Is Economic Armageddon on the Horizon?

 George Soros seems almost hopeful. He's buying up all the gold, and off-loading all of his equity positions in major financial stocks. Take a look at the 13-F report he filed with the SEC.  Moreover, billionaire John Paulson, who made $20 billion off the sub-prime mortgage meltdown, is also going gold crazy.  Not to mention the central banks. They're buying up gold in great quantity. In fact, central bank gold demand doubled since last quarter!

So Soros is backing up his words of warning, stated in Newsweek, with action in more ways than one. Let's not forget Soros's Management Fund purchased enough grain elevators and food production sites to become the third largest conglomerate in the food industry in the U.S.

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”
[...]
As anger rises, riots on the streets of American cities are inevitable. “Yes, yes, yes,” he says, almost gleefully. The response to the unrest could be more damaging than the violence itself. “It will be an excuse for cracking down and using strong-arm tactics to maintain law and order, which, carried to an extreme, could bring about a repressive political system, a society where individual liberty is much more constrained, which would be a break with the tradition of the United States.”

However, there are even more disturbing signs and/or clues that indicate economic collapse may be closer than we think. In addition to the billionaires and the central bank gold grab, here are some more interesting occurrences that make you go hmmm:

1. U.S. banks told to make plans for preventing collapse -- Uhm, shouldn't banks already have recovery plans? Banks are pulling in record profits right now, but you can bet your bottom dollar that should we see another economic collapse in the near future, the banks will be first in line for handouts, despite what this article reports.

U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.

2. The fed's plan to raise capital requirements for the banking industry in September. According to Mark Adams JD/MBA, in a comment he made regarding the possibility of a banking crisis, he said,

"an increase in the reserve ratio will cause many banks to become under-capitalized with the stroke of a pen thereby causing a banking crisis which will result in another bailout for the big banks, another consolidation of power in the banking industry, another tightening of credit for main street, another economic crash, and austerity for the rest of us.
[...]
I'll explain what going from a reserve capital ratio of 4% to 6% will do. With a capital ratio of 4%, a bank can lend $25,000 for each $1,000 of capital which includes funds raised through stock offerings, retained earnings and deposits. With a capital ratio of 6%, a bank can lend $16,667 for each $1,000 in capital. Since banks produce earnings by lending, most banks want to lend as much as is allowed, so this increase in the reserve ratio will immediately cause most banks to become undercapitalized thereby needing to be taken over and bailed out. After the new rule takes effect, banks that are lending more than 2/3rds of what is currently allowed will be undercapitalized, so that is most banks."

3. 611 bankster resignations in seven months -- American Kabuki posted  each and every one of them from 9/1/11 to 4/22/12...from world banks to investment houses to money funds to etc.

4. Homeland Security pursuit of crowd surveillance -- Are they expecting crowds to gather? And if so, why?

5. Multiple agencies of the federal government have ordered and are stockpiling millions of rounds of hollow point bullets -- While it's true, Fox News is reporting that it is not for potential civil unrest, but is "standard issue" and simply used for mandatory federal training sessions. However, as Maj. Gen. Jerry Curry pointed out, cheaper firing range bullets are used for practice and training.

Hollow point bullets are so lethal that the Geneva Convention does not allow their use on the battle field in time of war. Hollow point bullets don’t just stop or hurt people, they penetrate the body, spread out, fragment and cause maximum damage to the body’s organs. Death often follows." -- Maj. Gen. Curry

Moreover, Curry added that during the Iraq War the U.S. military used 70 million rounds of ammunition per year. Compare that with the 450 million rounds of hollowpoint bullets ordered in March by the Department of Homeland Security, and the additional 750 million rounds of hollow point bullets (DHS) ordered recently. That's over 1 billion hollow points in less than six months! 

RoninMaximus sums it up:

"What has largely been DELIBERATELY ignored by the media – though, I know full well they are more than aware – is that these thieves were insolvent when they were given trillions of US taxpayer money in the heist that was called a financial crisis in ’08. What the banks have done, along with their criminally complicit politicians is to craft the biggest fraud and the subsequent transfer of wealth in man’s history…using the outrageous and audacious fear tactic of too big to fail. The truth is, what was too big to allow to fail was the lie most all of the actors involved knew about and perpetuated.

The derivatives market is where the banks have been gambling away unabated since said financial crisis came to light in the first place. They’ve continued to manipulate the prices of the commodities market to keep their collective theft on going with Wall Street and Washington cheering it on. This is criminal, pure and simple and the government is attempting to quietly prepare militarily to deal with “we the people” when it becomes plainly apparent this ponzi scheme called the central bank is seen for what it is: An engine of theft and destroyer of the middle class’s wealth.

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Harvesting Profits and Power Despite the Human Toll.

In Roman society, just before the birth of Christ, lived the richest Roman of Julius Caeser's day. His name was Marcus Licinus Crassus; his passion for wealth rivaling even that of modern day banksters. How did he amass his millions? Well, to quote Plutarch, "he got [his riches] by fire and rapine, making his advantage of the public calamities."

You see, there was no such thing as a fire department in the Rome of Crassus' day. Once a fire started, it could level a whole neighborhood. So, Crassus took it upon himself to organize a fire brigade. Once the call of fire was heard, his men would rush to the blaze; however, once they arrived, the stood idly by while Crassus haggled with the frantic owners. If the owners agreed to sell cheaply enough, he ordered his men to stop the blaze. If the owners wanted a better price, he and his fire fighters left.

That's just one of the many calamity-induced schemes Crassus created, making him the wealthiest, and one of the most, if not, thee most powerful men in Rome.

Fast forward to present day, and Crassus looks like Mother Theresa in comparison to the greedy corporate bastards in power. Well, at least Crassus didn't start the fires (as far as we know). The same can't be said for those who think they rule the world in 2011. That's right...some say the Army Corp of Engineers flooded the land to drive down prices. Remember, because the floods were man made, insurance companies are refusing to insure these people, or they're claiming June 1, as the start date; therefore, anyone who bought flood insurance after May 1, 2011, are not covered.

Some river bottom property owners say they received a letter from the Army Corps of Engineers' Kansas City district office asking them if they want to sell their land.

KMBC's Micheal Mahoney reported that the letter is angering some of the people who received it because some of them are fighting for their land from a flood they believe the Corps caused.

The letter reads: "The Corps is currently seeking willing sellers." It is part of a 15-year-old corps plan to buy up river property or obtain easements.

That's not all. Ann Barnhardt of Barnhardt Capital Management, Inc. reports that George Soros, through Ospraie, is buying up farmland, too.

1. File this one under “Now It All Makes Sense”. A Missouri farming and ranching contact just got off a conference call wherein he was informed that the federal government is sending out letters to all of the flooded out farmers in the Missouri River flood plain and bottoms notifying them that the Army Corps of Engineers will offer to BUY THEIR LAND.

Intentionally flood massive acreage of highly productive farmland. Destroy people’s communities and homes. Catch them while they are desperate and afraid and then swoop in and buy the ground cheap. Those evil sons of bitches.

2. Speaking of evil sons of bitches, George Soros appears to be “investing” in farmland through the same puppet company that he used to get into the grain elevator and fertilizer business.  The company is called Ospraie Capital Management and is buying up farmland in a joint venture with Teays River Investments as a partner.

Okay. Here’s the connection. This Ospraie outfit was a hedge fund specializing in commodities that was started and run by some cocky child who didn’t know how to trade bear markets and got his butt kicked into next week in the grain market of 2008. He also lost a fortune trying to trade RARE EARTH METALS. In fact, it was so bad that he had to shut his fund down because he had promised his investors that he would give them all of their investment money back if the fund lost more than 30% in one year.

But it appears that Soros swooped in and saved the day because this Ospraie is the “co-investor” with Soros that bought the remnants of ConAgra’s trading operation and renamed it . . . Gavilon. In the industry, it is widely acknowledged that Ospraie IS Soros.

As you probably remember, Gavilon just recently bought both DeBruce Grain out of Kansas City and the biggest grain elevator company in the Pacific Northwest, thus making Soros (who is the money behind Gavilon through both his own Soros Fund Management AND his de facto control of Ospraie) the third-largest grain company in the U.S. with 280 million bushels of storage capacity, behind only Archer Daniels Midland (542 million bushels storage capacity) and Cargill (344 million bushels storage capacity).

Bottom line: . Please also note that the hotlink citation above is dated June 26, 2009. My contact says this has been going on for two years – and also remember what I told you about farmland prices inflating wildly, especially in Illinois. I have personally confirmed farmland in Illinois selling for $13,000 per acre within the last month, whereas that same kind of ground in Illinois was going for $5500 per acre the day Obama was inaugurated.

Links:
Ospraie launches JV Agricultural Fund.

Rogers & Soros: Farmland “One of the Best Investments of Our Time”

Betting the Farm

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Are the World's Wealthiest People Pulling Out While We Continue to Drink the Kool-Aid?

The world is chock-full of money, so why does everyone seem to be getting poorer? Well, not everyone.  Speak of the devil, what is going on in the world of the elite?  Because they seem to know something we don't. But what else is new?

First things first. The Federal Reserve plans on stepping up its expansionary monetary policy even further in November, and the rest of the world is responding accordingly, by devaluing its own currency. Quantitative easing is the name of the game. This Fed policy is supposed to keep interest rates as low as possible by purchasing government securities, or other securities from the market, thereby flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Now, keep in mind that the interest rate is essentially the price of money, and although, people like former Fed Chair Alan Greenspan would have you believe he promoted the idea of free markets, he did not. Because, at the same time he's preaching the gospel of laissez-faire capitalism, his heavy hand was busy intervening, controlling the price of money (interest rates).

You will find a good explanation of debt monetization here.

Anyway, Nobel Prize winning economist, Joseph Stiglitz thinks the ultra-loose monetary policies by the Federal Reserve is throwing the world into chaos rather than helping global economic recovery.

"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy. It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing." -- Joseph Stiglitz

Back to the wealthy.  Why the hurry to move assets out of the financial system? Do they know something we don't?
Well, they know one thing for sure: the Federal Reserve will go as far as it takes to protects their ASSets.

By all appearances, the way the wealthiest people in the world are rushing to gain exclusive access to real gold, as they buy it up by the ton, gold just might become extremely scarce in the future, as if it's not already. 

Even the Federal Reserve is selling its paper gold and buying up real gold.  Everyone knows if the financial system collapses, paper gold is worthless, right?  The price of real physical gold goes up as paper gold trades lower and lower and lower. Like everything else, precious metals will never find their true free trade value. That's the scam plan, anyway. Gold bubbles are created the same way other bubbles are created – by converting a limited item to unlimited, by fiat.

JPMorgan reopened its New York gold vault.

JPMorgan has reopened an underground gold vault in New York that was mothballed in the 1990s, in the latest sign of the soaring appetite for bullion.

Investors are piling money into gold in record quantities, pushing the price on Friday to a record nominal high of more than $1,320 a troy ounce. That has made the vaulting business highly lucrative, since banks often charge a small percentage of the value of the gold stored.

And why are insiders in such a rush to get out? 

Insider Selling To Buying: 2,341 To 1 "...insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough."

So, as more and more high income Americans are reduced to living paycheck to paycheck and record numbers apply for government anti-poverty programs, those at the top are cashing out.

Thirty percent of workers with salaries of $100,000 or more said they are living paycheck to paycheck, up from 21 percent last year, according to the survey of 4,400 workers nationwide.

Overall, 61 percent said they always or usually live paycheck to paycheck, up from 49 percent in 2008 and 43 percent in 2007.

To cope, Americans have been cutting back on how much they save.

Some 21 percent of all respondents said they have reduced their 401(k) contributions or personal savings in the last six months in order to get by, while 23 percent of the $100,000-and-over group said they had done so.

While some Americans have cut back on what they set aside, others have stopped saving all together.

Links:

Calculate your net worth, if you dare.

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Reinstate the Uptick Rule!

If you visit the zoo one day, and find that, the tigers and lions are wandering around... their cages removed; that's essentially, what Wall Street is like without the uptick rule in place. It's not safe for investors, because the uptick rule served as an important investor protection. Since its removal, short sellers have engaged in bear raids, where they sell a large quantity of shares of a company's stock rapidly to drive the price of that stock down, therefore creating panic selling, so they can buy it back later at a lower price and profit from it. So, why did/does the SEC grant so much power and control to greedy, self-interested short sellers? And why hasn't it been reinstated by now?

Schapiro's agenda has also been driven by political pressure, says James J. Angel, a finance professor at Georgetown University who has advised stock exchanges. Democrat Barney Frank, chairman of the House Financial Services Committee—one of the SEC's overseers—said at a Mar. 10 press conference that after speaking with the SEC boss, he was "hopeful" that "within a month" she would reinstate the uptick rule; it requires that investors wait for a stock to rise before betting against it, which prevents short-sellers from piling on. In April, Schapiro proposed the rule—only to postpone it.

In no other legal and ethical commercial endeavor in this country can you sell something you do not own. Such a design is usually punishable in criminal court as fraud, but for some reason Wall Street acts like this a God given right, and today, despite the massive plundering that took/takes place, it's just business as usual. Until the uptick rule is reinstated, short sellers still have a free license to steal from investors.

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We Must Tolerate the Inequality?

Despite the fact that a trained chimp could perform as well as Goldman Sachs, given all the help (TARP; $13 billion from AIG, because it was a counter party; free access to credit from the Federal Reserve; FDIC guaranteed debt...) they've received since the collapse of our economy, not to mention, the welfare recipients have not returned the favor by issuing credit to we, the people and to small business, the engine of job creation...despite all of that, they tell us we should tolerate the inequality...that it is good for all of us.

But, should we really be grateful to Reagan? And for all of those people responsible for the financialization (the increase in the size and significance of financial markets and financial institutions) of our economy? The Reagan revolution that helped to create the greatest state of inequality in the history of our nation? Is Wall Street really, "all that"? And one has to wonder, did people at Goldman Sachs know what was coming down the pike? More than that, did they knowingly push us into this crisis, knowing they could milk it for all its worth, while we, the suckers take it on the chin?

Well, it's hard to believe otherwise as they rake in their great fortunes at our expense. But hey, they claim inequality is good for us. Let's see if they're right.

We already know that Goldman Sachs Group Inc boasted third-quarter profits of $3.19 billion a few days ago. We know that Goldman Sachs Group Inc., set aside $16.7 billion for compensation and benefits in the first nine months of 2009, which is up 46% from a year earlier. We know that Goldman Sachs is cashing in like crazy.

And now we know, at a discussion panel titled, "What is the Price of Morality in the Marketplace?" a Goldman Sachs international adviser defended what can only be called over-the-top compensation in the finance industry, as his company plans a near-record year for pay, explaining that putting all this money in the pockets of the men who brought this economy down will help boost the economy.

“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all.”

Mayor Michael Bloomberg, it seems, would agree:

“They may be an enormous amount of money for one person, but they are how our people in the city in all industries get paid, whether you drive a cab, work in a restaurant, work in a store, whether you are a municipal employee.

All of this gets filtered down through our economy. No matter what you think about the propriety of any individual person’s bonus, we want companies in the city, and we are dependent on Wall Street finance, to do well.” - Mayor Bloomberg

So, is Wall Street performance really, as Mayor Bloomberg said, beneficial to us? Or is Wall Street simply a big myth? Does it really serve the function of allocating credit in the economy?

* Not according to the graph (left), which shows the percentage of capital expenditures by U.S. non-financial companies that was raised in U.S. financial markets from 1952 to 2006.

In other words, while it's true the dollar volume of financial trading has increased by an enormous amount - over three trillion dollars traded in U.S. financial markets each day - almost none of it is directed to toward creating real wealth.

The second graph (Private Investment in Capital Equipment as a Percent of GDP), shows that non-financial companies (NFC) do not use the stock market to raise funds for capital improvement programs.usury, speculation

"Figure 5.3 shows net funds raised through equity issuance, this time as a percent of capital expenditures ...It is evident that the stock market has not historically been a major source of NFC funds. On a quarterly basis, its contribution never exceeds 18 percent of capital expenditures. On average its contribution has been below 10 percent, even in the 1952-1980 period before (the increase in stock buybacks. However, there is a dramatic change in the relationship between the stock market and the NFCs starting in the early 1980s. Except for brief periods, in the post-1980 era the net equity issuance of the NFCs has been negative and often large. The NFCs have indeed been buying back their own stocks. The stock market has turned into an institution through which NFCs channel funds to financial markets, not the other way around."

The bottom line is that Wall Street and the financial elites, over the last three decades, have convinced us that we are here to serve money, that money is "god". However the opposite is true, money is here to serve us, to serve humanity. Money is nothing without us. In fact, considering money is created with one keystroke, it is nothing with us. We, the people, including atheists, if they believe in and use our monetary system, worship what amounts to nothing. We've been had.

* The Economic Populist

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Machiavellian Scheme or Stupidity?

Sixteen years ago, in 1992, Michael Stamenson, Merrill Lynch's number one salesman, worldwide, starred in the Merrill Lynch training video for brokers. He told recruits, that in order to become a successful broker, and "master of the universe", that they needed the "tenacity of a rattlesnake, the heart of a black widow spider and the hide of an alligator."

Stamenson went on to prove that that's not all you need to master the universe, as his star faded, after his client, Orange County, CA, sued Merrill Lynch for pushing the county into bankruptcy because of Stamenson's reckless investment advice. Orange County was Merrill's biggest account. They bought billions of dollars in exotic securities from Stamenson to fund almost 200 cities and school districts. Merrill Lynch made $100 million in fees. They ended up settling for $400 million, and an additional $30 million to prevent a grand jury investigation.

In addition, not only did Stamenson escape criminal charges, he remained on the payroll ($750,000/yr down from $3 million), retained his Merrill stock options and deferred compensation.

"You frequently see the person at the center of the storm continue to be well compensated by the corporate entity, while they are denying all wrongdoing,'' the lawyer added. "The company can cut someone off or embrace them. In the mix, they have to think about: 'What are the risks if I cut this person off? What happens if he starts saying things to others?"

All documents and testimony were sealed regarding this case, as is normally the case when Wall Street or any large corporation is involved in order to conceal their wrongdoing from public scrutiny.

The Merrill Lynch/Orange County example is just one of many that demonstrate the history of the credit derivatives' role in our current fiscal crisis. Fast forward sixteen years. Isn't it a little hard to believe that the former CEO of Goldman Sachs was blindsided by this economic disaster? Don't you think Enron, WorldCom, Global Crossing, Tyco, and McKesson-HBOC, not to mention, thousands of other warnings and signals that economic collapse was inevitable, should have clued him in? Despite Eliot Spitzer's lack of self-control, he saw this coming, as did many others without the credentials of Henry Paulson. Paulson's hysterics imploring us to approve a bailout were hardly believable. His three-page remedy, declaring himself omnipotent should have been the icing on the cake, so to speak.

So, what Paulson and Bush would like us to believe, that the current crisis is simply due to homeowners and mortgage loans is just one factor of many and the reality is that our government provided the credit derivatives market fertile ground to crash our economy. Structured Investment Vehicles (SIVs) and Special Purpose Entities (SPEs) served to hide enormous amounts of debt from public scrutiny, making companies appear more profitable and more solvent than they really were. No, this goes much further and its roots go much deeper, culminating in institutionalized criminality of which Paulson, Bush, the Supreme Court etc, wittingly, or unwittingly, are very much a part.

Since the Enron debacle, the Supreme Court has put big business' interests ahead of those of we, the people, loosening restrictions on corporate management and lightening the regulatory pressures. Here are just a few examples:

Wachovia v. Watters: The Supreme Court ruled that federal law trumps state consumer protection laws even when it involves an operating subsidiary of the national bank.

Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc : ("scheme liability") The court ruled to greatly limit the ability of shareholders to hold vendors, banks, accountants, law firms and others legally responsible for the securities fraud of another party. In an interview with the New York Times, J. Edward Ketz, called this ruling "a travesty of justice" and a "huge step backwards in the fight to prevent further accounting frauds from harming investors and the American economy."

Exxon Shipping Co. v. Baker: In June, 2008 the U.S. Supreme Court drastically reduced the punitive damages arising out of the 20-year old class action lawsuit, over the 1989 Alaskan oil spill. Since the jury awarded $2.5 billion in punitive damages in 1994, nearly 20% of the 33,000 fishermen, Native Alaskans, cannery workers and others who stood to benefit from the lawsuit have died.

Lilly Ledbetter Fair Pay Act of 2007 The Supreme Court held that the statute of limitations starts as soon as employment discrimination begins rather than when the employee first discovers it. How can you pursue a claim if you don't know that the claim even existed?

Binding Mandatory Arbitration: The Supreme Court's approval of mandatory pre-dispute arbitration has given banks and credit card companies their own system of "justice" where they act as judge and jury. Sen. Patrick Leahy, D-Vt sums it up as the Supreme Court's "blind devotion to corporation arbitration schemes".

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What a Mighty 4% "We the People" Are.

Today, all around the world stocks are plummeting.

Why?

It's not because of global economic distress -- China, India and Brazil are experiencing phenomenal growth -- rather it's due to this country's economic distress. The USA, containing only 4% of the world population still packs a mighty wallop.

Although, some analysts are not convinced the US carries the weight it used to a few decades ago. They believe that there are enough foreign countries worldwide who have built up enormous wealth recently who can withstand America's economic downturn and still come out ahead.

Even though the U.S. economy is stumbling, "I don't think it's even conceivable the world economy could go into recession" this year, said C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington.

Toronto experienced a huge 605-point drop losing more than $90 billion in value from the TSX and that is on top of a 6.6 per cent dive last week that had already wiped out all of the market's gains for 2007.

Far East Stock Markets, Jan 22 2008:

Australia: S&P/ASX -5.15%

China: DJ Shanghai -3.42%

Hong Kong: Hang Seng -5.50%

Japan: Nikkei Average -4.41%

Taiwan: Weighted -6.19%

Apparently, President Bush's $150 billion in tax rebates did not inspire all that much confidence here and abroad.

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