I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Tuesday, August 31, 2010

Mr. Beck Goes to Washington

Entering this weekend, I was convinced that Glenn Beck’s star was about to go into eclipse.

The New York Times

Just as Michael Moore, amid Democratic disarray, became the unlikely face of liberal opposition to George W. Bush, the mercurial, weepy, demagogic Beck has spent the last 18 months filling the void left by the institutional collapse of the Republican Party. And just as Moore’s influence diminished as the Democrats came roaring back, it seemed plausible that Beck would matter less and less as the midterms and then the 2012 election re-empowered actual Republican politicians.

But after spending my Saturday at Beck’s “Restoring Honor” rally on the Washington Mall, I’m beginning to think that I underestimated the man.

The Fox News host had promised that the rally, billed as a celebration of American values, would be an explicitly apolitical event. And so it came to pass: save for an occasional “Don’t Tread On Me,” banner, the crowded Mall was nearly free of political signs and T-shirt slogans, and there was barely a whisper of the crusade against liberalism that consumes most of Beck’s on-air hours.

Instead, Beck served up something considerably stranger. This was a tent revival crossed with a pep rally intertwined with a history lecture married to a U.S.O. telethon — and that was just in the first hour.

There was piety — endless piety, as speaker after speaker demanded that Americans rededicate themselves to God. There was patriotism: fund- raising for children of slain Special Forces vets, paeans to military heroism (delivered by Sarah Palin, among others), encomiums to the founding fathers. There was an awards ceremony on the theme of “Faith, Hope and Charity,” in which community-service prizes were handed out to a black minister, a Mormon businessman and the St. Louis Cardinals’ Albert Pujols. And since this was (as you may have heard) the anniversary of the “I Have a Dream” speech, there was a long tribute to Martin Luther King Jr.

There was enough material, in other words, to justify almost any interpretation of the event. A Beck admirer could spin “Restoring Honor” as proof that left-wing fears about the Tea Partiers are overblown: free of rancor, racism or populist resentment, the atmosphere at the rally resembled that of a church picnic or a high school football game. But a suspicious liberal could retort that all the God-and-Christ talk and military tributes were proof enough that a sinister Christian nationalism lurked beneath the surface. (I’m sure The New York Review of Books has already commissioned an essay on that theme.)

Similarly, one could call the rally a gross affront to the memory of King, who presumably wouldn’t have cared much for Beck’s right-wing politics. But one could also call the day a strange, unlooked-for fulfillment of King’s prophecies: 47 years after the “I Have a Dream” speech, here were tens of thousands of white conservatives roaring their approval of its author.

To this rally-goer, though, the most striking thing about “Restoring Honor” was the way the pageant effortlessly tapped into the same rich vein of identity politics that has given us figures as diverse as Palin and Howard Dean, George W. Bush and Barack Obama — but did so, somehow, without advancing any explicitly political agenda.

Now more than ever, Americans love leaders who seem to validate their way of life. This spirit of self-affirmation was at work in evangelicals’ enduring support for Bush, in the enthusiasm for the Dean campaign among the young, secular and tech-savvy, and now in the devotion that Palin inspires among socially conservative women. The Obama campaign raised it to an art form, convincing voters that by merely supporting his candidacy, they were proving themselves cosmopolitan and young-at-heart, multicultural and hip.

In a sense, Beck’s “Restoring Honor” was like an Obama rally through the looking glass. It was a long festival of affirmation for middle-class white Christians — square, earnest, patriotic and religious. If a speaker had suddenly burst out with an Obama-esque “we are the ones we’ve been waiting for,” the message would have fit right in.

But whereas Obama wouldn’t have been Obama if he weren’t running for president, Beck’s packed, three-hour jamboree was floated entirely on patriotism and piety, with no “get thee to a voting booth” message. It blessed a particular way of life without burdening that blessing with the compromises of a campaign, or the disillusioning work of governance.

For a weekend, at least, Beck proved that he can conjure the thrill of a culture war without the costs of combat, and the solidarity of identity politics without any actual politics. If his influence outlasts the current election cycle, this will be the secret of his success.
"In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." -- Alan Greenspan, 'Gold and Economic Freedom' in 1966.

Wednesday, August 25, 2010

Ron Paul Calls for Audit of US Gold Reserves : Kitco News Exclusive

24 August 2010, 5:24 p.m.
By Daniela Cambone

"If there was no question about the gold being there, you think they would be anxious to prove gold is there," said U.S. Rep. Ron Paul of the Federal Reserve.

Editor's Note: Catch Dr. Ron Paul at the upcoming Kitco Metals eConference September 12-13, 2010. A not-to-be missed event featuring Marc Faber, James Dines and other industry heavyweights. The eConference is free with Pre- Registration www.kitcoeconf.com.

Texas (Kitco News) -- U.S. Rep. Ron Paul , R-Tex., plans to introduce a new bill next year that will allow for an audit of US gold reserves, he told Kitco News in an exclusive interview.

Paul dropped the news in the interview, indicating that the bill still does not have an official name yet but will be unveiled at the start of the new U.S. Congress.

“If there was no question about the gold being there, you think they would be anxious to prove gold is there,” he said of the Federal Reserve.

This is not the first time the congressman has made his pitch. “In the early 1980s when I was on the gold commission, I asked them to recommend to the Congress that they audit the gold reserves – we had 17 members of the commission and 15 voted not to the audit,” said Paul. “I think there was only one decent audit done 50 years ago,” he said.

Though Paul did not say whether there is any truth to claims that there is no gold in Fort Knox or the New York Federal Reserve, he said, “I think it is a possibility.”

“If we ever get around to deciding we should use gold in relationship to our currency we ought to know how much is there,” said Paul. “Our Federal Reserve admits to nothing and they should prove all the gold is there. There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit?” he said.

The gold audit follows his crusade last year looking to audit the Federal Reserve, which he says is the chief culprit behind the economic crisis.

“I don’t think the Federal Reserve should exist – it would be best for congress to exert their responsibilities and that is find out what they are doing”' said Paul. "It is an ominous amount of power they have to create money out of thin air and being the reserve currency of the world and be able to finance runaway spending whether it is for welfare or warfare; it seems so strange that we have been so complacent not to even look at the books. If we knew exactly what they were doing, who they were taking care of, there would be a growing momentum to reassess the whole system,” he told Kitco News.

Before the creation of the Federal Reserve however, the US saw 16 recessions from 1850 to 1910; they averaged 22 months long. During this time, the U.S. was in recession 60 out of 91 months. Many would argue that the severity of these recessions led to the creation of the Federal Reserve System.

“I think they would be exaggerating what happened before 1913,” Paul responds. “We had some panics …they were usually short and there were no long depressions,” he said. “The Fed creates the bubbles and they are much worse since 1913, if you think of the size of the government and the valuation of the dollar, we are down to about a 2 cent dollar from the 1913 dollar.”

Paul said everyone accuses him of wanting the gold standard but he said he doesn't accept that. “I accept the idea of a gold coin standard and I think we can do much better than what we had," he said. "There was a lot that they did pre-Fed that was not exactly right but we never had a disastrous loss of purchasing power long-term, we didn’t have a great depression, we didn’t have the 1970s with stagflation and we wouldn’t have what we have right now.”

Since the Fed’s creation in 1913 the dollar has lost more than 96% of its value, and by inflating the money supply the Fed continues to distort interest rates and intentionally erodes the value of the dollar said Paul.

Paul’s solution is to not replace the Fed with anything. “It would make the dollar strong… who wants money to be devalued? I want a strong dollar and if it were equivalent to gold it would remain strong.”

Paul also said he wants to legalize the freedom for people to choose. “My proposal for now is to legalize the constitution to use gold and silver as legal tender in a parallel standard and have it compete with paper money. If people get tired of using the paper standard they can deal in gold or silver,” he said.

On the topic of gold price manipulation, Paul said, “I think it is probably true.”

“I am not the one to lay out proof of this, others have done a lot of investigation. One of the reasons I don’t dwell on that is they are not going to listen to us" he said. "But I think it is very important somebody talks about it and emphasizes it just as a warning to be careful; you don’t have to only anticipate what the markets are doing, but you have to anticipate what the government is doing.”

The best example of manipulating the ratio of gold to paper would have been from the late 1950s to 1971, said Paul. “We printed money like currency, we printed too many dollars against the gold, so they said, ‘we will take your gold.’ …if they are capable of that they are capable of doing this as well, because they don’t want their cover blown, ” said Paul. If the markets are saying not to trust paper money, they have to do everything they can to “destroy gold,” said Paul.

Recounting a visit with Paul Volcker, former Chairman of the Fed Reserve, Rep. Paul said the Chairman walked straight into the room, went immediately to his staffer and asked what the price of gold was. “They know gold is important. I think they are quite willing to manipulate it. That is the only way they can maintain this false illusion about gold.”

“If they are involved isn’t it pretty amazing what has happened in past year? What will happen if they throw in the towel?” said Paul.

The current economic situation is very healthy for gold, said Paul. “You see people rushing just to put their money in any place …they don’t even care about making money.”

New Regulations

When asked what regulations the Congressman is currently worried about, he said, “All of them.” However, Paul specifically points to the 1099 provision, a portion of the health-care act, passed earlier in the year. “For every transaction of over $600, gold dealers have to fill out a form, it is a lot of paperwork,” said the congressman. Entities must file a Form 1099 with the Internal Revenue Service whenever they make transactions paying out $600 a year to another party.

US economy

It is going to continue to go downhill said Paul on the US economy. “I don’t believe in a double dip, I believe we have single-dip and it has been continuous.”

“The only reason it doesn’t look so bad is if you spend $2 trillion dollars and you have a $5 hundred billion increase in some GDP figures, you didn’t get much for your trillion dollars but it might improve your statistics, so it was a fake recovery.”

As for another presidency run, Paul says it is too early to tell.

Illinois Teachers' Retirement System selling off $3B to cover benefits

ed. note

If State pension funds are forced to sell stocks or bonds to meet pension obligations, how much negative effect will that have on the markets?  If you have a pension plan, is it safe?

"TRS' current asset allocation is U.S. equities, 30.5%; international equities, 20.3%; fixed income, 17.5%; real estate, 9.6%; real return, 9.3%; private equity, 8.3%; absolute return, 3.6%; and short-term investments, 0.9%."


By: Barry B. Burr August 24, 2010

(Crain's) — Illinois Teachers' Retirement System, Springfield, plans to sell $3 billion in investments, or about 10% of its $33.1 billion in assets, in the current fiscal year to pay pension benefits, according to Dave Urbanek, public information officer.

The system is the fifth Illinois statewide defined benefit plan to sell off investments this fiscal year to pay benefits.

Illinois State Universities Retirement System, Champaign, expects to sell $1.2 billion in investments from its $12.2 billion defined benefit fund this fiscal year to raise liquidity to pay benefits to participants.

The Illinois State Board of Investment, Chicago, could sell $840 million investments from its $9.9 billion fund to pay benefits of the Illinois State Employees' Retirement System, Illinois Judges' Retirement System and Illinois General Assembly Retirement System. ISBI oversees the investments of the three systems.

The liquidity stress from the investment sales at the five plans could force each of them to restructure their strategic asset allocations, terminate investment managers and search for new managers.

Illinois Teachers sold $290 million in investments so far this month and $200 million last month because of a lack of state contributions.

“Without the monthly state contribution, TRS estimates sales of roughly $3 billion for the entire fiscal year, or approximately $250 million every month,” Mr. Urbanek said in a statement in response to an inquiry.

So far, TRS has accomplished the investment liquidation through “appropriate rebalancing,” Mr. Urbanek said in the statement. “As the year progresses, this approach will no longer be sufficient to cover the total amount of benefit payments and more targeted asset sales will need to be considered.

“TRS staff continues to study the impacts of the current liquidity situation on the total portfolio and recommendations will be made as necessary to adjust targets. These changes could include revisions to the system's target asset allocation and termination of investment manager relationships as 10% or more of the portfolio is liquidated to pay benefits this fiscal year,” he said.

Mr. Urbanek said the investment sales could force changes in the system's current asset allocation impacting whether it could meet its current 8.5% target rate of return.

“In the current market environment, there are significant market opportunities to institutional investors with available capital. In the absence of the required contribution from the state, TRS and the other Illinois pension systems will no longer be able to participate in these opportunities,” he said.

R.V. Kuhns, the system's investment consultant, is evaluating possible allocation changes for liquidity needs as they arise, Mr. Urbanek added. He said it was “impossible” to know details of possible searches or terminations at this time.

Since the start of the fiscal year on July 1 through Aug. 20, the system has received only $90 million in contributions from the state. For the current fiscal year, ending June 30, 2011, the system requested $2.35 billion in contributions from the state, Mr. Urbanek said.

In the last fiscal year, the system sold $1.3 billion in assets to pay pension benefits; it received $170.4 million in employer contributions and $899 million in member contributions, while requesting $2.08 billion in employer contributions alone.

TRS' current asset allocation is U.S. equities, 30.5%; international equities, 20.3%; fixed income, 17.5%; real estate, 9.6%; real return, 9.3%; private equity, 8.3%; absolute return, 3.6%; and short-term investments, 0.9%.

Tuesday, August 24, 2010

America: a walking dead-zombie country

Freitag, 20. August 2010 00:23
von Lars Schall

The high-profile financial pundit Max Keiser doesn’t shy away from crystal-clear, unmistakable statements. The following exclusive interview is no exception. Mr. Keiser sees an attack exercised against the majority of people in the U.S., sets out why gold is in no bubble at all, points at a remarkable move by the Harvard University, and has an advice to some US-American billionaires disguised as noble philanthropists: “Just pay your taxes and shut up!”

Max Keiser, born January 23, 1960 in New Rochelle, N.Y., USA, has been involved with markets and finance for 25 years. He started his career as a stock broker on Wall Street after graduating 1983 from New York University.

He is the inventor of the "Virtual Specialist Technology" (US patent number 5950176) - a software system used by the Hollywood Stock Exchange, and is the creator, co-founder and former CEO of HSX Holdings/Hollywood Stock Exchange, which allows traders to exchange virtual securities such as "MovieStocks" and "StarBonds," and a convertible virtual currency, the Hollywood Dollar. The Hollywood Stock Exchange remains until today the highest volume stock exchange in the world. He currently has a patent pending for “crowd funding media properties” used in his latest creation, “piratefilm.com”.

Mr. Keiser presented / produced TV and Radio formats at NBC, CBS, BBC, BBC World News, and the English programme of Al-Jazeera. For Iran’s Press TV he’s the host of “On the Edge,” and with his co-host, Stacy Herbert, he presents for the Russian broadcaster RT TV the “Keiser Report” (see for more at: http://maxkeiser.com/). In addition, he has appeared as a financial pundit on a number of news-networks.

To his success as a financial analyst belong the following predictions:

In the September 2004 issue of The Ecologist magazine, Keiser correctly predicted the 2008 collapse of Fannie Mae and Freddie Mac when he wrote, "My guess is that the two stocks that look the likeliest to implode at the hands of derivative-wielding Wall Street financial types (and other fundamentalists) preying on a US economy made weak by cheap money are Fannie Mae and Freddie Mac."

In 2006 he correctly predicted that sub-prime mortgage-backed securities would be the cause of recession by 2008.

In 2007 he correctly predicted the break-down of Iceland's economy in 2008.

In 2009 he correctly predicted that Cantor Fitzgerald would fail in their attempt to launch box office futures contracts (based on his intellectual property).

Max Keiser, who’s also a frequent contributor to “The Huffington Post” (http://www.huffingtonpost.com/max-keiser), lives in Paris, France.

Mr. Keiser, in your initial email you wrote to me:

“The key to understanding the current situation is to understand that house prices, jobs, wages, and pensions in the US are all being attacked with original-issue debt dollar junk.

This will continue until the middle class has been completely wiped out.”

Can you elaborate on this, please?

Yes, it’s a Financial Holocaust. It is designed to destroy the American middle-class. We face an original-issue deflation, if you will. It is as if Michael Milken ran the Fed. If you look at the work of Steve Keen (http://www.debtdeflation.com/blogs/), an economist in Australia and one of a very few economists who got the crisis of the past three years accurate, you understand that the banking system does not work on a system where deposits are the basis for fractional reserve. The banking system works on the basis of loans used as the collateral for more loans.

That means that the origination of all the fractional reserve lending that is going on is just more debt. There are no retail deposit reserves or wholesale deposit reserves, just original issue dollar based junk debt. And when you understand that debt is at the bottom of the pyramid and that there’s no equity at all, or capital as this term is usually understood, then you understand that the banks and the policy makers are continuing a programme at the behest of Wall Street to commit a Financial Holocaust to eliminate the majority in America, which is the middle-class. Wall Street banks with their CDS's, High Frequency Trading and bogus market making are injecting the equivalent of financial Zyklon B into the American and world economy.

With regard to the U.S. economy, would you agree with Paul Krugman, who wrote not a long time ago that the lights in the U.S. are about to go out?[1]

Paul Krugman is a salon monkey. You can quote me on that.

Okay, no problem (laughs).

He is a tool of the New York Times. If it wasn’t for the New York Times, no one would read Paul Krugman. He has absolutely nothing credible to say. He is merely a mouthpiece for neo-liberal clap-trap. Any minute you spend reading Paul Krugman is a minute of your life that you’ll never get back.

How does the mainstream media not only in the U.S., but in the Western hemisphere in general, play its part to ascertain its recipients that everything is more or less alright?

Well, the mainstream media is owned by the banking system. There is no widely disseminated media-outlet that is not owned by the banking system. Every media-outlet in the United States – Fox News, CNN, the New York Times etc. – is an extension of CNBC and James Cramer.

How do you feel in this context about the attempts to regulate the internet?

It’s a sad chapter in American history, because the internet came into being as the result of the good will of the American taxpayer. Now you have private corporations like Google and Verizon, who are stealing it. That’s unconscionable. It’s a hanging offense. If there would be any justice, the principles of Google and Verizon would be strung up and beaten.

Will those attempts have bad effects for the journalism that’s going on in the internet?


to continue the interview

Thursday, August 19, 2010

Salaries and Benefits of US Congress Members

U.S. Congress salaries and benefits have been the source of taxpayer unhappiness and myths over the years. Here are some facts for your consideration.

Rank-and-File Members:

The current salary (2010) for rank-and-file members of the House and Senate is $174,000 per year.

Members are free to turn down pay increase and some choose to do so.

In a complex system of calculations, administered by the U.S. Office of Personnel Management, congressional pay rates also affect the salaries for federal judges and other senior government executives.

During the Constitutional Convention, Benjamin Franklin considered proposing that elected government officials not be paid for their service. Other Founding Fathers, however, decided otherwise.

From 1789 to 1855, members of Congress received only a per diem (daily payment) of $6.00 while in session, except for a period from December 1815 to March 1817, when they received $1,500 a year. Members began receiving an annual salary in 1855, when they were paid $3,000 per year.

Congress: Leadership Members' Salary (2010)

Leaders of the House and Senate are paid a higher salary than rank-and-file members.

Senate Leadership

Majority Party Leader - $193,400

Minority Party Leader - $193,400

House Leadership

Speaker of the House - $223,500

Majority Leader - $193,400

Minority Leader - $193,400

A cost-of-living-adjustment (COLA) increase takes effect annually unless Congress votes to not accept it.

Benefits Paid to Members of Congress

You may have read that Members of Congress do not pay into Social Security. Well, that's a myth.

Prior to 1984, neither Members of Congress nor any other federal civil service employee paid Social Security taxes. Of course, the were also not eligible to receive Social Security benefits. Members of Congress and other federal employees were instead covered by a separate pension plan called the Civil Service Retirement System (CSRS). The 1983 amendments to the Social Security Act required federal employees first hired after 1983 to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress. Because the CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal workers. The result was the Federal Employees' Retirement System Act of 1986.

Members of Congress receive retirement and health benefits under the same plans available to other federal employees. They become vested after five years of full participation.

Members elected since 1984 are covered by the Federal Employees' Retirement System (FERS). Those elected prior to 1984 were covered by the Civil Service Retirement System (CSRS). In 1984 all members were given the option of remaining with CSRS or switching to FERS.

As it is for all other federal employees, congressional retirement is funded through taxes and the participants' contributions. Members of Congress under FERS contribute 1.3 percent of their salary into the FERS retirement plan and pay 6.2 percent of their salary in Social Security taxes.

Members of Congress are not eligible for a pension until they reach the age of 50, but only if they've completed 20 years of service. Members are eligible at any age after completing 25 years of service or after they reach the age of 62. Please also note that Members of Congress have to serve at least 5 years to even receive a pension.

The amount of a congressperson's pension depends on the years of service and the average of the highest 3 years of his or her salary. By law, the starting amount of a Member's retirement annuity may not exceed 80% of his or her final salary.

According to the Congressional Research Service, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service as of Oct. 1, 2006. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006.

U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff

By Laurence Kotlikoff - Aug 10, 2010 8:00 PM CT Email Share

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

Double Our Taxes

To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

Is the IMF bonkers?

No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

‘Unofficial’ Liabilities

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions “loans” and called our future benefits “repayment of these loans less an old age tax,” with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.

The fiscal gap isn’t affected by fiscal labeling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.

$4 Trillion Bill

How can the fiscal gap be so enormous?

Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.

This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.

And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Worse Than Greece

Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

Some doctrinaire Keynesian economists would say any stimulus over the next few years won’t affect our ability to deal with deficits in the long run.

This is wrong as a simple matter of arithmetic. The fiscal gap is the government’s credit-card bill and each year’s 14 percent of GDP is the interest on that bill. If it doesn’t pay this year’s interest, it will be added to the balance.

Demand-siders say forgoing this year’s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.

My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.”

(Laurence J. Kotlikoff is a professor of economics at Boston University and author of “Jimmy Stewart Is Dead: Ending the World’s Ongoing Financial Plague with Limited Purpose Banking.” The opinions expressed are his own.)

To contact the writer of this column: Laurence Kotlikoff at kotlikoff@bu.edu

Monday, August 16, 2010

The Best Gold Interview of 2010

Jeff Clark, Casey's Gold & Resource Report

Much of what passes for “insider” information these days is often conspiracy-edged or largely conjecture. True inside information is actually hard to come by. So what follows is the refreshingly candid and uncut version of my talk with a first-hand participant in the murky and little-understood world of gold bullion, mints, and bullion dealers.

Customarily, when considering a company for a potential recommendation, I hold a series of discussions with management. It was during one of these vetting procedures that I spoke with Andy Schectman of Miles Franklin – and heard some disturbing reports about supply that every investor should know. Andy is a bullion seller, so you’re welcome to take his comments with a grain of salt. On the other hand, what he sees week after week and what he hears from his high-level industry contacts might just make you pull back on that salt shaker and re-inventory the number of ounces you own...

Jeff Clark: Andy, tell us about the kinds of contacts you have in the industry and where you get your information.

Andy: I’m associated with two of the six primary mint distributors in the United States. There are only six primary precious metal distributors here because the qualifications are very difficult to meet. Aside from having $100 million in annual sales, you have to extend a $50 million line of credit to the U.S. Mint, and very few companies can do that. So in working with these companies, I’m privy to information that many others aren’t.

Jeff: So, what have you been hearing from them about supply for physical gold and silver?

Andy: I think in order to properly characterize what’s happening in the industry, it's important to start from a big-picture perspective, which is that by and large the masses in this country are not involved in precious metals. In my experience, the move we've seen in gold over the last decade has primarily been from international investment – sovereign wealth funds in the Orient, petrodollars in the Middle East, India buying from the IMF, Russia and Japan accumulating, etc.

Most U.S. investors have lived through nothing but prosperity and good times, where they perhaps didn’t think they needed to own gold – but I think the rest of the world isn't as optimistic about the future. So when you talk about supply, it's important to acknowledge that most people in this country don't own any gold and silver. To me, that's what should really alarm people.

Jeff: Tell us how you would characterize supply right now.

Andy: Fragile. Availability of product changes almost weekly.

But it’s worse than that. When the market plunged 1,000 points in one day last month, two German banks bought about 35,000 or 40,000 one-ounce coins and cleaned out the Royal Canadian Mint overnight. Think about that: two banks cleaned out one of the world’s preeminent mints in one day.

Then you have the Austrian Mint recently announcing they were running into supply issues. And the U.S. Mint has been the model of inefficiency for the last several years. They have been either reluctant or unable to meet demand when it comes to Gold Buffalos, Platinum Eagles, and fractional Gold Eagles. They issue dribs and drabs of them, but certainly not enough to meet demand.

Jeff: And they frequently run out.

Andy: They frequently run out, they frequently have delivery delays, and it's a situation where very quickly we could see major disruption in the supply chain.

Jeff: We saw supply constraint in 2008, where dealers were running out of product. Do you think we’re headed there again?

Andy: I do. In 2008, when gold dropped from $1,000 to $700 very quickly, all product worldwide disappeared. Within weeks the U.S. Mint was shut down. The Canadian, Austrian, and Australian Mints were all eight to 12 weeks back-ordered or shut down. The Australian Mint stopped taking any new orders in July or August for the rest of the year. The Rand Mint, for the first time ever, sold out of all its product. One wealthy Swiss businessman flew his own 747 there and cleaned them out.

So product was impossible to get, but not just from the primary mints; even the refiners that made 100-ounce silver bars couldn't get them. No one could get anything, and it was a very scary time if you owned a gold company. There were many days I sat at my desk wondering how I was going to get product tomorrow, and there were times we couldn't take orders whatsoever. And that comes from a company that’s done over $100 million in sales, is a member of the certified exchange, and that has contacts that run very deep in the industry – and I couldn’t get anything.

A friend of mine who owns a very prominent gold and silver company in Colorado has a store front, and back then he told me, "I want to put a sign on my window that says, ‘All we do is buy, we don’t sell,’ because one person will come in there and clean me out and there’s nothing to be had.”

So what I think is ahead comes from that experience. If you factor in that very, very few people in this country have even held a gold coin – let alone own any gold, or understand the reasons to own it, or will even accept the arguments for owning it – I think the primary distinguishing characteristic of this market will be that people won’t be able to get product when they want it. The rising price in and of itself will not be the main hurdle. For the most part, people will overcome price, because they’ll want to own it. The real issue will be getting product in a timely fashion, and that will become difficult for the average American.

Jeff: What about supply from those selling coins and bars who bought at lower levels? Doesn’t that increase the available supply?

Andy: This is what I believe is a distinguishing feature of this market: there is a total absence of a secondary market. There isn’t one. Period. In years past, we used to do a lot of business with people wanting to sell. Today, virtually no one is selling their coins back to us. In fact, for every 100 transactions we have, maybe one is a seller – the other 99 are buyers. Our largest supplier, who provides over 60% of all bullion to the U.S. market, told me earlier this month they have days without one single buy back. And this is from the largest supplier in the U.S.

Jeff: Why do you think no one’s selling?

Andy: People are afraid. They’re afraid of what's happening geopolitically, economically, fiscally, and want to hold on to their gold. As they should, because this is exactly the kind of circumstance gold is for.

So I would argue that as gold and silver creep higher, there will be more and more buying and less and less selling. And less selling means less product for buyers.

When you look at the fact that there is no secondary market, and then you throw into the mix that the mints are already running into production problems, and then add the troubles in Europe, which could easily spread, I think it’s easy to see how demand could outstrip supply. I assure you, there's an awful lot of gold acquisition going on in other countries – the Swiss and Germans, for example, see the handwriting on the wall. They were buying everything up when the European crisis broke. It was bedlam for awhile.

And if all of a sudden people here wake up and feel they really need to own gold but can’t get it, we’ll be right back where we were in 2008.

But to your point, yes, nobody is selling anything right now and almost anything you buy will be dated 2010. That’s because there are no backdatedcoins to be had virtually anywhere. Maybe 20 here or 50 there, but nothing on a meaningful basis.

Jeff: It sounds like regardless of what’s going on in America, global supply could be in jeopardy if this trend continues.

Andy: Absolutely, especially with the fact that there is no secondary market. Really, the people who enter the game late are going to be at the mercy of the mints. And if the mints run out of supply, or just stopped selling for whatever reason, it's “game over” for those who want to accumulate. Right now there's as good a supply as I've seen in a couple years, and that's at a time when we've already witnessed the Royal Canadian Mint running out of gold for a week or so, the Austrian Mint also running out of product, and the U.S. Mint rationing Silver Eagles for a short time.

Jeff: And you’re calling this a good supply market?

Andy: Yes. It’s as good as we've seen in a couple years.

Jeff: That's scary.

Andy: I don’t think you’re exaggerating by saying that. And the message is, “Buy now while it's still available.” I know it may sound like I'm trying to sensationalize it, but I'm really not. Based on what I know, it’s my opinion that if 5% of this country put 5% of their money into gold, there would be nothing left tomorrow morning. Supply is that small compared to the tremendous amount of money that's out there.

Here’s another example. I had a meeting with a money management company here in Minneapolis that manages some of the oldest money in the entire country, literally billions of dollars. And when I spoke with them, I discovered the principals of the firm had never held a gold coin. They asked me questions that were as rudimentary as what I would get from a complete novice. By the end of the conversation, they said they would start with a $5 million order. I later learned this was a small order for just one of their clients. It was just dipping a toe in the water for these people.

Well, it won’t take too many of these kinds of people waking up to gold to drain the supply chain. Most of the wealth in this country is driven through money managers, and at some point these people will tell their managers, "I don’t care what the price or premium is, get me gold." When they come knocking in large numbers like that, the supply chain will dry up overnight. I know this to be true. If we see an event that drives money managers to buy physical gold, the supply will be gone.

Jeff: Some of that money is already going into the ETFs.

Andy: Yes, but not when you consider the total capital that’s available. And keep in mind that the prospectus for GLD and SLV state that, more or less, you can’t take possession of the metal. So, do you “own” gold if you have shares in GLD or SLV, or any ETF, for that matter? If you can’t put the coin or bar in the palm of your hand, the answer is no.

Jeff: Are you seeing any difference between gold and silver? Is one more difficult to come by than the other?

Andy: We've seen a lot of demand for silver, probably more so than gold, and the U.S. Mint has already rationed Silver Eagles once this year. Junk silver bags are becoming much harder to get. And I think the higher gold goes, the faster silver will disappear. At some point the American public will realize they should have some gold and silver, and we could see a situation where the gold price could get out of reach for some investors. Those people will turn to silver and, as a result, it will probably be tougher to get than gold.

Jeff: If supply gets scarce, do you expect premiums to shoot up?

Andy: Absolutely. In 2008 the premiums were astronomical. Silver Eagles were $5.50 to $6 over spot. Gold Eagles were $100 to $150 over spot. The premiums went parabolic. That could easily happen again.

Jeff: And that was due to constrained supply.

Andy: Yes. When the price fell off the table, everything disappeared quickly. That’s counterintuitive, I know, because logic would dictate that as the price of something falls, demand is waning. But as the price fell, I think it became more attractive to large interests around the world, and everything got gobbled up fast.

Looking ahead, I can tell you that the only way you'll see premiums stay where they are is if the mints are able to keep up with demand, and based on what I see I would argue there is no way they can. They can’t even keep up now. On top of that, as I stated, people aren’t going to sell their gold this time unless they absolutely have to, so there won’t be any supply coming from sales.

Jeff: So your message to someone who owns little or no physical metal now is what?

Andy: Acquire as many gold and silver ounces as you can. In the end it’s not about price paid, it's about number of ounces. View the supply issue as critically as you would the price, because I believe that more than anything else, the lack of available supply will mark this industry.

Congress pays off the teacher's Unions to the tune of $26B

And it comes out of your wallet

Friday, August 13, 2010

Goldman: New Reform Law Can Kiss Our Ass

More GS BS from Taibbi

Foreign firms helped by U.S. bailouts: panel

WASHINGTON (Reuters) – The U.S. tactic of pouring money into ailing financial firms during the 2007-09 crisis helped many foreign banks whose governments should have shared some of the burden, a report from a congressional watchdog agency said on Thursday.

In its latest critique of the Treasury Department's handling of the Troubled Asset Relief Program (TARP) -- set up in 2008 as a $700 billion rescue fund -- the Congressional Oversight Panel said other countries got help from U.S. rescue efforts that exceeded any benefit their programs provided to the United States.

It cited insurer American International Group, Inc as an example, noting that while banks in France and Germany were big beneficiaries of a U.S.-initiated rescue of AIG, "the U.S. government bore the entire $70 billion risk of the AIG capital injection program."

U.S. officials should have more closely tracked what banks were doing with bailout money and what operations in which countries were being helped, it said.

"While the United States attempted to stabilize the system by flooding money into as many banks as possible -- including those that had significant overseas operations -- most other nations targeted their efforts more narrowly toward institutions that in many cases had no major U.S. operations," the report noted.

"If the U.S. government had gathered more information about which countries' institutions would most benefit from some of its actions, it might have been able to ask those countries to share the pain of rescue," the report said.

The oversight panel is headed by Elizabeth Warren, considered a potential pick to head a new consumer protection agency created as part of the financial regulatory overhaul signed into law last month by President Barack Obama.

The panel report says it is not too late to seek some transparency about where TARP funds went and who benefited most from them, but notes the Treasury must pick up the pace.

"The panel strongly urges Treasury to start now to report more data about how TARP and other rescue funds flowed internationally and to document the impact that the U.S. rescue had overseas," it says.

"The American people have a right to know where the money went and they have a right to that information quickly," Warren said in a telephone press conference.

Treasury said it welcomed the panel's recommendations but noted that, in its opinion, the report showed that Treasury had "worked effectively with its overseas partners in a number of ways to address the global crisis."

The panel's report also urged Treasury to set up a database of information about how rescue capital flowed across borders and to push foreign regulators and multinational organizations to do the same to enrich understanding about how to deal with future crises.

An addendum to the report said that while the panel cannot determine the ultimate recipient of most TARP bailout money, it does now have a more complete picture of the dealings between AIG and Goldman Sachs.

When the government was forced to engage in a costly rescue of the deeply troubled insurer, it said "taxpayer aid to AIG became aid to Goldman, and aid to Goldman became aid to a number of domestic and foreign investors."

AIG nearly collapsed in September 2008 from credit default swaps that left it on the hook for tens of billions of dollars in payouts to some of the biggest U.S. and European banks.

Tuesday, August 10, 2010

Frederic Bastiat, The Law [1850]

When plunder becomes a way of life for a group of men... they create for themselves, in the course of time, a legal system that authorizes it, and a moral code that glorifies it.

Gay Marriage

Stop protesting the overturning of the Gay Marriage Bans in California and Iowa

Many of you are looking at this the wrong way. In fact, from a purely legal standpoint, there is no way you can ban Marriage between 2 men (or 2 women) using the 14th amendment as reference. We are not a democracy, we are a constitutional republic ; just because you or I don't like something, doesn't mean if we can garner enough votes, we can ban it or make it illegal. The California judge was absolutely right to rule against the Gay marriage ban. The problem was the attempt to ban "Marriage" and what the definition of marriage is. The argument needs to be that Govt has no business defining marriage in the first place.

All govt/legal references to marriage should be changed to civil union, to allow those visitation/power of atty/inheritance rights that Gays want, while allowing religious objectors to define marriage in their own religious terms. If Catholics or muslims wish to deny gay marriage official status within their religious dogma, so be it.

Remember that the hx of govt licensing of marriage and govt recognition of marriage was rooted in post civil war America, and the original purpose of requiring marriage licences was the prevention of inter-racial marriage. Now I do not equate "gay rights", in general, to black "civil rights", but in this respect, there is some correlation. That is why we need to remove the govt from this contentious issue.

This should be the offical Libertarian position on the issue (I don't know if it is.) -

Govt should recognize civil unions between any 2 consenting adults, and the legal ramifications that formerly applied to marriage. The term "Marriage" should have no govt definition and may be applied as any non-govt group or individual sees fit.

The fact that any individual has a sexual preference (gay, straight, appliantology, etc.) should confer no special status or protection, IMO, confering special victim rights. No-one HAS to engage in sexual behavior of any kind, engaging in sex is a choice. Asking for governmental approval of your sexual choice is silly, you silly goose!

Monday, August 9, 2010

American voters deserve what they get

Matt Taibi does it again. You have to wonder about the state of the press when Rolling Stone mag seems to do the best job at investigative journalism. For those of you who vote, and who continue to vote repubicrat and demoblican (99.5%), you really need to read this somewhat long article, regarding the behind the scenes congressional dealmaking between the 2 parties. That they offer significant differences is a complete farce, and yet somehow you pub voters think throwing out the dems is going to make a big difference (get a clue!) and you dems think if the obstructions pubs would get out the way, we could enter a socialist nirvana (you're even more deluded than the pubs!).

I was disappointed at last weeks elections in Missouri, w only about 1/2% voting for Libertarians or Constitution party. As long as you keep voting for the 2 main parties, politicians win, and the people lose.
Here's the first article- Wall Street's Big Win


For you republicans who think the republican party is the answer, read this from David Stockman, a director of the Office of Management and Budget under President Ronald Reagan

Four Deformations of the Apocalypse


Published: July 31, 2010

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.

It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.

In fact, since chronic current-account deficits result from a nation spending more than it earns, stringent domestic belt-tightening is the only cure. When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.

Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.

The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.

The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing — as suggested by last week’s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter. Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

For you republicans who think the republican party is the answer, read this

Lunacy From The Department Of Nobody Gets Ahead

August 4, 2010 by Bob Livingston

There are few clearer examples of a fascist system’s views of exceptionalism and innovation than one pointed out by The Washington Examiner’s Byron York in a column yesterday.

It seems that last year Princeton, Arizona State and Case Western Reserve universities undertook an experiment to see if e-book readers would be more convenient and less costly than traditional textbooks. The idea also made sense from an environmental standpoint as the green-leaning educators felt it would reduce the huge amount of paper students use to print files from their laptops, not to mention the need to kill trees to make paper for textbooks.

So the universities set aside a couple of courses under a pilot program with a limited number of students and gave them the OPTION of using the Amazon Kindle. Amazon supplied the Kindle DX for the student’s use. But if the students chose to they could opt out and use a standard textbook.

That idea didn’t sit well with President Barack Obama’s radical Department of Justice Civil Rights Division head Thomas Perez, who sued the universities for violating the Americans With Disabilities Act. Why? Although the Kindle has a text-to-speech feature that can read a book aloud, it requires sight to operate the menu functions. So Perez assumed the courses were discriminatory to the visually impaired.

“We acted swiftly to respond to complaints we received about the use of the Amazon Kindle,” Perez recently told a House committee. “We must remain vigilant to ensure that as new devices are introduced, people with disabilities are not left behind.”

The Civil Rights Division ordered the universities stop distributing the Kindle because if blind students couldn’t use the device, then nobody could.

Never mind that no visually impaired students had registered for the classes. Never mind that the idea makes economic and environmental sense. Never mind that the technology was evolving quickly and the text-to-speech capabilities were improving. All Perez could see was that someone might be left behind.

The problem with that school of thought is, when you are so intent on making sure no one is left behind you also ensure that no one gets ahead. But isn’t that the goal of totalitarian regimes?

Saturday, August 7, 2010

Matt Taibi's scathing rebuke of "banking reform"

This is a must read


Thursday, August 5, 2010

Beware the Dragon's gold teeth

China is putting itself in a position where dominance of the gold market, of which it is capable, could lead to it exerting global financial hegemony.

Author: Lawrence Williams

Posted: Wednesday , 04 Aug 2010


Almost a year ago Mineweb published a short article referring to a report from China that state-controlled organisations - as virtually all entities are in China - had launched marketing efforts at persuading its citizens to buy gold and silver as an investment. This turned out to be the best read story ever published on Mineweb. Not surprisingly with such an article, which we have been assured by our Chinese contacts is correct, there have been those who have accused us of falling prey to pure promotional hype from the gold lobby and there has been no such programme. But the facts belie the doubters with Chinese gold purchases by investors rocketing last year and this.

Earlier this year you could also have read on Mineweb that the World Gold Council had entered an agreement with China's, and the world's, largest bank the Industrial & Commercial Bank of China (ICBC) (state-owned of course) to co-operate to promote gold investments in China.

Yesterday we learnt that China is further loosening its controls on the import and export of gold on the one hand, and on the other that it is also going to support Chinese company investment in overseas gold mining projects.

Does anyone notice a pattern emerging here?

For long we have put forward the view on Mineweb that Eastern buying, and that from China in particular, will effectively put a floor under the gold price - and that floor seems to be rising continuously as seen in the gold price's stair step advances in recent months. A senior Chinese official has stated publicly that the country will buy gold on the dips so as not to disrupt the market and undermine the US dollar - and there is perhaps more than anecdotal evidence that the Chinese government is buying gold, effectively surreptitiously, for its reserves, but not disclosing this until it reckons it is opportune so to do. Last time it announced an increase in gold reserves it had in fact been accumulating the yellow metal for 6 years before it actually made the fact public.

But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.

There has also been considerable evidence that Chinese companies (all state-controlled) have been buying up western investments - in the resource sector in particular - at a phenomenal, and seemingly ever-growing, rate. Some would say this is an attempt to convert some of the nation's huge dollar currency surplus into hard assets, while at the same time helping secure future supply lines for the global industrial giant. Some of China's top economists have gone on record as saying that they have little confidence in the long term future of the dollar as the only real reserve currency, and replacing some of its dollar reserves in this manner is probably - certainly - government policy.

But what this does mean to the West in general, and to the U.S.A. in particular, is ‘don't screw with the Dragon'. It has golden teeth which can really cause financial damage to the status quo if it should so wish, and it is also gaining a position where it can dominate the supply of many militarily strategic metals and minerals, not just gold, should any other country try and resort to gunboat diplomacy! The time is perhaps not ripe - yet, but every move that China makes in the resource sector in general, and in gold and in some particularly strategic metals and minerals (think rare earths) could be interpreted as a long term plan to make China top dog in the global economy and, at the same time, make it secure from any nation which might want to try to prevent it reaching this position of global dominance by any means.

But in the meantime it is set on keeping its own 1.4 billion population happy - and subservient. The best way of doing this is by continuing internal growth, which in turn is needed to generate the demand to fuel its industrial engine. 8% GDP growth is a bad year for China. What would most of the West's industrialised nations give for a growth rate of half that today? Within this policy, persuading its new, and rapidly growing, middle classes to invest in gold, and then ensure the metal continues to rise gradually in price, thus maintain wealth aspirations, is one way of keeping a potentially troublesome element of society more than happy.

Now maybe I'm being too cynical in my analysis, but history also suggests that some nations are prepared to look very long term in their approach to global business and politics, and ultimate dominance in both - and the Chinese seem to fit this pattern well. On the other hand a capitalist democracy is less well suited to extended planning of this type as fortunes of political parties wax and wane and agendas are constantly shifting. The world order is changing. The U.S. cannot exert its current global financial control for ever.

Wednesday, August 4, 2010

Ian Gordon: A Cyclical Case for Gold Stocks

Source: Brian Sylvester of The Gold Report 07/30/2010

"We're not going into a double dip. We're going into a depression. I'm convinced of that," claims renowned Market Forecaster Ian Gordon. Using his sharpest tools, Gordon has determined that the biggest market crash in our lifetime is coming sooner than most expect. But he is using a three-pronged strategy to limit the damage and even make money in the dark times ahead. You will learn why Gordon believes gold, and gold equities in particular, will perform when nothing else does in this exclusive interview with The Gold Report.

The Gold Report: Today we are talking with Ian Gordon, president of Longwave Analytics. Your market analysis model, known as the Longwave Principle, is a modified version of the Kondratieff cycle. Could you give us an overview of how it works?

Ian Gordon: I think that I've actually embellished it quite a lot. I've done far more than I think Kondratieff ever envisioned. For instance, breaking the cycle into four seasons—I don't think that's original. But I think those season breaks are very appropriate.

Spring is the birth or rebirth of the economy. Summer is the time when the economy reaches fruition. Autumn is a period where everyone feels very good because it's always the season where you have the biggest bull market in stocks, bonds and real estate. Winter is the period when debt is washed out of the system so that it can start refreshed again in the spring. The cycle lasts a lifetime of about 60 or 70 years. I call it a lifetime cycle, because we live only one cycle in a meaningful way. For that reason, it is also very difficult for anyone to recognize where we are in the cycle because we haven't lived in that period before.

TGR: And that model says we are in the winter of that cycle.

IG: Yes, we're in winter. The indication of the season change from autumn to winter is the bull stock market peak. We say that peak was effectively reached in 2000, not 2007, because NASDAQ obtained the real speculative peak in the market in March 2000. When that peak is reached, as it was in September 1929, it signals the onset of winter and the deflation/ depression stage of the cycle. That whole winter period is really where debt is expunged from the economy and that process is extremely difficult for creditors and debtors alike. The last depression, for instance, following the 1929 stock market peak, brought the entire U.S. banking system to its knees. In fact, between 1929 and 1933 about 10,000 banks failed. That kind of process is bullish for gold because people move to gold as money of last resort. It's the money that they ultimately place their full trust in. They move away from paper as a monetary medium.

TGR: And this is what you believe will push gold to $4,000 an ounce?

IG: That's why we're saying $4,000 per ounce gold, but that's a number that we've been predicting for about two years. About eight years ago we were predicting $2,000. But we think the sort of calamity that we're anticipating here is going to make the rush to gold quite dramatic. We're not even sure $4,000 will be the high. It could be something significantly greater than that.

TGR: Could we see another 10,000 banks close?

IG: I think there are only 8,000 banks in the U.S., but you could see a significant number of the banks fail. We have a major debt crisis worldwide right now. Who are the biggest creditors? The creditors are the banks, so as debt comes out, many of those banks are going to be in dire straits. We haven't really seen what's been happening to the banking system with regards to commercial real estate. We've certainly seen what's happening with regards to consumer real estate. But on the commercial real estate side, the banks are shielding themselves from obviously very difficult times in that area.

TGR: In addition to $4,000 gold, you're predicting that the DJIA is going to fall to 1,000. It's about 10,500 now. That would have gold trading at four times the Dow Jones Industrial Average (the Dow). How would you respond to people who might ask, "Ian, have you gone mad?"

IG: Well, I think a lot of people think I am mad. But so far everything that we've anticipated through our understanding of this cycle has come to pass. We know how desperate the winter of the Kondratieff season is because that process of debt unwinding is very, very painful. In the last depression, 25% of the American work force was unemployed. You had a massive drop in GDP in the United States; the economy basically collapsed by 45%. If that were to happen today, you would go from a $14 trillion dollar economy to about an $8 trillion dollar economy. That means that things are desperate. Major institutions are going bankrupt. People are going bankrupt because they've taken on too much debt and it's pushing the banks into bankruptcy as well.

TGR: So we are going to see the first signs of this at an institutional level?

IG: I remember going to Japan to speak on the cycle about seven years ago. I was ferried around Tokyo by a man in this chauffeur-driven Jaguar. This gentleman was very interested in investing in gold. He was talking and pointing to these big skyscrapers and he said: "See this building? Owner bankrupt. Bank bankrupt." That was a big lesson for me. We're going to have the same kind of experience here in North America because the people who put those buildings up have borrowed heavily from the banks. They're going to go under and the banks are going to be in dire straits as a result of lending them all that money.

TGR: What's the timeframe for all of this?

IG: It's already happening. I mean the debt bubble is unwinding worldwide. I think the next leg down restarts in earnest when it becomes apparent that North America's not immune to the banking crisis. We've already had the initial banking crisis here in North America; the Brits have had their banking crisis, and so on. But I think the next leg down will be some big bank in trouble in the United States. Then people will start to panic and move to gold. With that, the stock market will come down quite dramatically because the economy won't be recovering. We're not going into a double dip. We're going into a depression. I'm convinced of that.

TGR: Is there enough gold to go around?

IG: We don't actually produce very much gold every year. We only produce about 80 million ounces from the mines. You've got a lot of people who are going to return to gold because that's the monetary medium that they really trust. Eighty million ounces a year isn't going to go a long way to satisfy the demand that I see happening.

TGR: But gold stocks went down along with everything else when we had the massive correction in 2008. If we get to $4,000 gold and a 1,000 DJIA, won't everything be pretty much wiped out?

IG: We know what happened to the gold stocks following the 1929 peak. In the initial October 1929 crash, the gold stocks crashed alongside the general stock market. We had a rally back into April 1930 and the gold stocks came back in that rally. Then after April 1930, it was almost straight down for the Dow, yet the gold stocks continued to rise. The price of gold was fixed until January 1934 at $20.67, yet the gold stocks continued to go up. For instance, Homestake Mining's price more than doubled between that drop in 1929 until early 1934, when the price of gold increased from $20 to $35 an ounce. So it doubled in the face of the Dow dropping quite dramatically. In fact, between 1929 and 1936, Homestake's price actually increased by six times its value. We see a similar thing happening this time. I mean at $4,000 gold, gold stocks are going to be worth a lot of money. Let's say they're producing gold at a cash cost of production of $500. At today's gold price per ounce they're making $600 or $650 an ounce in profit. If you go to $4,000, they're making $3,500.

TGR: But won't there be anarchy on the streets?IG: Well, I think there's going to be major civil unrest. You're starting to see a little bit of that manifesting itself in the form of these Tea Party groups that are in the United States. But when you start to see 25% unemployment and a Dow that's basically as worthless as it was in 1932, I think people are going to be pretty angry.

TGR: In your last conversation with The Gold Report, you talked about this happening perhaps as quickly as 2012.

IG: The reason I picked 2012 as a bottom is because I was using anniversary dates because I'm a huge fan of W.D. Gann and that's kind of the work that he would've done. There are lots of anniversaries associated with 2012. . .It's the 80-year anniversary in 2012 of the 1932 bottom when the Dow was at 41 points. And 1982 was the bear market bottom that saw the beginnings of the big autumn bull market. Also, you've got an anniversary in 2002 when we had our first bear market bottom from that 2000 peak. There are so many anniversaries around that that I picked 2012, which would mean that you'd have to have a massive collapse starting almost immediately.

TGR: Great.

IG: It is very difficult for people to comprehend this because, first of all, stocks have risen in value since the 1932 bottom when the Dow hit 41. Every time we've had a bear market, stocks have always recovered pretty well from that bear market and gone up to new highs. We've been conditioned to believe that stocks are a lifetime investment. We've demonstrated through our work they're actually not a lifetime investment. They work in the spring of the season because of the rebirth in the economy. They work in the autumn because of the speculative period spins in real estate. That's the massive bull market and it always occurs in the autumn of the cycle. Similarly, we've also been conditioned to expect that every time the economy has a hiccup we'll recover from the recession and go on to bigger and better things. In effect, that has happened as well.

TGR: Why should we think that won't happen again?

IG: During the major 1980–1982 recession the U.S. was still a creditor nation. Her manufacturing base was much more significant than it is today. Her economy was probably 40% of the world economy. Now it's about 24% of the world's economy. This depression is something that we've never experienced. The recovery from these takes much, much longer because of all that debt that's being taken out of the system.

TGR: History, as far as the Kondratieff cycle goes, seems to be on your side.

IG: I've been able to go back and map this all the way from 1790 to the present to show that these things are quite repetitive. When you can see that repetition, we know that following that big bull market peak we're going to go into the depression stage of the economy. We can anticipate that. We've made that anticipation and have been invested in gold since 2000. That has been the right decision.

TGR: Based on that logic, though, another spring will come. How far off is that?

IG: The stock market bottomed in 1932, but we say the spring of the present cycle didn't start until 1949. The Second World War essentially took the United States out of the Depression. She wasn't out of the Depression until the war started because you basically had a big manufacturing buildup for the war. So many people were employed in the war that people started saving. As a means of saving, servicemen would put part of their paycheck into war bonds. That's really how an economy starts; it grows on savings, it doesn't grow on debt. The catalyst that got the Chinese and the Japanese economies moving was the huge savings that those people have. I think in China they save 40% of what they earn.

TGR: Given these dire predictions, what sort of investment strategy are you recommending?

IG: Well, there are really three things that we feel make sense in this kind of environment. One is to be long on gold, which we have been since 2000. Two is to be short on the market. We buy the inverse ETFs, the ones we think make more sense in that kind of environment. We like the inverse financial ETF stocks to short or we'll short the growth stock ETFs—the Russell Financial Bear 3x (NYSE:RGUSFL) and also the ProShares Ultrashort Russell 2000 Growth (NYSE:SKK), which is a double. We feel that growth stocks in a bear market are most likely to fail both first and fast.

TGR: And the third part?

IG: I also have bought the Sprott Physical Gold Bullion Trust (NYSE.A:PHYS; TSX:PHY.U). I'm generally a bit nervous about having a paper claim on gold, but I know Eric Sprott pretty well and I'm absolutely sure he has a gold backing for that fund.

TGR: What percentage of your portfolio would you recommend having in terms of gold equities?

IG: In terms of my portfolio, a small portion is in cash, probably about 5%, probably about 15% in the Sprott Gold Fund. Then maybe 30% is in these inverse ETFs. I see my short position as a hedge against a 2008 kind of melt down for these equities that I'm in. About half my portfolio is gold equities. In most cases I'm in junior equities. I have one senior gold equity in my portfolio.

TGR: What are some of the junior equities that you're excited about?

IG: My biggest position is in a company called Timmins Gold Corp. (TSX.V:TMM). I think I recommended that the last time we talked. I have a significant position in a company called Golden Goliath Resources Ltd. (TSX.V:GNG; OTCPK:GGTHF). Then a company called Millrock Resources Inc. (TSX.V: MRO) in Alaska. Millrock has a really good relationship with Kinross Gold Corp. (NYSE:KGC; TSX:K) so I'm fairly heavily weighted in Millrock. I've got a position in a company called Lincoln Mining Corporation (TSX.V:LMG). Their main assets are in Nevada, but they do have a great asset in Mexico.

TGR: Let's go back to Timmins. It has the San Francisco Gold Mine in Mexico that's in production, but their mill throughput is a bit lower than it was earlier in the year.

IG: You're always going to have some slight hiccups when you go into production. I've basically financed Timmins from the seed capital days. The management of this company has always delivered to shareholders essentially what they've promised that they're going to do. There have been some delays in the production process, but I'm very confident that they're going to get it right. Their goal is ultimately to produce 100,000 ounces a year. Their cash costs are in the lower $400 an ounce range. It's going to be extremely profitable. The key for Timmins, as I see it, is to expand that resource at the San Francisco mine from about 700,000 ounces to something considerably more than that. I think that the drilling that they've done to date would indicate that they are doing that. We don't have a new resource calculation yet, but the drill results that they've been producing are similar to the results that they had in their previous resource calculations. I think we can comfortably estimate that we're going to see a resource calculation come out that's going to improve that 700,000 to something significantly better than that. If you can get above a million ounces, then we've got a 10-year mine life. If Timmins can generate a multiple of that, the mine life just increases. I think this company is actually very undervalued; it's about $1.40 a share.

TGR: Golden Goliath is also in Mexico. You seem to be a believer in Mexico. You also mentioned that Lincoln had a project there. What is it about Mexico that you like?

IG: It's been a huge producer since the Spanish discovered gold and silver there. All of these properties, like the one Timmins has, are past-producing mines. There are several past-producing mines on the Golden Goliath properties. It's a maze of tunnels. The old mine was worked without any exploration expertise. They simply followed the veins. Golden Goliath was an extremely rich mining camp; so rich that there was a mint introduced in the local town to mint Mexican coinage from the ore being produced from local properties, most of which are now owned by Golden Goliath.

TGR: Agnico-Eagle Mines Ltd. (NYSE:AEM; TSX:AEM) holds about 9% of Golden Goliath. Is it anywhere near Agnico's Pinos Altos gold mine?

IG: It's a little south but not that far from Pinos Altos. Agnico-Eagle is also represented on the Golden Goliath board through their vice president for project development, Marc Legault. This is very positive, because I think he's been instrumental in getting Golden Goliath focused. They were property rich before and they didn't spend enough time on any one of the properties to do each of them proper justice. He's got them focused on Las Bolas, and I think we're starting to see some interesting results on that property.

TGR: That's generally Agnico's modus operandi. They take a stake in a promising junior, get a seat on the board, have a look at the geology and eventually take the company over. They did that with Cumberland Resources and its Meadowbank Gold Project. Agnico bought Cumberland in 2007 and Meadowbank just went into commercial production.

IG: I was actually instrumental in getting Agnico-Eagle to invest in Golden Goliath in the initial public offering. I knew Sean Boyd who's now the CEO. I phoned him and he sent down his geologist to take a look. They came back and said, yes, they would put money into Golden Goliath's IPO. That was in 2000.

TGR: You mentioned Millrock a bit earlier. Tell me about Millrock.

IG: Basically the company's main focus is in Alaska. They've worked very closely with the native bands in Alaska so they have a very good relationship, and the natives control much of the land.

TGR: Is this a pure exploration play?

IG: Yes, it is, but Kinross has recently financed Millrock at a premium to its share price . Kinross liked the properties that they have. Millrock has a really good gold property called Estelle, which they are joint venturing, again with Kinross. They're looking at doing other things with Kinross in Alaska, too. In some ways you could say Kinross is using Millrock as its exploration arm in Alaska.

TGR: Can you comment on Lincoln Mining? That's another one you mentioned.

IG: I like Lincoln very much. Paul Saxton, Lincoln's president, has put, probably, five mines into production in his lifetime, so he knows how to put a mine into production. They've got a fairly small deposit in Nevada. There's about half a million ounces there. Right now, they're trying to drill it up to a million ounces, but they're going to put the half a million into production.

TGR: You're talking about the Pine Grove project?

IG: Yes, Lincoln has another property in California, which scares a lot of people, but that had been permitted and had actually been in production. Paul is hoping to get the mining permit grandfathered and be able to put that back into production. He really likes this La Bufa property in Mexico. He's surrounded by Gammon Gold Inc. (NYSE:GRS; TSX:GAM). Gammon has always tried to do some sort of deal with them, but they feel they haven't done the property justice to do any sort of deal with any company yet. They think this has the potential to be a fairly significant discovery. It is early stage, but you know how much I like Mexico. I'm a big Lincoln fan simply because of Paul Saxton's ability to put these things into production. He's done it before.

TGR: Do you have some thoughts you would like end our talk with?

IG: I think we're heading down into the next stage of the bear market in stocks. I've always counseled people that if we're in a bear market, then we're going to make lower highs and lower lows. Well, we've seen the lower high below the DJIA's 14,200 in October 2007. And we can expect the next low to be below the 6,547.05 Dow low in March 2009. The next low should be below that. It's not going to be a fun time. I would counsel everybody to be out of stocks. Everything that is, except gold stocks.

A globally renowned economic forecaster, author and speaker, Ian Gordon is founder of the Longwave Group, comprising two companies—Longwave Analytics and Longwave Strategies. The former specializes in Ian's ongoing study and analysis of the Longwave Principle originally expounded by Nikolai Kondratieff. And with Longwave Strategies, Ian—who believes that the precious metals sector will continue to provide very secure investment options—assists select precious metal companies in financings. Eric Sprott, Chairman, CEO and Portfolio Manager at Sprott Asset Management, describes Ian as "a rare breed in the investment advisor arena." He notes that Ian's forecasts "have taken on a life force of their own and if you care to listen Ian will tell you how it will all end."

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1) Brian Sylvester of The Gold Report conducted this interview. He personally and/or his family own the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Timmins.

3) Ian Gordon: I personally and/or my family own shares of the following companies mentioned in this interview:Timmins Gold, Golden Goliath, Millrock and Lincoln. My company, Long Wave Analytics is receiving payment from the following companies mentioned in this interview, for receiving mention on my website, Golden Goliath, Millrock and Lincoln Gold.

Chelsea's Wedding

Let Them Eat Cake

It is not unusual for members of the diminishing upper middle class to drop $20,000 or $30,000 on a big wedding. But for celebrities this large sum wouldn’t cover the wedding dress or the flowers.

When country music star Keith Urban married actress Nicole Kidman in 2006, their wedding cost $250,000. This large sum hardly counts as a celebrity wedding. When mega-millionaire real estate mogul Donald Trump married model Melania Knauss, the wedding bill was $1,000,000.

The marriages of Madonna and film director Guy Ritchie, Tiger Woods and Elin Nordegren, and Michael Douglas and Catherine Zeta-Jones pushed up the cost of celebrity marriages to $1.5 million.

Tom Cruise and Katie Holmes upped the ante to $2,000,000.

Now comes the politicians’s daughter as celebrity. According to news reports, Chelsea Clinton’s wedding to investment banker Mark Mezvinsky on July 31 is costing papa Bill $3,000,000. According to the London Daily Mail, the total price tag will be about $5,000,000. The additional $2,000,000 apparently is being laid off on US Taxpayers as Secret Service costs for protecting former president Clinton and foreign heads of state, such as the presidents of France and Italy and former British Prime Minister Tony Blair, who are among the 500 invited guests along with Barbara Streisand, Steven Spielberg, Oprah Winfrey, Ted Turner, and Clinton friend and donor Denise Rich, wife of the Clinton-pardoned felon.

Before we attend to the poor political judgment of such an extravagant affair during times of economic distress, let us wonder aloud where a poor boy who became governor of Arkansas and president of the United States got such a fortune that he can blow $3,000,000 on a wedding.

The American people did not take up a collection to reward him for his service to them.

Where did the money come from? Who was he really serving during his eight years in office?

How did Tony Blair and his wife, Cherrie, end up with an annual income of ten million pounds (approximately $15 million dollars) as soon as he left office? Who was Blair really serving?

These are not polite questions, and they are infrequently asked.

While Chelsea’s wedding guests eat a $11,000 wedding cake and admire $250,000 floral displays, Lisa Roberts in Ohio is struggling to raise contributions for her food pantry in order to feed 3,000 local people, whose financial independence was destroyed by investment bankers, job offshoring, and unaffordable wars. The Americans dependent on Lisa Roberts’ food pantry are living out of vans and cars. Those with a house roof still over their heads are packed in as many as 14 per household according to the Chillicothe Gazette in Ohio.

The Chilicothe Gazette reports that Lisa Roberts’ food pantry has “had to cut back to half rations per person in order to have something for everyone who needed it.”

Theresa DePugh stepped up to the challenge and had the starving Ohioans write messages on their food pantry paper plates to President Obama, who has just obtained another $33 billion to squander on a pointless war in Afghanistan that serves no purpose whatsoever except the enrichment of the military/security complex and its shareholders.

The Guardian (UK) reports that according to US government reports, one million American children go to bed hungry, while the Obama regime squanders hundreds of billions of dollars killing women and children in Afghanistan and elsewhere.

The Guardian’s reporting relies on a US government report from the US Department of Agriculture, which concludes that 50 million people in the US--one in six of the population--were unable to afford to buy sufficient food to stay healthy in 2008.

US Department of Agriculture Secretary Tom Vilsack said that he expected the number of hungry Americans to worsen when the survey for 2010 is released.

Today in the American Superpower, one of every six Americans is living on food stamps.

The Great American Superpower, which is wasting trillions of dollars in pursuit of world hegemony, has 22% of its population unemployed and almost 17% of its population dependent on welfare in order to stay alive.

The world has not witnessed such total failure of government since the final days of the Roman Empire. A handful of American oligarchs are becoming mega-billionaires while the rest of the country goes down the drain.

And the American sheeple remain acquiescent.