03 Economy – Page 133 – Public Intelligence Blog

The Emperor is Naked: David Stockman

Testosterone Pit, May 9, 2012

Contributed by Karen Roche and JT Long of The Gold Report. A “paralyzed” Federal Reserve Bank, in its “final days,” held hostage by Wall Street “robots” trading in markets that are “artificially medicated” are just a few of the bleak observations shared by David Stockman, former Republican U.S. Congressman and director of the Office of Management and Budget. He is also a founding partner of Heartland Industrial Partners and the author of The Triumph of Politics: Why Reagan's Revolution Failed and the soon-to-be released The Great Deformation: How Crony Capitalism Corrupts Free Markets and Democracy. The Gold Report caught up with Stockman for this exclusive interview at the recent Recovery Reality Check conference (5/4/12).

The Gold Report: David, you have talked and written about the effect of government-funded, debt-fueled spending on the stock market. What will be the real impact of quantitative easing?

David Stockman: We are in the last innings of a very bad ball game. We are coping with the crash of a 30-year–long debt super-cycle and the aftermath of an unsustainable bubble.

Quantitative easing is making it worse by facilitating more public-sector borrowing and preventing debt liquidation in the private sector—both erroneous steps in my view. The federal government is not getting its financial house in order. We are on the edge of a crisis in the bond markets. It has already happened in Europe and will be coming to our neighborhood soon.

TGR: What should the role of the Federal Reserve be?

DS: To get out of the way and not act like it is the central monetary planner of a $15 trillion economy. It cannot and should not be done.

The Fed is destroying the capital market by pegging and manipulating the price of money and debt capital. Interest rates signal nothing anymore because they are zero. The yield curve signals nothing anymore because it is totally manipulated by the Fed. The very idea of “Operation Twist” is an abomination.

Capital markets are at the heart of capitalism and they are not working. Savers are being crushed when we desperately need savings. The federal government is borrowing when it is broke. Wall Street is arbitraging the Fed's monetary policy by borrowing overnight money at 10 basis points and investing it in 10-year treasuries at a yield of 200 basis points, capturing the profit and laughing all the way to the bank. The Fed has become a captive of the traders and robots on Wall Street.

TGR: If we are in the final innings of a debt super-cycle, what is the catalyst that will end the game?

DS: I think the likely catalyst is a breakdown of the U.S. government bond market. It is the heart of the fixed income market and, therefore, the world's financial market.

Because of Fed management and interest-rate pegging, the market is artificially medicated. All of the rates and spreads are unreal. The yield curve is not market driven. Supply and demand for savings and investment, future inflation risk discounts by investors—none of these free market forces matter. The price of money is dictated by the Fed, and Wall Street merely attempts to front-run its next move.

As long as the hedge fund traders and fast-money boys believe the Fed can keep everything pegged, we may limp along. The minute they lose confidence, they will unwind their trades.

On the margin, nobody owns the Treasury bond; you rent it. Trillions of treasury paper is funded on repo: You buy $100 million (M) in Treasuries and immediately put them up as collateral for overnight borrowings of $98M. Traders can capture the spread as long as the price of the bond is stable or rising, as it has been for the last year or two. If the bond drops 2%, the spread has been wiped out.

If that happens, the massive repo structures—that is, debt owned by still more debt—will start to unwind and create a panic in the Treasury market. People will realize the emperor is naked.

Continue reading “David Stockman: Emperor Naked, Bond Market Explodes Next”

2012/05/10

Sepp Hassleberger: Open Source Car Created in Three Months – Interview

03 Economy, 11 Society, Advanced Cyber/IO, Blog Wisdom, Commercial Intelligence, Communities of Practice, Cultural Intelligence, Ethics, Future-Oriented, Hacking, Liberation Technology, Methods & Process

Interviewing Joe Justice from Team Wikispeed on the Future of Manufacturing (and Consumption)

Joe Justice is the ideator of Team Wikspeed: a team of volunteers distributed around the world who recently created a prototype car that is open source, modular and ultra-efficient in just three mo… …YES, in just three months compared with the years it takes traditional car manufacturers to bring out a new model.

Reference: Defense and Energy Deficit Reduction: $688 Billion

03 Economy, 04 Inter-State Conflict, 05 Energy, 07 Other Atrocities, 08 Proliferation, 09 Justice, 10 Security, 11 Society, Budgets & Funding, Commercial Intelligence, Corruption, General Accountability Office, Government, Military, Office of Management and Budget, Officers Call

POGO Source Page, May 8, 2012

Wasteful Spending in the Department of Defense Budget
Wasteful Spending on Nuclear Weapons Programs
Service Contracts
Conclusion
Endnotes

Americans are tightening their belts, and it’s time for the U.S. government to do the same. In light of the Budget Control Act of 2011 and the subsequent failure of the “Super Committee,” Congress is still desperately seeking ways to reduce spending. To this end, the Project On Government Oversight and Taxpayers for Common Sense have closely examined the proposed national security budget[1] and found plenty of wasteful spending. Adjusted for inflation, U.S. national security spending is higher than at any point during the Cold War and accounts for more than half of all discretionary spending.[2] However, the U.S. faces no existential threats as it did then, and U.S. defense needs are changing as the military draws down its presence in Iraq and Afghanistan.

Still, military spending at the Department of Defense (DoD) has increased by an astounding 95 percent from FY 2001 to the FY 2013 estimate, adjusted for inflation.[3] Nuclear weapons spending at the Department of Energy (DOE) is projected to grow by billions of dollars over the next decade.[4] And the federal government’s reliance on contractors, most of whom work on national security-related work and cost on average nearly twice as much as the federal workers who do the same job, is also driving budgets through the roof.[5] It’s clear that any serious proposal to shrink the U.S. deficit must include cuts to the national security budget.

The following list updates our recommendations from 2011[6] and details nearly $700 billion in savings over the next ten years, including cuts to wasteful weapons systems as well as limits on out-of-control contract spending. We found programs for which there are cheaper yet equally effective alternatives, and programs that can be cancelled or delayed without putting America’s security at risk.

The Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

Taxpayers for Common Sense is a nonpartisan budget watchdog serving as an independent voice for American taxpayers. Its mission is to achieve a government that spends taxpayer dollars responsibly and operates within its means. TCS works with individuals, policymakers, and the media to increase transparency, expose and eliminate wasteful and corrupt subsidies, earmarks, and corporate welfare, and hold decision makers accountable.

Wasteful Spending in the Department of Defense Budget

Continue reading “Reference: Defense and Energy Deficit Reduction: $688 Billion”

2012/05/07

Josh Kilbourn: US Disability & Food Stamp Welfare Skyrocketing

03 Economy, 11 Society, Corruption, Government

Two Charts Exposing America's Record Shadow Welfare State

Here was a little mentioned tangent to last Friday's very disappointing NFP print of +115,000 (driven by a surge in temp jobs offsetting a collapse in full time positions): as David Rosenberg notes, the jobs number was about half of another far more important number – that of Americans applying for disability, which in April was +225,000. He continues: “this is the new stealth stimulus program – so far in 2011, nearly one million Americans have applied for disability and year-to-date, 333k have actually enrolled (covering 539k family members). In total, more than five million people have been added to disability coverage since President Obama took over three years ago.”

Welfare Shadow — Click on Image to Enlarge

The punchline will make all those who adore (insolvent) welfare states shake with giddy delight: “So look – either safety standards at work have eroded dramatically or the “99%” have found a creative way to milk the system and turn the economy into a quasi welfare state“…. Yup. What he said. Because remember: the BLS assumes that any amount up to the total 53 million people, is not in the labor force as they have other “wefare” based forms of government handouts and see no need at all to look for a job. Is there any wonder why US unemployment is realistically 20% if not much higher? As for the other chart, food stamps, we know that story all too well.

2012/05/072012/05/07

Tom Atlee: Wholesome Capitalism

03 Economy, 09 Justice, 11 Society, Blog Wisdom, Civil Society, Commerce, Ethics

Wholesome capitalism?

What would wholesome capitalism look like?

“Wholesome” means healthy, in the sense of something that promotes physical and moral well-being. Wholesome capitalism would take into account the wholeness of people and the social and natural world we live in, and it would enhance that wholeness.

Some people think capitalism already does this. They note how good it has been at generating wealth. The word wealth, meaning abundance, derives from roots meaning well-being and wholeness. Many of capitalism's advocates feel it should be freed from constraints so it can generate more wealth.

Others note that capitalism – while generating wealth for some – many or few, depending on its form in a particular time and place – nevertheless generates much suffering and destruction in the process. It reduces everything to money and maximizes financial return even if it has to degrade and destroy human and natural life to do it. Many of capitalism's critics feel it should be undermined or overthrown.

Still others note both the blessings and problems with capitalism. They think we can have the wealth without so much suffering and destruction. Most of these people promote freeing capitalism's creativity and productivity while restraining its rapaciousness in various ways – using everything from laws, regulations and taxes to moral suasion and consumer-shareholder activism.

In this article I advocate all three positions – odd as that may sound – but only after reframing “capital” and “wealth” to better reflect wholeness.

THE PRIMARY DYNAMIC OF CAPITALISM

The special gift of capitalism is its ability to create MORE – more products and services, more self-organized economic activity, more wealth. In systems science, this tendency to create more-ness is called a positive or reinforcing feedback dynamic.

Continue reading “Tom Atlee: Wholesome Capitalism”

2012/05/062012/05/06

Chuck Spinney: Why Doesn’t Spain Understand that Integrity is Priceless?

03 Economy, Commerce, Corruption, Government

One of core component's of the neoliberal agenda is privatization of state assets. Attached is one countries reaction to the inequalities and economic distortions privatization introduces. CS Afloat in the Mediterranean

Piracy as good policy

by Serge Halimi

Le Monde Diplomatique, 1 May, 2012

The head of state, confident after electoral victory, tells the governor of the central bank what to do, introduces forex controls and announces that a key sector of the economy, sold off to private investors 13 years ago, is to be nationalised. Two members of the government are appointed to head this enterprise, now in public hands again, and its private owners are told to go. The European Commission, The Wall Street Journal and the Financial Times are furious about this “shabby act of economic piracy”. The Economist suggests that the “pirate state” should be excluded from the G20, and that its citizens (who voted in the head of state) must get visas to travel abroad.

This is not Europe. It is Argentina. As President Cristina Kirchner explained on 16 April when most of the assets of the Spanish multinational Repsol, majority shareholder in the Argentinian oil company YPF, were about to be nationalised: “We are the only country in Latin America, and I would say in the world, that doesn’t control its natural resources.” Public ownership is not as prevalent as she suggests — Total, BP, ExxonMobil and others are private companies — but she is thinking of earlier battles to recover common sources of wealth: Mossadeq’s nationalisation of British Petroleum in Iran in 1951, Nasser’s seizure of the Suez Canal for Egypt in 1956, Boumedienne’s acquisition of Elf and Total assets for Algeria in 1971, Putin’s seizure of the Yukos company in Russia in 2003 and Hugo Chávez’s takeover of PDVSA (Petroleum of Venezuela).

Continue reading “Chuck Spinney: Why Doesn't Spain Understand that Integrity is Priceless?”

2012/05/042012/05/04

Paul Craig Roberts: Disinformation (Lies) From Left to Right — Why the Military-Industrial Complex Consistently Assassinates or Impeaches Presidents Who Cross Them….

03 Economy, 04 Inter-State Conflict, 07 Other Atrocities, 10 Security, 11 Society, Commerce, Corruption, Counter-Oppression/Counter-Dictatorship Practices, Cultural Intelligence, Government, IO Deeds of War, Military, Officers Call

Disinformation On Every Front

Some readers have come to the erroneous conclusion that the Matrix consists of Republican Party disinformation as if there is no disinformation from the left. Others think that propaganda is the business of Obama and the Democrats. In fact, propaganda from the right, the left and the middle are all part of the disinformation fed to americans.

If I may give some examples: The other day Chuck Colson, one of the Nixon officials imprisoned for Watergate crimes, died. This gave NPR the opportunity to relive the Nixon horror.

What precisely was the Nixon horror? Essentially, there was no such thing. Watergate was about President Nixon lying about when he learned about the Watergate burglary.
When Nixon learned about the burglary, he did not act on it prior to his reelection, because he reasoned, rightly, that the Washington Post would blame him for the burglary, although he had nothing to do with it, in the hopes of preventing his reelection.

By going along with a cover-up, Nixon enabled the Washington Post to make an issue of the precise date on which Nixon learned of the burglary. White House tapes indicated that Nixon had learned of the burglary before he said he learned of it. So Nixon had permitted a cover-up and had to go, but what was the real reason?

What was the Watergate burglary? We don’t really know. A group of men including former CIA operatives were hired by the Committee to Re-elect the President to break into a Democratic campaign office in the Watergate complex. We don’t know the purpose of the burglary. Some claim it was to wire-tap the telephones in the belief that the Democratic Party was getting re-election money from communists in Cuba or elsewhere. Others claim that the burglars were looking for a list of call girls, that compromised a White House official, as his fiancee was allegedly one of the call girls.

Looking back from our time during which Bush and Obama have deep-sixed the US Constitution, violated numerous US and international laws, and behaved as if they were caesars unconstrained by any law or any morality, Nixon’s “crimes” appear so trivial as to be unremarkable. Yet, Nixon was driven from office and is regarded as a criminal.

What was Watergate really about?

Continue reading “Paul Craig Roberts: Disinformation (Lies) From Left to Right — Why the Military-Industrial Complex Consistently Assassinates or Impeaches Presidents Who Cross Them….”