Posts tagged Europe
Prof. Mark Almond: Ukraine Protestors May Topple Government
RPI Academic Advisor Mark Almond was interviewed on RT today about the intensifying conflict in Ukraine. Prof. Almond is a long-time expert on the “color revolutions.” As he points out in the interview, protestors in Ukraine are using a well-known template for color revolutions used with success, “in Serbia in 2000 and in Georgia in 2003: storm public buildings, hope to face a demoralized government.” Read the transcript of Prof. Almond’s interview here and watch the video below.
RT video capture added to original post.
20 years ago NAFTA passed, This is what one of the greatest free market economists ever had to say about it at the time.0
20 years ago NAFTA passed, This is what one of the greatest free market economists ever had to say about it at the time.
This essay by Murray Rothbard holds particular relevance as the Trans Pacific Partnership continues to be negotiated in secret.
Yet Nafta is more than just a big business trade deal. It is part of a very long campaign to integrate and cartelize government in order to entrench the interventionist mixed economy. In Europe, the campaign culminated in the Maastricht Treaty, the attempt to impose a single currency and central bank on Europe and force its relatively free economies to rachet up their regulatory and welfare states.
In the United States, this has taken the form of transferring legislative and judicial authority away from the states and localities to the executive branch of the federal government. Nafta negotiations have pushed the envelope by centralizing government power continent-wide, thus further diminishing the ability of taxpayers to hinder the actions of their rulers.
Central Bank Monetary Cures Cannot Work
Published by Peter Schiff
Peter Schiff on CNBC Europe (11/7/2013)
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By Hunter Lewis
Monsanto’s Friends in High Places
Editor’s Note: The following is adapted from Hunter Lewis’s new book Crony Capitalism in America, now available in the Mises Store.
Many companies hope to send an employee into a government agency to influence regulation. How much better if the employee can actually shape government regulation to promote and sell a specific product! Monsanto seems to have accomplished this — and much more.
Michael Taylor is among a number of people with Monsanto ties who have worked in government in recent years. He worked for the Nixon and Reagan Food and Drug Administration in the 1970s, then became a lawyer representing Monsanto. In 1991, he returned to the FDA as Deputy Commissioner for Policy under George H. W. Bush, and helped secure approval for Monsanto’s genetically engineered bovine (cow) growth hormone, despite it being banned in Canada, Europe, Japan, Australia, and New Zealand.
This was only a start for Taylor. He also did not like some producers advertising their milk as bovine-growth-hormone-free. That seemed to put Monsanto’s product in an unfavorable light. So in 1994 he wrote a guidance document from within the FDA requiring that any food label describing the product as bovine-growth-hormone-free must also include these words: “The FDA has determined … no significant difference has been shown between milk derived from [BGH] and non-[BGH] supplemented cows.”
It apparently did not concern Taylor that this new pronouncement by the FDA was unsupported by either Monsanto or FDA studies. A private company making any such unsupported claim could have been charged with fraud. But since it came out of the FDA, milk producers would place themselves at legal risk by not printing it on their label.
Taylor moved to the US Department of Agriculture (USDA) in the mid-1990s. During this period, he tried to persuade the FDA and Federal Trade Commission (FTC) to take a further step and make it illegal for dairies to make any claim to a bovine-growth-hormone-free product. Failing in that, he reached out to state governments to make such a claim illegal at the state level. This was finally blocked by a court decision in Ohio that there was indeed a “compositional difference” between BGH and non-BGH-treated milk. Long before this 2010 ruling, Taylor had returned to Monsanto as a vice president, and then returned to President Obama’s FDA, first as Senior Advisor on Food Safety and then Deputy Commissioner for Foods.
Taylor’s story, however, is not just about milk, or even mainly about milk. During his second posting at the FDA, as Deputy Commissioner for Policy 1991–1994, Agency scientists were grappling with questions about the overall safety of genetically engineered foods (often labeled Genetically Modified Organisms). As Jeffrey Smith notes,
[Internal] memo after memo described toxins, new diseases, nutritional deficiencies, and hard to detect allergens. [Staff scientists] were adamant that the technology carried “serious health hazards,” and required careful, long-term research, including human studies. …
The Agency, under Taylor’s and later under others’ leadership, simply ignored these findings. No human studies were required. GMO foods were allowed to enter the food supply unregulated by the FDA and barely regulated by the USDA, which views them as an important US export product. By 2012, in the US, 90 percent of sugar beets (representing half of overall sugar production) was GMO, 85 percent of soybeans (which are to be found in 70 percent of all supermarket food products), and 85 percent of corn, including the corn used to make high fructose corn syrup, a sweetener used in most soft drinks and processed foods.
The few scientists trying to conduct independent research on GMO often found their careers damaged. Most food research, conferences, and fellowships are funded by “Big Food” companies including Monsanto, which has a chilling effect. Even sympathetic colleagues may be reluctant to back those who dare speak out.
Those who persevered in conducting independent research, often abroad, reported worrisome findings. An Austrian study found that mice fed GMO corn seemed fine in the first and second generations, but by the third were sterile. A Russian study of hamsters fed GMO soybeans found a similar result. Could human beings exhibit a similar, delayed response? No one knows. Another, unrelated study showed that the pesticide used in large quantities on engineered Roundup Ready crops is toxic to male testicle cells and threatens both testosterone synthesis and sperm count.
At the same time that the FDA tries to remain as silent as possible about GMOs, the US Department of Agriculture and other parts of the US government are doing everything they can to promote them. The USDA under both George W. Bush and Obama has sought to accelerate what is already an automatic rubberstamp for new GMO products, to “deregulate” them (including grasses such as alfalfa that cannot be restricted to the planted area), and to provide immunity from lawsuits over the spread of GMO crops to adjoining organic farms. Immunity from lawsuit was especially ironic. For years, GMO producers had threatened, intimidated, sued, and in every imaginable way attempted to bully adjoining farmers. If any of the patented seeds drifted and were found on the neighboring farm, that farmer would be charged with “theft.” The clear message: buy the patented seeds or face destruction through legal costs. Remarkably, courts were buying this specious argument. But finally the persecuted began to counter-sue successfully, and the USDA immediately rushed to provide legal immunity to the GMO producers in the form of an insurance policy that organic farmers would have to buy and that would be their only available form of compensation.
Although we have chosen to focus on the remarkable revolving door career of Michael Taylor at the FDA and Monsanto, because it has potentially affected the future health of hundreds of millions of people, stories like his are not uncommon. A Chicago Tribune article from 2012 is headlined: Chemical Firms Champion New EPA (Environmental Protection Agency) Expert. It describes how Todd Stedeford worked at the EPA from 2004–2007 under the George W. Bush administration, then joined chemical firm Albemarle Corp. While at Albemarle, which makes flame retardants, he defended chemicals used in many products and even suggested that the standard set by the EPA for flame retardants was 500 times too high. Having returned to the EPA in 2011, under President Obama, he is now “in charge of a … program studying whether dozens of industrial chemicals, including flame retardants, are too dangerous.” One must ask: what was the EPA thinking when it made this appointment?
Bill Ruckelshaus, twice EPA head, once said that “at EPA you work for a cause that is beyond self-interest. … You’re not there for the money, you are there for something beyond yourself.” But on leaving the EPA, he himself became a Monsanto director. Meanwhile the Geneva-based Covalence group placed Monsanto dead last on a list of 581 global companies ranked by their reputation for ethics.
A look at some Monsanto representatives and their positions in government:
|Suzanne Sechen, worked on Monsanto-funded academic research||A primary reviewer for bovine growth hormone in FDA|
|Linda J. Fisher, VP, lobbyist for Monsanto||Assistant Administrator at EPA|
|Michael Friedman, MD, Sr. VP, GD Searle, subsidiary of Monsanto||Acting Commissioner of FDA|
|Marcia Hale, international lobbyist, Monsanto||Assistant to President under President Clinton|
|Michael (Mickey) Kantor, director||Secretary of Commerce and US Trade Representative under President Clinton|
|William D. Ruckelshaus, director||Head of EPA under both Presidents Nixon and Reagan|
Hunter Lewis is cofounder of Against Crony Capitalism. He is the former CEO of Cambridge Associates and the author of eight books, including two new books, Free Prices Now! and Crony Capitalism in America: 2008-2012. He has served on boards and committees of 15 not-for-profit organizations, including environmental, teaching, research, and cultural organizations, as well as the World Bank. See Hunter Lewis’s article archives.
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Image credit: https://mises.org
All-Time High Unemployment: The Economic Depression In Europe Just Keeps Getting Deeper
The unemployment rate in the eurozone is higher than it has ever been before. This week we learned that eurozone unemployment came in at an all-time high of 12.2 percent for September. Back in January 2012, it was sitting at just 10.4 percent. So anyone that believes that “things are getting better” in Europe is just being delusional. In fact, the economic depression in Europe just keeps getting deeper. The funny thing is that the mainstream media will barely call what is going on in Europe a “recession” even though the unemployment rates in both Spain and Greece are now much higher than anything that the United States ever experienced during the “Great Depression” of the 1930s. There haven’t been as many headlines about the financial crisis in Europe lately because the ECB has been papering over the debt problems of the periphery (at least for the moment), but the economic conditions on the ground for average Europeans just continue to get even worse. Later on in this article, you will read about a 25-year-old Spanish man with three college degrees that moved to London in a desperate search for a job who is now cleaning up poop for a living. The economic collapse of Europe continues to march on, and there is no end in sight.
All you have to do is look at the latest unemployment numbers to realize that things are getting worse in Europe.
In Italy, the unemployment rate is up to 12.5 percent.
In January 2012, less than two years ago, it was sitting at just 8.9 percent.
In Greece, the unemployment rate is up to an astounding 27.6 percent.
In January 2012, it was sitting at just 21.4 percent.
In Spain, the unemployment rate is up to 26.6 percent.
The youth unemployment statistics in the eurozone are even more horrifying…
Unemployment among the under-25s rose by 22,000 in September to 3,548,000 – nudging up youth jobless rate to 24.1%. In France, the youth jobless rate jumped from 25.6% to 26.1%, while in Italy it increased from 40.2% to 40.4%.
But as bad as those numbers are, they are nothing compared to what is going on in Spain and Greece. In Spain, the youth unemployment rate is up to 56.5 percent, and in Greece the youth unemployment rate is up to 57.3 percent.
And of course unemployment is not the only problem that the European economy is dealing with right now. The following are some more facts about the European economy that show that the economic depression in Europe just keeps getting deeper…
-European car sales are on pace to hit a 23 year low in 2013.
-The percentage of “bad loans” in Spain has soared to a new all-time record high.
-The number of mortgage applications in Spain has fallen 90 percent since the peak of the market.
-Citigroup is projecting that the unemployment rate in Greece will reach 32 percent in 2015.
-The number of unemployed workers in Cyprus is now five times higher than it was before the financial crisis of 2008.
-It is being projected that Spain’s debt to GDP ratio will rise to nearly 100 percent by the end of next year.
-The debt to GDP ratio of Portugal is already up to 123 percent.
-The debt to GDP ratio of Italy is already up to 127 percent.
-Even though Greece has implemented a whole host of “austerity measures”, the debt to GDP ratio of Greece is now up to 156 percent.
But what these numbers cannot really communicate is the tremendous amount of pain and despair that millions upon millions of Europeans are experiencing right now.
For example, consider the story of Benjamin Serra Bosch, a 25-year-old Spanish man that moved to London in a desperate search for a job. He has three college degrees, including a Master’s Degree from the IEBS Business School in Barcelona. The following is a rough translation of a message that he recently posted on Facebook…
My name is Benjamín Serra, I have two bachelor degrees and a master’s degree, and I clean toilets.
No, it is not a joke. I do it to pay the rent for my room in London.
I’ve been working in a famous chain of cafes in the United Kingdom since May, and for the first time today, after 5 months working there, I see it clearly. I have been cleaning toilets. My thought was: “I received distinction in my two degrees and I clean other peoples’ poop in a country that isn’t my own.” Well, I also make coffee, clean the tables and wash cups.
And I am not ashamed to do so. Cleaning is a very decent job. What embarrasses me is having to do so because no one has given me an opportunity in Spain. Like me, there are many Spaniards, especially in London. “You are a plague,” I was told once here. And let’s not kid ourselves. We are not young people on an adventure to learn the language and have new experiences. We are immigrants.
I’ve always been very proud, I am not going to deny. Those who know me, you know. And I have to bust out a smile at customers who look over my shoulder as I am simply a “barista” (as they call it here). Some are so outrageous that it makes me want to pull out my University and master degrees and put them in their face. But it would not really do anything. It appears that those titles now only serve to clean the poop that I clean from the toilets in the cafe. A pity.
I thought that it deserved something better after putting so much effort in my academic life. It seems that I was wrong.
As economic conditions continue to decline all over Europe, anger and frustration with the “European experiment” continue to grow. UKIP’s Nigel Farage expressed these sentiments very eloquently during a speech on the 23rd of October when he stated that “what we are saying, large numbers of us from every single EU member state is: we don’t want that flag, we don’t want the anthem that you all stood so ram-rod straight for yesterday, we don’t want EU passports, we don’t want political union.”
Unfortunately, the elite of Europe are so obsessed with their little experiment that the only “solutions” to these economic problems that they are even willing to consider involve even more European integration.
And Americans certainly should not be looking down their noses at what is happening in Europe.
What is going on in Italy, France, Spain and Greece will be coming here soon enough. In fact, even during the midst of this so-called “economic recovery”, poverty continues to absolutely explode in the United States.
Economic conditions in both the United States and Europe have never even gotten close to where they were prior to 2008, and now the next major wave of the economic collapse is rapidly approaching.
This is just the beginning. Things are going to get much worse in the years ahead.
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Image credit: http://theeconomiccollapseblog.com
Spain today, The USA tomorrow? A country in depression.
Spain is the country of Picasso, Miro, Gaudi, Salvador Dali, Don Quixote, and a former superpower (centuries ago.) Now it is a shadow of even what it was a decade ago. This report comes to us from a friend of ACC.
“…The grandparents are the safety net for the extended family. They provide lodging for the children and grandchildren. The grandparents have avoided debt and own more than one home mortgage free. They pay for groceries, school, and clothing for the children and grandchildren.
There is no hiring beyond what is absolutely necessary. The same people stock shelves, make deliveries and act as cashiers in grocery stores. Self checkout kiosks are ubiquitous.
Small business staff with family and friends who are paid under the table. Businesses open sporadically and share what business there is by deciding among themselves which days they will be open.
People who are working full time are almost all older than you would expect. They are tenured employees who do not quit until they qualify for a pension.
The wonderful network of toll roads is deserted. One can drive 50 kilometers and encounter maybe 10 speeding Mercedes and BMWs and no trucks.
The new high speed rail (AVE) is little used because it is so expensive. Intercity and long haul bus routes thrive.
NOBODY drinks wine – only beer….wine is too expensive. Café owners complain that young people don’t go out but instead buy their booze at supermarkets and drink in the parks.
There are many street side vendors who are in the country illegally.
It is considered bad form not to give to beggars (as long as they are not gypsies.)
Tax avoidance is common. You know when you get no receipt that the sale is not reported.
Abandoned cars are common (too expensive to put on the road.)
The 1% goes on – No one knows where all their money comes from.”
Image credit: http://www.againstcronycapitalism.org
Are the Producers (in society) Losing to the Predators?
This is an article which should be read by anyone who understands the mission of Against Crony Capitalism.
What is a society to do as the population keeps getting older, when the economically “productive” people number fewer than the people who are retiring? This is the great question which is confronting this country and Europe right now. How can the 20th Century welfare state survive in the face of such an important demographic shift?
The answer is that it can not. We will go through hell coming to this understanding however.
(From Real Clear Markets)
Most Americans seem indifferent as to how they get ahead, whether by wealth creation or redistribution. The choice seems abstract. Fair enough. But for the country, the choice matters enormously. The appeal of the affluent society was that one group’s gains didn’t have to come at the expense of others’. The promise of economic growth was oversold, but it had the healthy effect of encouraging an expansive and inclusive vision of America.
What’s emerging today is more self-interested and self-destructive. The dilemma of a rich society is that its prospects can be undermined by its very abundance. Countries preoccupied with distributional wars are distracted from production.
Image credit: http://www.againstcronycapitalism.org
About Nick Sorrentino
Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.
Cyprus-Style Wealth Confiscation Is Now Starting To Happen All Over The Globe
Now that “bail-ins” have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again. In fact, Cyprus-style wealth confiscation is already starting to happen all around the world. As you will read about below, private pension funds were just raided by the government in Poland, and a “bail-in” is being organized for one of the largest banks in Italy. Unfortunately, this is just the beginning. The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe. It is only a matter of time before we see this exact same type of thing happen in the United States as well. From now on, anyone that keeps a large amount of money in any single bank account or retirement fund is being incredibly foolish.
Let’s take a look at a few of the examples of how Cyprus-style wealth confiscation is now moving forward all over the globe…
For years, there have been rumors that someday the U.S. government would raid private pension funds.
Well, in Poland it just happened.
According to Reuters, private pension funds were raided in order to reduce the size of the government debt…
Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The Polish government is doing the best that it can to make this sound like some sort of complicated legal maneuver, but the truth is that what they have done is stolen private assets without giving any compensation in return…
The Polish pension funds’ organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.
Announcing the long-awaited overhaul of state-guaranteed pensions, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.
He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.
For years, Iceland has been applauded for how they handled the last financial crisis. But now it is being proposed that the “blanket guarantee” that currently applies to all bank accounts should be reduced to 100,000 euros. Will this open the door for “haircuts” to be applied to bank account balances above that amount?…
Following the crisis in October 2008, Iceland’s government declared all deposits in domestic financial institutions were ‘blanket’ guaranteed – an Emergency Act that was reafrmed twice since. However, according to RUV, the finance minister is proposing to restrict this guarantee to only deposits less-than-EUR100,000. While some might see the removal of an ‘emergency’ measure as a positive, it is of course sadly reminiscent of the European Union “template” to haircut large depositors. This is coincidental (threatening) timing given the current stagnation of talks between Iceland bank creditors and the government over haircuts and lifting capital controls – which have restricted the outflows of around $8 billion.
European finance ministers have agreed to a plan that would make “bail-ins” the standard procedure for rescuing “too big to fail” banks in the future. The following is how CNN described this plan…
European Union finance ministers approved a plan Thursday for dealing with future bank bailouts, forcing bondholders and shareholders to take the hit for bank rescues ahead of taxpayers.
The new framework requires bondholders, shareholders and large depositors with over 100,000 euros to be first to suffer losses when banks fail. Depositors with less than 100,000 euros will be protected. Taxpayer funds would be used only as a last resort.
What this means is that if you have over 100,000 euros in a bank account in Europe, you could lose every single bit of the unprotected amount if your bank collapses.
As Zero Hedge reported on Tuesday, a “bail-in” is now being organized for the oldest bank in Italy…
Recall that three weeks ago we warned that “Monti Paschi Faces Bail-In As Capital Needs Point To Nationalization” although we left open the question of “who will get the haircut including senior bondholders and depositors…. given the small size of sub-debt in the capital structures.” Today, as many expected on the day following the German elections, the dominos are finally starting to wobble, and as we predicted, Monte Paschi, Italy’s oldest and according to many, most insolvent bank, quietly commenced a bondholder “bail in” after it said that it suspended interest payments on three hybrid notes following demands by European authorities that bondholders contribute to the restructuring of the bailed out Italian lender. Remember what Diesel-BOOM said about Cyprus – that it is a template? He wasn’t joking.
As Bloomberg reports, Monte Paschi “said in a statement that it won’t pay interest on about 481 million euros ($650 million) of outstanding hybrid notes issued through MPS Capital Trust II and Antonveneta Capital Trusts I and II.” Why these notes? Because hybrid bondholders have zero protections and zero recourse. “Under the terms of the undated notes, the Siena, Italy-based lender is allowed to suspend interest without defaulting and doesn’t have to make up the missed coupons when payments resume.” Then again hybrids, to quote the Dutchman, are just the template for the balance of the bank’s balance sheet.
Why is this happening now? Simple: the Merkel reelection is in the bag, and the EURUSD is too high (recall Adidas’ laments from last week). Furthermore, if the ECB proceeds with another LTRO as many believe it will, it will force the EURUSD even higher, surging from even more unwanted liquidity. So what to do? Why stage a small, contained crisis of course. Such as a bail in by a major Italian bank. The good news for now is that depositors are untouched. Unfortunately, with depositor cash on the wrong end of the (un)secured liability continuum it is only a matter of time before those with uninsured deposits share some of the Cypriot pain. After all, in the brave New Normal insolvent world, “it is only fair.”
Fortunately, it does not appear that this particular bail-in will hit private bank accounts (at least for now), but it does show that European officials are very serious about applying bail-in procedures when a major bank fails.
The New Zealand government has been discussing implementing a “bail-in” system to deal with any future major bank failures. The following comes from a New Zealand news source…
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.
“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.
“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.”
Incredibly, even Canada is moving toward adopting these “bank bail-ins”. In a previous article, I explained that “bail-ins” were even part of the new Canadian government budget…
Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013″ was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted.
So what does all of this mean for us?
It means that the governments of the world are eyeing our money as part of the solution to any future failures of major banks.
As a result, there is no longer any truly “safe” place to put your money.
One of the best ways to protect yourself is to spread your money around. In other words, don’t put all of your eggs in one basket.
If you have your money a bunch of different places, it is going to be much harder for the government to grab it all.
But if you don’t listen to the warnings and you continue to keep all of your wealth in one giant pile somewhere, don’t be surprised when you get wiped out in a single moment someday.
Image credit: http://theeconomiccollapseblog.com
The Greatest Debt Crisis The World Has Ever Seen Is Coming
The largest mountain of debt in the history of the world just continues to grow even larger, and everyone knows that this colossal debt spiral is not going to end well. But we all keep playing along because nobody wants the party to end. Right now, there is an unprecedented ocean of red ink covering the planet. Globally, governments have never been in so much debt, corporations have never been in so much debt and consumers have never been in so much debt. But every time someone suggests that this is a problem and that we should at least try to get debt levels to settle down a bit, people start screaming that “austerity” will hurt the global economy. And of course it will. But we can’t continue to live way, way above our means indefinitely. Well, we can try, but at some point this entire house of cards is going to come crashing down and we are going to be facing the greatest economic crisis the world has ever seen.
It is kind of like watching a slow-motion train wreck that you have no chance of possibly stopping that you know will end up killing lots of innocent people. This debt crisis is going to end up destroying the global financial system, but there is not a thing that you or I can do to prevent it from happening. The unprecedented debt binge that we are witnessing right now is going to continue until someday we hit a brick wall of financial disaster. We can yell and we can scream, but it isn’t going to stop what is happening.
As the Telegraph recently noted, even the Bank for International Settlements is warning that debt levels are way too high. According to the BIS, total public and private debt levels are now 30 percent higher than they were in 2008…
“This looks like to me like 2007 all over again, but even worse,” said William White, the BIS’s former chief economist, famous for flagging the wild behavior in the debt markets before the global storm hit in 2008.
“All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle,” said Mr White, now chairman of the OECD’s Economic Development and Review Committee.
The BIS can see the disaster coming, but even they have no chance of preventing it.
For the rest of this article, I am going to focus on government debt, but please keep in mind that corporate debt and consumer debt are also totally out of control globally. It would be very hard to overstate the nightmare that we are facing.
But of course national governments are the biggest offenders when it comes to debt…
Looking purely at the numbers, Japan’s medium-term fundamentals are among the bleakest in the world.
Total government debt amounts to over 200% of the country’s entire GDP– a figure so large that the Japanese government spends 51.5% of the 43 trillion yen ($430 billion) they collect in tax revenue just to pay interest!
Perhaps even more astounding is that ‘primary balance expenses,’ i.e. normal government expenditures, totaled 70.3 trillion yen, or 163% of tax revenue.
The only way they’ve managed to stay afloat is by issuing more debt, which makes the problem even worse. In fact, 46% of the 2013 budget is being financed by debt.
These guys are running out of rope. And fast.
China is facing a different sort of a problem. In that nation, the growth of private domestic debt is wildly out of control.
According to a recent World Bank report, private domestic debt in China has grown from 9 trillion dollars in 2008 to 23 trillion dollars today.
There is no way that is sustainable, and at some point that massive bubble is going to burst.
Even though some European nations have supposedly implemented “austerity measures” in recent years, debt levels continue to rise rapidly. The following are some numbers that were recently released which show that government debt to GDP ratios for some of the most financially troubled nations in Europe are absolutely soaring…
- Euroarea: 92.2%, up from 88.2% a year ago
- Greece: 160.5%, up from 136.5% a year ago
- Italy: 130.3%; up from 123.8% a year ago
- Portugal: 127.2%, up from 112.3% a year ago
- Ireland: 125.1%, up from 106.8% a year ago
- Spain: 88.2%, up from 73.0% a year ago
- Netherlands: 72.0%, up from 66.7% a year ago
Anyone that tells you that the crisis in Europe is “over” is lying to you. The debt crisis is getting worse, not better.
The United States
The biggest mountain of debt of all can be found in the United States.
30 years ago, the national debt was a little bit above a trillion dollars.
Today, it is rapidly approaching 17 trillion dollars.
At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain. And since Barack Obama entered the White House, the debt to GDP level has soared to unprecedented heights…
Sadly, this is just the beginning.
One reason for this is that the U.S. is facing some tremendous demographic challenges in the years ahead.
In other words, our population is getting older.
It is being projected that the number of Americans on Social Security will rise from 57 million today to more than 100 million in 25 years.
How in the world are we possibly going to pay for that?
Already, we are very heavily dependent on foreigners to pay our bills.
According to the U.S. Treasury, foreigners hold approximately 5.6 trillion dollars of our debt at this point.
So what would happen if we went to war with Syria and they decided to quit borrowing from us and they started dumping our debt instead?
That is a very good question.
And actually, according to Zero Hedge foreigners have already started to dump a little bit of our debt…
Today’s TIC data showed something disturbing: for the fourth month in a row, foreigners were net sellers of US Treasury paper in July, as total foreign holdings declined from $5.600 trillion to $5.590 trillion which represents 49% of total marketable debt (including the debt owned by the Fed of course). In other words, since peaking at $5.724 trillion in March, foreign-held debt has declined by $134 trillion, at a time when yields have surged on fears the Fed’s tapering of its own purchases of bonds will mean less Fed frontrunning opportunities.
We certainly cannot afford for that to continue, because we desperately need other nations to finance our reckless spending.
Our debt is wildly out of control, and the only way we can keep the entire system from collapsing is to go into even more debt.
That is a whole lot of money.
But most Americans do not consider it to be a problem because disaster has not struck yet.
Unfortunately, they simply don’t understand how quickly an exponential problem can overwhelm you. I think that the following illustration from Simon Black is particularly helpful…
Let’s say you’re at a party in a small apartment that’s about 500 square feet in size. Then suddenly, at 11pm, a pipe bursts, starting a trickle into the living room.
Aside from the petty annoyance, would you feel like you were in danger? Probably not. This is a linear problem– the rate at which the water is leaking is more or less constant, so the guests can keep partying through the night without worry.
But let’s assume that it’s an exponential leak.
At first, there’s just one drop of water. But each minute, the rate doubles. So by 11:01pm, there’s 2 drops. By 11:02, 4 drops. And so forth.
By 11:27pm, there’s only six inches of standing water. Yet by 11:31pm, just four minutes later, the entire room is under nearly 8 feet of water. And the party’s over.
For nearly half an hour, it all seemed safe and manageable. People had all the time in the world to leave, right up until the bitter end. 11:27, 11:28, 11:29. Then it all went from benign to deadly in a matter of minutes.
By the time that our politicians and the talking heads on the mainstream media admit that we have a debt emergency on our hands, it will probably be far, far too late.
The greatest debt crisis the world has ever seen is coming, and there is nothing that anyone can do to stop it.
But you can take measures to get prepared for it.
Please get prepared while you still can.
Image credit: http://thetruthwins.com
Is The United States Going To Go To War With Syria Over A Natural Gas Pipeline?
Why has the little nation of Qatar spent 3 billion dollars to support the rebels in Syria? Could it be because Qatar is the largest exporter of liquid natural gas in the world and Assad won’t let them build a natural gas pipeline through Syria? Of course. Qatar wants to install a puppet regime in Syria that will allow them to build a pipeline which will enable them to sell lots and lots of natural gas to Europe. Why is Saudi Arabia spending huge amounts of money to help the rebels and why has Saudi Prince Bandar bin Sultan been “jetting from covert command centers near the Syrian front lines to the Élysée Palace in Paris and the Kremlin in Moscow, seeking to undermine the Assad regime”? Well, it turns out that Saudi Arabia intends to install their own puppet government in Syria which will allow the Saudis to control the flow of energy through the region. On the other side, Russia very much prefers the Assad regime for a whole bunch of reasons. One of those reasons is that Assad is helping to block the flow of natural gas out of the Persian Gulf into Europe, thus ensuring higher profits for Gazprom. Now the United States is getting directly involved in the conflict. If the U.S. is successful in getting rid of the Assad regime, it will be good for either the Saudis or Qatar (and possibly for both), and it will be really bad for Russia. This is a strategic geopolitical conflict about natural resources, religion and money, and it really has nothing to do with chemical weapons at all.
It has been common knowledge that Qatar has desperately wanted to construct a natural gas pipeline that will enable it to get natural gas to Europe for a very long time. The following is an excerpt from an article from 2009…
Qatar has proposed a gas pipeline from the Gulf to Turkey in a sign the emirate is considering a further expansion of exports from the world’s biggest gasfield after it finishes an ambitious programme to more than double its capacity to produce liquefied natural gas (LNG).
“We are eager to have a gas pipeline from Qatar to Turkey,” Sheikh Hamad bin Khalifa Al Thani, the ruler of Qatar, said last week, following talks with the Turkish president Abdullah Gul and the prime minister Recep Tayyip Erdogan in the western Turkish resort town of Bodrum. “We discussed this matter in the framework of co-operation in the field of energy. In this regard, a working group will be set up that will come up with concrete results in the shortest possible time,” he said, according to Turkey’s Anatolia news agency.
Other reports in the Turkish press said the two states were exploring the possibility of Qatar supplying gas to the strategic Nabucco pipeline project, which would transport Central Asian and Middle Eastern gas to Europe, bypassing Russia. A Qatar-to-Turkey pipeline might hook up with Nabucco at its proposed starting point in eastern Turkey. Last month, Mr Erdogan and the prime ministers of four European countries signed a transit agreement for Nabucco, clearing the way for a final investment decision next year on the EU-backed project to reduce European dependence on Russian gas.
“For this aim, I think a gas pipeline between Turkey and Qatar would solve the issue once and for all,” Mr Erdogan added, according to reports in several newspapers. The reports said two different routes for such a pipeline were possible. One would lead from Qatar through Saudi Arabia, Kuwait and Iraq to Turkey. The other would go through Saudi Arabia, Jordan, Syria and on to Turkey. It was not clear whether the second option would be connected to the Pan-Arab pipeline, carrying Egyptian gas through Jordan to Syria. That pipeline, which is due to be extended to Turkey, has also been proposed as a source of gas for Nabucco.
Based on production from the massive North Field in the Gulf, Qatar has established a commanding position as the world’s leading LNG exporter. It is consolidating that through a construction programme aimed at increasing its annual LNG production capacity to 77 million tonnes by the end of next year, from 31 million tonnes last year. However, in 2005, the emirate placed a moratorium on plans for further development of the North Field in order to conduct a reservoir study.
As you just read, there were two proposed routes for the pipeline. Unfortunately for Qatar, Saudi Arabia said no to the first route and Syria said no to the second route. The following is from an absolutely outstanding article in the Guardian…
In 2009 – the same year former French foreign minister Dumas alleges the British began planning operations in Syria – Assad refused to sign a proposed agreement with Qatar that would run a pipeline from the latter’s North field, contiguous with Iran’s South Pars field, through Saudi Arabia, Jordan, Syria and on to Turkey, with a view to supply European markets – albeit crucially bypassing Russia. Assad’s rationale was “to protect the interests of [his] Russian ally, which is Europe’s top supplier of natural gas.”
Instead, the following year, Assad pursued negotiations for an alternative $10 billion pipeline plan with Iran, across Iraq to Syria, that would also potentially allow Iran to supply gas to Europe from its South Pars field shared with Qatar. The Memorandum of Understanding (MoU) for the project was signed in July 2012 – just as Syria’s civil war was spreading to Damascus and Aleppo – and earlier this year Iraq signed a framework agreement for construction of the gas pipelines.
The Iran-Iraq-Syria pipeline plan was a “direct slap in the face” to Qatar’s plans. No wonder Saudi Prince Bandar bin Sultan, in a failed attempt to bribe Russia to switch sides, told President Vladmir Putin that “whatever regime comes after” Assad, it will be “completely” in Saudi Arabia’s hands and will “not sign any agreement allowing any Gulf country to transport its gas across Syria to Europe and compete with Russian gas exports”, according to diplomatic sources. When Putin refused, the Prince vowed military action.
If Qatar is able to get natural gas flowing into Europe, that will be a significant blow to Russia. So the conflict in Syria is actually much more about a pipeline than it is about the future of the Syrian people. In a recent article, Paul McGuire summarized things quite nicely…
The Nabucco Agreement was signed by a handful of European nations and Turkey back in 2009. It was an agreement to run a natural gas pipeline across Turkey into Austria, bypassing Russia again with Qatar in the mix as a supplier to a feeder pipeline via the proposed Arab pipeline from Libya to Egypt to Nabucco (is the picture getting clearer?). The problem with all of this is that a Russian backed Syria stands in the way.
Qatar would love to sell its LNG to the EU and the hot Mediterranean markets. The problem for Qatar in achieving this is Saudi Arabia. The Saudis have already said “NO” to an overland pipe cutting across the Land of Saud. The only solution for Qatar if it wants to sell its oil is to cut a deal with the U.S.
Recently Exxon Mobile and Qatar Petroleum International have made a $10 Billion deal that allows Exxon Mobile to sell natural gas through a port in Texas to the UK and Mediterranean markets. Qatar stands to make a lot of money and the only thing standing in the way of their aspirations is Syria.
The US plays into this in that it has vast wells of natural gas, in fact the largest known supply in the world. There is a reason why natural gas prices have been suppressed for so long in the US. This is to set the stage for US involvement in the Natural Gas market in Europe while smashing the monopoly that the Russians have enjoyed for so long. What appears to be a conflict with Syria is really a conflict between the U.S. and Russia!
The main cities of turmoil and conflict in Syria right now are Damascus, Homs, and Aleppo. These are the same cities that the proposed gas pipelines happen to run through. Qatar is the biggest financier of the Syrian uprising, having spent over $3 billion so far on the conflict. The other side of the story is Saudi Arabia, which finances anti-Assad groups in Syria. The Saudis do not want to be marginalized by Qatar; thus they too want to topple Assad and implant their own puppet government, one that would sign off on a pipeline deal and charge Qatar for running their pipes through to Nabucco.
Yes, I know that this is all very complicated.
But no matter how you slice it, there is absolutely no reason for the United States to be getting involved in this conflict.
If the U.S. does get involved, we will actually be helping al-Qaeda terrorists that behead mothers and their infants…
Image credit: http://theeconomiccollapseblog.com