MONEY TALKS – PEOPLE DIE

Plagued With High Cancer Rates, One Tar Sands Community’s Eight Year Quest For Answers

By Emily Atkin on April 2, 2014 at 10:32 am

Dr. John O’Connor can’t forget the cancer patients he’s seen. The quiet school bus driver who tried to hide his jaundice from his wife. The traditional elderly man who came to the examining room “yellow, almost green” and died the day after his operation. The Lebanese immigrant, deeply in love with his partner who lost her uncle nine years ago to the same disease, given less than a year to live. As the physician for the beautiful, remote First Nations community of Fort Chipewyan, Alberta, O’Connor wants to know why he’s seen so much suffering.

“Why should I see such illness in such a stunning, out of the way community?” he wondered. “It makes absolutely no sense. The rate of smoking is lower there. People walk everywhere … There’s no processed foods in their diets. It just doesn’t make sense.”

It was 2006 when O’Connor first went public with his claims of unprecedented cancer rates in Fort Chipewyan. What followed were eight long years that saw O’Connor questioned, threatened, and forced to move, all because he publicly voiced his suspicions that those rates might be caused by pollution from large tar sands reserves extracted just 150 miles upstream.

Now, he is still wondering why the government hasn’t yet studied the cause for the high cancer rates, why they recommended the oil industry take part in the health study process, and, perhaps most importantly, why it has taken so long to provide updated information regarding the cancer rates to the ailing community.

“It is nauseatingly disgusting, what’s going on,” O’Connor said. “This community has been totally brushed aside.”

‘Totally Unprecedented’

In March 2006, CBC News published its first article about O’Connor and Fort Chipewyan, known locally as Fort Chip.

“Dr. John O’Connor, a physician and medical examiner for the remote northern community, says the population of 1,200 has been disproportionately affected by a high number of both rare and common cancers,” the article read. “Elders in the community say they didn’t see these kinds of diseases until the oil industry started production near their homes on the southwestern tip of Lake Athabasca. O’Connor said he suspects oil and gas activity may play a role.”

Soon after, the public and the media began putting pressure on the government to study the cancer rates further. If pollution from tar sands production was indeed causing these high cancer rates as O’Connor suspected, people wanted to know. After all, Fort Chip is only 150 miles downstream from Canada’s largest tar sands reserve. If cancer was on the rise there, the same could be true for other communities.

Then, in what many considered a surprising turn, the country’s lead agency for public health filed four complaints of misconduct against O’Connor, including causing “undue alarm” and “engendering a sense of mistrust” in the Canadian government. The College of Physicians and Surgeons of Alberta was asked to investigate. O’Connor risked losing his medical licence.

“From what I’ve heard off the record, from members of the medical community, this [was] totally unprecedented,” Andrew Nikiforuk, a Canadian journalist who has been writing about the oil and gas industry for nearly 20 years, said during a parliamentary hearing on O’Connor’s now-famous situation.

Media attention swirled around O’Connor in Alberta while the charges were being processed. So he moved to Nova Scotia, “to escape all the craziness.” He set up his own practice there, and a friend, Dr. Liam Griffin, took over physician services at Fort Chip.

But public pressure over O’Connor’s case would not cease, and the Alberta Cancer Board finally conducted a study on O’Connor’s claims in 2009. In that study, the Board confirmed that there were, indeed, high cancer rates in Fort Chip. O’Connor was absolved of the charges and moved back to Alberta — but not without scars from the experience.

“The feeling, it’s hard to describe,” O’Connor said. “That was two years and eight months of my life that I would not want to repeat.”

Three Options

The results of Alberta Cancer Board’s study were staggering. Cancer rates in Fort Chip were 30 percent higher than expected. There were elevated rates of blood cancer, lymphatic cancer, and soft tissue cancers. The high rates were primarily seen in the last six years of the 12-year study, a finding the Board said should warrant “closer monitoring of cancer occurrences in Fort Chipewyan in the coming years.”

The Board was not asked to look into the cause of the cancer. It did, however, offer three potential reasons for the increased rates.

First, O’Connor could be what is called a “Texas Sharp Shooter” — like someone who randomly shoots his gun at the side of a barn and draws a bulls-eye around the bullet clusters. In this case, O’Connor’s observations of cancer would be a coincidence.

Second, O’Connor could just be a really good at detecting cancer. Maybe, before O’Connor came to the community, Fort Chipewyan’s doctors just weren’t as skilled at recognizing disease. Maybe there was always cancer in Fort Chip.

And the third option the board offered was that the people of Fort Chipewyan could be at higher risk of developing cancer due to heightened exposure to carcinogens that may have leached into their water from tar sands and uranium extraction.

O’Connor believes the answer is option three. For him, knowing the history of Fort Chip before and after tar sands expansion, it is just common sense.

Warning Signs

Though O’Connor became Fort Chip’s physician in 2006, he began visiting in 2000. “Like every or any aboriginal community, you don’t just barge in and expect people to trust you right away,” he said. “I kind of represent the invader, the white guy. They sort of have to get a measure of you before they open up.”

During his visits, he would hear about the old Lake Athabasca, the clear Lake Athabasca. Twenty years ago, Fort Chip residents would draw their drinking water from it, bathe in it, think nothing of dunking a cup over the side of a canoe during fishing trips. A bounty of big walleye and pickerel made the lake a fishing industry for two months of the year and residents would earn extra money sending the fish to markets in the Eastern United States.

But then things started to change. “Every one of them described the same thing,” O’Connor said. “The water was constantly — there was a sheen of oil on it. It didn’t taste right. It tasted bad. They couldn’t boil it. They couldn’t use it for anything at all.”

The fish started to change, too. Fort Chip elder “Big Ray” Ladouceur said he began to see “pushed in faces, bulging eyes, humped back, crooked tails.” A friend caught a jackfish with two lower jaws. The community eventually decided to send two boxes of the fish to Canada’s Fish and Wildlife agency for study. At the last minute, the boxes were never sent.

“I think they did that on purpose,” Ladouceur said. “They didn’t want to get the feedback … They’re scared.”

Fort Chip did receive some feedback anyway in 2007, a few months after O’Connor’s self-exile to Nova Scotia. Health Canada released a study that said the fish abnormalities were not necessarily related to water pollution or toxic discharges. Even so, the study recommended residents limit fish consumption and caution children against playing in the surrounding waters, due to higher-than-expected levels of mercury, aluminum, and selenium.

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Water surrounds Fort Chip, making it nearly impossible to avoid. The community is only reachable by plane, save for two months out of the year when the ice can serve as a road for vehicles. The portion of Lake Athabasca that encompasses the community is located 150 miles downstream from the Athabasca tar sands, one of three large deposits that helps make Alberta home to the second largest oil reserve in the world after Saudi Arabia.

Out of those three regions, the Athabasca tar sands are the biggest. It is also the only large tar sands field that is suitable for surface mining. There are several active and abandoned uranium mines that surround the lake, which O’Connor believes could also be contributing to the elevated cancer rates.

It’s not hard to believe that the tar sands may be causing some detrimental pollution. The Primrose tar sands project near Cold Lake, Alberta has been leaking for at least the past ten months, though Canadian officials acknowledge they’re not sure when those leaks started. In northeast Alberta, scientists have found the tar sands deposits are surrounded by a nearly 7,500-square-mile ring of mercury. And at least six families, including children, have abandoned their homes in Peace River, Alberta, citing health concerns from heavy oil emissions. The Alberta Energy Regulator recently confirmed that those families’ illnesses were likely caused by the tar sands.

A Seat At The Table

Dr. O’Connor concedes that he does not know if it’s pollution from the tar sands that is causing cancer in Fort Chip and that’s precisely the reason why, for the last eight years, he has been asking for the Canadian government to conduct a comprehensive health study that could pinpoint the cause.

That study seemed like it just might happen back in September 2009 when Health Canada and Alberta Health agreed to set up a joint federal committee, called the Physician Advisory Committee (PAC), to set the terms. O’Connor says things ultimately fell apart, though, when the chair of the PAC — Dr. Brent Friesen, the medical officer of health at Alberta Health Services — suggested that a clause be added giving the tar sands industry an integral role in management and oversight of the study.

The Canadian government is not allowed to conduct studies on First Nation communities without their consent, and Fort Chip residents would not give their blessing to a study overseen by the oil industry, O’Connor said. Alberta Health confirmed that the Friesen and other members of the PAC had proposed industry representation in the study, but added that it was not meant to be a requirement for it to move forward.

“Dr. Friesen did not, in any way, insist upon industry representation as a condition of the study proceeding,” Alberta Health senior communications advisor Shannon Evans said via e-mail. “Though the proposal did suggest the inclusion of industry representation … neither Dr. Friesen nor other Physician Advisory Committee members insisted upon this industry representation as a condition of the study proceeding.”

On the other side, Chief Allan Adam of the Athabasca Chipewyan First Nation said his community specifically rejected the health study proposal because the oil industry had to be involved.

“It was a condition that was put on the [study] and that’s why it was rejected by the First Nations,” Chief Adam said.

Health Canada, the other government agency spearheading the PAC, declined to answer questions about industry involvement in a health study for Fort Chip residents. Instead, Health Canada spokesperson Judith Gadbois-St-Cyr said Fort Chip residents “have publicly stated they do not support proceeding with that study,” not because of industry involvement but “because [the study] would not focus solely on cancer, but instead be a comprehensive health study that would include cancer as a key element.”

When pressed to explain why Health Canada would not address industry ties to a study, Gadbois-St-Cyr said the agency’s official position was that it was “not their place” to participate in a “he said she said” argument over why Fort Chip residents did not want a health study, and noted that Alberta Health had a bigger role.

Both Chief Adam and Dr. O’Connor have alleged that Friesen has unethical ties to the oil industry, including doing consulting work for the Canadian Association of Petroleum Producers (CAPP) and the Oil Sands Community Alliance (OSCA).

Alberta Health confirmed that Friesen once sat on the Health Sub-Committee of OSCA, an industry group with a focus on community impacts of the oil sands, but only to “ensure that [Alberta Health] — as the health service delivery organization — is properly represented in discussions pertaining to prevention, treatment and health services needs in the area,” Evans said. Evans denied accusations that Friesen ever did any consulting work for CAPP.

Those in Fort Chip are not convinced. “We’re doing our analysis on Dr. Friesen and we’re going to expose him,” Chief Adam said. “We’re going to bring all of this into perspective, but give us some time.”

Still Fighting For Answers

Last week, Alberta Health officials released updated numbers for cancer rates in Fort Chip. According to those numbers, the community has slightly increased rates of biliary tract cancer, cervical cancer, and lung cancer. Everything else, they said, is normal.

The numbers report was not the comprehensive health study Fort Chip residents are looking for — just an update on how much cancer is in the area compared to other areas of Alberta. Even so, Alberta Health’s Chief Medical Officer of Health, Dr. James Talbot, told the community that none of their increased cancer rates are likely due to pollution from the tar sands industry and can easily be explained by other factors.

Not everyone is buying it.

“Anyone who knows the slightest bit of mathematics knows that with a population as small as Fort Chipewyan, the statistics are not going to work,” said Dr. David Schindler, a University of Alberta limnologist who has researched how the tar sands effect freshwater systems. “The nature of epidemiological studies is that if you’re studying 10,000 or 100,000 people, you can say something is significant. You can’t do that with less than 1,000 people.”

Schindler says his experience with studying how the oil industry pollutes water — particularly Lake Athabasca and Fort Chipewyan — has proved to him that the Canadian government is disinterested in making the link, if there is one, between tar sands and cancer. He claims that after his research found the industry was adding a significant number of pollutants to Lake Athabasca, the government and the oil industry underwent repeated attempts to prove his studies were flawed.

“It’s a standard government and industry tactic to cast doubt on things and then continue to do what you’re familiar with, and you don’t have to make any decisions,” he said. “It’s interesting, because if they find no chemicals that can be linked to the oil sands, then it exonerates the oil sands completely. But no one seems interested in answering that question.”

Both Alberta Health and Health Canada have stated that they remain committed to funding a comprehensive health study on the cancer rates. But at this point, Fort Chip residents don’t even want them to.

“Based on the specifications that both Health Canada and Alberta Health put on they study, that industry wants to have a say in it, we said no,” Chief Adam said. “We can’t trust them … We need a completely independent report.”

Not Just A Canadian Concern

Fort Chip’s cancer debacle is beginning to attract the attention of some lawmakers — but they’re not from Canada.

U.S. Sens. Barbara Boxer (D-CA) and Sheldon Whitehouse (D-RI) last month invited Dr. O’Connor to Washington D.C., to testify on his experience working on Fort Chip. They’re now calling for the U.S. government to study how America’s public health would be affected by the increased extraction and processing of tar sands oil, particularly via the controversial Keystone XL pipeline. The pipeline will leak, after all. All pipelines do.

And the transport of tar sands isn’t the only thing that should have Americans concerned. In February, U.S. Oil Sands received its final permits to begin tar sands extraction in Utah’s Unitah Basin and other states have expressed interest in exploring the possibility, as well.

For the people of Fort Chip, however, simply being concerned is no longer an option.

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%
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

BLS LIES REVEALED IN A FEW CHARTS

The Bureau of Lies and Shams issued their latest Orwellian data report this morning. They declared that inflation was only up .1% in February, despite the massive jump in food prices. Here is the MSM regurgitation of the BLS bullshit propaganda. A real journalist might verify the numbers to see if they pass the smell test.

Consumer prices edge up in February as food prices jump

Last month’s 0.1% increase driven by biggest spike in food costs since 2011

WASHINGTON (MarketWatch) — Consumer prices in the U.S. rose slightly in February because of higher food and housing costs, but overall inflation remained quiet, according to the latest government figures. The price of food jumped 0.4% — the largest gain since September 2011 — because of higher costs of meat, poultry, fish and vegetables. Still, food prices have only risen 1.4% over the past year.The cost of energy fell 0.5% as lower gasoline costs offset increases in fuel oil and natural gas. High demand for home heating fuels boosted prides during a very cold month.

The drones at the BLS declare that energy prices plummeted in February due to lower gasoline costs. Let’s look at a handy dandy chart of the actual price of gasoline over the last three months. Well looky here. The average price of a gallon of gasoline on February 1 was $3.26 per gallon. The average price of a gallon of gasoline on February 28 was $3.45 per gallon. And the trend was straight up during the entire month. My handy dandy calculator says that gasoline ROSE by 5.8% in February. The BLS says gasoline prices fell dramatically. Do you believe the BLS drones or your pocketbook? How can they get away with these blatant lies? Oil rose from $97 per barrel to $102 per barrel. That is a 5.1% increase. Natural gas prices spiked from $5 to over $6 during February before settling back around $5. The average price was easily up 10% over the prior month. How stupid do our government keepers think we are?

Even the BLS contention that food prices went up .4% in February is a lie. That is a 4.8% annualized rate. Let’s see the reality. Pork is up 43% since the beginning of the year. Beef is up 8%. Coffee is up 75%. Corn is up 13%. Wheat is up 12%. Soybeans are up 8%. Cocoa is up 12%.

These are the price changes in the real world, not in the BLS world of manipulation and deception.

The CPI is a fake number issued by the STATE and designed to keep the sheep docile and compliant. In reality true inflation is running above 5%. You know it and I know it. Will the faux journalists in the MSM report the truth? Hell no. They are paid to peddle lies and propaganda by their corporate bosses.

PORK

BEEF

COFFEE

CORN

WHEAT

SOYBEANS

COCOA

SUCCESS – SOCIALIST STYLE

These Venezuelans aren’t rioting. They are waiting in line for food. Their country has ample farmland and a great climate for growing food. They put all their faith in their socialist leaders to centrally plan their economy and create a government controlled paradise.

Venezuela has 211 billion barrels of oil reserves, 2nd only to Saudi Arabia on the planet. The socialists have been in charge for decades. Why are the people waiting in lines to get fuel for their homes? They put their trust in the all powerful, all benevolent socialist government.

Barack Obama and his minions believe government can allocate resources (your taxes) better than you can. Forward Amurika!!! Venezuela is our goal. Free shit for everyone. What could go wrong?

EU ABOUT TO GET A BAD CASE OF GAS

So let me get this straight. Obama and the nattering nabobs of NATO are threatening Russia with economic sanctions. Meanwhile, Europe is entirely dependent on Russian oil and natural gas to run their societies. Even the U.S. imports 200,000 barrels of oil per day from Russia. The American and European oligarchs can certainly make Russia feel pain by freezing assets and hurting their currency, but at the end of the day, they will still have the oil and gas in the ground.

If I was a betting man, I think our old friend China might just take some of that oil and gas off of Russia’s hands and provide some short term liquidity to old Vlad.

I wonder how the booming American economy will function at $150 per barrel oil? Maybe Obama can ramp up those student loans and subprime auto loans to save the country.

This little political incident has all the makings of a tipping point in the decline of the teetering American Empire. The rise of China/Russia has never been more evident.

But at least we gave out multiple Oscars to slave films and gay films to prove we are progressive. We got that going for us.

It Begins: Gazprom Warns European Gas “Supply Disruptions” Possible

Submitted by Tyler Durden on 03/04/2014 00:03 -0500

We had previously warned that Putin’s “trump card” had yet to be played and with Obama (and a quickly dropping list of allies) preparing economic sanctions (given their limited escalation options otherwise), it was only a matter of time before the pressure was once again applied from the Russian side. As ITAR-TASS reports, Russia’s Gazprom warned that not only could it cancel its “supply discount” as Ukraine’s overdue payments reached $1.5 billion but that “simmering political tensions in Ukraine, that are aggravated by inadequate economic conditions, may cause disruptions of gas supplies to Europe.” And with that one sentence, Europe will awaken to grave concerns over Russia’s next steps should sanctions be applied.

It would appear this is the most important map in Europe once again…

Some recent history…

In late January, Ukraine asked Russia for deferral of payments for gas supplied in 2013 and in early 2014. President Vladimir Putin said Ukraine’s debt totalled $2.7 billion then.

and then…

On March 1, Gazprom’s spokesperson Sergai Kupriyanov said the gas holding could cancel its gas supply discount for Ukraine as its overdue debt for gas reached $1.5 billion. This figure includes debts not only for last year’s supplies, but also for the current deliveries.

“The situation with payments is worrying,” said Andrei Kruglov, Gazprom’s chief financial officer.

“Ukraine is paying but not as well as we would like it to. We are still thinking about whether to extend the pricing contract into the next quarter based on current prices.”

And now today…

Russia’s gas giant Gazprom said on Monday it did not rule out possible disruptions of gas supplies to Europe over Ukraine’s political situation.

“Simmering political tensions in Ukraine, that are aggravated by inadequate economic conditions, may cause disruptions of gas supplies to Europe,” the monopoly said in its materials, adding that it would do its utmost to reduce export risks.

“We will further invest into other export-oriented projects such as South Stream and will enhance our LNG (liquefied natural gas) production and export capacity. We also increase our access to underground gas storage facilities in Europe.”

Andrei Kruglov, Gazprom’s chief financial officer, said at the moment Russia had been supplying gas to Ukraine according to schedule, although the latter failed to fulfil its debt obligations.

With that last sentence providing exactly the ‘real world’ cover Gazprom needs to cut its supplies “through” Ukraine and thus to Europe…

And, as The Guardian notes, this would…

not the first time Russia has used gas exports to put pressure on its neighbour – and “gas wars” between the two countries tend to be felt far beyond their borders. Russia, after all, still supplies around 30% of Europe’s gas.

In late 2005, Gazprom said it planned to hike the price it charged Ukraine for natural gas from $50 per 1,000 cubic metres, to $230. The company, so important to Russia that it used to be a ministry and was once headed by the former president (and current prime minister) Dmitry Medvedev, said it simply wanted a fair market price; the move had nothing to do with Ukraine’s increasingly strong ties with the European Union and Nato. Kiev, unsurprisingly, said it would not pay, and on 1 January 2006 – the two countries having spectacularly failed to reach an agreement – Gazprom turned off the taps.

The impact was immediate – and not just in Ukraine. The country is crossed by a network of Soviet-era pipelines that carry Russian natural gas to many European Union member states and beyond; more than a quarter of the EU’s total gas needs were met by Russian gas, and some 80% of it came via Ukrainian pipelines. Austria, France, Germany, Hungary, Italy and Poland soon reported gas pressure in their own pipelines was down by as much as 30%.

Short of an actual war, the consensus appeared to be, Europe’s gas supplies are unlikely to be seriously threatened (since Putin relies on those revenues)… that is clearly about to change with Gazprom’s comments.

As the following image from Agence France Presse (created at the end of last year) indicates, things are about to get a lot more problemati for Germany, France, and Italy…

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

TRYING TO STAY SANE IN AN INSANE WORLD – PART 1

“I mean—hell, I been surprised how sane you guys all are. As near as I can tell you’re not any crazier than the average asshole on the street.” – R.P. McMurphy – One Flew Over the Cuckoo’s Nest

“Years ago, it meant something to be crazy. Now everyone’s crazy.” – Charles Manson

“In America, the criminally insane rule and the rest of us, or the vast majority of the rest of us, either do not care, do not know, or are distracted and properly brainwashed into acquiescence.” – Kurt Nimmo

I have to admit to being baffled by the aptitude of the Wall Street and K Street financial elite to keep their Ponzi scheme growing. I consider myself to be a rational, sane human being who understands math and bases his assessments upon facts and a sensible appraisal of the relevant information obtained from trustworthy sources. Of course, finding trustworthy sources is difficult when you live in a corrupt, crony-capitalist, fascist state, controlled by banking, corporate and military interests who retain absolute control over the mainstream media and governmental propaganda agencies. Those seeking truth must pursue it through the alternative media and seeking out unbiased critical thinkers who relentlessly abide by what the facts expose. This is no time for wishful thinking, delusions and fantasies. In the end, the facts are all that matter. As Heinlein noted decades ago, the future is uncertain so facts are essential in navigating a course that doesn’t lead you to ruin upon the shoals of ignorance.

“What are the facts? Again and again and again – what are the facts? Shun wishful thinking, ignore divine revelation, forget what “the stars foretell,” avoid opinion, care not what the neighbors think, never mind the un-guessable “verdict of history” – what are the facts, and to how many decimal places? You pilot always into an unknown future; facts are your single clue. Get the facts!” ― Robert A. Heinlein

Facts are treasonous and dangerous in an empire of lies, fraud and propaganda. It is maddening to watch the country spiral downward, driven to ruin by a psychotic predator class, while the plebs choose to remain willfully ignorant of reality and distracted by their lust for cheap Chinese crap and addicted to the cult of techno-narcissism. We are a country running on heaping doses of cognitive dissonance and normalcy bias, an irrational belief in our national exceptionalism, an absurd trust in the same banking class that destroyed the finances of the country, and a delusionary belief that with just another trillion dollars of debt we’ll be back on the exponential growth track. The American empire has been built on a foundation of cheap easily accessible oil, cheap easily accessible credit, the most powerful military machine in human history, and the purposeful transformation of citizens into consumers through the use of relentless media propaganda and a persistent decades long dumbing down of the masses through the government education system.

This national insanity is not a new phenomenon. Friedrich Nietzsche observed the same spectacle in the 19^th century.

“In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”

The “solutions” imposed by the supposed brightest financial Ivy League educated minds and corrupt bought off political class upon people of the United States since the Wall Street created 2008 worldwide financial collapse are insane and designed to only further enrich the crony capitalists and their banker brethren. The maniacs are ruling the asylum. John Lennon saw the writing on the wall forty five years ago.

“Our society is run by insane people for insane objectives…. I think we’re being run by maniacs for maniacal ends … and I think I’m liable to be put away as insane for expressing that. That’s what’s insane about it.” – John Lennon, Interview BBC-TV (June 22, 1968)

The world is most certainly ruled by a small group of extremely wealthy evil men who desire ever more treasure, supremacy and control, but the vast majority of Americans have stood idly by mesmerized by their iGadgets and believing buying shit they don’t need with money they don’t have is the path to happiness and prosperity, while their wealth, liberty and self-respect were stolen by the financial elite. Our idiot culture, that celebrates reality TV morons, low IQ millionaires playing children’s sports, egomaniacal Hollywood hacks, self-promoting Wall Street financers, and self-serving corrupt ideologue politicians, has been degenerating for decades.

“We are in the process of creating what deserves to be called the idiot culture. Not an idiot sub-culture, which every society has bubbling beneath the surface and which can provide harmless fun; but the culture itself. For the first time, the weird and the stupid and the coarse are becoming our cultural norm, even our cultural ideal.” – Carl Bernstein -1992

The examples of our national insanity are almost too vast to document, but any critical assessment of what we’ve done over the last one hundred years reveals the idiocracy that has engulfed our collapsing empire.

The Madness of Crowds

“In reading The History of Nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.” – Charles MacKay – Extraordinary Popular Delusions and the Madness of Crowds

We have become a nation that seamlessly goes mad every five years in pursuit of some new delusionary fantasy sold to us by the ruling class, only to see those dreams shattered like a wooden ship on the reef of reality. You can never underestimate the power of human stupidity. Ben Bernanke and his Federal Reserve cronies have printed $2.6 trillion of new money out of thin air since September 2008 in order to prop up their Wall Street owners, who had engineered the largest control fraud (mortgage debt/housing bubble) in world history, recklessly gambled in their ravenous appetite for sordid profits, and drove their firms into insolvency. It took the Federal Reserve 95 years to accumulate a balance sheet of $900 billion of safe U.S. Treasuries.

They have insanely quadrupled their balance sheet in the last 5 years by accumulating toxic mortgage debt from Wall Street banks and purchasing the majority of new Treasury debt being issued to fund the Federal government’s insane trillion dollar annual deficits. Bernanke, the corporate media, government apparatchiks, and captured political class act as if this is normal, when it is clearly the act of a desperate ruling class in its final death throes. Bernanke has leveraged his balance sheet 60 to 1. Lehman and Bear Stearns were leveraged 30 to 1 when they collapsed. The 100 basis point move in rates over the space of two months has resulted in Bernanke losing $200 billion and effectively wiping out his $55 billion of capital.

Of course, in a corrupt regime accounting fraud is encouraged and applauded by the status quo. Just as the spineless accountants on the FASB buckled to threats from Bernanke and Paulson in early 2009 and reversed the requirement that assets be marked to market so the felonious Wall Street banks could fraudulently hide their insolvency, the Federal Reserve has decided their losses don’t matter. The Federal Reserve classifies their losses as an asset. Don’t you wish you could classify your 401k losses and your home value losses as an asset? The tapering bullshit storyline is just another attempt to distract the masses from focusing on the fact that Bernanke will never stop expanding his balance sheet because if he stops the financial system will collapse in a catastrophic implosion. The Ponzi scheme will continue until loss of faith leads to a scramble away from the U.S. dollar.

Since the infamous creation of the Federal Reserve by a secretive cabal of bankers and politicians in 1913, the ultimate destination of the American empire was set. Every fiat currency in world history has collapsed. Our entire system has been based on infinite exponential growth. The fallacy of American exceptionalism has been built on an underpinning of pure stupid luck and the issuance of more and more debt. The American empire grew to epic proportions due to the discovery of cheap easily accessible oil in the late 19^th century and the physical and economic destruction of Europe, Russia and Japan during World War II. The accumulation of debt was fairly moderate during the glory years after World War II, but began to accelerate after the fateful year of 1971 when U.S. oil production peaked and Tricky Dick Nixon removed the last vestiges of restraint from central bankers and politicians by closing the gold window. With the shackles removed from the wrists of corruptible knaves and shysters, America’s future depended upon the wisdom, honesty and financial acumen of Washington politicians and Wall Street financers. Once the citizens realized they could vote for more bread and circuses, our ultimate demise was set in motion. A nation that had produced real annual growth of 4% during the 1950’s and 1960’s has seen a steady decline for the last four decades.

The term pushing on a string describes the Quantitative Easing (literally money printing) and Keynesian debt financed pork spending efforts of our increasingly frantic owners. The insanity of what we’ve done since 1971 is almost too crazy to comprehend. In the first 182 years of our existence the leaders we elected to steward the nation accumulated $400 billion of national debt. By 1981, unleashed from any semblance of spending control, the politicians and bankers had added another $600 billion of debt, a 150% increase in 10 years. By 1991 our beloved leaders had added another $2.6 trillion of debt, another 160% increase in 10 years. By 2001 another $2.2 trillion had been accumulated, only a 60% increase due to the end of the Cold War and a one-time tax surge from the Dot.com stock bubble. Bush’s worldwide War on Terror, expansion of the police state, tax rebate stimulus idiocy, and expansion of the welfare state (Medicare Part D) drove the national debt up by another $2.2 trillion in just eight years, a 40% increase.

The insane amassing of debt since 2008 has put a final nail in the coffin of the ridiculous Keynesian theory, as the Federal government has increased annual spending by 35% over the last five years and the economy is still moribund. Our fearless leaders have driven the national debt from $7.8 trillion to $16.7 trillion in less than five years, a 110% increase. The country continues to add $2 to $3 billion of debt per day. Consider how insane it is that we now accumulate more debt in half a year than we did cumulatively over the first 182 years of our existence as a country. And our elected, or should I say selected, leaders, cheer on the intellectually bankrupt academics like Bernanke whose only solution to every crisis is to print moar and then lie to the American people about his true purpose, act as if annually spending $1 trillion more than we collect while knowing there are over $200 trillion of unfunded promises to fulfill is a reasonable and realistic way to manage the national finances. Any sane person knows our current path will lead to ruin. When you need to issue new debt in order to honor old debt, the end is in sight.

The multitude of insane responses to a financial crisis created by a few greedy psychopathic bankers will be looked upon by historians with contempt and scorn. Future generations will wonder “What were they thinking?” Trillions in wealth were vaporized due to the actions of a small secretive league of highly educated, egocentric psychopaths whose warped sense of morality led them to pillage the wealth of the nation through fraudulent financial products, bribing regulatory agencies, stabbing clients and competitors in the back, and peddling lies, propaganda and misinformation to the public through their captured media mouthpieces. Not only haven’t any predator bankers been thrown in jail, but these villains have grown their parasitic entities to enormous proportions while paying themselves obscene billion dollar bonuses. Jon Corzine stole $1.2 billion directly from the accounts of his customers to cover his gambling losses and he remains free to laze about in one of his five gated mansions. The largest banks on earth have been caught red handed forging mortgage documents, rigging LIBOR, front running the muppets with non-public economic information, insider dealing, and using their HFT supercomputers to manipulate the markets at their whim. Government spy agencies regularly use the U.S. Constitution like toilet paper while accumulating electronic dossiers on every citizen in the country. The rule of law does not exist for the ruling class.

Only in a world gone insane would we be celebrating Wall Street generating all-time high profits through the use of accounting fraud and Bernanke filling their coffers with trillions of interest free money while bilking senior citizens out of $400 billion per year of interest income through his dastardly ZIRP “save a Wall Street banker” scheme. Bernanke has stolen close to $2 trillion from the bank accounts of little old ladies since 2008 and given it to Jamie Dimon, Lloyd Blankfien and the rest of the Wall Street scumbags. While Wall Street and the crony capitalist mega-corporations report record profits, Main Street is left with 5 million less full-time jobs than they had in 2007 and a real unemployment rate exceeding 20%. While the government has insanely reported a recovering economy since mid-2009, the food stamp rolls have grown from 33 million to 47 million. The ruling class cheers the record highs in the stock market that overwhelmingly benefit the top .1% because they are the .1%. Meanwhile, the average schmuck out in the hinterlands is paying double the price they were paying for gas in 2009 and their everyday living costs are rising by greater than 5% annually. Luckily for the financial elite, the average American would rather watch Honey Boo Boo than try to understand the evilness of Federal Reserve created inflation. The economic recovery storyline is obliterated by the fact that real household income is still 9% below its 2008 peak and amazingly 8% below its 2000 level.

Since the 2009 low, the household net worth of the wealthiest 7% has grown by 28%, while the other 93% have seen their net worth decline by a further 4%. The profits accrue to those who run the show, buy the politicians, write the laws, command the media propaganda machine and control the currency. As a sane person in this insane world I’m flabbergasted that there is virtually no outrage at the perpetrators of these crimes against humanity. Americans have earned the moniker – ignorant masses. Bread and circuses have won the day in our declining empire. The oligarchs thank you.

The blame doesn’t rest solely on the shoulders of the evil men running the show. They have only done what we allowed them to do. From top to bottom our society has hopped on the crazy train. The lack of national morality, sense of civic duty, inter-generational responsibility, and willful ignorance regarding sensible financial policies has led us to a tipping point. Decades of feckless self-serving political leadership making entitlement promises they could never honor to win votes, combined with a parasitic financial class peddling debt to millions of witless, narcissistic, math challenged, materialistic morons, has left the country in debt up to its eyeballs with no escape other than cataclysmic default. Michael Lewis documents the bleeding out of our society in his recent book:

“The people who had the power in the society, and were charged with saving it from itself, had instead bled the society to death. The problem with police officers and firefighters isn’t a public sector problem; it isn’t a problem with government; it’s a problem with the entire society. It’s what happened on Wall Street in the run-up to the subprime crisis. It’s a problem of taking what they can, just because they can, without regard to the larger social consequences. It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.” – Michael Lewis – Boomerang

The insanity of our debt accumulation in relation to our pathetic economic growth is clearly evident to even an Ivy League educated economist or a bubble headed CNBC anchorwoman. Since 1971 nominal GDP has grown by a factor of 14. Over this same time frame total credit market debt (household, corporate, government) has grown by a factor of 32. Real GDP (even using the fraudulent BLS manipulated CPI) has only expanded by a factor of 3.5 since 1971. The exponential growth model is clearly failing, with debt going hyperbolic, while GDP has stagnated.

Since 2007 real GDP has gone up $500 billion while total credit market debt has gone up by $6 trillion. Only an insane society would allow itself to be convinced by the perpetrators of the financial crimes that collapsed our economic system that accelerating the level of debt in our system will resolve the dilemma of Too Big to Trust banker insolvency. Transferring the immense losses of greedy sham capitalist gambling addicts from their insolvent balance sheets onto the balance sheets of the taxpayer has allowed the criminals to retain and expand their wealth, while sovereign states shift the pain and suffering onto the backs of the sinking middle class. This is a worldwide phenomenon perpetuated by central bankers at the behest of their crony capitalist co-conspirators. They call it capitalism when the scams, dodges and swindles work and the profits accrue to the schemers. When the gamblers and extreme risk addicts roll craps they use their crony capitalist connections, bought with blood money, to socialize their losses. The game is rigged and your owners don’t care about your hopes and dreams or your children’s future. They care about their own wealth and lifestyles of luxury. When the richest 300 people in the world have a greater net worth than the poorest 3 billion people on earth, a sane person realizes a chaotic end of the existing social order beckons.

“All over the world people borrowed vast sums of money they could never repay. The honest toting up, and taking, of the losses is being delayed. There’s a reason for this. The bad debts are owed, largely, to big banks. The big banks (even bigger than they were at the start of this crisis) and the people who own them enjoy a wildly disproportionate amount of political influence. And so, even now, five years into this mess, we remain at the mercy of the failed financial institutions that sit at the center of our capitalism. Geithner & Bernanke, along with their European counterparts, are doing everything in their power to prevent banks from failing. But the effect of this new financial order is bizarre: capitalism for everyone but the capitalists. Ordinary workers remain fully exposed to the increasingly harsh collisions in the marketplace while the highest paid financial elites ride protected by a passenger airbag.” – Michael Lewis – Boomerang

Clearly we’ve entered the final phase of our debt financed orgy of narcissistic materialism and self-absorbed avarice. The unsustainability of our course is a fact. Our society has gone mad en-masse but we are only recovering our sanity one by one. The global financial system is insolvent. A fractional reserve fiat money based system requires continuous growth or it collapses. The global banking system is overleveraged and real global growth is stagnant. Central bankers are not smart men. They have one response to every crisis – print!!! Bernanke and his fellow banker cronies are printing at hyper-speed in order to prop up the terminally ill mega-banks. Bernanke feigns confusion at the fact that his QE to infinity and ZIRP have only benefitted his banker puppet masters and the richest .1%, while further impoverishing senior citizen savers and the working middle class.

The anger at the true Wall Street malefactors manifested itself in the Tea Party movement and Occupy Wall Street movement, but both efforts were quickly hijacked by neo-con right wingers and socialist left wingers for their own ideological purposes. The existing social order continues to hold the reins of power, but their grip is growing precarious. The anger, dismay and resentment in the country simmer beneath the surface. The average person senses that all is not well, but most absurdly continue to believe the lies and propaganda spewed at them on a daily basis by the ruling class and their corporate media pawns. When the next shoe drops and billions of stock market and housing wealth are wiped out again, the national anger will sweep away the corrupt social order in a torrent of blood and retribution. Innocent and guilty alike will suffer the consequences. Michael Lewis is somewhat perplexed by the lack of outrage and violence so far.

“A lot has happened. And yet, given the provocation, it’s amazing how little has happened. No one on Wall Street has been shot, or even jailed – and the existing social order has not been seriously challenged. There’s a reason for this, too. The anger arising from the financial crisis finds no natural channel. In another era – an era before catastrophic experiments with radical socialism and nationalism – we would be watching market capitalism being displaced by something far uglier. But today there is no natural place for anger to flow, and so the anger flows haphazardly, like raindrops down a windowpane. The only political ideology that anger benefits these days is anarchy. From the point of view of those who enjoy political stability, it’s a stroke of luck that anarchists have no natural talent for organizing themselves. But how long will it take them to learn?” – Michael Lewis – Boomerang

Staying sane in a society gone mad is not easy. Millions of people believe themselves to be sane, but they have really just adapted to an insane society, so they appear sane within the warped paradigm of that insane society. The truly sane people appear to be insane in an insane society. It’s enough to drive a man crazy. The immense forces of normalcy bias and social inertia have led millions to refuse to understand the mathematical certainty of the coming collapse. The worldwide banking system is like a great white shark that needs to keep moving or it dies. Exponential growth and continuous credit expansion have been the essential ingredients to expanding the American empire, but the growth has stopped, while the debt keeps growing. Infinite growth on a finite planet is impossible. As natural resources deplete and become more expensive to obtain, while the planet’s population continues to grow, the fractional reserve banking system and the nation states who continue to pile up trillions in debt will suddenly suffer a catastrophic collapse. We are in the end stages of a confidence game. Your government will not give you warning. We need to come to our senses one by one, until there are enough sane people to tip the scales in our favor. I’ve concluded that I live in a dishonest, insane, intolerable world and consider it my duty to spread discontent among those I can reach. I’m a dangerous man in the eyes of our corporate fascist surveillance state. So be it.

“The most dangerous man, to any government, is the man who is able to think things out for himself without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is apt to spread discontent among those who are.” – H.L. Mencken

In Part 2 of this article I will attempt to figure out why mass insanity has gripped the world and ponder what might happen when sanity returns.

AND THE BAND PLAYED ON

A confluence of events last week has me reminiscing about the days gone by and apprehensive about the future. I’ve spent a substantial portion of my adulthood rushing to baseball fields, hockey rinks, gymnasiums, and school auditoriums after a long day at work. I’d be lying if I said I enjoyed every moment. Watching eight year olds trying to throw a strike for two hours can become excruciatingly mind-numbing. But, the years of baseball, hockey, basketball, and band taught my boys life lessons about teamwork, sportsmanship, winning, losing, hard work, and having fun. There were championship teams, awful teams and of course trophies for finishing in 7^th place. As my boys have gotten older and no longer participate in organized sports, the time commitment has dropped considerably. Last week was one of those few occasions where I had to rush home from work, wolf down a slice of pizza and head out to a school function. It was the annual 8^th grade Spring concert.

My youngest son was one of a hundred kids in the 8^th grade choir. I think it was mandatory, since none of my kids like to sing. As my wife and I found a seat in the back of the auditorium where we could make a quick escape at the conclusion of the show, neither of us were enthused with the prospect of spending the next ninety minutes listening to off-key music and lame songs. I’ve been jaded by sitting through these ordeals since pre-school. But a funny thing happened during my 30^th band concert. I began to feel sentimental about the past and sorrowful about the future for these Millennials.

The Millennial generation was born between 1982 and 2004. Therefore, they range in age from 9 years old to 31 years old. There are approximately 87 million of them, or 27.5% of the U.S. population. In comparison, the much ballyhooed Boomer generation only has 65 million cohorts remaining on this earth. The Millennials will have a much greater influence on the direction of this country over the next fifteen years than the currently in control Boomers. There has been abundant scorn heaped upon this young generation by their elders. In a fit of irrationality befit the arrogant, hubristic, delusional elder generations, they somehow blame a cohort in which 54 million of them are still younger than 21 years old for many of the ills afflicting our society. This disgusting display of hubris is par for the course among these delusional elders.

Are Millennials addicted to their iGadgets, cell phones and Facebook pages? Probably. Do they spend too much time on the internet and playing PS3 & Xbox? Certainly. Have they been indoctrinated in social engineering gibberish like diversity and planet worship by government run public school bureaucrats? Absolutely. Are they young, foolish, immature, irrational and not respectful towards their elders? You betcha. Teenagers have acted like this forever. You acted like that. The ongoing crisis in this country and our unsustainable economic system are in no way the result of anything perpetrated by the Millennial generation.

Can the Millennial generation be blamed for the $17 trillion national debt, $222 trillion of unfunded un-payable social obligations promised by corrupt politicians, $1 trillion of annual deficits, undeclared wars being waged across the globe on behalf of the military industrial complex arms dealer mega-corporations, economic policies that have resulted in 48 million people dependent on food stamps, tax policies that enrich those who write the code, trade policies that benefit corporations who gutted the industrial base and shipped jobs overseas to slave labor factories, or monetary policies that have destroyed 96% of the dollar’s purchasing power? They had no say in the creation of our untenable welfare/warfare state.

There are no Millennials among the 535 corrupt bought off politicians slithering down the halls of Congress. There are no Millennials running the Too Big To Control Wall Street banks. There are no Millennials in charge of the mega-corporations that buy and sell our politicians. There are no Millennials at the upper echelon of the Military Industrial Complex or in the upper ranks of the U.S. Military. But, and this is a big but, they have done most of the dying in the Middle East over the last ten years in our multiple undeclared preemptive wars of aggression. They have died under the false pretenses of a War on Terror, when they are truly dying on behalf of the crony capitalists who profit from never ending war. They have been fighting and dying to protect “our oil” that happens to be under “their sand”. If the energy independence storyline was true, why is our military perpetually at war in the Middle East?

The Millennials will also be required to do the heavy lifting over the next fifteen years of this Fourth Turning Crisis. The Silent Generation is dying off rapidly. The Boomer generation has done some hard living and some hefty eating and with the oldest of their cohort hitting 70 years old, their supremacy will begin to diminish over the coming fifteen years. At 87 million strong, and millions yet to reach voting age, the Millennials will become more influential by the day regarding the future course of this nation. The question is what will be left of this country by the time they assume control. They are saddled with $1 trillion of student loan debt, peddled to them by the government and Wall Street with the false promise of good paying jobs and the opportunity for a better life than their parents lived. They have obediently followed the path laid out by their elders, but they have been badly misled. This American dream has been shattered upon an iceberg of debt, delusion, deception and denial. The unsinkable American empire’s hubris and arrogance are leading to its demise. The Millennials are coming of age during a Crisis that will reach momentous magnitudes over the next fifteen years, and they had nothing to do with creating the circumstances which will propel the chaos and anarchy that ensues. But, they will bear the brunt of the dreadful consequences.

Generational Bridge

“The Boomers’ old age will loom, exposing the thinness in private savings and the unsustainability of public promises. The 13ers will reach their make or break peak earning years, realizing at last that they can’t all be lucky exceptions to their stagnating average income. Millennials will come of age facing debts, tax burdens, and two tier wage structures that older generations will now declare intolerable.” – Strauss & Howe – The Fourth Turning

The kids on the stage at the 8^th grade Spring concert were all around 14 years old. They are unaware they are in the midst of a twenty year period of Crisis. The boys are at that gawky looking stage with pimply faces and gawky limbs. The girls mature quicker than the boys at that age. These youngsters have barely begun their lives. I was amazed at their proficiency with a wide variety of musical instruments. They displayed poise and talent. The soloists exhibited composure well beyond their years. The performers were all musically endowed and proved that hard work and practice pays off. They were clearly enjoying themselves. They were all dressed in their Sunday best. I found myself enjoying the show despite my jaded attitude upon entering the auditorium. Even my son, wearing one of my ties, actually appeared to be singing during the choir performance. What I saw were hundreds of bright eyed Millennials with their hopes and dreams for a bright future intact. They have no idea what trials and tribulations await them.

I reached a milestone on the age chart last week that had me ruminating about yesteryear and contemplating the future. I reached the half century mark. Birthdays generally do not faze me, but the intersection of the 8^th grade concert and my landmark birthday had me pondering my purpose for inhabiting this world. I’ve likely realized two-thirds of my life. The final third of my life will be spent trying to maneuver through the minefields of this Fourth Turning. I’m a father to three Millennial boys. I consider it my duty to defend and support them during this Crisis. Strauss & Howe wrote their book in 1997 and predicted a Great Devaluation in the financial markets around the time Millennials were entering their twenties. This Crisis began in September 2008 with the worldwide financial collapse created by Wall Street “Greed is Good” Boomers, as the oldest Millennials entered their twenties. It continues to worsen as more Millennials approach their twenties. We’ve reached a point in history when the elder generations need to sacrifice in order to insure younger generations have a chance at some form of the American dream.

I believe each generation has an obligation to future generations. We are bridge between preceding generations and future generations. We have a civic obligation to manage the resources of the country in a prudent manner. It’s our duty to leave the country in a financially viable condition so younger generations have an opportunity to live a better life than their parents. Every generation that preceded the Millennials has achieved the goal of having a better standard of living than their parents. I don’t believe my boys will enjoy a better life than I’ve lived. We’ve lived well beyond our means for decades. Government, Wall Street banks, corporations and individuals have run up a $56 trillion tab and are sticking the Millennials with the bill.

The $17 trillion national debt accumulated by elder generations to benefit themselves and $222 trillion of unfunded entitlements promised to themselves is nothing but generational theft. It’s immoral and possibly the most selfish act in human history. I’m ashamed that my generation and older generations have committed this criminal act of theft. Deficit spending today with no intention of repaying that debt is a tax on future generations. This egotistical abuse of power by the current and past regimes must be reversed voluntarily or it will be done by force. I’m 50 years old and will dedicating my remaining time on this earth fighting to create a sustainable future for my kids and their kids. The lucky among us get eighty years on this planet to make a difference. When did the definition of success become dying with the most toys and spending your life screwing your fellow man by accumulating obscene levels of wealth at their expense? If Boomers and Generation X have any sense of guilt about what they have done, they would be willingly offering to sacrifice their ill-gotten entitlements.

Not only are those currently in power not proposing to scale back their spending, debt accumulation, or entitlement transfers, but they have accelerated the pace of each in the last five years. An already unsustainable corrupted economic structure is being driven towards collapse by psychopathic central bankers and cowardly captured politicians. These are acts of treason against the youth of this country and larceny on a grand scale. It will lead to generational warfare and these crooks will pay for their transgressions. Strauss & Howe suspected in 1997 the elders might cling to their illicit profits acquired at the expense of the Millennials:

“When young adults encounter leaders who cling to the old regime (and who keep propping up senior benefit programs that will by then be busting the budget), they will not tune out, 13er – style. Instead, they will get busy working to defeat or overcome their adversaries. Their success will lead some older critics to perceive real danger in a rising generation perceived as capable but naïve.” – Strauss & Howe – The Fourth Turning

The elders who represent the status quo do perceive real danger in the rising Millennial generation. The initial skirmishes occurred in the midst of the Occupy protests. The young protestors initially focused on the true culprits in the crashing of the financial system and vaporizing of the net worth of millions – Wall Street bankers and their sugar daddy at the Federal Reserve. In a display of status quo bipartisanship you had liberal Democrat mayors in cities across the country call out their armed thugs to beat the millennial protestors into submission while being cheered on by Fox News and the neo-cons.

The existing status quo regime provides the illusion of choice, but both political parties are interchangeable in their desire to control our lives, flex our military might around the globe, indebt future generations and write laws to favor their corporate and banking masters. The establishment is showing contempt for the futures of our youth. Their solutions to the criminally created financial crisis have been to reward reckless debtors and bankers at the expense of future generations. Their doling out of hundreds of billions in student loan debt and artificial propping up of home prices has effectively made it impossible for millions of young people to get their lives started. Boomers have done such a poor job saving for their retirements they are unable to leave the workforce. Since January 2009, despite adding $400 billion of student loan debt, Millennials have a net loss in jobs, while the Boomers have taken 4 million jobs.

Strauss & Howe anticipated that older people would be anguished to see good kids suffer for the mistakes they had made. They thought the elders couldn’t possibly be shallow enough, selfish enough, or immoral enough to deny the Millennial generation a chance at the American Dream. They were wrong. The old regime has no plans to step aside or sacrifice on behalf of younger generations. The implications of this resistance will be dire.

“The youthful hunger for social discipline and centralized authority could lead Millennial youth brigades to lend mass to dangerous demagogues. The risk of class warfare will be especially grave if the 20% of Millennials who were poor as children (50% in inner cities) come of age seeing their peer-bonded paths to generational progress blocked by elder inertia.” – Strauss & Howe – The Fourth Turning

The social mood in this country continues to deteriorate as the sociopathic financial elite accelerate their pillaging of the working middle class, steal money from senior citizens through zero interest rate inflationary policies, and enslave our youth in the chains of crushing debt and promise of dead end jobs. When the next leg down in this ongoing depression strikes like an F5 tornado, the simmering anger in this country will explode in a chaotic frenzy of violence and retribution. The chances of class and generational warfare have increased exponentially due to the actions of the elderly regime over the last five years.

Generational Sacrifice

“You got your whole life ahead of you, but for me, I finish things.” – Walt Kowalski – Gran Torino

A couple days after the Spring concert I was flipping through the 650 channels on my TV with nothing worth watching when I stumbled across the 2008 Clint Eastwood movie Gran Torino. This was the third episode within the week that had me thinking about the future of my kids. It was his highest grossing film in history. Eastwood played a bigoted tough guy Korean War veteran whose Detroit suburban neighborhood had deteriorated into a dangerous gang infested Asian war zone. The movie did not follow the standard Eastwood plot where he kills dozens of bad guys. He grudgingly befriends two young Millennial teenage Laos refugees who live next door. He had lost his wife of 50 years. He was in his 70s and dying from some undiagnosed illness. I viewed the movie as an allegory for the generational sacrifice that should be taking place now.

Eastwood’s character, Walt Kowlaski, decided to finish things his way. He realized the two Millennials would never find peace or have a chance at a better life until the criminal gang running the show in the neighborhood were confronted and defeated. He knew he was too old to kill six gang members singlehandedly, so he made a choice to sacrifice himself and be gunned down in cold blood in front of multiple witnesses so the perpetrators would go to jail and allow his Millennial companions to have a chance at a better life. He sacrificed his life for the good of young people who weren’t even related to him. This message has not connected with the elder generations who control the purse strings and political system in this country. The media propaganda machine supporting the existing regime continues to peddle a storyline that debt doesn’t matter, consumption is good, saving is for suckers, and passing the bill for unfunded entitlements to future generations is not immoral and cowardly. Walt Kowalski displayed courage, bravery, and valor that is sorely lacking in the elderly generations today.

At the age of 50 I have a choice with my remaining 20 or 30 years. I can choose to keep accumulating material goods with debt, voting for politicians who promise never to cut my entitlements, believing deficits growing to infinity are beneficial to the economic health of the nation, supporting the military industrial complex as they wage undeclared wars across the world, applauding the Orwellian fascist surveillance measures instituted to give the illusion of safety while sacrificing freedoms and liberties and selfishly looking out for my best interests. Or I can stand up to the corporate fascist old boy regime and lure them into a violent response that will ultimately lead to their downfall. I’m willing to sacrifice what is supposedly “owed” to me on behalf of my kids and all Millennials. They don’t deserve to start life in a $200 trillion hole created by their parents and grandparents. It is disconcerting to me that more Boomer and Generation X parents are unprepared, unwilling or too willfully ignorant to forfeit entitlements awarded them under false pretenses in order to preserve a decent standard of living for their children and grandchildren. The Bernaysian propaganda programmed into their brains over decades by the sociopathic central planning status quo has created this inertia.

The inertia will be replaced by frenzied activity when this unsustainable system ultimately fails. Time seems to be standing still. People have been lulled into a false sense of security even though history is about to fling us into a chaotic transformational period in history. How do I know this is going to happen? Because it happens every eighty years like clockwork. The best laid plans of the men running the show will be swept away in a whirl of pandemonium, violence, war and reckoning for sins committed against humanity. There will be no escape.

“Don’t think you can escape the Fourth Turning the way you might today distance yourself from news, national politics, or even taxes you don’t feel like paying. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted. The Fourth Turning necessitates the death and rebirth of the social order. It is the ultimate rite of passage for an entire people, requiring a luminal state of sheer chaos whose nature and duration no one can predict in advance. The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.” – Strauss & Howe – The Fourth Turning

Our country has entered a period of Crisis. We may or may not successfully navigate our way through the visible icebergs and more dangerous icebergs just below the surface. The similarities between the course of our country and the maiden voyage of the Titanic are eerily allegorical.

The owners of the ship (Wall Street, Washington politicians, crony capitalists) are arrogant and reckless. They declare the ship unsinkable, while only providing half the lifeboats needed to save all the passengers in case of disaster in order to maximize their profits. The captain (Ben Bernanke) has been tendered the greatest cruise liner (United States) in history. The initial voyage across the Atlantic Ocean has drawn the financial elite ruling class (financers & bankers) onboard, occupying the luxurious state rooms on the upper decks. But, the lower decks are filled with young poor peasants (Millennials) who are sneered at and ridiculed by those in the upper decks. A maiden voyage should always be approached cautiously. A prudent captain would not take undue risks.

Our captain (Ben Bernanke) wants to make his mark on history. He considers himself an expert in navigating dangerous waters (Great Depression) because he studied dangerous waters at his Ivy League school. It doesn’t matter that he never actually captained a ship in the real world. He declares full steam ahead (reducing interest rates to 0% and throwing vast amounts of fiat currency into the engine room boilers). Midway through the voyage, the captain is handed a telegram warning of icebergs (potential financial catastrophe) ahead. If he slows down the vessel, he will not set the speed record and receive the accolades of an adoring public. He ignores the warning and steams on to his rendezvous (eternal disgrace) with destiny.

In the middle of the night, the lookouts (Ron Paul, John Hussman, Zero Hedge) cry iceberg!! But, it is too late. The great ship (United States) has struck an enormous iceberg (debt & currency crisis). At first, it seems like everything will be OK. The captain and crew assure the passengers that everything is under control and their evasive action has saved the ship. But below the waterline, the great ship (United States) is taking on water (toxic levels of debt, un-payable entitlement promises, trillion dollar deficits, political & financial corruption). The engine room (Federal Reserve) works frantically to alleviate the damage (QE to infinity). The captain is sure the compartmentalization of the ship will save it. One of the designers of the ship (David Stockman) sadly declares that the ship will surely sink. The captain orders the band (CNBC, Fox, MSNBC, CNN) on deck to distract the passengers from their impending fate with soothing music. The owners of the ship (Wall Street, Washington politicians, crony capitalists) aren’t worried. They collected their fees upfront and over-insured the vessel. They anticipate a windfall when the ship sinks. It worked last time.

To avoid mass panic, the crew (government apparatchiks) has locked the youthful poor peasants (Millennials) below deck. The captain and his crew are content to let them go down with the ship. They’ve decided the women, children, and senior citizens (Middle Class) can also be sacrificed. The financial elite ruling class (financers and bankers) are piling into the boats with the ship’s jewels, escaping the fate of the peasants. The captain (Ben Bernanke) has no intention of going down with the ship. In a cowardly act, he leaps onto the 1st lifeboat to be launched. We are on a voyage of the damned. The great cruise liner (United States) has a fatal wound and is headed for a watery grave. Are we going to let the owners, captain and crew dictate who will be saved in the few lifeboats or will we rise up and throw these guilty parties overboard?

It comes down to the abuse of power by a few evil men and their henchmen as they have centralized their control over our financial, political, economic and social institutions. The existing social order is an ancient, rotting, fetid swamp of parasites that will be drained during this Fourth Turning. The Millennials are rising and will be the spearhead of the coming revolution. As each day passes they will become a more powerful force and the power of the existing regime will wane. Meanwhile, the band will play on as the ship of state descends into the abyss.

U.S. ENERGY INDEPENDENCE

Listening to the two clowns running for President discussing energy policy is like listening to those babies on the internet babbling jibberish as if it means something. One clown babbles about renewable energy and green jobs. The other clown babbles about drill, drill, drill and 100 years of supply under our feet. These two lying sacks of shit are telling the American public that America can and will be energy independent any day now. You see stories in the MSM that we have become a net exporter of “petroleum products”. The clueless masses thinks this means we have an excess supply of oil. What it means is that our economy is so bad, we have gasoline left over to sell other countries because we don’t have enough business to generate demand in this country.

The fact is that the United States uses 18 million barrels of oil per day. We import 10 million barrels of oil per day. We export 2 million barrels of petroleum products per day. We extract 5.7 million barrels per day from our soil. Do these facts support the idea of energy independence in the near future? Ever?

Is fracking going to save the day? When was the last time you filled up your tank with shale natural gas? How will our glut of shale gas save us? I haven’t seen the plans for converting gas stations and vehicles to natural gas. Have you? Obama wants you to plug your cars into an outlet and use coal to power your cars. The 2,000 Chevy Volts that Government Motors has sold this year will surely save the country from Big oil.

The dishonesty and lies spewed by both parties regarding U.S. energy independence benefits no one. An honest discussion about the implications to our society of much more expensive energy is too much to ask in the land of delusion.

DON’T WORRY, DRIVE ON: Fossil Fools & Fracking Lies from MONSTRO on Vimeo.

From both political parties come cliches on energy policy

Monday, September 24,2012

We’ve heard it all before. Over and over for most of the last 40 years.

From politicians of both parties, cliches and nonsense on energy. Take the biggest cliche of all: U.S. energy independence. The candidates are all for it. Mitt Romney says he’ll make us independent by 2020, conveniently at the end of his second term. President Barack Obama says the route to energy independence is an “all-of-the-above” strategy and a “doubling-down” on renewables, especially if, as Obama has argued at various times, we have “Apollo” programs for new energy technologies.

These pronouncements are imprecise to the point of being meaningless.

Virtually any policy could be attached to the slogans, and their interminable restatement seems mainly an effort to produce a few uplifting sound bites on the evening news.

So Romney and his running mate, Paul Ryan, R-Wis., are for U.S. energy independence.

How original! This has been proposed by, well, just about every politician since Richard Nixon. He came up with the idea in 1973 (to be achieved by 1980). Romney’s only innovation is an eight-year time frame and he has called for “North American energy independence,” to include Canada and Mexico, both major energy exporters. Nixon wanted independence in seven years, but since Gerald Ford, the standard energy independence time frame has been 10 years. When Ford’s aides first looked into the matter, they felt their first goal was to redefine “independence” and their second was to redefine “10 years.”

The pained effort to define energy independence has been ongoing. In the 1970s Nixon’s (and Gerald Ford’s) Treasury Secretary William Simon thought energy independence meant having diversified sources of oil supply. By that definition we’ve been energy independent for about 25 years.

I have no idea what Romney means by it, especially since he seems to want us to only be independent of such countries as Venezuela (at least under Hugo Chavez) and of the Middle East.

Of course, the simplest definition is one Nixon first used: We would only use energy supplies produced in and by the U.S. This is possible; we could forbid imported energy supplies. Period.

It would also be almost unspeakably stupid. It would mean, for example, if world energy prices were low, we would forcibly lower our standard of living and put American firms at a great competitive disadvantage by choosing expensive energy over cheaper. No doubt other nations would send us a “thank you.” Complete energy self-sufficiency was tried in Romania under the Communist dictator Nicolae Ceausescu.

Ask any Romanian who lived through that time how well the experiment worked out; you won’t get a recommendation.

A few politicians and pundits argue that our engagement in the global energy market does cost us. That is why we went to war, in 1991, most notably. But does anyone seriously believe the U.S. (the world’s only military superpower) would just stand aside while the global economy fell to pieces because of a major disruption of the oil market?

Of course, Obama also touts energy independence on his campaign website along with a few new imprecise energy slogans.

“All-of-the-above,” for example, could mean “anything-I-like-to the extent-I-like it.” “Doubling-down” could mean spending twice as much money as we already have or just reinforcing some nebulous commitment with twice as much rhetoric, uttered twice as loudly.

Obama also has the burden of having spent billions of taxpayer dollars already on his fantasies of renewable energy “Apollo” programs, programs that were supposed to create millions of “green jobs.” Like energy independence, as studies have shown, it’s unclear just what constitutes a green job.

What is really unfortunate about the president’s policies is that he could actually do some good on the energy front by ordering the Environmental Protection Agency to suspend the pernicious Renewable Fuel Standard — a.k.a. the ethanol mandate. He could even blame George W. Bush since the 2007 ethanol bill was one Bush strongly endorsed.

Then again so did Sen. Barack Obama and many other Democrats in Congress.

Of course, that bill had a lofty goal beyond ethanol: As House Speaker Nancy Pelosi described it, this was the U.S. “energy independence day” bill.

And who opposes that?
Peter Z. Grossman is a professor of economics at Butler University in Indianapolis and the author of “U.S. Energy Policy and the Pursuit of Failure.”

TORA TORA TORA

In case you hadn’t noticed, this Fourth Turning just happened to turn up a few notches on the intensity scale in the last week. For those who are hoping for a positive outcome and rational people to come to their senses – So Solly. Fourth Turnings are a bitch.

Meanwhile In Beijing: “For The Respect Of The Motherland, We Must Go To War With Japan”

Submitted by Tyler Durdenon 09/15/2012 12:23 -0400

Anti-US protests sweeping across the entire Muslim world (which are continuing today), besieging, attacking and burning down US embassies, are not the only thing that the central banker policy vehicle known as “the markets” have to ignore in the coming days and weeks. Cause here comes China: “Thousands besiege Japan’s embassy in Beijing over Tokyo’s assertion of control over disputed islands in East China Sea.” And China is not happy: “For The Respect Of The Motherland, We Must Go To War With Japan.” Sure enough, where would the US be if the focal point of this escalation in militant anger – the Senkaku Islands – was not merely the latest expression of Pax Americana, and America’s national interests abroad.

We already discussed the inevitable implications of the meaningless populist agitation over the contested Senkaku Islands. Here it is playing out in real time:

Protests in China are growing over Japan’s assertion of control of disputed islands.

Thousands of Chinese besieged the Japanese embassy in Beijing on Saturday, hurling rocks, eggs and bottles with protests reported in other major cities over the territorial dispute in the East China Sea.

Paramilitary police with shields and batons barricaded the embassy, holding back and occasionally fighting with slogan-chanting, flag-waving protesters who at times appeared to be trying to storm the building.

“Return our islands! Japanese devils get out!” some shouted.

One of them held up a sign reading: “For the respect of the motherland, we must go to war with Japan.”

The protests were not confined in Beijing. In Shanghai, streets around the Japanese consulate, in the were cordoned off on Saturday even as hundreds of police allowed a small groups of people in at a time to protest.

“The Chinese government has not done much to quell the inflamed passions of its citizens,” Al Jazeera’s Marga Ortigas reported from Hong Kong on Saturday.

Protesters are also calling for a widespread boycott against Japanese businesses and products.

Liu Gang, a migrant worker from the southern region of Guangxi, said: “We hate Japan. We’ve always hated Japan. Japan invaded China and killed a lot of Chinese. We will never forget.”

Japanese media are also reporting that large anti-Japan protests were held in the Chinese cities of Xian, Changsha, Nanjing and Suzhou.

Kyodo news agency said protesters attacked a dozen Japanese restaurants in Suzhou.

Sino-Japanese ties have long been plagued by China’s bitter memories of Japan’s military aggression in the 1930s and 1940s and present rivalry over resources and regional clout.

Relations between the two countries, whose business and trade ties have blossomed in recent years, chilled in 2010, after Japan arrested a Chinese trawler captain whose boat collided with Japanese Coast Guard vessels near the Japanese-controlled islands of Senkaku, called Diaoyu in China.

Anti-Japanese sentiment surfaced anew in the last few weeks after the Japanese government purchased the islands from their private owners.

Though Japan has controlled the islands for decades, China saw the purchase as further proof of Tokyo’s refusal to negotiate.

In response to Japan’s purchase, China on Friday sent six surveillance ships into what Japan says are its territorial waters.

And that’s how “escalation” always begins.

MUCK ALERT

Who the fuck knows? I certainly don’t. Maybe Muck can check with his sources and give us the answer. I can’t imagine that Obama would be supportive of oil prices going up to $150 a barrel just before the election. Is Netanyahu that crazy? He strikes me as a prick, but not crazy.

Netanyahu ‘Determined to Attack Iran’ Before U.S. Elections, Israeli News Says

Posted on Aug 25, 2012

Abode of Chaos (CC BY 2.0)

Israel’s Channel 10 reported this week that Israeli Prime Minister Benjamin Netanyahu “is determined to attack Iran before the U.S. elections” and that Israel is now “closer than ever” to a military strike intended to foil Iran’s nuclear ambitions.

The station’s military reporter said Netanyahu was unlikely to wait for a potential meeting with President Barack Obama in late September. “I doubt Obama could say anything that would convince Netanyahu to delay a possible attack,” the reporter added, before saying that Netanyahu and Israel’s defense minister believe Obama would be pressured to support an attack given the U.S. presidential elections in November.

Ex-CIA analyst Ray McGovern earlier stressed the possibility of such an attack.

—Posted by Alexander Reed Kelly. Follow him on Twitter: @areedkelly.

The Times of Israel:

The TV station’s military reporter Alon Ben-David, who earlier this year was given extensive access to the Israel Air Force as it trained for a possible attack, reported that, since upgraded sanctions against Iran have failed to force a suspension of the Iranian nuclear program in the past two months, “from the prime minister’s point of view, the time for action is getting ever closer.”

Asked by the news anchor in the Hebrew-language TV report how close Israel now was to “a decision and perhaps an attack,” Ben-David said: “It appears that we are closer than ever.”

Read more

DOUG CASEY DOES SELF IMMOLATION & OIL

Doug should have been reading TBP and he would have known about Thomas Ball the day after it happened. He has the same questions I had. Why was this story completely ignored by the MSM. This convinced me once and for all that the corporate MSM is in bed with the government and will report whatever they are told to report and coverup what they are told to coverup. It is up to sites like ours to report the truth.

Doug also agrees that oil prices are headed to $200 a barrel. I disagree with his unconcern with fracking. He assumes that corporations will do the right thing, follow proper safety guidelines, and be good corporate citizens. That is ridiculous. They only care about short term profits and will use their armies of lawyers to fight legitimate claims by the poor people being victimized by their greed and incompetence.

Doug Casey on Self Immolation – Individual and National

(Interviewed by Louis James, Editor, International Speculator)

L: Labas, “Dougas,” as we might say in Lithuania — sure is beautiful here! It’s 11:30 p.m. and the sun is below the horizon, but the sky is still smoldering. Where are you, and what’s on your mind this week?

Doug: It’s afternoon here in Aspen, a nice little communist town in the Rockies. From here the world seems to be turning as usual, but that’s only because the place is full of people who are so rich that they’re largely insulated from the real world, as are the parasites who live off them. We’ll have to talk about the politics and sociology of Aspen sometime. But out in the real world, the engines are grinding toward a halt on the American Titanic – but it’s still moving, so everyone thinks everything is fine. There are signs that the 2008 iceberg was bigger than the crew is telling us, however, for anyone paying attention. Did you hear about that man who set himself on fire in front of a courthouse in New Hampshire?

L: I did, but only through email from friends.

Doug: Yes, the same with me; we have the same friends. It’s truly shocking that a story like this got absolutely zero major media coverage, even though it went out on AP. In Tunisia, a fruit and vegetable street vendor sets himself on fire to protest his government making his life impossible, and it sparks a revolution that doesn’t even stop at his country’s borders. Something similar happens in the U.S. and no one even hears about it… at least not this time. In February 2010 there was a guy who crashed his plane into an IRS office: That did make the national news. But perhaps since then the word has gone out that these things shouldn’t be reported for fear of encouraging others, “national security,” or whatnot.

L: Thomas Ball wasn’t a fruit vendor, but a divorced man who apparently felt that the court system had put him in an impossible situation. [Editor’s note: Ball’s last statement is available online, subscription required.] I’m not a conspiracy theorist, but it defies belief that every single major news editor across the country decided on his own that such a striking story wasn’t news.

Doug: I know. Not a lot surprises me anymore, but this truly is shocking. In my entire life I can only remember two previous instances of self-immolation. The first was that of Buddhist monks during the Vietnam war. I didn’t know what to make of it at the time, but it sure caught everyone’s attention.

L: Why did they do it? U.S. troops on the temple steps?

Doug: No, they were protesting the rule of Ngo Diem in the south, who was Catholic and giving them a hard time. The U.S., of course, was supporting the terminally corrupt Diem regime. When, I’d like to know, has the U.S. ever supported anybody but the worst criminal available in Third-World countries? The second instance was the one in Tunisia earlier this year that touched off the Arab Spring – which is far from over, by the way. Thomas Ball is the first case of it in U.S. history – first one I’ve ever heard of, at any rate – and it received no press whatsoever, outside of acknowledgement in the local papers. The Internet picked it up, of course, but to me it seems extraordinarily serious that an event like this can transpire and not even get noticed. Instead, the headlines were dedicated to such urgent matters as that stupid congresscreature, Weiner.

L: So, are you saying that the powers that be censored the story?

Doug: If they didn’t, it’s certainly further proof of how degraded society has become in the U.S. that something like this could go unnoticed. It’s appalling – disgusting, actually. And scary, on a couple of levels.

But get this: When I was in Dubai a couple of weeks ago, a guide I’d hired to show me around had heard of the event. It was big news there that everyone heard about – it was in all the papers. So you could make the argument that the average Arab may know more about what’s happening in the U.S. than the average American does. That’s a turnaround…

L: What were you doing in Dubai?

Doug: It had been a while, and I wanted to see how things had changed since the crisis. I also went to Israel, Egypt, and Lebanon. I’ll have some articles on my findings in the Middle East in the next few issues of The Casey Report. Obviously, the area being prime oil hunting ground, I was thinking about energy-related speculations a great deal. In practical terms, energy really means oil, coal, gas, and nuclear – green energy is nice, but hydrocarbons and nuclear are the only forms of mass power that can satisfy any need, anywhere, anytime. Most particularly oil. Developments in oil affect the Middle East, and developments in the Middle East affect oil.

L: Hm. Speaking of nuclear, we haven’t talked about that since our conversation on Fukushima, and there’s been time for new market trends to become visible. What do you think?

Doug: Well, as we speak, I see that the price of uranium is $54.25 per pound. It was about $70 before Fukushima, dropped to about this level, bounced back to the high $50s, and is now fluctuating in the low $50s, so it’s definitely cheaper than it was before. But it was over $140 a pound in 2007, so it’s much cheaper than it has already been in this cycle. On the other hand, it’s still roughly six times what it was at the end of the 1990s, when it bottomed around $9. That’s pretty good performance for a commodity. Still, I’ve got to say that I think it has a lot of upside yet ahead – although keeping track of prices in dollar terms is becoming ever more tricky, as the dollar itself fluctuates wildly – mostly down – and the official CPI statistics become ever more unreliable.

The reason I’m still bullish on uranium is because, as we said before – and Fukushima notwithstanding – nuclear power is still the cleanest, safest, and cheapest type of mass power generation available. I find it quite ludicrous that the Germans have announced that they will phase out all of their nuclear plants over the next decade. Where are they going to get the power to replace the approximately 22% they get from nuclear now? Windmills aren’t going to do it. Solar doesn’t have a prayer in northern Europe. Are they going to burn more coal? That’d be great for their environment.

L: Aside from pumping sulfur into the air, coal plants emit C-14 too, and that’s radioactive. Nukes emit less. Maybe they plan to wear thicker coats and eat more cold food?

Doug: There’s a lot of radioactive material released from burning coal, including uranium. Geothermal would be nice, but Germany is not Iceland. Maybe they think they can burn more natural gas, but that’s a greenhouse issue – although the whole greenhouse gas/global warming hysteria has always impressed me as something in between a political scam, a fraud, and a new age religion. But we covered that in a prior conversation; no need to beat a dead horse. Anyway, it seems to me that the global warming hysteria actually peaked a few years ago, and will soon be just another idiotic embarrassment everyone will be anxious to forget. Especially when another hysteria catches their attention.

L: The Russians would love to see the Germans burning more natural gas.

Doug: Of course. And they wouldn’t be shy about demanding political concessions as well as higher prices when they can shut off the pipelines to Europe in the middle of the winter. The Germans will get what they deserve. But then, most everybody eventually does. I’ve got no sympathy for them; stupidity is its own reward.

L: That would literally be a cold war. No need for ballistic missiles. Looks like national self-immolation on the part of the Germans.

Doug: Right – the German reaction is clearly political grandstanding pandering to hysteria. I wouldn’t count on the policy ever being carried through to completion, and wouldn’t be the least bit surprised to see it reversed after the first winter when there’s not enough power to go around. They really have no other practical alternative… though they might try to finesse it by importing electricity from France, which produces over 75% of its power from nukes.

Meanwhile, that hysteria is certainly going to slow down nuclear power in the U.S., but as we said in our conversation after the disaster in Japan, world demographic trends leave no choice but to employ more nuclear power. That makes the current relatively low prices an opportunity.

L: In that context, we should probably mention that there was a flood in the U.S. midwest, and the Fort Calhoun nuclear power plant in Nebraska was flooded. A dike surrounding the plant was even breached, but there appears to be no sign of danger yet. Granted, the plant was shut down for maintenance at the time of the flood, but still, the thing seems to be taking the abuse as designed.

Doug: That’s right, and it bears reiterating that at this point, all of these operating plants are basically 40-year-old technology. Because of the hysteria and resultant government regulations, newer, better, and even safer designs have not been implemented. Almost all the reactors in use today are what are known as “Generation 2.” But there are probably two dozen Gen 3 and 3+ designs that could be deployed; and in a few years there will be Gen 4 units available. Some of these designs are extraordinary – from 10-50 megawatts, self-contained, with almost no moving parts, extremely small, low cost, and capable of being buried for a decade, until they need refueling.

L: So, buy uranium and uranium exploration stocks?

Doug: That’s one way to play it, and we do have a lot of exposure to uranium’s upside in our portfolio. Another, more ground-floor way to play it might be to look into thorium plays. As I understand it, thorium – element 90 on the periodic table – is actually better for power generation than uranium or plutonium. Nuclear scientists originally proposed it for power generation, but governments opted for uranium because it coincided with their weapons programs. As usual, government interference takes us down the wrong path.

L: [Chuckles] As usual. So, there’s an opportunity to invest in nuclear while it’s unpopular, and while it’s unpopular, that’s bullish for hydrocarbons.

Doug: Right. I subscribe to the peak oil theory. By that I do not mean that the world is running out of oil, but that the easy availability of conventional sweet, light crude is in decline. There’s plenty more oil to be found, but it’s a more expensive to process, heavy oil. Or it’s shale oil, or comes from tar sands, or it’s deep under the ocean, which has its own environmental issues and is neither cheap nor easy to produce.

Peak oil is a geological concept. It basically holds that all the low-hanging fruit has been picked. Now, philosophically, it rubs me the wrong way, in that I have total confidence that human ingenuity will find scores of ways to produce new hydrocarbon fuels – and lots of totally new energy sources in addition. Furthermore, the higher oil prices go, the more will be found – and the more it will be economized. So, in a free-market world, oil is a non-problem.

But we don’t currently live in that kind of world. In the meantime – let’s say the next 10-20 years – oil is an issue, for simple geological reasons. And also because, even though consumption has been basically flat in the advanced world for decades, consumption is going to grow radically in “Chindia” and the rest of the developing world. The biggest problem though is likely political, especially because of the increased political risk in the Middle East, where most of the world’s oil reserves are. You’ve got to be bullish on oil.

L: Even with the stuff at $100 a barrel?

Doug: Yes. I believe the odds favor it going to $200, even $250 a barrel before too long. I say that despite the fact I’m much more comfortable buying things when they’re manifestly cheap, and nobody wants them. But at the same time, it’s important to see the trend, and make the trend your friend. And I see no reason to believe this one is anywhere near an end.

L: Okay… But you’re also famous for predicting the coming – now started – Greater Depression. In a major, global economic reversal, wouldn’t energy consumption decrease, and hence prices drop?

Doug: That’s certainly a possibility, but China, India, and the rest of the Third World are marching, increasingly, to the beats of their own drums these days. The Greater Depression will definitely affect them adversely, but the enormous growth that has already gone on there won’t stop – despite the fact China has misallocated gigantic amounts of money in property. There could very well be a real revolution there in the next ten years. People forget that during one of the most turbulent periods in history, 1914-1946 – including, among other disasters, World War I, the Great Depression, and World War II – the world economy expanded by something like 1.8% annually. That trend will continue at one level or another, even if there’s a truly massive upset in the global economy – which I fully expect. The countries of the world will compete in using more oil; China will greatly increase its imports. India even more so. The price will necessarily rise.

So, sure, there could be a dip, especially if there’s a big financial crash, but that would not change the major underlying trend. Long-term energy demand is not dictated by speculators or other financial factors; at heart it’s based on demographic and technological trends, and those are not going to change easily nor soon. Oil in particular supplies very dense and convenient energy. It will be superceded, but not soon.

L: So if oil and gas stocks retreat on bad news, back up the truck for more?

Doug: Exactly. And it seems to me that in today’s world, in which nothing is cheap, one thing that is relatively cheap and a good value is natural gas. The reason it’s cheap is that previous high prices spurred technological developments, such as horizontal drilling and hydrofracking, that have made huge resources of shale gas economic. This vast increase in supply has made natural gas cheaper – and the time to buy commodities is when they are cheap. You have to be a contrarian, buy what’s unpopular, and sell when it’s the flavor of the day. It’s like my friend Rick Rule says: You’re either a contrarian or a victim. That’s natural gas right now – it’s cheaper, in BTUs per dollar, compared to oil, than it’s been for a very long time.

L: But there’s some risk too, especially with scare stories circulating about fracking causing gas leaks and problems on the surface. A political response could crush whole swathes of gas companies.

Doug: That’s true, and it would be true even if the scare weren’t completely unfounded hysteria, as I suspect it is. It’s mostly the same people who are so hysterically anti-nuclear who are anti new natural gas technologies. These stories about flames coming out of your water faucet have nothing to do with fracking. First, it’s freakishly rare. Second, it can and does happen naturally, for the same reason you see oil (and gas) coming to the surface all over the world, or even marsh gas bubbling up from swamps. Fracking generally occurs thousands of feet under ground; drinking water tables are close to the surface; it theoretically can have an effect, but as a practical matter does not. But I don’t want to get into a discussion of that here. Marin Katusa has covered that ground, from all points of view, as you can see here.

The technophobes of the world are a costly nuisance to everybody. But the good news is that they only drive prices up more, much to the benefit of the companies which are not affected. So, the way to play this is not with any kind of blanket approach, but with well-selected companies that should do well, based on where and how they produce their natural gas.

L: Very good. And this time I don’t have to ask you about investment implications.

Doug: Great. I love being off the hook. We’ll leave it at that, then. Talk to you next week.

L: Sure, Doug, thanks for the insights.

Doug: My pleasure.

OBAMA’S PISSING IN THE WIND

Zero Hedge http://www.zerohedge.com/ with an outstanding piece on the ridiculousness of Obama’s blatant attempt to manipulate the oil markets so his diminishing re-election chances are bolstered. As usual, this moron has no idea how markets work, or the law of unintended consequences. He is doing wonders for making the Fourth Turning as chaotic and desperate as possible. OPEC is now being led by Iran, not Saudi Arabia. The release of 60 million barrels of oil from strategic reserves will be as effective on keeping oil prices low as QE2 was in reviving our economy and spurring the housing market.

The second article is from www.oilslick.com and details the reasons for the Strategic Oil Reserve. Two thirds of the reserve is sour crude, which many of the refineries in the US can not process. We are depleting our reserve of sweet crude and sending it to Europe. Brilliant “strategic” move by Obama. I really think Obama approaches life like it is a game and he is smarter than everyone else. He is a dangerous man. Four more years of this guy will insure the destruction of our country.

As The IEA-OPEC Nash Equilibrium Collapses, Is A 1973-Style OPEC Embargo Next?

Submitted by Tyler Durden on 06/26/2011 11:13 -0400

Last week’s dramatic decision by the US administration to strongarm the IEA into releasing strategic petroleum reserves (of which the US would account for 30 million barrels, or half of the total), is nothing but yet another example of the hobbled and incredibly short-sighted thinking that permeates every corner of the Obama administration. Because as the WSJ reports, “the move by the U.S. and its allies to release strategic reserves of oil could provide a much-needed shot in the arm for the U.S. economy, but risks inflicting lasting damage on the already tense relationship between oil producers and consumers.” The move comes on the heels of the dramatic collapse in OPEC talks in Vienna two weeks ago when Saudi Arabia was effectively kicked out of the cartel, further confirmed by reports that the IEA consulted with Saudi (and China and India) in advance of its decision (more later). Additionally, “OPEC and the European Union are due to hold an energy summit in Vienna Monday that will be the first official meeting of producers and consumers since the IEA’s move, and will provide a platform for OPEC members to express their disquiet over the stocks’ release. However, OPEC’s biggest player, Saudi Arabia, won’t be present.” Make that former player, in an organization now headed by the previously #2 producer, Iran (which just happens is not all that pro-US). The biggest threat, however, is that in direct retaliation against the IEA’s cartel-like decision, which comes at the expense of the remaining OPEC countries, is that as Zero Hedge suspected, the next step will be a more than proportionate cut in crude production by OPEC: “Some analysts speculated that OPEC could respond to the IEA release by cutting output to offset the increased supply.” What happens next is complete Nash equilibrium collapse, with a high possibility of a 1973-type OPEC oil embargo announcement in the immediate future.

“Going ahead with an increase would cut into revenue, said Christof Ruehl, chief economist of BP PLC. But cutting production to offset the release, he said, “would be seen as hostile by IEA members” and “could lead to a war of attrition, at least as expensive,” in which OPEC cuts production and the IEA keeps releasing stocks to make up for the shortage.” The winner of all this, is of course, China, which will gladly benefit from ongoing blue light specials courtesy of the US Strtategic Petroleum Reserve to build up its own reserve holdings, as the rest of the world squabbles over a US-dominated status quo whose time has now officially passed. And just as the rare earth metal price spike in recent weeks demonstrates what happens when China is the marginal anything in any supply chain, one can be certain that the price of Crude will be far, far higher several years from now.

And speaking of Iran, its oil ministry SHANA wasted no time in firing the retaliating round against the IEA’s decision, accusing the US of acting unilaterally and purely for the benefit of Obama’s reelection campaign, warning that the drop in oil prices won’t persist:

Iranian governor for OPEC Mohammad Ali Khtatibi says International Energy Agency (IEA) decision to draw oil from its emergency reserves implies intervention in the ordinary function of the oil market.

Speaking to Shana, Mr. Khatibi said that the trend of falling oil prices would not be sustainable.

‘Following the failure to bring down the prices at 159th ministerial meeting of OPEC in June 8, the United States of America and Europe are using all the means to push oil prices lower, Iranian governor for OPEC said.

Khatibi noted that IEA’s initiative to release oil from strategic petroleum reserves would followed by artificial falling of oil prices but those countries believing in open markets showed they are not genuine in their believes.

According to Khatibi recent days’ developments in oil market is not the result of issues relating to supply and demand or market needs but political pressures by the United States drives the initiative.

‘The United States government plans to influence the results of the upcoming presidential elections of the country by putting pressure on oil prices’ top Iranian oil official said.

Khatibi pointed out that developed countries initiative to draw oil from strategic petroleum reserves is risky because they cannot continue the move in the long term.

He added: these reserves are being held for emergency situations so the consuming countries of the International Energy Agency will have no other choice except to replenish the reserves for further use.

Indeed, if Obama’s reelection campaign is such an emergency that it requires tapping the SPR, what will happen when there is a real emergency: such as a repeat of the 1973 OPEC embargo, which set the stage for Volcker’s last minute and very painful intervention to prevent the US economy from tailspinning into an inflationary supernova?

And just to make sure things get even more polarized, Dow Jones reports that the “International Energy Agency consulted Saudi Arabia, China and India before it authorized the release of some of its emergency reserves, the agency’s executive director said Sunday.”

“They understand, and they appreciate the action,” Nobuo Tanaka said on the sidelines of the second Global Think Tank Summit in Beijing.

The release of some of IEA’s strategic stockpiles is meant only to fill the gap in supply until higher crude volumes from Saudi Arabia reach the global market, he added.

Oddly enough, the leadership at the IEA is just as clueless as that of the US:

Separately, Tanaka said he asked China once again to join the IEA on Saturday. Although there hasn’t been any official response, Tanaka said he was encouraged by China’s recent statement publicly welcoming the IEA’s strategic stockpiles release.

Of course they welcome it you idiot, because they will be buying everything your member countries have to sell, and thanks to your stupidity, at a welcome discount. And why the hell would China want to join the IEA when it gets all the benefits of participation, without any of the obligations of being a member (i.e., adhering to your retarded politically-motivated agenda).

Good luck buying it back at the same price when OPEC fires its own warning shot and announces it is reducing crude output for all remaining OPEC countries (ex. Saudi) by 10-15%. And yes, Goldman will promptly move it Brent sell recommendation to a buy, within hours of said announcement.

Strategic Petroleum Reserve

Jim Brown
Back before the OPEC meeting the Obama administration held talks with Saudi Arabia on swapping oil in the SPR for new oil Saudi would produce. This revelation shocked many traders and suggests the administration is unaware of the strategic reasons behind the SPR.The Strategic Petroleum Reserve (SPR) holds 727 million barrels of oil that is “reserved” for times when oil is not available on the open market due to war, hurricane, embargo, etc. The oil in the SPR is not there to be used to manipulate prices. It is a “strategic” reserve. Most presidents have forgotten what strategic means and have instead treated it like a “Political Petroleum Reserve.”

The SPR was created by President Ford in 1975 as an answer to the 1973-1974 oil embargo when Arab nations cut off supplies of oil to the USA. Although commissioned in 1975 with construction beginning in 1976 and the first shipment into the reserve in July 1977 it was not until Christmas Day 2009 that the SPR was finally filled to capacity. It took 32 YEARS to fill the reserve. Oil was purchased outright and also procured as a Royalty-in-Kind (RIK) from U.S. producers in lieu of royalty payments to the Federal government.

In 2005 Congress decided the events in the Middle East were suggesting future problems for imported oil and they authorized an expansion of the SPR to one billion barrels. However, despite a comprehensive plan to locate and prepare additional storage facilities there has been no actual construction to fulfill the authorization. The current administration is “reviewing” the plans and the reason behind the SPR.

It has been tapped in the past when national disasters like Katrina knocked out the Louisiana Offshore Oil Platform (LOOP) where oil imported from overseas is offloaded into pipelines for transport to refineries. I view that as a valid use since the amount of oil released is trivial and will be replaced as soon as practical after the disaster. Actually the refineries receiving the oil from the SPR have to replace it with oil within so many weeks after the disaster is over. There have been two major drawdowns from the SPR. Desert Storm saw a distribution of 17.3 million barrels when prices when world supplies dropped after Kuwait was invaded and Iraq production was degraded. The second major drawdown was after Katrina when 25% of our domestic production was halted. The DOE authorized a sale of 30 million barrels but only 11 million were actually purchased by refiners.

The current SPR inventory is 292.5 million barrels of light sweet crude and 434 million of heavy sour crude.

We found out last week that the current administration held talks with Saudi Arabia on taking light sweet crude, the kind in short supply, and shipping it to Europe and replacing it with heavy sour crude from Saudi Arabia.

Europe is facing a very tight situation today with the loss of 1.5 mbpd of light crude production from Libya. Since light crude supplies in general are what controls oil prices the shortage of sufficient light oil has pushed Brent prices well over $100. There is no shortage of heavy sour crude but there are fewer refineries that can process that crude and that makes heavy sour crude a lot cheaper on the world markets.

In the U.S. we have a mix of refineries with some capable of processing the cheaper oil and some only the light oil.

If we were to take out 1.5 mbpd of light sweet crude from the SPR and send it to Europe to replace the Libyan crude when would that program end? The IEA does not expect Libyan crude to be back at full production until 2015. Obviously at the rate of 1.5 mbpd (45 mb per month) we could not supply the missing oil for more than a few months.

By replacing that highly desirable light oil with less than desirable heavy oil we would be reducing the value of our strategic reserves. If this program continued for several months our flexibility in handling future real emergencies would be degraded. It took 32 years to fill the reserve and that period covered times of plenty and times of scarcity, economic boom and economic bust.

With the budget under extreme pressure and spending cut comments in every newscast should we really be depleting our strategic reserves so Europe can have cheaper gasoline and Saudi Arabia can sell more low quality oil without going through the OPEC quota program? I think not.

The SPR is a STRATEGIC reserve that lawmakers saw fit to construct and fill at the cost of billions of dollars. Politically several presidents have talked about releasing oil to reduce fuel prices in the USA but so far they have all been dissuaded from weakening the strategic value of the reserve.

Lawmakers should prevent presidents from making these kinds of political moves. When we actually need this oil we need it to be there. If Iran obtains a nuclear weapon there are two targets at the top of their hit list. The first is Israel although they may not follow through with that attack because of the tremendous retaliation Israel could inflict on Iran. The second target is their archenemy Saudi Arabia. If they could knock out Saudi’s major oil terminal they could inflict severe financial damage on Saudi and eliminate Saudi’s financial influence in the region. The loss of Saudi’s 10.0 mbpd of production would immediately send oil prices well over $200 a barrel and Iran’s oil would be worth triple what it is today. Of course they would still have the problem of selling it because global sanctions would be severe.

Al Qaeda has targeted the Saudi oil fields and production facilities for years but have so far been unable to mount an effective attack. If al Qaeda eventually manages to act on their aspirations the same significant drop in the worlds oil supply would appear.

Today’s Arab Spring uprising all over the Middle East and Northern Africa is another warning that oil supplies from that region could dry up in a matter of days given the right sequence of events. This is all the more reason we should not dwindle away our strategic resources.

Lastly, China is eventually going to be a serious thorn in our oil supply. Chinese generals have said China will be at war with the U.S. by the end of the decade over natural resources. China could cause the U.S. great harm by interdicting oil supplies from the Middle East. If they believe we don’t have the backbone to stand up to them in an armed conflict then they could take action to acquire more supplies and it would be our loss.

As we continue approaching the peak in oil production we are going to see news events increasing in frequency that will make our strategic reserves more strategic. The U.S. military already believes there will be shortages in 2012 and that shortage could grow to 10 million barrels per day by 2015.

U.S. Joint Operating Environment, Page 29

If our own military believes there will be shortages by 2012 and severe shortages by 2015 why would we want to send critical supplies of light crude to Europe in exchange for sour crude from Saudi Arabia?

The administration claims they have a plan “teed up” to use the SPR in the case of market shifts. Let’s hope that plan fails to leave the tee and calmer and less political heads prevail.

Jim Brown

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YEARS OF THE MODERN

Is humanity forming en-masse? for lo, tyrants tremble, crowns grow dim,
The earth, restive, confronts a new era, perhaps a general divine war,
No one knows what will happen next, such portents fill the days and
nights;

Years prophetical! the space ahead as I walk, as I vainly try to
pierce it, is full of phantoms,

Unborn deeds, things soon to be, project their shapes around me,
This incredible rush and heat, this strange ecstatic fever of dreams
O years! – Years of the Modern– Walt Whitman

The great American poet Walt Whitman wrote these words in 1859. Whitman was trying to peer into a future of uncertainty. He was sure the future would be bleak. He had visions of phantoms. Maybe he saw the 600,000 souls who would lose their lives in the next six years. Whitman had captured the mood of a country entering the Fourth Turning. He didn’t know what would happen, but he felt the beat of war drums in the distance. Whitman did not have the benefit of historical perspective that we have today.

There have been three Fourth Turnings in American History. The American Revolution Fourth Turning ended in 1794 with the Crisis mood easing with the presidency of George Washington. Whitman didn’t realize that, 64 years after the previous Fourth Turning, the mood of the country was ripe for revolution and the sweeping away of the old order. When the stock market crashed in 1929, 64 years after the exhausting conclusion to the Civil War Fourth Turning, Americans didn’t realize the generational constellation was propelling them toward a new social order and a horrific world war. It is now 66 years since the conclusion of the Depression/WWII Fourth Turning. All indications are that the current Fourth Turning began in the 2007 – 2009, with the collapse of the housing market and the ensuing financial system implosion.

I find myself vainly trying to pierce the veil of events yet to be. The future is filled with haunting phantoms of unborn deeds which could lead to renewed glory, untold death and destruction, or the possibly the end of the great American experiment. Walt Whitman captured the change of mood in the country with his poem. History books are filled with dates and descriptions of events, battles, speeches and assassinations. What most people don’t understand is Fourth Turnings aren’t about events, but about the citizens’ reaction to the events.

The Boston Massacre did not start the American Revolution Fourth Turning, but the Boston Tea Party did. John Brown’s attack on Harper’s Ferry did not start the Civil War Fourth Turning, but the election of Abraham Lincoln did. World War I did not start the Great Depression/World War II Fourth Turning, but the 1929 Stock Market Crash did. The 9/11 terrorist attack did not start latest Fourth Turning, but the Wall Street induced housing/financial system collapse did. In each instance, the generations were aligned in a manner that would lead to a sweeping away of the old civic order and a regeneracy with the institution of a new order. Old Artists disappear, Prophets enter elder hood, Nomads enter midlife, Heroes enter young adulthood—and a new generation of child Artists is born.

One hundred and fifty years ago this week Fort Sumter was bombarded by upstart revolutionaries attempting to break away from an overbearing Federal government based in Washington D.C. Exactly four years later the butchery and death concluded dramatically with Robert E. Lee surrendering to Ulysses S. Grant at Appomattox and the assassination of Abraham Lincoln by John Wilkes Booth at Ford’s Theatre. For the next four years we will celebrate the 150th anniversary of various battles that marked the Civil War. What people will not consider are the similarities between that tumultuous period in our history and the period we are in today. Fourth Turnings are marked by different events but the same mood of upheaval, anger and fury.

As Strauss & Howe note in their book, the morphology of a Fourth Turning follows a predictable pattern:

A Crisis era begins with a catalyst – a starting event (or sequence of events) that produces a sudden shift in mood.
Once catalyzed, a society achieves a regeneracy – a new counter entropy that reunifies and reenergizes civic life.
The regenerated society propels toward a climax – a crucial moment that confirms the death of the old order and birth of the new.
The climax culminates in a resolution – a triumphant or tragic conclusion that separates the winners from losers, resolves the big public questions, and establishes the new order.

Strauss & Howe describe the normal sequence:

This Crisis morphology occurs over the span of one turning, which (except for the U.S. Civil War) means that around fifteen to twenty-five years elapse between the catalyst and the resolution. The regeneracy usually occurs one to five years after the era begins, the climax one to five years before it ends.

The catalysts are relatively easy to identify, but the point of regeneracy is more subtle and harder to grasp.

Fiery Moment of Death & Discontinuity

“Like nature, history is full of processes that cannot happen in reverse. Just as the laws of entropy do not allow a bird to fly backward, or droplets to regroup at the top of a waterfall, history has no rewind button. Like the seasons of nature, it moves only forward. Saecular entropy cannot be reversed. An Unraveling cannot lead back to an Awakening, or forward to a High, without a Crisis in between. The spirit of America comes once a saeculum, only through what the ancients called ekpyrosis, nature’s fiery moment of death and discontinuity. History’s periodic eras of Crisis combust the old social order and give birth to a new.” – Strauss & Howe – The Fourth Turning

The catalyst for the American Revolution was the Boston Tea Party. The catalyst for the Civil War was the election of Abraham Lincoln. The catalyst for the Great Depression was the 1929 Stock market crash. The catalyst for the current Crisis was the housing/financial system collapse. The catalyst is an event that terminates the brooding mood of the Unraveling and unleashes the fury of a Crisis. The three previous Crisis periods in American history were driven by different events, but similar generational dynamics. By closely examining the dynamics and threats that were facing the country during these previous Crisis periods, we may be able to peer into the murky fog of the future and make out the phantoms of events to come. What we know for sure is every previous Crisis had an economic and fairness dimension that provided the initial spark, triggering a series of events that eventually led to an all encompassing war for survival.

American Revolution – The economic dimension that led to the onset of the American Revolution can be summed up in the rallying cry of the colonists, “No Taxation, Without Representation.” The British felt that the colonies were created to be used in the way that best suited the crown and parliament. The French & Indian War left the British Empire deeply in debt. They responded by demanding more revenue from the colonies. The British Parliament continued to pass taxation Acts which became increasingly onerous to the independent minded American colonists:

Sugar Act – 1764
Currency Act – 1765
Stamp Act – 1765
Townshend Acts – 1767
Tea Act – 1773

The increasing levels of taxation and control resulted in the formation of Committees of Correspondence and the Sons of Liberty. Samuel Adams, Thomas Paine and the other firebrands led the movement for independence. The colonists grew increasingly angry with the heavy handedness and harshness of the British Monarchy. These incidents and actions solidified the mood for independence:

Quartering Act – 1765
Boston Massacre – 1770
Intolerable Acts – 1774

As you can see there were years of economic and political turmoil before the Boston Tea Party catalyst event ignited the revolution. The mood of enough citizens had shifted as the generational alignment no longer allowed for compromise. In the end, the increase of economic restrictions and limiting of freedom led to the revolution. As a side note, a Fourth Turning does not need a majority to be initiated. Only one-third of the colonists actively supported the rebellion.

American Civil War – The economic dimension that drove the dynamics of the Civil War related to the Southern agrarian society based upon growing cotton and the rapidly industrializing North with its cities and manufacturing prowess. The invention of the cotton gin led to many more plantations in the South depending solely on cotton to support their way of life. Cotton farming required vast amounts of cheap human labor, and slaves fit the bill. Abolitionists in the North had the moral high ground as Southern plantation owners treated human beings as property. Attitudes became more intense after the publication of Uncle Tom’s Cabin, the Dred Scott Decision, and the John Brown raid on Harper’s Ferry. The issue of slavery had been boiling beneath the surface since the adoption of the US Constitution. Various compromises had been struck over the years to keep the issue at bay:

Missouri Compromise
Compromise of 1850
Kansas – Nebraska Act

These economic and human rights issues became wrapped in the mantle of states’ rights and the struggle between the Federal government and State governments. The battle reached back to the earliest days of the Republic between Jefferson and Hamilton. Many felt that the new constitution ignored the rights of states to continue to act independently. They felt the states should still have the right to decide if they were willing to accept certain federal acts. This resulted in the idea of nullification, whereby the states would have the right to rule federal acts unconstitutional. The federal government denied states this right. With the election of Abraham Lincoln, the Southern states saw a man who was against slavery, believed in a strong Federal government, and supporter of the industrial North. The years of compromise were over. The firebrand prophet generation took control in Washington DC and Richmond Virginia. A fight to the finish was unavoidable.

Great Depression/World War II – The economic dimension that drove the onset of this Crisis was the unbridled greed and speculation of Wall Street banks. The easy money policies of the Federal Reserve, formed in secret and voted into existence on Christmas Eve with many members of Congress not present created the Roaring 20’s. While farmers struggled to survive on the drought stricken plains and the average person lived a hard scrabble existence, the banking elite reaped obscene profits, with the top 1% sucking 23.9% of all the national income – the highest level in U.S. history.

The 1920’s were a time of cultural decay, decadence and disillusionment. This mood was reflected in F. Scott Fitzgerald’s The Great Gatsby. As we know too well, every boom eventually goes bust. The bust came in October 1929, with a stock market crash. Stockholders lost $40 billion. The market dropped 89% over a two year period. By 1933, 11,000 of the 25,000 banks in the US had failed. These were mostly small regional banks. The major NY banks such as JP Morgan and Mellon became more powerful. The artificial interference in the economy by the Federal government and Federal Reserve was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. Passage of the Smoot-Hawley tariffs spread the depression around the world. The economic hardship in Germany led to the election of Adolf Hitler and set the stage for a future war that would kill 65 million people. FDR’s New Deal programs crowded out private industry and resulted in unemployment staying at levels exceeding 15% for an entire decade. Keynesian government spending prolonged the depression and put into place social programs that set in motion the debt bomb that threatens the country today.

Force Advancing with Irresistible Power

I see not America only, not only Liberty’s nation but other nations
preparing,

I see tremendous entrances and exits, new combinations, the solidarity
of races,

I see that force advancing with irresistible power on the world’s stage,
(Have the old forces, the old wars, played their parts? are the acts
suitable to them closed?)

I see Freedom, completely arm’d and victorious and very haughty,
with Law on one side and Peace on the other,

A stupendous trio all issuing forth against the idea of caste;
What historic denouements are these we so rapidly approach?
I see men marching and countermarching by swift millions,
I see the frontiers and boundaries of the old aristocracies broken,
I see the landmarks of European kings removed,
I see this day the People beginning their landmarks, (all others give
way;)

Never were such sharp questions ask’d as this day,
Never was average man, his soul, more energetic, more like a God,

Years of the Modern– Walt Whitman

Walt Whitman foresaw vast armies on the march and old orders being swept away by the historic denouements that were rapidly approaching. But even he couldn’t have foreseen the butchery and tragic deaths of over 600,000 men in the next four bloody years. The economic dimensions of the current Crisis were foreseeable at least a decade before the Crisis arrived. The Federal Reserve, under the “wise” supervision of former Ayn Rand disciple Alan Greenspan, progressively blew one bubble after another through its easy money policies. The Greenspan Put allowed the Wall Street vampire squids to suck the life out of the American economic system without fear of being harpooned for taking financial system endangering leveraged bets. The financial oligarchs used their influence, power and vast wealth to repeal Glass-Steagall, capture and buy off the rating agencies, neuter the SEC and other regulatory agencies and place their executives in high level government positions. The ruling wealthy elite again matched their peak take of the national income, just as they did in 1928.

The debt, fraud and lack of financial regulation that catalyzed the near collapse of the worldwide financial system in 2008, 63 years after the end of the last Fourth Turning, have not been purged from the system. In fact, those in power have decided more debt, accounting fraud and financial ignorance is the path to recovery for America. The issues which will be the driving forces during this Crisis are clear to anyone with their eyes open:

A National Debt the will approach $20 trillion by 2015 and has already surpassed 90% of GDP, the point of no return.
Annual deficits exceeding $1.5 trillion and equal to over 10% of GDP.
The unfunded promises made by slimy politicians over decades for Medicare, Medicaid and Social Security exceeds $100 trillion and can never be paid.
A military industrial complex that controls Congress, is fighting three wars, occupies hundreds of bases throughout the world and spends $1 trillion per year, seven times more than any other country in the world.
A financial industry debt peddling complex that has gained control over the government and media to such an extent they have been able to rape and pillage the American people for three decades, convincing regulatory agencies to allow them 40 to 1 leverage, crashing the financial system through a massive mortgage/derivatives fraudulent ponzi scheme, threatening the American people into giving them $4 trillion of taxpayer money, paying themselves hundreds of billions in bonuses for a job well done, and then insisting on lower taxes for their corporations and the rich oligarchs who inhabit these towers of evil in downtown Manhattan.
Wealthy elite who use their existing wealth to control Congress, the media and the financial debt peddling industry, abscond with 25% of the national income and control 42% of the financial wealth in the country. At the same time real wages of middle class Americans have been stagnant for 4 decades, real unemployment exceeds 20%, 45 million people need food stamps to make ends meet, and real inflation on the things middle class Americans need hovers around 10%. The gap between the Haves and Have Nots has never been greater.

The Federal Reserve has boxed itself into a corner and will be unable to extricate itself with its only weapon – the printing press. It has tripled the size of its balance sheet to $2.7 trillion, with at least half of the “assets” consisting of toxic worthless mortgages bought from their Wall Street masters. 0% interest rates for two and a half years, QE1 and QE2, and allowing banks to fraudulently report the value of their loans have failed to jumpstart the economy. Come June of 2011 they will be faced with a dilemma – PRINT or DIE. If they stop buying U.S. Treasury debt, interest rates will go up dramatically. If they keep printing to buy U.S. Treasury debt, the dollar will continue to fall and inflation will accelerate from its already high level.
The biggest wildcard among the Fourth Turning catalysts is Peak Oil. The modern industrial world is completely dependent upon cheap accessible oil. Globalization, consumerism, suburban sprawl, food production and distribution, and all means of transportation are dependent upon cheap abundant oil. Peak world oil production has occurred. Demand will outstrip supply going forward at an ever increasing rate. Various levels of chaos will ensue as the realization of this fact becomes evident to everyone.
The peak oil scenario will mix with the toxic brew of religion. The centuries old war between Christianity and Islam has been gaining strength over the last three decades. The revolutions spreading across the Middle East will not die down. They will intensify and create havoc for the existing despotic regimes. The new regimes will not be friendly towards the U.S. The combination of peak oil, with the fact that 56% of the world’s oil reserves are controlled by Muslim countries in the Middle East provides an unsettling backdrop for the U.S., which controls less than 2% of the world’s oil reserves.

The technological complexity and interconnectedness of people across the world is a danger and a possible boon to civilization. Our entire world is dependent upon computers and networks to run our infrastructure, defense, commerce, and everyday lives. Armies, naval ships, and massed confrontation will be made obsolete by cyber warfare. Computer hackers will be able to do more damage to a country in minutes than armies could do in years of traditional warfare. The trillions the US spends on aircraft carriers, fighter jets and tanks will be wasted. The positive side of technology has been realized in its ability to organize people to fight oppression and government propaganda. Likeminded people have been able to use technology to seek and reveal the truth.

The initial stage of this Fourth Turning has run its course. The catalyst was easy to recognize. The issues that confront the nation over the next twenty years are clear. What is completely unclear to me is how our fractured society achieves a regeneracy – a new counterentropy that reunifies and reenergizes civic life. The regeneracy usually occurs one to five years after the Crisis era begins. This means that the country would need to reunify and begin to confront our challenges by 2013. Regeneracy began with the Declaration of Independence during the American Revolution. Regeneracy began with Abraham Lincoln demanding the enlistment of 500,000 men after the Battle of Bull Run. Regeneracy began with FDR’s New Deal programs in 1933 during the Great Depression. What will begin the Regeneracy this time?

Something Wicked This Way Comes

“Decisive events will occur – events so vast, powerful, and unique that they lie beyond today’s wildest hypothesis. These events will inspire great documents and speeches, visions of a new political order being framed. People will discover a hitherto unimagined capacity to fight and die, and to let their children fight and die, for a communal cause. The Spirit of America will return, because there will be no other choice. Thus will Americans reenact the great ancient myth of the ekpyrosis. Thus will we achieve our next rendezvous with destiny.” – Strauss & Howe – The Fourth Turning

The storyline promulgated by the mainstream linear thinking opinion leaders is the economy is recovering, the banking system is sound, the stock market is booming, buying a house is a great investment, inflation is below 2%, jobs are being created, and consumers have regained their confidence and spending power. This message is hammered home on a daily basis by the corporate run mainstream media. It is patently false and the thinking members of the American public know it. The economic condition of the country is rapidly deteriorating. While politicians posture and lie to the citizens, the fissures in our financial system grow wider. As of today, regeneracy and unification behind one common national purpose seems light years away. Strauss & Howe speculated in 1997 about potential events that could spur events during the next Fourth Turning. One of their possible scenarios looms in the near future:

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 event necessary to cause a regeneracy in this country will need to be on an epic scale. Based upon a review of the foreseeable issues confronting our society it is clear to me that a worse financial implosion will strike before the 2012 presidential election. It may be triggered by a debt ceiling confrontation, the ending of QE2, a panic out of the USD, hyperinflation, a surge in oil prices, or some combination of these possibilities. The ensuing collapse of the stock and bond markets will remove the last vestiges of trust in the existing financial system and the government bureaucrats who have taken taxpayer dollars and funneled them to these Wall Street oligarchs.

The economic chaos will likely lead to a Republican landslide in the 2012 election. A Boomer Prophet with a reputation for fixing financial disasters (aka Mitt Romney) would be given a mandate to fix the economic system. All generations will realize that generational promises made cannot be fulfilled. People of a libertarian mindset, like me, will not be happy with the turn of events. In a chaotic scenario, the Federal government is likely to assume even more power than they have today. The American people will be fearful and angry. If the financial criminals on Wall Street are brought to justice, the chances of a unified populace will increase. A drop in everyone’s standard of living would be acceptable, as long as the rich shared equally in the burden. If the super wealthy oligarchs retain their power, a fracturing along class lines would become a distinct possibility. Social unrest, riots, and violent protests along the lines of the current situation in the Middle East could develop. Then a question of military use against the civilian population becomes paramount to what would happen next.

Amidst the financial chaos will be the ever present peak oil issue. The increasingly high prices and imminent shortages of supply will exacerbate the pain for the American people. The current War on Terror is really a cover for keeping American troops in the Middle East as a forward vanguard to keep the oil flowing. The U.S. consumes 7 billion barrels of oil per year and will use all means necessary to keep it flowing. With a Boomer Prophet leader invoking American manifest destiny, it is likely we will intervene to protect Saudi Arabia, Iraq, and Kuwait in the name of democracy. A terrorist incident in the U.S. would provide convenient cover for further intervention in the Middle East. As with most wars the unintended consequences will overwhelm the best laid plans of politicians and generals. Further U.S. intervention into an already exploding Middle East will likely spur a larger conflict between Islam and Christianity. Ground zero could shift to Europe as millions of Muslims have settled there and will not react positively to western powers siphoning oil from Islamic countries in the name of Christianity. History has taught us that Fourth Turnings end in all out war. The outcome of wars is always in doubt.

“History offers more sobering warnings: Armed confrontation usually occurs around the climax of Crisis. If there is confrontation, it is likely to lead to war. This could be any kind of war – class war, sectional war, war against global anarchists or terrorists, or superpower war. If there is war, it is likely to culminate in total war, fought until the losing side has been rendered nil – its will broken, territory taken, and leaders captured. And if there is total war, it is likely that the most destructive weapons available will be deployed.” – Strauss & Howe – The Fourth Turning

“Each of the last three American Crises produced moments of extreme danger: In the Revolution, the very birth of the republic hung by a thread in more than one battle. In the Civil War, the union barely survived a four-year slaughter that in its own time was reagrded as the most lethal war in history. In World War II, the nation destroyed an enemy of democracy that for a time was winning; had the enemy won, America might have itself been destroyed. In all likelihood, the next Crisis will present the nation with a threat and a consequence on a similar scale.” – Strauss and Howe – The Fourth Turning

It may be 150 years since Walt Whitman foresaw the imminent march of armies, visions of unborn deeds, and a sweeping away of the old order, but history has brought us right back to where we started. Immense challenges and threats await our nation. Will we face them with the courage and fortitude of our forefathers? Or will we shrink from our responsibility to future unborn generations? The drumbeat of history grows louder. Our rendezvous with destiny beckons.

RE’s Daily Rant-3/8/2011

World War III Expands
Daily Rant Archive 2/11/11, 2/12/11, 2/14/11, 2/15/11, 2/17/11, 2/18/11, 2/19/11, 2/20/11, 2/21/11, 2/23/11, 2/25/11, 2/27/11, 2/28/11, 3/2/11, 3/3/11, 3/5/11, 3/7/11	Top Links Reverse Engineering Automatic Earth Zero Hedge Economic Undertow Of Two Minds
Rant Lite Today’s rant examines scenarios for the escalating War for Oil in the Middle East.		Quote of the Day Revelation 6:8 And I looked, and behold a pale horse: and his name that sat on him was Death, and Hell followed with him. And power was given unto them over the fourth part of the earth, to kill with sword, and with hunger, and with death, and with the beasts of the earth.

A Tale of Two Depressions

As the Great Depression progressed onward, the early collapse in RE prices made many Banks insolvent, which then precipitated the Stock Market Crash of 1929.

Saudi Arabia is Going Down

When the Saudis have to Ban Protests in an already ridiculously repressive state, the End is not far off.

Other Shoes and the Uselessness Premium

“Creating fuel production in a failed- state Libya is beyond the grasp of the EU’s and United States’ unconventional ‘assets’. Blatant military intervention would be opposed by Russia, China and no doubt the other oil- producing autocracies.”

http://www.youtube.com/watch?v=YUcnNfjku6U&feature=related

World War III over in the M.E. has ratcheted its way up here quite a bit in the last couple of days. Dominoes are falling fast and furious now.

Unlike in Egypt, el-Kabong has shown he isn’t going to exit stage left quietly, and while the MSM tiptoes around the subject saying “Libya MIGHT descend into Civil War”, the truth is apparent, there is ALREADY a full on Civil War going on there.

Obama-sama has declared “Nothing is off the Table”, and they are floating the idea of arming the rebel forces. Now exactly who to and how they will issue Assault Rifles and RPGs to isn’t exactly clear. Does a Container Ship pull up at the dock and Libyan Towel Heads line up for an issue of Guns and Ammo? Do they pay for the Ammo or we just hand it out for free? Nobody is handing me free Ammo! I am paying through the nose for it here! These folks live on $2 a day. How many rounds can you buy for $2 in Libya?

Then there are the Limeys and the Frogs, the ones most strenuously pushing for a “No Fly Zone” to be established over Libya. This because apparently for the Brits the boys at the London School of Economics were in bed with el-Kabong, and they are probably looking at losing a shit load of money here if they cannot protect their assets. For the Frogs, I suspect they along with the Ities get most of the shipments of Libyan Oil, its right across the Mediterranean Sea. They are getting hit first and hardest with the supply loss, which they have to try to make up from other sources, but this is pretty hard to do when all the other sources are having problems producing also and what they do produce already has been contracted for.

So, on the Gas shortages/lines/rationing problem, the Ities and the Frogs look like they will be the first Western Countries hit. I don’t know if either of those countries maintain any kind of SPR. Labor strikes have already hit the Frogs, if they start having trouble getting gas, France is going to be in the deep doo-doo very quickly. So these folks want to shut down the Libyan Civil War ASAP and get those Oil Wells producing quickly.

So if you figure its hitting them first, they should be the ones who sign up a bunch more Mercs for the French Foreign Legion to head over to Libya to guard the Oil Wells. Both the French and the Brits have plenty of their own Jets, and you don’t even need an Aircraft Carrier, you can sortie the Jets straight out of an airbase in Sicily. Its only about 300 nautical miles across the Med Sea for them to Bomb Tripoli back to the Stone Age. So if any Western Countries are about to drop in on this Clusterfuck, one suspects the Brits and the French will be the first to do so.

While the Civil War has been spinning up, the Refugee issue is getting rapidly bigger. Just yesterday I read in the MSM the Spin that the refugee issue was not too bad, 100K or so on the borders of Algeria and Egypt. Today, the number was jacked up an order of magnitude to 1M. “Humanitarian Crisis” has hit the pages of the MSM. An HC is ALWAYS the excuse for a UN “Peacekeeping” Force to be dropped into a War Zone. So I am figuring the UN is negotiating to set up Refugee Camps in Egypt and Algeria, where they will then drop in a shit load of French and Brit Mercs, using these refugee camps as a staging ground for sending in counterinsurgency Special Ops to try and Capture/Kill el-Kabong. They clearly have to try this before trying to stage up a massive INVASION with Tanks, the hope being if they can come out with el-Kabong’s Head on a Pike, the Rabble will calm down and they can then Restore Order. Trying alternatively to restore order here by Brute Force will take a LOT of military assets. Just think about all those WWII Tank Battles in North Africa between Patton, Montgomery and Rommel. This is a BIG patch of land to try to control this way.

The question here is just how well prepped is el-Kabong? How much fuel does he have stored up for his Jets? How many MREs does he have sequestered to dish out to his “Loyal” troops? How good a Bunker did he build with his Oil Billions? Is it better than Hitler’s Bunker? I’ll bet it is. Probably has its own Micro Nuke Hitachi Power Plant buried and a deep well drilled down to the water table left over from the Jurrasic Period, 50 years worth of Mountain House Freeze Dried Food and an Underground Hydroponic Farm for growing produce into the next century. LOL.

Even if he just has an average Bunker though, its unlikely that unless he makes a HUGE mistake and gets caught out in the open making a Speech that the Mossad will be able to take him out quickly. How LONG can he keep his war machine rolling with fuel and ammo? Can he hold his OWN Oil fields Hostage, and threaten the Brits and Frogs that if they try to get him he will blow the wells to Kingdom Come? El-Kabong is CLEARLY psycho enough to do this, you would have to believe he would do it.

Meanwhile, over in Saudi Arabia, its heating up fast as well. Despite the Diktat from the House of Saud that all demonstrations are Illegal under Sharia Law and political opponents being arrested and tortured willy nilly, there is a big Demonstration planned for Friday, and I suspect this will get the ball really rolling in Saudi Arabia as well. The Saudi Royalty has been watching all the shit go down all around them, so I cannot see them tolerating any kind of large demonstration. If there is one, I suspect the Saudis will go in and hit them hard and fast. This won’t work to stop the problem, it will make it worse and then Saudi Arabia goes down the same road as Libya. I certainly cannot see the House of Saud picking up and leaving quietly like the Hoser did from Egypt. Like el-Kabong, those Sheiks know if they cannot hold onto Power there, they are FINISHED, all their wealth goes Bye-Bye as the “Authorities” at the BIS freeze all their accounts. They’ll be back to Camel driving.

So, bottom line here, possibly in as short a time span as one month or so from RIGHT NOW, we could see along with Libya in full on Civil War, Saudi Arabia in much the same predicament. This basically completes the path of Anarchy and War stretching from Morocco in North Africa all the way across to Pakistan, easily triple the geographical area of Europe in WWII. This by itself is World War, but does not even take into account the shit going on between the Koreas, the shit going on in Chechnya, and the shit going on down on the Mexican Border, along with all the shit going down in Ecuador, Venezuela, Colombia et al. Its WORLD WAR III folks, its here. So far YOU are still somewhat insulated from this anarchy, but its Coming Soon to a Theatre Near You in some fashion.

What will the “fashion” be that the Big Show comes to your Theatre? Well, remembering back to WWII, the Battles all occurred over in Europe and North Africa and China and in the Pacific Islands. We did not get Bombed over here, but we did have serious rationing. At the moment, for the most part it looks like that scenario gets repeated, but as I indicated in a prior post, it looks to be worse rationing this time because we do not have our own local supply of Oil in sufficient quantity to keep all the systems developed since running and we have a much larger population.

The Austerity required this time around here in the FSofA to support the War Machine I think will be too great for the society to bear, and so as this progresses we also will break down into Civil War. This isn’t going to happen overnight, its still likely a couple of years away. Still, you have to remember that down in Mexico they are already about in full anarchy as Cantarell stops producing, and this can only mean the border issues down in TX and AZ will increase. If/when we start having Blackouts/Brownouts in the Big Shities, the FSA in these Shities will take the opportunity to start Looting. Mad Max commences shortly thereafter. Forget subsisting on Grasshoppers and Mealworms, if you expect to survive in the Big Shities, you will need to develop a taste for Human Flesh. Stock up plenty of Curry, all meat tastes the same when Curried, just ask any Chef in an Indian Restaurant. Cats, Dogs, Mice, 4^th Grade Children, Nursing Home residents, whatever, you cannot tell the difference when you load it up with Curry. If/when we get Soylent Green, its about guaranteed it will be flavored with Curry.

Time is definitely RUNNING OUT now to make your ESCAPE. I do not recommend you try to escape outside the borders of the FSofA unless you have contacts and some connection to people wherever it is you are planning on evacuating to and you fit in racially, ethnically and religiously with the dominant population of the area. Do not head for South America unless you speak FLUENT Spanish and/or Portuguese and can pass as Hispanic. Do not head for Asia unless you speak FLUENT Mandarin and are at least half Han Chinese. If you are a White, the only places you should head for are the ones where Whites are dominant. Canada, Australia, New Zealand, Iceland, Finland, the Falkland Islands, Norway, Tasmania, Tristan de Cunha-Edinburgh of the Seven Seas are about the ONLY places I would ever consider as reasonable to try to evacuate to if you were going to leave the FSofA as a White Person. Britain is OUT. Britain is TOAST. The Sun has SET on the British Empire and the little island they Ruled the World from for a while. Ireland might be survivable.

Inside the borders of the FSofA, Numero Uno BEST location for White Folks, ALASKA!!! Ranked in order on the FSofA Top Ten RE Doomer Holes List:

1) Matanuska-Susitna River Valley, Alaska

2) Juneau/Ketchikan Alaska

3) The Valley of the Great Salt Lake, Rocky Mountains Utah (especially if you are a Mormon)

4) Cascade Mountains, Oregon,Washington

5) Ozarks Mountains, Missouri and Arkansas

6) Tennessee Valley, Smokey Mountains

7) Shenandoah Valley, Poconos Mountains

8) Adirondack Mountains, New York, Vermont, New Hampshire

9) White Mountains, New Hampshire, Maine

10) Louisiana Bayou (if you are OK with Sweating all the time)

You can buy some raw land CHEAP in many of these places right now (though not as cheap as it will be in the future, but if you have the money and want to secure the purchase now the prices are not too bad). A good purchase would be Raw Land bordering on a National Park. Much as I do not believe in Land Ownership for myself, I bought 20 Acres bordering on Mark Twain National Forest and put it in my Grand Nephew’s Name. Used about half my 401K when I cashed out to make that purchase. He is only 5 years old, but unlike his Dad my Nephew, he has no Debts encumbering him. The Banksters do not Own him yet. He OWNS that land under our current Goobermint and Property Ownership system, Free & Clear. I’ll pay the Taxes on it long as I can, it is unimproved hunting land and the taxes are low. My family in Missouri can pack up and go there if things get tough. I have hammered down on them for the last 3 years to Prep Up and be ready to move, I can only hope they will when it becomes necessary, I am too far away otherwise to make a difference for them. As it is, they aren’t in a bad zone, Springfield MO is a small city surrounded by a lot of working Farms, I think Springfield will do OK for a while. My Brother-in-Law is a Tool & Die Man, and his company got a contract to supply plumbing fixtures for the building going up on the old WTC site in NYC. Should keep the company going a few more years if the monetary system does not crap out completely. Call me a Hypocrite if you like for doing this, for taking some of my Illuminati Money and BUYING land, but this IS the system and its not changing this minute, so I might as well get rid of the Fiat this way, eh? WTF else would I do with the money anyhow? Buy GOLD? Sorry, I don’t need a new Paperweight and besides, I can always go out and pan up some more, it just takes a lot of patience to do it and you get very little each day, but good grief, when its price goes up to $1500/oz, any idiot with a pan can pull up that much in a month of work by a good stream. Tedious work, but not as bad as flipping burgers at Mickey Ds, and while you do it you can ponder on the nature of existence, quite like when you go Ice Fishing. It’s not stressful, very relaxing actually.

Of course, you also can only do it for 3 or 4 months or so after the spring thaw, it’s not year-round work. I expect though that if the Gold price continues to skyrocket, this summer there will be a LOT of Panners out there. LOL. I am actually considering taking the summer off this year just to Pan, Fish and Hunt. Probably won’t do it, but I am considering it. Another alternative I am considering for the summer is touring Doomstead locations in NZ and British Columbia, and maybe making a last trip to Europe before it devolves into complete anarchy (assuming that has not already occurred by June). Another alternative I am considering is taking one last Gas Consumptive Tour of the NA Continent, driving from the Mat Valley across the Al-Can and all the way back to my birthplace in NYC. If it looks like the gas is going to be available for that trip at anything under $5/gallon, I might go for it. Visit tent cities, check out the real stories across the nation. Perhaps make some speeches and talk from the pulpit of some Unitarian Churches across the country. I still have decent connections with the Unitarians, it’s the “religion” I was brought up under. If I use the Bugout Machine for it, it probably costs $10K in fuel. There is REAL Hypocrisy for you if I do that one. LOL. But Hell, I am gonna die soon enough anyhow, and the 2000 gallons of gas I use to make this trip isn’t going to make a damn bit of difference anyhow globally speaking, so WTF. I think it would be a decent utility of the fuel and my money, to chronicle what I see and write about it. Anyhow, I will decide come around May what I will do this summer. Call this Doomer Vacation Planning.

Anyhow, I have drifted quite a bit in this Rant off the main topic of the evolution of WWIII we are witnessing. I really do not see at this point how anyone could make the case that WWIII is not already in progress when you look at what is currently going on in the M.E. At this MOMENT, it is not really affecting directly most of us here in the FSofA, but it most CERTAINLY is affecting millions if not BILLIONS of people across the M.E. countries. All of these countries are LOADED with the weapons of the Industrial War Machine, in order to Maintain Power Puppets like el-Kabong and the Saudi Sheiks have spent a FORTUNE in Oil money buying the tools of high tech warfare, from the assault rifles to the helicopter gunships to the jets. The system is coming apart at the seams, and now these weapons will be used, one way or the other. It is getting ugly out there NOW, and it is Coming Soon to a Theatre Near You.

See you on the Other Side.

CHINA & U.S. – WAR IS INEVITABLE

Why do countries go to war?

One or both countries are led by maniacs (Hitler, Stalin, Tojo)
Opposing political systems (Capitalism, Communism)
Necessity for resources or land (Japan, Germany)
Accident due to treaties & alliances (WWI)
Seccession or internal political issues (Revolutionary War, Civil War)

China is tired of playing second fiddle to the U.S. They are already kicking our asses economically. They have us by the balls as they own $900 billion of our debt. We need to issue $1.5 trillion of new debt every year for the next 5 years. We need the Chinese to buy a good chunk of this debt. The Chinese know that. They also know that Bernanke is trying to screw them by devaluing the USD.

They are converting their USD into hard assets. They are buying up natural resouces like mines and oil wells. They are signing deals with Iran, Venezuela, and African nations to tie up oil resources. They are buying gold. They have most of the rare earths in the world and aren’t sharing. Now it seems they are using those USD to build missiles and other high tech military hardware.

The US Navy revolves around their 11 aircraft carriers. We are in the process of building 3 new aircraft carriers at a cost of $14 billion each. The Chinese have perfected a new missile that will put these outmoded WWII antiques at the bottom of the sea. The US is preparing for the last war. China is preparing for cyber war using satellites, computer hackers, and high tech missiles.

China and the US both need oil. The supplies of oil are depleting. Economic tensions are already high. As oil becomes more precious, the US and China will be competing for the same supply sources. Any economic collapse experienced by either country will significantly increase tensions between the countries. These issues are a powder-keg and both countries will be lighting matches. I expect armed conflict with China to commence between 2015 and 2020, as would be expected in the Fourth Turning Crisis. World War erupted 12 years after the onset of the last Fourth Turning. A similar scenario would result in major war around the year 2017. It is our destiny.

China preparing for armed conflict ‘in every direction’

China is preparing for conflict ‘in every direction’, the defence minister said on Wednesday in remarks that threaten to overshadow a visit to Beijing by his US counterpart next month.

By Peter Foster, Beijing 1:30PM GMT 29 Dec 2010

“In the coming five years, our military will push forward preparations for military conflict in every strategic direction,” said Liang Guanglie in an interview published by several state-backed newspapers in China. “We may be living in peaceful times, but we can never forget war, never send the horses south or put the bayonets and guns away,” Mr Liang added.

China repeatedly says it is planning a “peaceful rise” but the recent pace and scale of its military modernisation has alarmed many of its neighbours in the Asia-Pacific, including Japan which described China’s military build-up as a “global concern” this month.

Mr Liang’s remarks come at a time of increasingly difficult relations between the Chinese and US armed forces which a three-day visit by his counterpart Robert Gates is intended to address. A year ago China froze substantive military relations in protest at US arms sales to Taiwan and relations deteriorated further this summer when China objected to US plans to deploy one of its nuclear supercarriers, the USS George Washington, into the Yellow Sea off the Korean peninsula.

China also announced this month that it was preparing to launch its own aircraft carrier next year in a signal that China is determined to punch its weight as a rising superpower. The news came a year earlier than many US defence analysts had predicted.

China is also working on a “carrier-killing” ballistic missile that could sink US carriers from afar, fundamentally reordering the balance of power in a region that has been dominated by the US since the end of the Second World War.

A US Navy commander, Admiral Robert Willard, told Japan’s Asahi Shimbun newspaper this week that he believes the Chinese anti-ship missile, the Dong Feng 21, has already achieved “initial operational capability”, although it would require years of testing.

Analysts remain divided over whether China is initiating an Asian arms race. Even allowing for undeclared spending, China’s annual defence budget is still less than one-sixth of America’s $663bn a year, or less than half the US figure when expressed as a percentage of GDP.

However in a speech earlier this year Mr Gates warned that China’s new weapons, including its carrier-killing missile, “threaten America’s primary way to project power and help allies in the Pacific”, underscoring the difficulties that lie ahead as China and the US seek to contain growing strategic frictions.

As China modernises, Mr Liang pledged that its armed forces would also increasingly use homegrown Chinese technology, which analysts say still lags behind Western technology even as China races to catch up.

“The modernisation of the Chinese military cannot depend on others, and cannot be bought,” Mr Liang added, “In the next five years, our economy and society will develop faster, boosting comprehensive national power. We will take the opportunity and speed up modernisation of the military.”

Chinese missile shifts power in Pacific

By Kathrin Hille in Beijing

Published: December 28 2010 11:58 | Last updated: December 28 2010 11:58

A new Chinese anti-ship missile that will significantly alter the balance of military power in the Pacific is now operational, according to a senior US commander.

Admiral Robert Willard, the top US commander in the Pacific, said the Chinese ballistic missile, which was designed to threaten US aircraft carriers in the region, had reached “initial operational capability”.

His remarks signal that China is challenging the US ability to project military power in Asia much sooner than many had expected.

The US and other countries in the Pacific region are increasingly concerned at the speed with which China is developing its naval power. Japan, for example, recently decided to refocus its military on the potential threat from China.

“So now we know – China’s [anti-ship ballistic missile] is no longer aspirational,” Andrew Erickson, an expert on the Chinese military at the US Naval War College, said in response to Adm Willard’s comments to the Asahi newspaper.

Defence analysts have called the Dongfeng 21 D missile a “game changer” since it could force US aircraft carriers to stay away from waters where China does not want to see them. These include the Taiwan Strait where a potential conflict could develop over the self-ruled island which China claims.

The land-based missile is designed to target and track aircraft carrier groups with the help of satellites, unmanned aerial vehicles and over-the-horizon radar. Aircraft carriers and their accompanying ships are unable to defend themselves against such a threat.

Aware of the missile’s development, the Pentagon has already started considering ways to counter the new threat, including a new concept for more closely integrated navy and air force operations.

Robert Gates, US defence secretary, said in September, the development of such a missile would force the Pentagon to rethink the way carriers were deployed.

“If the Chinese or somebody else has a highly accurate anti-ship cruise or ballistic missile that can take out a carrier at hundreds of miles of ranges and therefore in Asia puts us back behind the second island chain, how then do you use carriers differently in the future?” Mr Gates asked.

The second chain of islands runs from the Bonins along the Marianas, Guam and Palau, forming a north-south line east of Japan and the Philippines. This line defines what China sees as its “near seas” – waters in which the US navy now frequently operates and are home to US naval bases and allies such as Japan and South Korea.

Adm Willard noted this year that China’s anti-ship ballistic missile was undergoing extensive testing and was close to deployment. Observers believe China started production of missile motors last year and that the Chinese military is preparing a nuclear missile base in the southern city of Shaoguan for their deployment.

Defence analysts have also linked several missile flight tests this year to the new weapon but no conclusive evidence has been available to date.

Adm Willard’s latest comments appear to remove any doubts. The term “initial operational capability” as used by the Pentagon indicates that some military units have started deployment of the weapon and are capable of using it.

Mr Erickson said: “Beijing has successfully developed, tested, and deployed the world’s first weapons system capable of targeting a moving carrier strike group from long-range, land-based mobile launchers.” .

Adm Willard said the new Chinese weapon was still not fully-operational and would probably undergo testing for “several more years”. The key remaining step is a comprehensive test of the entire system at sea, which is much more difficult than test flights over land.

China also needs to deploy more satellites to ensure seamless tracking of a moving target at sea. But defence experts warn that the weapon would immediately be a threat to US carriers because China could make up for a lack in accuracy by launching larger numbers of missiles.