10 Myths That Politicians Want You to Believe -

10 Myths That Politicians Want You to Believe - 



The financial system is on the brink of collapse after trillions in bad loans were issued by greedy bankers. If you were a U.S. political figure, would you:


A.) Tell everyone to suck a lemon, and (maybe) let the economy implode.


B.) Fire the bankers who made the bad loans, prosecute the guys who broke the law and guarantee a portion of the loans in a grin-and-bear-it show of good faith.


C.) Reward the bankers who made the bad loans with billions of dollars in bonuses and guarantee every loan with U.S. taxpayer money (with interest, because we borrowed the money from China).


If you answered C, then maybe you should run for office, support laws that funnel billions to insolvent companies, retire from politics and start working for one of the companies you helped bail out. Heck, that's what former Republican-senator Judd Gregg did (newly hired by Goldman Sachs).


But don't worry, the revolving door between Wall Street and government is just a "myth", and here are 10actual myths that politicians want you to believe:


Yes, quantitative easing is "printing" money. No, it won't help the economy.
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10. Quantitative Easing Helps the Economy


Make no mistake, quantitative easing is a gift to bankers and nothing else. Let's take a deeper look:


Quantitative easing is when the United States' central bank, the Federal Reserve, buys U.S. Treasury bonds.


Treasury bonds are a future obligation of the United States, paid out with Federal Reserve notes (dollars).
Federal Reserve notes are a current obligation of the United States, redeemable for goods and services.
If the Federal Reserve purchases bonds directly from the United States Treasury, they are electronically creating dollars (current obligations) in exchange for future obligations. This is inflationary if the amount of obligations (money) is increasing faster that the amount of capital (goods, services, products and ideas). But the Federal Reserve doesn't buy bonds from the Treasury, it buys them from "primary dealers."


Primary dealers are a network of banks (including Goldman Sachs(GS_), JPMorgan Chase(JPM_) and Citigroup(C_)) that are obligated to buy bonds from the U.S. and serve as a trading partner with the Federal Reserve. So Goldman Sachs can buy a bond from the Treasury on Monday and sell it to the Federal Reserve on Tuesday (at a profit) -- the blogZeroHedge has named this game "Flip That Bond."


Bottom Line: If Americans weren't already saddled in debt, quantitative easing might work. But as things stand, the Federal Reserve is giving bankers risk-free trading profits and causing food and gas prices to surge (making it even harder for Americans to get out of debt).


9. Republicans Are Fiscal Conservatives


Since 1968, the U.S. national debt accelerated fastest under President Ronald Reagan until President Obama claimed this distinction. The national debt does not take inflation into account, so perhaps we should look at inflation-adjusted deficits instead. According to research by Dave Manuel,


From 1946-2010:


Democratic President


Total Years: 29
Average Inflation Adjusted Deficit: $150.73 billion
Republican President


Total Years: 36
Average Inflation Adjusted Deficit: $202.28 billion
A president is not solely responsible for the nation's deficit, but he does sign the budget into law. And Republicans have put their John Hancock on some really short-sighted budgets while preaching conservatism.


8. President Obama Is an Enemy of Wall Street


When he was on the campaign trail, then-candidate Obama had some tough words for those who repealed Glass-Steagall (the law that prevented banks from acting like hedge funds), calling the process of deregulating banks a "legal but corrupt bargain." But get a load of this:


The two men who served as principal negotiators for banking deregulation: Gene Sperling and Larry Summers.
The two men who President Obama appointed to become his top economic advisers: Gene Sperling and Larry Summers.
Two guys who happen to be paid millions of dollars in consulting and speaking fees by "too big to fail" banks: Gene Sperling and Larry Summers.
President Obama is the best friend Wall Street could have.


7. The Financial System Is Safer Today Than in 2008


The Federal Reserve, which neglected to use regulatory powers to rein in the last crisis, has been awarded more regulatory powers. The majority of "too big to fail" banks are even bigger. And while the government is guaranteeing fewer mortgages through Fannie Mae(FNMA_)and Freddie Mac(FMCC_), it's made up the difference by guaranteeing mortgages through the Federal Housing Authority. "Good as cash" money market funds are full of mortgage-backed securities backed by the government (who needs to borrow money to back them up).


Meanwhile, high-frequency trading is alive and well and the causes of the Flash Crash have not been addressed. In fact, the solution of stock-specific "circuit breakers" (the percentage a stock can plummet before it stops trading) will guarantee future crashes. Here's why:


Having a defined breaking point provides high-frequency traders with an arbitrage window: If they can create an event that causes a stock to temporarily plummet, they can use "sweep to fill" orders (a special type of order used to buy stock rapidly, in small increments) to buy the stock back up to fair value. The size of the circuit breaker limits the size of the profit, but this removes the uncertainty of what trades will be honored or killed.


6. The 'Bush Tax Cuts' Increased Tax Revenue


Washington has always had a spending problem, but since the "Bush Tax Cuts," we have a revenue problem as well. From 1990 to 2000, U.S. tax revenue had a period of exceptional growth. Following the 2001 tax cuts, revenue plummeted -- then recovered -- then plummeted again. You can attribute the sustained revenue growth of the 1990s to the fact that the decade didn't have a recession, but if you expand the timeline to 1965, we've had numerous recessions without substantial drops in revenue.


5. 'No One' Could Have Seen the Financial Crisis Coming


No one -- except for everyone who did. TheStreet has interviewed numerous economists and money managers who have been pounding the table for years.


4. If You Support Capitalism, You Support Big Business


Can a corporation be socialist? Well, let's analyze an unnamed company:


A small, centrally located corporate management of fewer than 50 people plans the operations of hundreds of thousands of "associates." Corporate managers can make more money in one hour than an associate makes in one year. The majority of corporate managers have never worked as an associate. The benefits of corporate managers and associates are very, very different. Corporate managers are trained to respond to dissent by using propaganda to turn one associate against another.


Corporations and governments are very similar entities, and both can have capitalist or socialist leanings. If a politician praises big business while chastising big government, or the other way around, be skeptical.


3. Republicans Are a Bunch of Fat-Cat Millionaires


Well, this is true -- but a "half-truth" in the context it is usually told: Both Republicans and Democrats are a bunch of fat cats. The average congressperson is a millionaire, and if you break down the 50 richest members of Congress by political party, here's the split:


Republican: 22


Democrat: 28


When it comes to political contributions, Wall Street gives both parties lots of love (recently favoring the Democratic party).


2. The U.S. Has the Highest Standard of Living in the World


According to the United Nations' most recent Human Poverty Index (from 2008), the U.S. standard of living ranks 17 of 19 among developed countries. The ranking is a composite of life expectancy, literacy, long-term unemployment and income equality -- while this data is over three years old, it's not unthinkable that our situation has worsened in the aftermath of the Great Recession.


1. U.S. GDP Is Growing


U.S. GDP has increased by 4.26% from 2007 to 2010, according to data compiled by the U.S. Bureau of Economic Analysis. In the same period of time, the U.S. national debt has increased by 61.6%, according to the U.S. Treasury. Looking at these numbers, you don't need to be an economist to see that something is very, very wrong.


Charles Hugh Smith makes an excellent case that questions the viability of a debt-fueled U.S. recovery, you can read his article here.


How You Can Fight for the Truth


America is still a great place to live -- we've just lost our way, misled by Republicans and Democrats alike. If you're fed up with the way things are and you want to make a real change, don't buy into the hype around political parties. Political parties are like unions: They do the absolute minimum to keep constituents happy while doing everything they can to raise money and hold on to power.


In the days of the Internet and free-flowing information, there is never a good reason to vote along party lines. Vote for the best man or woman -- he or she might be a Democrat, Republican or independent. When people say things that make you uncomfortable, they might be onto something and are at least worth listening to.


Bill Bernbach, one of America's most innovative businessmen, used to carry a slip of paper in his pocket. It read: "Maybe he's right."


Read more - http://www.thestreet.com/story/11142443/1/10-myths-that-politicians-want-you-to-believe.html

10 Tipping Points Which Could Potentially Plunge The World Into A Horrific Economic Nightmare -

10 Tipping Points Which Could Potentially Plunge The World Into A Horrific Economic Nightmare - 

The global economy has become so incredibly unstable at this point that it is not going to take much to plunge the world into a horrific economic nightmare.  The foundations of the world economic system are so decayed and so corrupted that even a stiff breeze could potentially topple the entire structure over.  Over the past couple of months a constant parade of bad economic news has come streaming in from Europe, Asia and the United States.  Signs of an impending economic slowdown are everywhere.  So what "tipping point" will trigger the next global economic downturn?  Nobody knows for sure, but potential tipping points are all around us.

Today, the global economic system is even more vulnerable than it was back in 2008.  Virtually none of the systemic problems that contributed to the 2008 collapse have been fixed.

Mark Mobius, the head of the emerging markets desk at Templeton Asset Management, was recently was quoted in Forbes as saying the following....

"There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis."

The "financial reform" law that Barack Obama and the Congress passed a while back was a complete and total joke.  They might as well have written the law on toilet paper for all the good that it is doing.

We did not learn from our mistakes and our future economic lessons are going to be even more painful.

The world is drowning in a mountain of debt, the global financial system is packed to the gills with toxic derivatives, everyone is leveraged to the hilt and the dominoes could start falling at any time.

I am not the only one that is warning that another financial collapse is coming.  In fact, a whole lot of people have been warning about the next financial collapse lately.

So what will the tipping point for the next collapse be?

The following are some potential nominees....

Tipping Point #1: Syria

Syria is a situation to watch very, very closely.  The Syrian government is in a lot of trouble right now.  Sadly, the instability inside Syria probably makes war with Israel even more likely.

Make no mistake - a war between Israel and Syria has been brewing for a long, long time and at some point it will happen.  When it happens, the entire Middle East may erupt in warfare.

Just the other day, a very troubling incident happened in the area around the Golan Heights.  The following is an excerpt from a report by The Daily Mailabout the incident....

"About 20 pro-Palestinian demonstrators were killed and 325 injured yesterday when Israeli forces opened fire on them as they crossed the border from Syria into occupied territories, according to reports."

At this point, the Syrian government is probably glad that the attention has been taken off of them at least for a while.  The Syrian government has been getting a lot of bad press lately.  The following is an excerpt from a recent report by Human Rights Watch about the treatment of protesters inside Syria....

"The methods of torture included prolonged beatings with sticks, twisted wires, and other devices; electric shocks administered with Tasers and electric batons; use of improvised metal and wooden 'racks'; and, in at least one case documented by Human Rights Watch, the rape of a male detainee with a baton.

"Interrogators and guards also subjected detainees to various forms of humiliating treatment, such as urinating on the detainees, stepping on their faces, and making them kiss the officers' shoes. Several detainees said they were repeatedly threatened with imminent execution."

So in light of the "precedent" that we recently set in Libya, does this mean that we will be "forced" to conduct a "humanitarian mission" inside Syria as well?

Syria is one tipping point that we all need to keep a close eye on.

Tipping Point #2: Iran

The Iranian nuclear program is in the news again. A new report by RAND Corporation researcher Gregory S. Jones claims that Iran could have a nuclear weapon within 2 months.  His report is based on recent findings by the International Atomic Energy Agency.  According to Jones, airstrikes alone would be incapable of stopping Iran's nuclear weapons program at this point.  Instead, Jones says that a "military occupation" would be required.

It is a minor miracle that a war with Iran has not erupted yet.  It seems almost inevitable that at some point either the United States or Israel will use military force to try to stop Iran's nuclear program.

When that happens, it is going to cause a major shock to the global economy.

Tipping Point #3: Libya

NATO has made it abundantly clear that Moammar Gadhafi will no longer be tolerated.  In fact, NATO apparently plans to reduce Tripoli to a heap of smoking ruins if that is what it takes to bring about the fall of Gadhafi.

What a "humanitarian mission" we have going in Libya, eh?  It turns out that NATO believes that the United Nations gave it permission to bomb television stations and to make attack runs with helicopters.

Russian Deputy Prime Minister Sergei Ivanov recently said that by using attack helicopters, NATO has moved dangerously close to turning the Libya operation into a ground invasion....

"Using attack helicopters, in my view, is the last but one step before the land operation."

So why is Libya a potential tipping point?

It isn't because Gadhafi is a threat.  He is toast.

It is because the rest of the world is watching what is happening in Libya, and that is raising global tensions.

Even if Gadhafi falls, the Libyan operation will still be a failure because it has brought us all significantly closer to World War III.

Tipping Point #4: More Revolutions In The Middle East

The revolutions throughout the Middle East earlier this year sent oil prices absolutely skyrocketing and they have remained at elevated levels.

And in case you haven't noticed, revolutions continue to sweep the Middle East.

Have you seen what has been happening in Yemen lately?

Yemeni President Ali Abdullah Saleh has burns over 40% of his body and he has suffered a collapsed lung as a result of a recent attack.

If violence and protests throughout the Middle East become even more intense as the weather warms up this summer that could have a very significant impact on world financial markets.

Tipping Point #5: Fukushima

The mainstream news has gotten a bit tired of covering it, but the situation at Fukushima is still a complete and total disaster.

Japan's Nuclear Emergency Response Headquarters admitted on Monday that three reactors experienced "full meltdowns" in the aftermath of the earthquake and tsunami in March.

Did it really take them nearly three months to figure this out, or were they lying to the rest of the world all of this time?

The truth is that the nuclear disaster at Fukushima is far worse than the mainstream media has been telling us.  If you doubt this, just check out this excellent article or this article by Natural News: "Land around Fukushima now radioactive dead zone; resembles target struck by atomic bomb".

The economic impact of the Fukushima disaster is going to continue to unfold over an extended period of time.  It turns out that Japan is now officially in a recession.  Their economy contracted at a 3.7 percent annualized rate during the first quarter.

Look for more bad economic numbers to come out of Japan for the rest of the year.  Considering the fact that the Japanese economy is the third largest economy in the world, the fact that they are struggling so badly right now is not a good sign for the rest of us.

Tipping Point #6: Oil Prices

The price of oil is going to continue to be one of the biggest economic stories for the rest of this year and for 2012 as well.

The last time U.S. energy expenditures were over 9 percent of GDP was in 2008 and we quickly plunged into the deepest economic downturn since the Great Depression.

Well, we have reached the significant 9 percent figure once again in 2011, and many fear that once again high oil prices will cause another major economic decline.

Tipping Point #7: Government Austerity

In the United States, it is not just the federal government that is drowning in debt.

All over America, there are state and local governments that are financial basket cases.

I don't always agree with the time frames that Meredith Whitney puts out there, but she is absolutely correct that we are going to see a massive municipal bond crisis. The following is an excerpt from a recent report about Whitney's predictions on CNN....

"Meredith Whitney is issuing a fresh warning to mutual funds, banks, and politicians: The state of state finances is far worse than what you think, or at least than what you've been willing to tell the investors and taxpayers who will eventually carry the burden."

Many state and local governments are attempting to get their budgets balanced by making huge budget cuts.  But most of the time these austerity programs also include the elimination of a lot of government jobs.

UBS Investment Research is projecting that state and local governments will combine to slash a whopping 450,000 jobs by the end of next year.

So where will the half a million good jobs come from to replace all of those lost jobs?

Tipping Point #8: The European Sovereign Debt Crisis

Greece is just the tip of the iceberg in Europe.

Moody's downgraded Greek debt again last Wednesday.  This time Moody's downgraded Greek debt by three levels all the way down to Caa1.  At this point, the yield on 10-year Greek bonds is over 15 percent.

The EU has been going crazy trying to deal with the Greek debt crisis.  The truth is that a default by the Greek government would be absolutely catastrophic. If you do not understand the kind of chaos a Greek default would set off on world financial markets, just read this editorial.

But Greece is not the only major European nation with a massive debt problem.

The government of Ireland is already indicating that they may need another bailout.

Portugal, Spain and Italy are also on the verge of collapse.

So will the EU bail all of these nations out for years and years to come?

At some point will the whole house of cards come crashing down?

Everyone needs to keep watching what is going on in Europe.  The status quo is not sustainable and it cannot go on forever.

Tipping Point #9: The Dying U.S. Dollar

The euro is not the only major currency that is in trouble.

The U.S. dollar is also slowly dying.

On April 18th, Standard & Poor’s altered its outlook on U.S. government debt from "stable" to "negative" and warned that the U.S. could soon lose its prized AAA rating.

The sad truth is that faith in the U.S. dollar and in U.S. Treasuries is rapidly declining.  The mainstream news is not reporting on it much, but right now the Chinese are rapidly dumping U.S. government debt.

As the dollar declines, so will the purchasing power of average Americans.  We are already seeing a tremendous amount of inflation in 2011.

But this is just the beginning.

A lot worse is going to be coming down the road.

Tipping Point #10: Drought

A lot of people that read my articles doubt that we will ever see a major global food crisis.

But one is coming.

It is just a matter of time.

Even now, many areas of the world are experiencing very serious droughts.  The following is from a recent  Bloomberg article....

Parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse. Inventory is dropping 8.8 percent, the most in five years, Rabobank International says. Prices will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg survey of 14 analysts and traders shows.

Are you concerned yet?

You should be.

But if you prefer some mindless pablum that will make you feel better, we have some of that for you too.

Larry Summers, the former director of the National Economic Council under Barack Obama, recently told CNBC the following....

"We definitely hit a slower patch, but I think the basic fact that the terrible financial strains we had are abating, remains in place, and I expect this recovery to continue for a substantial period of time."

Does that make you feel better?

Larry Summers says that everything is going to be okay.

It would be great if Summers was actually right, but sadly he is not.

In fact, the worst economic times that America has ever seen are ahead.

The following is a brief excerpt from a recent interview with Dmitry Orlov about the coming economic collapse that was posted on shtfplan.com....

First you have financial collapse, which is basically the volume of debt that has to be taken on in order for the economy to continue functioning, cannot continue. We’re seeing that right now in Greece, we’re probably going to see that in Japan, we’re definitely at a point now in the United States where even if you raised the income tax to 100 percent, there’s absolutely no way of covering the liabilities of the U.S. federal government. So, we’re at that point now but the workout of the financial collapse is not all quite there. We don’t quite have a worthless currency but that’s in the works.

That, of course, is followed by commercial collapseespecially in a country like the United States that imports two thirds of its oil. A lot of that is on credit and if a little bit of that oil goes missing then the economy starts to fall apart because nothing moves unless you burn oil in the United States and, of course, a lot of goods that are sold everywhere are imported again, on credit.

When the U.S. dollar dies and our financial system collapses we are not going to be able to get all of the things that we need from the rest of the world so cheaply any longer.

That is going to cause fundamental changes inside the United States.

Right now, the economic news just seems to get worse and worse, but this is just the beginning.

What is eventually going to happen in this country is going to be so nightmarish that most Americans could not even imagine it right now.

So are our leaders doing anything to prepare for the coming economic crisis?

No, they are too busy with other things.

The big political news of the day was U.S. Representative Anthony Weiner finally admitting that he sent out lewd photos of himself over Twitter to women that he was not married to.

We have become the laughingstock of the world and the economic collapse has not even happened yet.

Read more - http://theeconomiccollapseblog.com/archives/10-tipping-points-which-could-potentially-plunge-the-world-into-a-horrific-economic-nightmare