Some Clear Thinking on the Debt

Simon Black of SovereignMan provides some clear thinking on the debt...

If you haven't heard yet, the United States of America just hit $16 trillion in debt yesterday. On a gross, nominal basis, this makes the US, by far, the greatest debtor in the history of the world.
It took the United States government over 200 years to accumulate its first trillion dollars of debt. It took only 286 days to accumulate the most recent trillion dollars of debt. 200 years vs. 286 days. This portends two key points:
1. Anyone who thinks that inflation doesn't exist is a complete idiot;
2. To say that the trend is unsustainable is a massive understatement.
At an average interest rate of 2.130%, Uncle Sam will shuffle $340 billion out the door just in interest payments this year... and it's a number that's only going up. To put it in context, China owns so much US debt that the INTEREST INCOME they receive from the Treasury Department is nearly enough to fund their entire military budget.
It's rather disgusting when you think about it.
Yet when you look at the raw numbers, there is no sign of improvement anywhere on the horizon. Last year, the Treasury Department brought in about $2.3 trillion in tax revenue. They spent $2.9 trillion JUST on -mandatory- programs like Social Security and Medicare, plus the very sacrosanct defense budget.
In other words, the US government was $600 billion dollars in the hole before paying a dime of interest on the debt, or paying the light bill at the White House. In fact the government's own numbers reflect a budget deficit through the end of the decade, i.e. the debt level is only going to get higher. These are their own figures.
In the 19th century, the Ottoman Empire was facing a similar debt crisis. In just 11-years, the Ottoman central government went from spending 17% of its tax revenue on interest payments, to spending over 52% of its tax revenue on interest payments. Then came default. Eleven years. The US is at 15% right now. How long will it take for the interest burden to become unbearable?
History is full of examples of superpowers bucking under the weight of their debt. This is not the first time that it's happened, and it won't be the last.
Sovereign debt is a giant confidence game. Investors buy bonds on the belief that governments can (and will) pay. When that confidence is chipped away, the cost of capital becomes debilitating. And people tend to notice a $16 trillion debt burden.
This is banana republic stuff, plain and simple... and smart, thinking people ought to be planning on capital controls, wage and price controls, pension confiscation, and selective default. Because the next trillion will be here before you know it.

Corrupt Government Officials Should Be In Jail … Alongside Corrupt Banksters

Author George Washington of ZeroHedge believes that Corrupt Government Officials Should Be In Jail … Alongside Corrupt Banksters

Wall Street fraud caused the Great Depression and the current financial crisis. Top economists and financial experts agree that our economy will never recover unless Wall Street fraud is prosecuted.Yet the government has more or less made it official policy not to prosecute fraud, and instead to do everything necessary to cover up for Wall Street.  For example, the Obama administration is prosecuting fewer financial crimes  than under Reagan or either Bush.For example, we pointed out in 2010:The government's entire strategy now – as during the S&L crisis – is to cover up how bad things are. But it is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud. Here are just a few of many potential examples:

• The government-sponsored rating agencies committed massive fraud (and see this)

• The Treasury department allowed banks to "cook their books"

• Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks

• Tim Geithner was complicit in Lehman's accounting fraud, (and see this), and pushed to pay AIG's CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was "very much in the center of the action" regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: "Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth"

• The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted

• Freddie and Fannie helped to create the epidemic of mortgage fraud

• The government knew about mortgage fraud a long time ago. For example, the FBI warned of an "epidemic" of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen

• Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not

• Arguably, both the Bush and Obama administrations broke the law by refusing to close insolvent banks

• Congress may have covered up illegal tax breaks for the big banks

Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith's, definitive study of the Great Depression, The Great Crash, 1929:The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy. In 2004, the FBI warned publicly of "an epidemic of mortgage fraud." But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting …. This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor.
 The government that permits this to happen is complicit in a vast crime.In other words, the fraud started at the very top with Greenspan, Bush, Paulson, Negraponte, Bernanke, Geithner, Rubin, Summers and all of the rest of the boys. As William Black told me today:In criminology jargon: they created an intensely criminogenic environment.The government's special inspector general in charge of oversight of the Troubled Asset Relief Program (the "TARP" bank bailouts) – Neil M. Barofsky – said today:It was a "message to the banks 'if we commit fraud, we break the rules, don't worry, we're too big — they'll never bring the appropriate steps against us,'" Barofsky says in an interview with The Daily Ticker. "And that is why we've had scandal after scandal after scandal." This was a "global conspiracy to fix one of the most important interest rates in the world," Barofsky continues. "[Geithner] heard this information and looked the other way. Geithner and other regulators should be held accountable, they should be fired across the board. If they knew about an ongoing fraud, and they didn't do anything about it, they don't deserve to have their jobs. I hope we see people in handcuffs."Government regulators have become so corrupted and "captured" by those they regulate that Americans know that the cop is on the take.  (Even top justice officials are incredibly cozy with Wall Street fraudsters.)Institutional corruption is killing people's trust in our government and our institutions, which is one of the reasons the economy is faltering again.Indeed, polls show that very few Americans believe that the U.S. government has the "consent of the governed", a higher percentage of Americans liked King George during the Revolutionary War than like Congress today, and people are publicly discussing whether it's a good or bad idea to "hang bankers".I noted 7 years ago:I am NOT calling for the overthrow of the government. In fact, I am calling for the reinstatement of our government. I am calling for an end to lawless dictatorship and a return to the rule of law. Rather than trying to subvert the constitution, I am calling for its enforcement.
 The best way to avoid all types of revolution would be for the government to start following the rule of law. I passionately hope it will do so.While conservatives tend to view government as the problem, and liberals tend to view corporations as the problem, the real problem is the malignant, symbiotic relationship between corrupt officials and criminal  corporate leaders.  Without the cancerous relationship, neither side could cause so much damage.  If America returns to the rule of law, we might have a fighting chance.The justice system may be the only thing which stands between peace and violence.   All of those who benefited from Wall Street fraud must be prosecuted ... including corrupt government officials who aided and abetted their crimes, helped cover them up, or have blocked prosecution.Iceland should be a role model:Iceland has prosecuted the fraudster bank heads (and here and here) and their former prime minister, and their economy is recovering nicely… because trust is being restored in the financial system.Indeed, even evangelical leader Pat Robertson agrees:Pat Robertson discussed the banking crisis and glowingly spoke about how Iceland jailed many of the bankers who devastated their nation's economy by taking out fraudulent loans. Robertson hailed the Nordic nation for its actions and said that Americans should deal with the financial crisis in the same way. 
"They are putting people in jail.  Prime ministers are being indicted. They are going after banks. The people said the banks are ripping us off. We don't like what they did, and they brought our country to ruin. Suddenly, Iceland is turning around and they look like a big success story!"
 "We could start putting all of those bankers in jail. There was not one banker prosecuted and so many people were lying, and so-called "no-doc loans" and liars' loans, and none of them have been held accountable. 
Iceland is leading the way and their GDP is growing, and all of a sudden, they were in a terrible mess, terrible mess, and look what is happening!"

When We Wake Up November 7th... Nothing Will Have Changed

Jim Karger writes that:

Voting is the illusion of influence in exchange for the loss of freedom.   

Both Obama and Romney are men of privilege, Romney born with a silver spoon in his mouth, and Obama gifted power. Romney is the poster child of the power elite and Obama is clearly acceptable after four years of doing their bidding.

Obama has clearly enjoyed his four years of high rolling, playing at least 100 rounds of golf in 3 1/2 years of being POTUS, while his wife has imitated the rich and famous, sporting a personal staff of 22 and taking extravagant vacations on the taxpayers' dime with not a hint of embarrassment.

Romney is equally unsympathetic.  Michael Cohen, a good friend and political observer, summarizes Romney as follows: "Romney"s father was a CEO, a governor, and a candidate for President.  He was born to great wealth and status and privilege.  He attended the poshest private schools, where he was a bully. At Stanford, he demonstrated publicly in favor of the Vietnam War while he sat it out as a missionary in the steamy jungles of Paris, France. He got filthy rich by starting a fund that bought companies and, for the most part, ran them into the dirt, and the seed money for this noble venture came from immensely wealthy Central and South American families who supported right-wing death squads but also needed to park some substantial money in the US.

"The only rules that Romney thinks apply to him are the rules of rich-people etiquette – how to use snail tongs for escargot, how to talk quietly while your partner is teeing off or putting, how to refer to African Americans without calling them "niggers" or "darkies," which people you can screw (literally and figuratively) and get away with it, and which you can"t.  Other rules, especially the rule of law, do not apply to him.  The law is for little people.  Romney has no need for rules or the law; he is guided by his unerring internal moral compass and incorruptible conscience."

A disturbing choice, indeed, but who will get the nod from the sheeple?

Obama is my odd's on favorite to win in November, if only because half of the US receives a check from the government and intends to continue collecting. 

The Republicans are seen as the party of the rich, mostly because they are. Romney is an empty suit, unlikable, and reminds me of the mildly-retarded George W., but without the childlike qualities. He is of the elite. He is not Main Street. He is Wall Street, brought to the general public by the same elites that have and continue to rape and pillage what is left of the markets and violate the law with impunity. He was an absurd choice by a party that has been absconded with by the neocons.  

Romney's tax return issue won't go away and there is speculation that the reason he won't release more tax returns is because he hid millions in Switzerland believing he wouldn't get caught.  When the Swiss rolled over, he figured he better take advantage of the amnesty because his name would certainly have stood out on a list of US tax cheats turned over by the Swiss government.  No one knows, but if that turns out to be the case and is revealed, he is history.  Even the rumor is taking a toll. 

Finally, Romney's blatant attempt to silence Ron Paul at the Republican convention by refusing to seat his delegates ensures he will lose the vast majority of Libertarians, estimated to constitute at least 12% of the Republican Party. They will either vote for Gary Johnson in protest or not vote at all. Romney's pathetic attempt to appear open by offering Paul a place on the podium was rejected after Romney insisted that he have an advance review Paul's remarks.  Dr. Paul would rather be silenced than censored.

Yet, partisans on the "winning" side of this faux campaign will celebrate their "freedom," if for no other reason that they got to choose their dictator.

Americans, except the elite, will be the losers. Again. They will remain debt slaves, tax donkeys and work mules for the owners. They will watch their dollars become more worthless than they already are, become poorer and more dependent, and sooth their pain with the bread and circuses provided by those in control – alcohol and sport. They will cheer on their gladiators, their teenage sons dying in foreign lands, and not even notice they are being strip-searched daily and their phone calls, email and Facebook feeds monitored.  

While the spokesman for the owners will change, the owners will not, mostly because most voters on both sides are too lazy, ignorant or disinterested to go further than campaign rhetoric.

Former US Marine Brandon Raub Interviewed by John Whitehead

Some Quotes from the Founding Fathers

Thomas Jefferson: "Peace, commerce, and honest friendship with all nations – entangling alliances with none."

John Quincy Adams: "America . . . goes not abroad seeking monsters to destroy."

George Washington: "The great rule of conduct for us in regard to foreign nations is, in extending our commercial relations to have with them as little political connection as possible."

Romney’s Paul Ryan VP Pick Pleases War Hawks -- News from Antiwar.com

John Glaser of Antiwar.com notes that Ryan has been meeting with top neocons and blindly supports the violent US Empire:

Presumptive Republican Presidential nominee Mitt Romney has chosen Rep. Paul Ryan to run for his Vice President slot and although Ryan has built an unearned reputation as a deficit hawk, the pick has also pleased foreign policy hawks.Rep. Paul Ryan made a name for himself as the chairman of the House Budget Committee as someone willing to put forth deep cuts in government spending. Last year he authored a spending bill that was advertised as slashing $38 billion in government spending, even though the Congressional Budget Office found he would actually only cut $325 million overall, which is which is inconsequential enough to the overall budget for it to have not happened at all.
But Republican chairman of the House Armed Services Committee, Howard “Buck” McKeon, told Newsweek’s Daily Beast he has worked closely with Ryan to come up with ways to avoid making any significant cuts to defense. Specifically, to avoid sequestration cuts, which Ryan and other hawks have described as too deep, but which would only cut defense spending back to 2007 levels.

Romney Offers Few Details in Major Foreign Policy Speech

From the Inter Press Service News Agency website:

Reprising the neo-conservative rhetoric of the primary election campaign, former Massachusetts Gov. Mitt Romney [on] Tuesday [July 25th] harshly criticised Barack Obama’s foreign policy but offered few clues as to specific changes he would make if he defeats the president in November.
Speaking before the traditionally hawkish Veterans of Foreign Wars (VFW), Romney accused Obama of “abandon(ing)” U.S. allies, particularly Israel, and described the possibility of a nuclear-armed Iran as “the most severe security threat facing America and our friends”.
But critics said they were struck by the absence of specifics and, in some cases, the failure to draw clear differences between him and the president on specific policy issues.

That's because Obama is the Second Coming of Bush.  What differences?  I don't see any differences between Obama and Romney, between the GOP and the Democrat Party.

The Mitt Romney-Paul Ryan's Brother Money Connection

From the EconomicPolicyJournal website:

Mitt Romney and Paul Ryan's brother provide an object lesson on how crony capitalism is done, Romney may have breached state ethics laws as Governor of Massachusetts by holding a stake in a company that did lucrative work for his administration and was linked to the family of Paul Ryan, according to the Daily Telegraph.
Imagitas, a marketing company, was contracted by the state of Massachusetts after receiving $5 million  investment from Bain Capital, Romney’s investment firm.
DT has learned that one of Paul Ryan's brothers, Tobin Ryan, is a former Bain consultant. Both Romney and Tobin Ryan apparently stood to benefit from the $230 million sale of the company in 2005, while Romney remained governor of Massachusetts.
Massachusetts law requires that all state employees divest themselves of financial interests in private sector contracts with state agencies. At the time, failure to do so could have resulted in a $2,000 fine or a 2.5-year prison sentence.