that the catalyst will worsen into a full-fledged catastrophe, since the nation will probably find a way to avert the initial danger and stabilize the situation for a while. Yet even if dire consequences are temporarily averted, America will have entered the Fourth Turning.”

But they have solved nothing. In fact, they have exacerbated the problem areas of debt, civic decay and global disorder with their “solutions”. Our leaders have added $5.6 trillion to the National Debt; the Federal Reserve tripled their balance sheet by taking on $2 trillion of Wall Street toxic debt; the Federal Government assumed trillions in new debt by taking over Fannie Mae, Freddie Mac and Sallie Mae; and real GDP went up by a mere $103 billion (.8%) between the 4^th quarter of 2007 and the 4^th quarter of 2011. Rescuing the 99% was never the focus of their solutions. It was to save the bankers and wealthy investors (1%) who took the world destroying risks and should have borne the losses of their risk taking. The oligarchs have been wildly successful in this effort. The stock market has doubled from its lows. Borrowing at 0% from the Federal Reserve has done wonders for banker bonuses. Global disorder increases by the day, as politicians and bankers force austerity on their citizens, while continuing to harvest billions in profits and bonuses still waging wars of choice, further enriching the peddlers of debt and the peddlers of death (military industrial complex).

The Great Depression lasted from 1929 until 1940. The GDP of the country actually grew by 80% between 1933 and 1940. The stock market soared by 100% from the 1932 low to its 1933 high. It then soared another 100% from 1934 through 1937. Despite these fabulous economic statistics and investment riches scooped up by the 2.5% of the population that owned stocks, they still call this time period the Great Depression. With unemployment ranging from 15% to 25% during this entire time frame, the common man suffered greatly. There was no recovery for the 99%.

The net worth of the 99% is highly dependent on the value of their homes and their ability to increase their annual wages. Home prices have fallen 34% from their peak and continue to fall, recently reaching 2002 levels. Real median weekly earnings are lower than they were in 2003 and have fallen 3% since the economy supposedly entered its recovery in December 2009. Gas prices have doubled since early 2009. The 1% rejoices as they treat oil as an investment in their diversified portfolio. The 99% suffer as the average household is spending $2,500 per year more to fill up their vehicles. Food prices are up 15% to 25% in the last three years, even using the manifestly manipulated BLS figures.

It is essential for those in power to utilize their mainstream media propaganda machines, massaging of economic information and Ben Bernanke’s printing press to give the appearance of recovery to the masses. In the last three months the hyperbole and extreme spin from the corporate mainstream media has become exceedingly robust. It smells of desperation. Even as the media touts a recovery and Obama peddles drivel about millions of new jobs, Bernanke keeps the throttle of quantitative easing and zero interest rates wide open. Their actions are not consistent with their rhetoric. People who had jobs as accountants making $55,000 per year in 2007 are now stocking fertilizer in the garden center at Lowes making $20,000, with no benefits. This is the face of the jobs recovery. Only a corporate media doing the bidding of their masters could possibly rejoice at the February data showing consumers spending at a rate 450% higher than their income gains as a sign of recovery. There is a concerted effort to revive the auto market by the Federal Government (Ally Financial) and the Wall Street banks by employing exceptionally loose credit standards for auto loans and leases that are reminiscent of the subprime mortgage debacle. I’m sure it will turn out better this time. The downward spiral of trust is accelerating as predicted by Strauss & Howe:

“As the Crisis catalyzes, these fears will rush to the surface, jagged and exposed. Distrustful of some things, individuals will feel that their survival requires them to distrust more things. This behavior could cascade into a sudden downward spiral, an implosion of societal trust.”

The downward spiral of societal trust is well founded. The monied interests have captured the political process. The regulated have captured the regulators. Wall Street has always controlled the Federal Reserve. Corporations and the wealthiest among us select the politicians that will best serve their interests. The governing elite of psychopathic bankers, corrupt politicians, and powerful mega-corporations create crises, then save us from the crises they created, while accumulating more control, wealth and power. This perpetual swindle has been going on for decades and has reached its zenith as it did during the last Fourth Turning. Income inequality has reached the extreme levels last seen in the 1930s. The capitalism storyline has grown old and tired. Complete systematic capture is the reason for those at the top reaping all the benefits of our dysfunctional economic system.

The rampant mortgage fraud, the robo-signing crimes, trillions of shadowy derivatives, unfunded government pensions, unfunded Medicare and Social Security promises, and the bald-faced looting of customer accounts at MF Global have brought about a realization among those capable of critical thought that this Crisis is growing worse by the day. Strauss & Howe clearly understood the factors that would lead to this deficit of trust:

“But as the Crisis mood congeals, people will come to the jarring realization that they have grown helplessly dependent on a teetering edifice of anonymous transactions and paper guarantees. Many Americans won’t know where their savings are, who their employer is, what their pension is, or how their government works. The era will have left the financial world arbitraged and tentacled: Debtors won’t know who holds their notes, homeowners who owns their mortgages, and shareholders who runs their equities – and vice versa.”

Here we stand, three and a half years since the catalyst of this Crisis. What event or events will produce the regeneracy stage of this Fourth Turning and when can we expect its arrival? I’ll try to make some educated guesses in Part Three of this series.

Click here to read: PART ONE

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ASLEEP AT THE WHEEL

Americans have an illogical love affair with their vehicles. There are 209 million licensed drivers in the U.S. and 260 million vehicles. The U.S. has a higher number of motor vehicles per capita than every country in the world at 845 per 1,000 people. Germany has 540; Japan has 593; Britain has 525; and China has 37. The population of the United States has risen from 203 million in 1970 to 311 million today, an increase of 108 million in 42 years. Over this same time frame, the number of motor vehicles on our crumbling highways has grown by 150 million. This might explain why a country that has 4.5% of the world’s population consumes 22% of the world’s daily oil supply. This might also further explain the Iraq War, the Afghanistan occupation, the Libyan “intervention”, and the coming war with Iran.

Automobiles have been a vital component in the financial Ponzi scheme that has passed for our economic system over the last thirty years. For most of the past thirty years annual vehicle sales have ranged between 15 million and 20 million, with only occasional drops below that level during recessions. They actually surged during the 2001-2002 recession as Americans dutifully obeyed their moron President and bought millions of monster SUVs, Hummers, and Silverado pickups with 0% financing from GM to defeat terrorism. Alan Greenspan provided the fuel, with ridiculously low interest rates. The Madison Avenue media maggots provided the transmission fluid by convincing millions of willfully ignorant Americans to buy or lease vehicles they couldn’t afford. And the financially clueless dupes pushed the pedal to the metal, until everyone went off the cliff in 2008.

America is proving itself to be insane as described by Albert Einstein:

“Insanity: doing the same thing over and over again and expecting different results.”

The 2008 cataclysm was created by the voracious greed and avarice of Wall Street, sustained by corrupt politicians in Washington, non-existent regulation by banking regulators, Federal Reserve easy money policies, unspoken guarantees of Fed bailouts if Wall Street excess risk taking blew up, and millions of delusional Americans with an unlimited credit line. Excessive debt created the problem. Adding debt is the present solution to the problem. And the accumulation of debt will lead to a tipping point that destroys the U.S. dollar and topples the Great American Empire.

This spiral of government sponsored debt financed debacles has shockingly accelerated as we have supposedly been experiencing an economic recovery for the last two years. The 2008 financial meltdown was the result of too much debt peddled to too many people who never had the means or intentions to repay the debt. The Wall Street peddlers of debt didn’t care if it got repaid because they had already packaged it, bribed Moodys and S&P to rate the toxic garbage as AAA, and sold it to their “clients”. Then they made derivatives bets that it wouldn’t be repaid and raked in billions more as their Ponzi scheme unwound. There was just one problem with their master plan. The Wall Street titans made their derivate weapons of mass destruction so complicated and confusing that their own evil organizations of Harvard MBAs didn’t understand them. Enough hubristic CEOs existed at enough financial firms (AIG, Lehman, Bear Stearns, Citicorp) to bring the entire system crashing down as the toxic derivatives intertwined every major institution in the worldwide banking cabal.

What has happened since those dark days of 2008 is mind blowing in its epic proportions and epic stupidity. To quote Doug Casey, “Not only haven’t we done the right thing, we’ve done the exact opposite of the right thing.” It is absurd and ultimately suicidal to cure a debt disease by administering massive doses of more debt. But that is exactly what those in power have done. The National Debt has risen from a $9.7 trillion to $15.6 trillion, a 61% increase in three and a half years, while our real GDP has grown by $244 billion, a 1.9% increase. Not exactly a fabulous return on investment. But at least there are 7 million less people employed today than there were at the peak in 2008. Plus, senior citizens and middle class savers have seen $450 billion of annual interest income they were earning in 2008 pilfered from their savings accounts and handed to the Wall Street banking elite through Ben Bernanke’s ZIRP.

The Federal Reserve has tripled their balance sheet (actually your liability) from $950 billion to $2.9 trillion. Various other Federal government controlled bureaucracies (Fannie Mae, Freddie Mac, FHA) have stealthily subsidized hundreds of billions in losses on behalf of the criminal Wall Street banks. Other Federal government run agencies (BLS, BEA, CBO) exist solely to massage, manipulate, misuse, and malign economic data and financial projections in order to muddle, misinform and mislead the American people about the true nature of our ongoing economic calamity. Propaganda and obfuscation are the scheme of choice by the powers that be. They are counting on decades of government run public education to insure that millions of non-critical thinking dullards will be unqualified or uninterested in the truth about our grim economic prospects. The oligarchy’s master plan has centered on houses, automobiles, and the illusion of a jobs recovery.

Whenever I’m trying to understand the motivations of the sociopathic Washington politicians, Wall Street bankers and mega-corporation CEOs, I always come back to the words of master manipulator Edward Bernays:

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” – Edward Bernays, Propaganda, 1928

The relatively small number of wealthy men thinks they are smarter than the masses and can manipulate them through their control of the government, the financial system and the media. The players in this game remain the same, but they have switched positions. The debt accumulation which led to the 2008 collapse was heavily concentrated on the books of the ruthless Wall Street psychopathic banks and on the backs of a readily pliable public. Today, the Federal government and the Federal Reserve have switched positions with their banker puppet masters, essentially shifting all past and future debt onto the backs of the American middle class. The Federal Reserve Flow of Funds Report, issued two weeks ago, reveals the extent of this blatant scheme to screw the American people in order to save and further enrich the Wall Street psychopaths who won’t be satisfied until their looting and pillaging leads to complete collapse and the world erupting into a world war. The despicable facts are as follows:

Total U.S. credit market debt has RISEN from $50.9 trillion in 2007 to $54.1 trillion as of 12/31/11, a $3.2 trillion increase.
Household debt has declined from $13.8 trillion in 2007 to $13.2 trillion as of 12/31/11. The mainstream media would point to this $600 billion decline as proof that Americans have embraced austerity and have learned their lesson. Of course that would be a lie. The Wall Street banks have written off $200 billion of credit card debt and the 5 million completed foreclosures extinguished another $800 billion of mortgage debt. The truth is that consumers have continued to pile up debt.
Much has been made of corporate America being flush with cash. If they are so flush, why have they added $900 billion of debt since 2007, an increase of 13% to an all-time high of $7.8 trillion?
The revealing data shows up in the financial company data. These Wall Street national treasures have reduced their debt from $17.1 trillion in 2008 to $13.6 trillion as of 12/31/11. How were they able to do this, while writing off $1 trillion of consumer debt?
You guessed it. They dumped it on the American taxpayer. The Federal government increased their debt from $5.1 trillion to $10.5 trillion. And our old friends called government sponsored enterprises (Fannie, Freddie, Student loans) increased their debt from $2.9 trillion to $6.2 trillion. Wall Street banks and millions of deadbeats who chose to game the system and live the good life have effectively foisted their $4.5 trillion of debt upon the backs of middle class taxpayers who lived within their means. Another $4.2 trillion has been pissed down the toilet by Obama with his $800 billion Keynesian porkulus program, home buyer tax credits, cash for clunkers, green energy boondoggles, 47 million people on food stamps success story, 99 weeks of unemployment, doubling of SSDI membership, and his multiple wars of choice in the Middle East.

The average hard working, taxpaying American has been enslaved in debt of such proportions that they will never be able pay it off. Your share of the $15.6 trillion National Debt is now $50,000, and growing by $4,500 per year. Your share of the future unfunded liabilities, created by the people you elected, is approximately $350,000. This crushing burden is in addition to the $13.8 trillion of mortgage, credit card, student loan, and auto loan debt Americans have accumulated in the last three decades of delusion. Forty percent of all credit card users do not pay-off their credit card every month and carry an average balance of $16,000 at an average interest rate of 15%. Good to see the Wall Street banks passing along some of their 0% borrowing windfall to their “customers”.

Source: TF Metals Report

Pedal to the Metal

You may have noticed the corporate mainstream media, crooked politicians and lying Wall Street shills attempting to pound the economic recovery storyline into the consciousness of a terminally distracted populace. This is part of the Bernays inspired master plan of a small cabal of powerful men to control the public mind and keep our mass consumer society functioning smoothly so these corporate fascists can continue to gorge upon the carcass of a once vital republic. Decades of mass media consumer indoctrination, dumbing down of children through public school education and the conscious manipulation of attitudes and opinions of the malleable masses has succeeded. The invisible government of the rich and powerful has effectively converted responsible citizens into mindless consumers of products, bought with debt, peddled by associates of the invisible government. The crowded shopping malls, automobile showrooms, and restaurants are a testament to the power of propaganda and the intellectual bankruptcy of a vast swath of the American population.

Only psychopaths would encourage and condone behavior that would financially enrich themselves while destroying the lives and personal wealth of millions. The invisible government (Wall Street bankers, D.C. political hacks, mega-corporate executives, mass media titans) exhibits all the traits of a psychopath as described in a recent Harvard Business Review article:

Glibness and superficial charm
Lack of empathy
Consistent decisions in their self-interest, even where it is ethically questionable
Chronic, sometimes transparent lies, even with regard to minor things
Lack of remorse
Failure to take responsibility for their actions, and instead blaming others
Shallow emotions
Ignoring responsibilities
Persistent focus on gratifying their own needs at the expense of others
Conning and manipulative behavior

Do you recognize any of these traits in our president (Obama), congressmen (Weiner, McCain) Wall Street bankers (Dimon, Blankfein), corporate CEOs (Immelt), and mass media titans (Murdoch)? These people and many more like them will stop at nothing to further their self-serving agenda. They are intelligent and highly skilled at lying and manipulation. They lack empathy and don’t care what others think as they relentlessly pursue riches and power no matter the damage they inflict upon the people they so casually abuse, scorn and look down on. These are the people attempting to convince you that the path to economic recovery is through increased spending by consumers, utilizing debt supplied by them.

The entire recovery theme is a sham, financed by the Federal government with your tax dollars and the tax dollars of future unborn generations. I’ve arrived at this conclusion after pondering what I’ve been seeing with my own two eyes and through the insightful analysis found in the non-mainstream media (Zero Hedge, Jesse, Mish and many others). The mantra being pounded relentlessly by the mainstream media is that retail sales are booming and the unemployment rate has declined significantly, therefore an economic recovery is at hand. The chart below reveals the dramatic surge in vehicle “sales”. The annual pace is all the way back to 15 million, from the low below 10 million in 2009. The brief surge in mid-2009 was due to Obama’s highly successful Cash for Clunkers program that cost taxpayers $2.8 billion or $24,000 per car sold. It was highly successful for Government Motors (GM) and their union workers (Obama voters).

This rapid surge in auto sales has also resulted in a boost to overall retail sales, which have reached an all-time high. Automobile “sales” make up 18% of the retail sales number, by far the largest segment. The “record” retail sales are the result of surging gasoline sales, swelling food inflation, and a somewhat confusing cascade of car sales. It’s somewhat confusing until you realize how and why the 50% rise in vehicle sales has been accomplished by our Bernaysian masters. Retail sales in the first two months of 2012 are up 8.2%, led by a 9.2% wave of motor vehicle sales. Auto sales are at levels last seen in early 2008. This seems peculiar, since there are still 7 million less employed people in the country than in early 2008 and the real median household income is 9% lower than it was in early 2008. Real average hourly earnings have fallen for the last three months and are 1.2% lower than they were in October, 2010. A critical thinking person might ask himself, how could American households with less jobs and lower wages increase their purchases of automobiles by 50% in the last two years?

The answer is just what you expected. A phenomenal amount of debt peddled to people without the means or intent to ever repay the debt by the usual suspects: Ally Financial, Capital One, Wells Fargo, JP Morgan and Bank of America. These fine upstanding institutions control 25% of the auto loan market. They doled out $24 billion of new car loans in the 4^th quarter of 2011, with an outpouring of loans to those downtrodden subprime borrowers and an extension in the average loan length beyond 6 years. Subprime borrowers now account for 45% of all auto loans. As a refresher, subprime borrowers generally have little or no assets, have a history of late payments or defaulting on obligations, and have low incomes. No worries there. When has making hundreds of billions in subprime loans ever caused a problem before. Ally Financial CEO Michael Carpenter had this to say about the market:

“We have seen crazy, irrational competition in the subprime end of the marketplace, which is one reason why more banks are targeting the lower end of the market.”

Bank of America and Capital One increased their market shares of the auto loan market by 40% in the 4^th quarter as they attempt to keep up with Ally Financial in reckless lending to deadbeats. If you aren’t familiar with Ally Financial, then you should be. You own 74% of this POS. Here is a brief summary:

GMAC, after contributing mightily to the financial crash of 2008 through their reckless subprime mortgage (Ditech) and auto lending and requiring a $16 billion bailout from American taxpayers, changed its name to Ally Financial in 2009. It’s sort of like John Dillinger using acid to try and change his fingerprints.
Ally Financial provides financing for all GM and Chrysler customers and dealers and is the market share leader in auto lending.
Ally Financial still owes the American taxpayers $12 billion.
Ally Financial is a ward of the Federal government and will do anything it is told to do by Obama. The recent foreclosure fraud settlement required Ally to pay $250 million to the customers it defrauded. They will only pay $110 million based on their inability to pay $250 million. Sounds like a company that should be increasing their subprime loan portfolio. Obama and his minions instead received a commitment from a lender they own and control to cut principal for delinquent borrowers and refinance underwater borrowers. And Obama didn’t even offer us a cigarette afterwards.
Ally Financial, along with Capital One, failed the Federal Reserve stress test last week. Ally, Capital One, Bank of America, and Citicorp are dead banks walking. Brilliant bank analyst Chris Whelan succinctly sums up their fate after analyzing the Federal Reserve stress test results:

“When you get to junior liens and HELOCs you will understand why I have been saying that Ally Financial and BAC need to be restructured. With a plus 20% loss rate on second liens, Ally has substantial capital issues to put it mildly. But look at C right behind them with a loss rate in the mid-teens followed by BAC. Yikes. This type of loss rate is typical for credit cards and both of these second lien portfolios are > $100 billion.

And the real lesson, dead friends, is that the good old USA is a subprime nation, a society of individuals whose aggregate probability of default is probably around a “B” to “CCC.” Convert the loss rates in the stress tests to bond ratings using the break points from Moody’s or S&P and tell me what you see.

Last point on Ally Financial: Yikes. Probably the weakest results of the whole group. Memo to POTUS: File Ch. 11, sell auto biz and bank to GM in 365 sale. Liquidate ResCap. Declare success. But do not be surprised if BAC follows if Ally goes into bankruptcy. The one thing that the Fed almost completely ignores is the vast financial risk facing BAC and Ally, and to a lesser degree, WFC, JPM and C.”

When you understand this background, anecdotal evidence that seems absurd starts to make sense. I spend two hours per day on the road and have plenty of time to observe my surroundings. I drive through the Mantua section of West Philadelphia every day. The average household income in this neighborhood is $16,000. The average home value is $25,000. The true unemployment rate exceeds 40%. At least 20% of the properties are vacant and the neighborhood resembles Baghdad. Last week, I counted six brand new vehicles with registration tags in their back windows in a one block radius of this neighborhood. Every block has newer model Ford Expeditions, GMC Sierras, BMWs, Acuras, Cadillacs, and Mercedes sprinkled among the squalor. Someone is loaning these people the money to buy these $40,000 vehicles or approving them for leases. This neighborhood puts the SUB in subprime. No financial firm worth spit would make a six year $35,000 auto loan to someone in this neighborhood unless they were instructed to do so by the Federal government or were guaranteed that the future loss would be borne by someone else – YOU.

The GM, Chevy and Chrysler car dealer ads in my local paper actually have the following headline in bold:

Have credit problems? NO PROBLEM

Most of the ads don’t even list the prices of the vehicles. They either tout the 72 month 0% financing or they list the monthly lease cost. It seems that virtually any vehicle can be leased for $300 per month or less these days. This might explain why 25% of all vehicles are leased today. In reality, 25% of the cars being “sold” today are really just being rented for three years. Both the lessors and lessees are basing these transactions upon delusions and assumptions which will likely blow up in their faces and again cost – YOU.

An auto lease payment is based upon interest rates, the cost of the car, subsidies from the auto makers, and the expected residual value of the vehicle at the end of the three year lease. When have financial companies ever miscalculated any of these assumptions? How about 2001-2002 and 2008-2009? The reason auto leases are ridiculously low is because Ben Bernanke’s zero interest rate policy is providing free money to Ally Financial and the rest of the Wall Street zombie banks and creating huge mal-investment – Again. The auto makers see no risks, as the used car market has been extremely strong for the last year and they anticipate continued strong demand for cars as they come off their three year leases. Therefore, they have estimated the residual values three years out at a very high level. The strong used car market may have been slightly impacted by the destruction of 700,000 vehicles under Obama’s Cash for Clunkers debacle. The combination of excessively low interest rates and excessively high residual value estimates leads to ridiculously low lease rates. The sales statistics for the first two months of 2012 reveal why this will blow up in the faces of lessors and the predictably incompetent financial drug dealers.

	Feb-12	% Chg Feb’11	YTD 2012
Cars	612,145	23.9	1,080,466
Midsize	304,601	25.6	532,818
Small	225,061	26.5	397,838
Luxury	81,476	22.7	147,647
Large	1,007	-85.8	2,163
Light-duty trucks	537,251	7.6	982,217
Pickup	148,956	13.8	273,430
Cross-over	225,621	0.4	412,974
Minivan	64,849	15.3	111,764
Midsize SUV	54,827	15.3	101,813
Large SUV	16,783	-5.4	31,566
Small SUV	13,926	24	25,951
Luxury SUV	12,289	12.4	24,719

It seems the delusional American public and their love affair with big SUVs, pickups, and their 8 cylinder luxury wheels will continue until they are hit over the head with the baseball bat of $5 a gallon gas. The Madison Avenue Bernays disciples have molded the minds and formed the opinions of millions of easily influenced, financially ignorant superficial Americans into believing the vehicle they drive is a true measurement of success. These people choose being up to their eyeballs in auto debt or perennial renters of luxury vehicles to appear prosperous to their neighbors and coworkers rather than actually achieving real success through the time honored tradition of earning more than you spend and saving the difference. The fact is that 80% of all the vehicles being sold in the U.S. are SUVs, pickups, crossovers, minivans, and larger cars that get 25 mpg or less.

As gas prices continue to rise towards $5 per gallon, a war with Iran looming in the near future, interest rates beginning to rise, and the country headed back into recession (MSM is wrong about the recovery), the car makers are poised to again experience enormous losses. Auto makers will have a sense of déjà vu as they have committed an epic blunder by overestimating the future value of the gas guzzlers they have been leasing. As a result, when the leases expire and auto makers take back the SUVs and pickups that get 15 mpg and attempt to resell them, the losses will run into the billions of dollars. There will be no one buying used gas guzzlers, with gas costing $5 per gallon. As the millions of subprime borrowers realize they can’t afford car payments, paying 40% more for gas, and trying to put food on the table, auto loan delinquencies will soar. This is as predictable as the housing market collapse in 2005. None of this matters to the psychotic governing elite who only care about the illusion of recovery today. These vampire squids will not be satisfied until every drop of blood is sucked out of the national carcass.

Ally Financial is part of the Federal Government and is being used to promote the agenda of the governing elite. They join Fannie Mae, Freddie Mac, and the Federal student loan peddlers as the primary tools of the corporate fascist powers that control this country. The nominal private ownership of these companies is a sham, as the state dictates how they will be run and who they will benefit. This corporate fascist empire is built upon an unholy alliance between big banks, big business, big media and big government, with each protecting and enriching each other. The psychopaths who are drawn to these organizations want to control people. They desire power, wealth, and the ability to manipulate public opinion. Their tactics include spreading fear and an atmosphere of paranoia in order to convince the populace that more government action will improve their lives. We are headed towards economic and financial collapse as these psychopaths will never willingly reverse course and the majority of our population has become so degraded (have you been to a Wal-Mart lately) that they are incapable or unwilling to confront the psychopaths.

Doug Casey in the latest Casey Report explains how evil and stupidity are a deadly combination:

“I would like to suggest that what really distinguishes political elites from normal people is not just a predilection for stupidity but a real capacity for evil. Evil might best be defined as the intentional and usually gratuitous commission of acts that are cruel or unjust. A person who commits many evil acts is a sociopath. The sociopaths who are naturally drawn to government eventually come to dominate it. They’re very dangerous people. They reset the social mores of the country they control. After a certain point, a critical mass is reached, and it’s GAME OVER. I suspect we’re approaching that point.”

The next time you hear a government drone, Wall Street shyster, or corporate mainstream media whore declare we are experiencing an economic recovery try not to laugh out loud. Their agenda doesn’t include making your life better. You are not in the club. Prepare accordingly.

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