From micro to macro: How we’re becoming a country drowning in debt
The Globe and Mail
Published Saturday, Mar. 09 2013
This article is part of The Paycheque Project: Bold Canadians talk to The Globe and Mail about how they spend their incomes and their tough choices for the future.
Canada’s overseas-bound central banker suggests he’s got the country’s debt problems licked. Those left behind may feel less jaunty.
Bank of Canada governor Mark Carney, who will move to the Bank of England later this year, implied this week that the need for higher interest rates is less imminent as Canadians heed the call to curb borrowing.
But households are still sitting on record levels of debt. And Mr. Carney’s usual ally, Finance Minister Jim Flaherty, criticized the Bank of Montreal this week for reducing mortgage rates, saying, “I encourage responsible lending.”
Given muted wage growth, tough choices lie ahead: It seems 2013 might turn out to be the hangover after the great Canadian debt party.
A new analysis paints a picture of just how pinched households have become, at a time when house prices are expected to fall and amid weak income gains, poor job prospects for young people and growing income inequality.
For most of the past five years, what stood out was how much better the Canadian economy fared than in most other western nations. Those days might be coming to an end.
“We’re in for a difficult time,” says Roger Sauvé, economist and author of the Ottawa-based Vanier Institute of the Family’s annual studies on the state of Canadian family finances, including the one to be published this month.
Since the recession, Canadians have been saving much less, at rates about a quarter of what they were in the early 1990s. Household debt levels have soared past those of the U.S. and the U.K. in recent years, reaching an average of just over $110,000 dollars per household in the third quarter of last year – more than double the level of $50,691 in 1990.
Meanwhile, disposable income hasn’t changed much since 2008. Which means one thing: “Debt that’s been created by boomers and older people is coming to roost,” Mr. Sauvé says.
One central factor in this is real estate: Canadians have bought pricey homes, taken out big mortgages and used them as cash machines by drawing on home-equity lines of credit to pay for renovations or other purchases.
But an expected drop in house prices – on the order of 10 per cent in some markets in the next year or two, according to some economists – poses another challenge.
Of course, most Canadians bought their houses assuming prices would go up reliably. At 52, Cindi Thompson, in Kamloops, B.C., for example, views her townhouse as a key part of her retirement plan. Now she is worried, as it’s lost $35,000 in value since she bought it in 2009.
As the Vanier Institute report warns, many Canadians will see their “nest eggs” shrink, which has all kinds of repercussions, from keeping older people in the work force longer to the need to scrimp on discretionary spending such as vacations and restaurant meals.
Therefore, many economists are predicting this year will see a great pivot, when consumers pull back from spending and focus instead on budgeting – making tough choices between a night out, new clothes or a car repair.
This year is “back to reality,” says Benjamin Tal, deputy chief economist at CIBC World Markets.
Consider Stephanie Adams, a 25-year-old kinesiologist who lives in Burnaby, B.C. Having paid off her credit-card debt, she’s still saddled with student loans. So she’s become thrifty, living in a basement apartment, cooking at home and studying four grocery-store flyers before shopping.
It’s not all grim news: Canada’s labour market has held up much better than others in recent years, and youth joblessness, although bad, isn’t nearly as dire as in other countries.
Some segments of the population are even faring better today – the poverty rate among female single parents, for example, is now less half of what it was in 1990.
But while income inequality – the gap between the rich and the poor – isn’t nearly as stark here as in the United States, it is growing in Canada, too. The most recent data on distribution of incomes shows more inequality now than in the entire 34 years for which this measure is available, the analysis says.
Spending habits have changed, too. The fastest growth in spending in the past four years has been in expenses related to higher pension fund fees. We’re also spending more of our budgets on new vans and SUVs, parking and funeral services. Spending on pets, curiously, has soared 25 per cent on average per household since its pre-recession peak. By contrast, we’re spending less on cameras, toys and appliances.
In the next year or two, “the Canadian consumer will be a shadow of its former self,” says the CIBC’s Mr. Tal.
That might mean more slow growth. But a return to old-fashioned savings, prudent shopping and more affordable real estate might not be a bad thing, given the excesses of years past.
Statistics: Posted by yoda — Sat Mar 09, 2013 4:09 pm
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The Day Obama Became Toxic: After Libya, We Cannot Trust Him—Barack Must Fall
- Kelly OConnell Sunday, September 16, 2012
Is it really possible the President of the United States was informed Muslim radicals were ready to strike American embassies, yet literally did nothing to warn them or bolster security? If so, Barack’s presidency is no longer tenable. If the US had credible knowledge of an impending Libyan embassy attack and took no defensive measures—this government must not stand.
If Obama knew of the threat, and was indifferent, he is therefore morally unfit to lead, and perhaps suffering from a grave mental or character defect. Or, Barack did not know, and therefore cannot possibly be actually in command of his position, and therefore—is likewise unfit to lead
There can be no other interpretation of events. The world is suddenly so dangerous, we Americans must return to our senses to save ourselves and the rest of the free world. It is time to end this diseased experiment in political correctness, and progressive fantasies.
“Cry ‘Havoc,’ and let slip the dogs of war—Act III, scene 1, Julius Caesar—William Shakespeare
American Traitors: Burr, Benedict, Barack
America has occasionally suffered traitors. Dictionary.com defines Treason as:
The offense of acting to overthrow one’s government or to harm or kill its sovereign.
A violation of allegiance to one’s sovereign or to one’s state.
The betrayal of a trust or confidence; breach of faith; treachery.
Benedict Arnold’s story is well known, trading his position as the Revolutionary War’s most successful general for traitor to America, trying to sell a Colonial fort to Britain. But Aaron Burr’s tale is the more interesting. Founding Father Burr is considered perhaps the most brilliant Princeton graduate, despite entering at 13 years of age. He had every conceivable gift, except common sense and moral probity. Burr’s fatal flaw was blind ambition, believing he should be emperor of his own country. Writes PBS:
If he had been able to keep his ambition in check, Aaron Burr might have become president. Instead, he became known as the man who killed Alexander Hamilton and as one of the most notorious traitors in history. The United States purchased the Louisiana Territory from France in 1803. Aaron Burr saw the territory as a place where his political hopes could be revived. Conspiring with others, Burr hatched a plot to conquer some of Louisiana and maybe even Mexico and crown himself emperor.
Burr’s trial for treason might rank as the greatest in American history, with more luminaries than any other. Burr was acquitted.
II. What Happened in Libya?
Four hundred Muslim radicals stormed the US Embassy in Libya and killed several Americans, including Ambassador Christopher Stevens. There was no contingent of US troops to protect the building. Further, it is claimed the US government was warned well-ahead of the attack, but did nothing in response. Afterward, across the globe—Muslim unrest errupted. The UK Independent who broke the story reported this:
The killings of the US ambassador to Libya and three of his staff were likely to have been the result of a serious and continuing security breach, The Independent can reveal. According to senior diplomatic sources, the US State Department had credible information 48 hours before mobs charged the consulate in Benghazi, and the embassy in Cairo, that American missions may be targeted, but no warnings were given for diplomats to go on high alert and “lockdown”, under which movement is severely restricted.
The obvious question is how there could be no response to a serious threat to an embassy in a place that just suffered civil war, from the most powerful country in history—at the height of its powers. Besides flatly denying the story, Barack has yet to give any reasonable explanation.
The US Constitution, in Article III Section 3, addresses treason:
Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.
So, what does this all mean? Liberal Washington Post just reported Barack regularly skips half his intelligence meetings. Stunningly, Obama skipped the intelligence meeting the day before the attack. Now, to state the obvious: Even if Obama were the greatest genius in history, he could never overcome a lack of factual knowledge, which by definition changes day by day. Further, a highly disturbing pattern has emerged revealing Barack a highly conceited, yet underinformed and disinterested absentee leader who most typically depends on underlings to digest information and offer simplistic, predigested choices for him. Can anyone say—Asleep at the wheel?
III. A Potential Grid to Explain Obamaism
Yet, it is simply inconceivable that all of Obama’s bad choices are unlucky accidents—especially if he is the brilliant savant his backers claim. Moreover, is it really coincidental that the net effect of his policies just happen to lead towards what most people believe are his deeply held secret beliefs—Marxist socialism? Of course not. Consider the following.
All Marxist ideologies presume revolution must occur before a better world can evolve. This revolution achieves the actual overthrow of capitalism; which is then supplanted by socialism; then finally replaced by communism. In this struggle the wealthy are stripped of their ill-gotten gains, which are symbolically returned to “the people.” The fight must be led by professional revolutionaries, who erect a temporary Tyranny (of the Proletariat) so that all societal ills can be addressed.
Here is erected a state with absolute powers and control—there no longer being any civil or constitutional rights for residents. This state is hard-minded, judging all by “materialistic” standards, that is, by who controls wealth. Religion is banned as a paradise of humanism flourishes in its place. Finally, the state takes precedence over the decisions and even fate of all persons, for salvation is only found in this humanistic paradise—for to reject the deified state’s benefices is to be damned.
Since there is no afterlife, and as man has no soul, what remains the proper object of our labors should be the improvement of this life. This can only be achieved by pooling all resources, placing always the group before individuals, and settling all rights and privileges within the strong and dependable arms of the state. Once all resources are shared collectively, then peace on Earth will reign—because there will be nothing left to fight for, as all hunger will end, and all wants cease. (see If Obama were a Marxist, what would he believe?)
Arguendo, If Obama carried such crypto-Marxist beliefs, it would explain virtually every currently inscrutable aspect of his troubled reign. First, American economic decline would be the only desired outcome for a Marxist, which fits in with Barack’s avoidance of putting jobs first in his policies. A Marxist would want to stress global relations over his own country’s—which would explain Obama repeatedly pitching his appeals to foreign audiences. A true Marxist would find no shame in lying for the good of the cause, in fact—that’s presumed, given the unpopularity of Marxism amongst commoners. A genuine Marxist considers his socialism a religious creed, and resents any other religion that cannot be co-opted into Marxism. It’s no surprise that Islam uses default socialism as its economics, or that Obama’s “Christian Church” was the quintessence of crypto-Marxism. etc
All of the complaints and perplexities about Obama can be settled within a Marxist framework, quite easily. In fact, probably only this acceptably resolves all the various contradictions. Therefore, according to Thomas Kuhn—this theory appears true based on its ability to explain more of the known facts than any other.
IV. Dire Consequences of Extended Incompetence: Global Dangers of Adopted Weakness
Imagine the obvious negative outcome of the American president refusing to protect his employees, overseas, or stateside! Or pay enough attention to do so. Here are a few to ponder caused by Obama’s malfeasance:
Emboldening attacks against Americans, allies and our facilities globally.
Causing allies, present and potentially future, to doubt our words and commitments.
Increasing the risks of war, and actual conflicts either regionally or globally.
Causing a general spike of lawlessness in local areas as control becomes more tenuous.
Costing more American lives as increased numbers of clashes take their toll.
Increasing commodity prices as globe becomes rated more dangerous, and insurance skyrockets.
Making many previously safe foreign areas inaccessible to world travelers and missionaries.
Causing goods to become more expensive or unavailable as America loses trade leverage.
Surging global unease as it becomes unclear whether bad acts will be punished.
Making it much more likely America will be attacked again, since a strong response can no longer be presumed.
Putting Liberties and Arts at risk as the globe becomes a less safe place to dissent.
Causing a worldwide depression as trade tanks over sudden fears and risks.
The most extraordinary aspect of Barack’s failure to act prudently to protect Americans, even by way of warning, is the utter subjective sense of this wrong. Certainly, either he or his staff could have communicated danger and a need for a Marine platoon or evacuation in less than a minute. Therefore, it paints his entire administration as not just incompetent, but cavalier, and utterly lacking in good will, or even any humanity. An astoundingly bad and absolutely unforgivable turn of events.
V. A Compendium of Horrors
Contemplate now the many unpleasant and frightening things we learned about Obama from this one simple failure, which ought be described as a foreshadowing of things to come. The absolute, inescapable, takeaway fact from the Libyan event is Obama is pathologically unable and unfit to lead. In fact, in retrospect—perhaps he never did attempt to lead, but only foment revolution—and everything else was the pure, pathetic projections of his supplicants?!! But consider these unseemly facts, come to light, like a field full of fresh dead:
We now know for certain Obama is not a sincere person, a dedicated civil servant, or a strong leader.
Barack reveals in sickening fashion that danger and death to Americans concerns him not.
Obama obviously feels no responsibility for those in danger.
Chances are high Barack has a dangerous mental illness or a psychological anomaly.
Obama putting others at risk and in danger to achieve his goals presents no obstacle to him.
Barack’s “secret deal” conversation with Russia’s President Medvedev, caught on camera, now augers even greater dismay in his future “cooperation” with their goals.
We must now recap every single Obama statement, decision and fact, looking for manifold ways in which he has tried to sell America down the river, aka Benedict Arnold.
Frighteningly, we can no longer trust anything from Barack, ever again.
Most of all, we must now admit the most obvious fact in the world—Barack is a brutal critic of America, our values, aspirations and history.
As Heraclitus once observed, Character is Destiny. Whether Obama purposefully left the embassy in Libya unprotected in the face of telegraphed threats, or was too distracted to notice, doesn’t really matter in the final analysis. Either choice represents the kind of character unfit for leadership of any organization, let alone the helm of the world’s only superpower.
“It is the supreme function of statesmanship to provide against preventable evils.”—Enoch Powell
Stasis is the condition of non-movement; Revolution the rank imposition of change. That Barack could not foresee that blind support of Islamic rebels during “Muslim Spring” would motivate previously static societies into religious revolution, thereafter threatening Americans, is astounding. Again, if done from stultifying ignorance or incomprehensible indifference, Obama does not have the mental capacity to lead the free world. Contra, if this was attempted as some dark chess move, it threatens world war. This reveals an infernal character of the sociopath.
From any possible angle, the net effect of Barack’s tenure is a spectacular failure of the statesman’s arts. After his epic malfeasance approximating treason, Barack should resign or be impeached. Knowing the improbability of this, at the very least, he cannot be allowed further misadventures, but must be stopped before Hades itself is loosed upon the Earth.
Statistics: Posted by yoda — Sun Sep 16, 2012 9:29 am
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By Daniel J. Mitchell
During the dark ages, nations like China were relatively advanced while Europeans were living in squalid huts.
But that began to change several hundred years ago. Europe experienced the enlightenment and industrial revolution while the empires of Asia languished.
What accounts for this dramatic shift?
I’m not going to pretend there’s a single explanation, but part of the answer is that Europe benefited from decentralization and jurisdictional competition. More specifically, governments were forced to adopt better policies because labor and capital had significant ability to cross borders in search of less oppression.
I’m certainly a big fan of making governments compete with each other, but even I didn’t realize how jurisdictional rivalry gave us modernity.
But you don’t have to believe me. This topic was discussed by Professor Roland Vaubel at last week’s Mont Pelerin Society meeting. Here are some excerpts from one of Professor Vaubel’s papers on the topic.
…competition among the public institutions of different countries can benefit from an international competitive order which preserves peace and prevents governments from colluding with each other at the expense of third parties, notably their citizens.
This post will have lots of additional excerpts, but if you’re not as excited by the issue as I am, just take a moment to review this table from Vaubel’s paper (click it for a larger image). You will see that the intellectual history of this issue is enormous, and the common theme is that big, centralized states hinder development.
Remember that this table merely looks at the classical thinkers on the issue. The paper also includes modern thinkers, some of who are quoted below. And I also have a postscript that shows how many Nobel Prize-winning economists see jurisdictional competition as a tool for restraining excessive government.
But let’s see what insights we can find from the great thinkers of history, starting with this passage from Charles Montesquieu that Vaubel cites in his paper.
In Europe, the natural divisions form many medium-sized states in which the government of laws is not incompatible with the maintenance of the state; on the other hand, they are so favourable to this that without laws this state falls into decadence and becomes inferior to all the others. This is what has formed a genius for liberty, which makes it very difficult to subjugate each part and to put it under a foreign force other than by laws and by what is useful to its commerce… princes have had to govern themselves more wisely than they themselves would have thought, for it turned out that great acts of authority were so clumsy that experience itself has made known that only goodness of government brings prosperity.
In other words, the mobility of capital among jurisdictions limits government interference.
The father of economics, Adam Smith, made a very similar point. Here’s a passage from the Wealth of Nations that Vaubel includes in his paper.
The … proprietor of stock is properly a citizen of the world and is not necessarily attached to any particular country. He would be apt to abandon the country in which he is exposed to a vexatious inquisition in order to be assessed a burdensome tax and would remove his stock to some country where he could either carry on his business or enjoy his fortune at ease. A tax that tended to drive away stock from a particular country would so far tend to dry up every source of revenue both to the sovereign and society … The nations, accordingly, who have attempted to tax the revenue arising from stock, instead of any severe inquisition … have been obliged to content themselves with some very loose and, therefore, more or less arbitrary estimation. The abuses which sometimes creep into the local and provincial administration of a local or provincial revenue, however enormous so ever they may appear, are in reality, however, almost always very trifling in comparison with those which commonly take place in the administration and expenditure of the revenue of a great empire.
Jacques Turgot (Bastiat was not the only great French economist) looked at the new nation of the United States and saw the benefits of jurisdictional competition.
The asylum which (the American people) opens to the oppressed of all nations must console the earth. The ease with which it will now be possible to take advantage of this situation, and thus to escape from the consequences of a bad government, will oblige the European governments to be just and enlightened
And Immanuel Kant observed.
…civil liberty cannot now be easily assailed without inflicting such damage as will be felt in all trades and industries and especially in commerce; and this would entail a diminution of the powers of the state in external relations. This liberty, moreover, gradually advances further. But if the citizen is hindered in seeking his prosperity in any way suitable to himself that is consistent with the liberty of others, the activity of business is checked generally; and thereby the powers of the whole state are again weakened.
Kant expanded on this notion in another publication.
…peace is created and guaranteed by an equilibrium of forces and a most vigorous rivalry. Thus, nature wisely separates the nations.
Professor Vaubel remarked that, “In other words, Kant prefers interjurisdictional anarchy to centralised despotism.”
Lord Acton also noted the dangers of centralization.
…the distribution of power among several states is the best check on democracy. By multiplying centres of government and discussion it promotes the diffusion of political knowledge and the maintenance of healthy and independent opinion. It is the protectorate of minorities and the consecration of self-government. …It is bad to be oppressed by a minority but it is worse to be oppressed by a majority.
Max Weber wrote.
The competitive struggle (among the European nation states) created the largest opportunities for modern western capitalism. The separate states had to compete for mobile capital, which dictated to them the conditions under which it would assist them to power.
Weber’s comments are significant from a terminological perspective. As Vaubel noted in his paper, “This is the first time that we find the economic term “competition” rather than jealousy (Hume) or rivalry (Kant) or emulation (Gibbon) in this literature.”
From Eric Jones.
…how did Europeans escape crippling exploitation by their rulers? … The rulers of the relatively small European states learned that by supplying the services of order and adjudication they could attract and retain the most and best-paying constituents …European kings were never as absolute as they wished. The power dispersed among the great proprietors was a check on them, as was the rising power of the market.
Harold Berman of Harvard wrote.
In the Western legal tradition diverse jurisdictions and diverse legal systems coexist and compete within the same community. … The pluralism of Western law was a source of legal sophistication and of legal growth. It was also a source of freedom.
Brian Tierny noted that rivalry between church and state also helped advance liberty.
In the Middle Ages there was never just one hierarchy of government exercising absolute authority but always two – church and state to use the language of a later age – often contending with one another, each limiting the other’s power” (1995, p. 66). “Since, in the conflicts between church and state, each side always sought to limit the power of the other, the situation encouraged theories of resistance to tyranny and constitutional limitations on government.
Here are some additional quotes from more modern academics, all taken directly from Professor Vaubel’s paper.
- “In the West, the absence of an empire removed the crucial bureaucratic block on the development of market forces; merchants persecuted in one place could always go with their capital elsewhere” (John A. Hall 1985, p. 102).
- “The paradox is that competition between states, economic and political rivalry, and international tension are the best guarantees of continuing progress … The very tension which presents the greatest threat to our survival assures that, if we survive at all, some states, in order to compete better, will be obliged to encourage intellectual freedom and progress” (Daniel Chirot 1986, p. 296).
- “Competition among the political leaders of the newly emerging nation states … was an important factor in overcoming the inherited distaste of the rural military aristocracy for the new merchant class. Had the merchants been dealing with a political monopoly, they might not have been able to purchase the required freedom of action at a price compatible with the development of trade” (Nathan Rosenberg, L.E. Birdzell 1986, pp. 136ff.).
- “The political and social consequences of this decentralized, largely unsupervised growth of commerce … and markets were of the greatest significance. In the first place, there was no way in which such economic developments could be fully suppressed … There existed no uniform authority in Europe which could effectively halt this or that commercial development; no central government whose change in priorities could cause the rise and fall of a particular industry; no systematic and universal plundering of businessmen and entrepreneurs by tax gatherers … In Europe there were always some princes and local lords willing to tolerate merchants and their ways even when others plundered and expelled them” (Paul Kennedy 1987, pp. 19f.).
- “The availability of alternative nation states for production meant that labour expelled from one nation could find other nations in which to locate, and the possibilities opened for capital mobility could operate as a deterrent to widespread political confiscations” (Stanley L. Engerman 1988, p. 14).
- “Western technological creativity rested on two foundations: a materialistic pragmatism based on the belief that the manipulation of nature in the service of economic welfare was acceptable, indeed, commendable behavior, and the continuous competition between political units for political and economic hegemony” (Joel Mokyr 1990, p. 302).
- “The various European societies complemented one another, and their internal competition gave (Europe) a dynamism that China lacked” (Mokyr 2003, p. 18).
- “Ironically, then, Europe’s great good fortune lay in the fall of Rome and the weakness and division that ensued … The Roman dream of unity, authority, and order (the pax Romana) remained, indeed has persisted to the present. After all, one has usually seen fragmentation as a great misfortune, as a recipe for conflict … And yet, … fragmentation was the strongest brake on wilful, oppressive behaviour. Political rivalry and the right of exit made all the difference” ( David S. Landes 1998, pp. 37f.).
For those interested in the topic, Vaubel’s entire paper is worth reading. But if you don’t have time, just remember that national sovereignty should be celebrated. Not because national governments are good, but because competition between governments is the best protector of liberty and civilization.
I favor tax competition, financial privacy, and fiscal sovereignty because these institutions lead to better tax policy. But Vaubel teaches us that promotion of better tax policy is just the tip of the iceberg.
P.S. Since this post is designed to show the intellectual case for jurisdictional rivalry, here are some quotes from a number of Nobel Prize-winning economists.
Competition among communities offers not obstacles but opportunities to various communities to choose the type and scale of government functions they wish.
…competition among nations tends to produce a race to the top rather than to the bottom by limiting the ability of powerful and voracious groups and politicians in each nation to impose their will at the expense of the interests of the vast majority of their populations.
…tax competition among separate units…is an objective to be sought in its own right.
Competition among national governments in the public services they provide and in the taxes they impose is every bit as productive as competition among individuals or enterprises in the goods and services they offer for sale and the prices at which they offer them.
With apologies to Adam Smith, it’s fair to say that politicians of like mind seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise taxes. This is why international bureaucracies should not be allowed to create tax cartels, which benefit governments at the expense of the people.
[I]t’s kind of a shame that there seems to be developing a kind of tendency for Western Europe to envelope Eastern Europe and require of Eastern Europe that they adopt the same economic institutions and regulations and everything. …We want to have some role models… If all these countries to the East are brought in and homogenized with the Western European members then that opportunity will be lost.
…international competition provided a powerful incentive for other countries to adapt their institutional structures to provide equal incentives for economic growth and the spread of the ‘industrial revolution.’
…while it has always been characteristic of those favouring an increase in governmental powers to support maximum concentration of powers, those mainly concerned with individual liberty have generally advocated decentralisation.
[Tax competition] is a very good thing. …Competition in all forms of government policy is important. That is really the great strength of globalization …tending to force change on the part of the countries that have higher tax and also regulatory and other policies than some of the more innovative countries. …The way to get revenue is doing all you can to encourage growth and wealth creation and then that gives you more income to tax at the lower rate down the road.
In other words, it’s not just me making these arguments.
View full post on Cato @ Liberty
Big Changes Ahead: Gold Just Became Money Again
Posted on 17th August 2012 by Administrator in Economy |Politics |Social Issues
By Doug Hornig, Casey Research
On June 18, the Federal Reserve and FDIC circulated a letter to banks that proposes to harmonize US regulatory capital rules with Basel III.
BASEL III is an accord that tells a bank how much capital it must hold to safeguard its solvency and overall economic stability.
It’s a global standard on bank capital adequacy, stress testing, and market liquidity risk.
Here’s the important bit:
At the top of the proposed changes is the new list of “zero-percent risk weighted items,” which now includes “gold bullion,” right after “cash.”
That’s the part to take notice of.
If the proposals are approved by regulators – and that seems likely since adoption of Basel III will be– then this is a momentous change for the gold market.
Now banks will be allowed to hold bullion in their vaults and count it among their Tier 1 assets – in other words, the least risky assets.
That by itself would be bullish for the gold price, as banks that recognize gold’s unique characteristics seek to stockpile more of it.
But that’s not the whole story…
Gold Regains Money Status
For one thing, Basel III also stipulates that a bank’s Tier 1 holdings must rise from 4% of assets to 6%.
That means that banks may not only replace a portion of their existing paper with bullion, but may use it to meet some of the extra 2% as well.
In addition, this vote of confidence from the highest monetary authorities gives further impetus to the remonetization of gold.
In essence, what’s happening is that from now on gold will be considered “money” in virtually the same way as cash or bonds.
And banks will be given the choice between holding more of their core assets in history’s most reliable store of value vs. paper backed by nothing more than the promises of increasingly wasteful governments.
Finally, there is the impact on individual and institutional investors.
Jeff Clark, in Casey Research’s BIG GOLD newsletter, has been guiding gold investors for years. In his view, this news looks set to really shake up the gold market, because as regulators and banks increasingly view gold as having safety on a par with the various paper alternatives, it is logical that they will also see the need to beef up their own holdings.
There are a number of positives for gold going forward.
Though it remains speculation on our part, we believe that the net result of Basel III and associated adjustments to US regulations will be an increased recognition of gold’s safe-haven status across all markets.
And that translates into higher global demand for the metal next year, and a concomitant increase in its price.
Statistics: Posted by yoda — Sat Aug 18, 2012 9:22 am
View full post on opinions.caduceusx.com
Terminator Planet: How America Became an Empire of Drones
"Terminator Planet: The First History of Drone Warfare," by Tom Engelhardt and Nick Turse, chronicles the rise of drone warfare.
June 17, 2012 |
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Lord knows, I should’a been gone
And I wouldn’t've been here, down on the killin’ floor
- Howlin’ Wolf, Killing Floor
As convenient as it is for someone in a cubicle in the Nevada desert to press a button and incinerate a Pashtun wedding party in North Waziristan, now, with only a click, anyone can download a 359 KB file available on Amazon for only $8.99 – including free wireless delivery – and learn everything there is to learn about All Things Drone.
It’s fitting that Terminator Planet: The First History of Drone Warfare, 2001-2050 has been put together by Tom Engelhardt – editor, MC of the TomDispatch website and "a national treasure", in the correct appraisal of University of Michigan professor Juan Cole – and TomDispatch’s associate editor Nick Turse, author of the seminal 2008 study The Complex: How the Military Invades Our Everyday Lives.
This is essentially Tom and Nick’s revised and updated body of work detailing the uber-dystopian Dronescape over the past few years – spanning everything from secret Drone Empire bases to offshore droning; a Philip Dick-style exercise on a more than plausible drone-on-drone war off East Africa in 2050; and a postscript inimitably titled, "America as a Shining Drone Upon a Hill". It does beat fiction because it’s all fact-based. An MQ-1 Predator or an MQ-9 Reaper to go?
This digital file becomes even more crucial now that US and world public opinion knows US President Barack Obama is the certified Droner-in-Chief; the final judge, jury and digital Grand Inquisitor on which suspicious Muslim (for the moment, at least, they are all Muslims) will get his paradise virgins via targeted assassination.
Obama owns his newspeak-drenched "kill list". He decides on a "personality strike" (a single suspect) or a "signature strike" (a group). "Nominations" are scrutinized by Obama and his associate producer, counter-terrorism czar John Brennan. The logic is straight from Kafka; anyone lurking around an alleged "terrorist" is a terrorist. The only way to know for sure is after he’s dead.
And the winner of the Humanitarian Oscar for Best Targeted Assassination with No Collateral Damage goes to… the Barack Obama White House death squad.
Targeted – and dissolved – throughout this grim process are also a pile of outdated concepts such as national sovereignty, set-in-stone principles of US and international law, and any category which until the collapse of the Soviet Union used to define what is war and what is peace. Anyway, those categories started to be dissolved for good already during the Bush administration – which "legalized" widespread CIA and Special Ops torture sessions and death squads.
Any self-respecting jurist would have to draw the inevitable conclusion; the United States of America is now outside international law – as rogue a state as they come, with The Drone Empire enshrined as the ultimate expression of shadow war.
Incinerate the faithful
Reading Terminator Planet inevitably evokes the incestuous interaction between Hollywood and the Pentagon. Even discounting the trademark wacky paranoia of Hollywood screenwriters and producers, a simple re-run of both the Robocop and Terminator series reveals this may end up badly.
And we’re not even talking about a Revolt of the Drones – yet. In 2010 there was already a hint of juicy possibilities to come, when a RQ-170 Sentinel crash-landed in Western Iran via sophisticated jamming, and was duly reverse-engineered, to the delight of Iranians, Russians and the Chinese. The Pentagon hysterically denied it had been outmaneuvered.
The notion that a Drone Empire may win definitive control over what the Pentagon used to call the "arc of instability" between the Middle East and Central Asia – at the behest of Big Oil – is eminently laughable.
As laughable as the notion that a Drone Empire active in AfPak, Yemen, Somalia and soon in all points across the "arc of instability" will save the homeland from jihad, Sharia law, a new Caliphate set up by a bunch of fanatics, and all of the above.
Especially now that the Pentagon itself ditched the rhetoric – and is focused on a "pivoting" to face the potential peer competitor that really counts, China.
And US Army brigades (and Special Ops commandos) from 2013 onwards will be rotated all around the world – with an emphasis in Africa – according to a Pentagonese "regionally aligned force concept."
And Southcom has announced that Predator, Reaper and Global Hawk drones will be deployed in Central and South America for "anti-drug operations, counter-insurgency and naval vigilance".
As much as The Drone Empire is global, drones can only be effective if ground intelligence is effective. A simple example is enough. Ultimately, in AfPak, it’s not Obama that decides on his "kill list". It’s the Pakistani ISI – which relies the info that suits its contingencies to the CIA. And this while the Pentagon and the CIA keep working under the galactic illusion of absolute supremacy of American technology – when they cannot even neutralize an inflation of cheap, ultra low-tech IEDs.
Uncle Sam wants your ass
Americans must also worry about the Inland Drone Empire – as the pitifully unpopular US Congress and President Obama have now fully authorized their "integration" into American airspace by 2015; by 2020, they will number at least 30,000. For the moment, the Pentagon has "only" 7,000 drones (ten years ago there were less than 50).
Predictably, massive corporate lobbying by drone manufacturers such as General Atomics was key for the approval of the new legislation. There’s even a drone caucus, with 55 Congressmen (and expanding), and a global lobby with 507 corporate members in 55 countries, the Association for Unmanned Vehicles International, which essentially sets the rules.
The Orwellian – and Philip Dick – overtones are inescapable; this is all about 24/7 drone surveillance of large swathes of the US population via radar, infrared cameras, thermal imaging, wireless "sniffers" and, crucially, crowd-control weapons. You better monitor the skies very closely before you even start thinking about protesting. And wait for the imminent arrival of nuclear-powered drones, which can go on non-stop for months, and not only days.
Tom and Nick’s digital file is absolutely essential reading for contextualizing the lineaments of an already de facto surveillance state, where everyone is a suspect by definition, and the only "winner" is the military-industrial complex. Welcome to Motown as Dronetown: "Nowhere to run to, baby, nowhere to hide…" Obama and the Dronellas, anyone?
Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) andRed Zone Blues: a snapshot of Baghdad during the surge. His most recent book, just out, is Obama does Globalistan (Nimble Books, 2009). He may be reached at
firstname.lastname@example.org (Copyright 2012 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)
Statistics: Posted by DIGGER DAN — Sat Jun 23, 2012 1:12 pm
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Brian Doherty is a senior editor at Reason magazine and Reason.com, and is a preeminent historian of the American libertarian movement. His books include Ron Paul’s Revolution: The Man and the Movement He Inspired (2012), Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement (2007), and Gun Control on Trial: Inside the Supreme Court Battle Over the Second Amendment (2008).
If you are a libertarian, what inspired you to become one? Was it a fiction book? A novel? A philosophical treatise? A movie? A politician? Family? Your own reflections on freedom? Tell us in the comments.
Produced by Evan Banks.
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18 Statistics That Prove That The Economy Has Not Improved Since Barack Obama Became President
Has the economy improved since Barack Obama became the president of the United States? Of course not. Despite what you may be hearing in the mainstream media, the truth is that when you compare the U.S. economy on the day that Barack Obama was inaugurated to the U.S. economy today, there is really no comparison. The unemployment crisis is worse than it was then, home values have fallen, the cost of health insurance is up, the cost of gas is way up, the number of Americans living in poverty has soared and the size of our national debt has absolutely exploded. Anyone that believes that things are better than they were when Barack Obama was elected is simply being delusional. Yes, things have stabilized somewhat and our economy is not in free fall mode at this point. But don’t be fooled. This bubble of false hope will be short-lived. The problems we are seeing develop in Europe will erupt into another full-fledged global financial crisis and economic conditions in the United States will get even worse. When that happens, what possible " economic solutions" will Barack Obama have for us? We never even came close to recovering from the last great financial crisis, and now something potentially even worse is staring us in the face. This is not a great time to have a total lack of leadership in Washington.
The following are 18 statistics that prove that the economy has not improved since Barack Obama became the president of the United States….
#1 Today there are 88 million working age Americans that are not employed and that are not looking for employment. That is an all-time record high.
#2 When Barack Obama was elected, the percentage of unemployed Americans that had been out of work for more than 52 weeks was less than 15%. Today, it is above 30%.
#3 There are 1.2 million fewer jobs in America today than there were when Barack Obama was inaugurated.
#4 When Barack Obama first took office, the number of "long-term unemployed workers" in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.
#5 The average duration of unemployment in the United States is hovering close to an all-time record high.
#6 During the Obama administration, worker health insurance costs have risen by 23 percent.
#7 Since Barack Obama has been president, the average price of a gallon of gasoline in the United States has increased by 90 percent.
#8 Since Barack Obama has been president, home values in the United States have declined by another 13 percent.
#9 Under Barack Obama, new home sales in the U.S. set a brand new all-time record low in 2009, they set a brand new all-time record low again in 2010, and they set a brand new all-time record low once again during 2011.
#10 Since Barack Obama took office, the number of Americans living in poverty has risen by more than 6 million.
#11 Since Barack Obama entered the White House, the number of Americans on food stamps has increased from 32 million to 46 million.
#12 The amount of money that the federal government gives directly to Americans has increased by 32 percent since Barack Obama entered the White House.
#13 According to the U.S. Census Bureau, the percentage of Americans living in "extreme poverty" is now sitting at an all-time high.
#14 When Barack Obama first took office, an ounce of gold was going for about $850. Today an ounce of gold costs more than $1700 an ounce.
#15 Since Barack Obama became president, the size of the U.S. national debt has increased by 44 percent.
#16 During Barack Obama’s first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.
#17 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
#18 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.
Oh, but Barack Obama is promising that things will be much better very soon. Barack Obama is pledging that 2 million more jobs will be added to the economy in 2012.
Do you believe him?
Congress certainly seems to think that things will be getting better. Congress has reduced the maximum amount of time that the unemployed can receive unemployment benefits to 73 weeks. That change will go into effect later this year.
But there are still millions of very talented Americans that cannot find work after years of looking.
So what are they supposed to do?
A recent Business Insider article featured the story of Helen Hatat, a woman from southern California that has been unemployed since 2009….
She lost her job in public relationships in 2009 after more than 20 years of working in the entertainment industry, the Southern California resident said.
"When you don’t have a job, you don’t find a job, and when you don’t have a job, you don’t find a home," she said.
At first she tried moving into a homeless shelter, but left because they treated her "like garbage." Eventually she found a friend she could stay with, but this arrangement won’t last forever.
"I’ve found you lose most of your friends, you know. If you have money people love you. If you don’t have any money people hate you. They treat you like you are contagious."
As government finances get tight, things are going to get really tough for women like her.
When evaluating the health of the American economy, the key is not to focus on the short-term economic numbers. Sometimes they go up and sometimes they do down.
Instead, the key is to look at the long-term balance sheet numbers. When you do that, it quickly becomes apparent how appalling our economic decline has been.
The size of federal government debt is exploding, state and local governments all over the country are drowning in debt, our collective national wealth is decreasing and our ability to produce new wealth is also being reduced as our economic infrastructure is systematically gutted.
Of course all of the blame should not go to Obama. The truth is that the Federal Reserve has much more power over the economy than Obama does. But the American people are constantly told that the Federal Reserve is "not political" and that we should not criticize the Fed.
So it is kind of ridiculous that presidents are judged by the performance of the economy. Yes, Bush, Clinton, Bush and Obama have all greatly contributed to the mess that we are in, but they are not solely responsible for it.
In the end, however, the outcome of the next presidential election will probably be very heavily influenced by how the U.S. economy performs during the rest of 2012.
Sadly, as our economy declines it is bringing out the worst in many Americans. For example, "sugar daddy" websites are absolutely exploding in popularity. Young women that are hungry for cash are selling their "services" to sick older men who are willing to finance the lifestyles of these desperate young women in exchange for "companionship".
The following comes from a recent article in The Independent….
In America’s booming online dating market, few sectors are hotter than so-called "sugar daddy" sites, which help rich men to make "arrangements" with attractive and financially needy younger women. Between them, these specialist sites now account for 10 percent of the entire industry. That’s no small beans, given that in the US the online dating business now generates profits estimated at $700m ($442m) per year and, according to the polling firm GlobeSpan, has helped just over one in five Americans to find their life partner.
As the economy gets even worse, millions upon millions of Americans are going to become extremely desperate and will do things for money that they never dreamed that they would do.
That is a very frightening thing.
America is changing, and not for the better.
You better get ready for what is ahead, because Barack Obama is not going to save you.
Statistics: Posted by yoda — Fri Feb 24, 2012 4:32 pm
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