May 16, ’13
DISPATCHES FROM AMERICA
Where’s all the money gone?
By David Vine
Outside the United States, the Pentagon controls a collection of military bases unprecedented in history. With US troops gone from Iraq and the withdrawal from Afghanistan underway, it’s easy to forget that we probably still have about 1,000 military bases in other peoples’ lands. This giant collection of bases receives remarkably little media attention, costs a fortune, and even when cost cutting is the subject du jour, it still seems to get a free ride.
With so much money pouring into the Pentagon’s base world, the question is: Who’s benefiting?
Some of the money clearly pays for things like salaries, health care, and other benefits for around one million military and Defense Department personnel and their families overseas. But
after an extensive examination of government spending data and contracts, I estimate that the Pentagon has dispersed around US$385 billion to private companies for work done outside the US since late 2001, mainly in that baseworld. That’s nearly double the entire State Department budget over the same period, and because Pentagon and government accounting practices are so poor, the true total may be significantly higher.
Not surprisingly, when it comes to such contracts and given our recent wars, the top two countries into which taxpayer dollars flowed were Afghanistan and Iraq (around US$160 billion). Next comes Kuwait ($37.2 billion), where the military has had a significant presence since the first Gulf War of 1990-1991, followed by Germany ($27.8 billion), South Korea ($18.2 billion), Japan ($15.2 billion), and Britain ($14.7 billion).
While some of these costs are for weapons procurement, rather than for bases and troop support, the hundreds of thousands of contracts believed to be omitted from these tallies thanks to government accounting errors make the numbers a reasonable reflection of the everyday moneys flowing to private contractors for the world of bases the United States has maintained since World War II.
Beyond the sheer volume of dollars heading overseas, an analysis of Pentagon spending reveals a troubling pattern: the majority of benefits have gone to a relatively small group of private contractors. In total, almost a third of the $385 billion has flowed into the coffers of just 10 top contractors, including scandal-prone companies like KBR, the former subsidiary of Halliburton, and oil giant BP.
In addition, Pentagon spending on its baseworld has been marked by spiraling expenditures, the growing use of uncompetitive contracts and contracts lacking incentives to control costs, outright fraud, and the repeated awarding of non-competitive sweetheart contracts to companies with histories of fraud and abuse.
There’s been so much cost gouging that any attempt to catalog it across bases globally would be a mammoth effort. The $31-$60 billion in contracting fraud in the Afghanistan and Iraq wars alone, as calculated by the Commission on Wartime Contracting, which the United States Congress established to investigate waste and abuse, suggests the global total could be astronomical.
Since 2001, US taxpayers have effectively shipped hundreds of billions of dollars out of the country to build and maintain an enormous military presence abroad, while major Pentagon contractors and a select group of politicians, lobbyists, and other friends have benefited mightily.
Peeling potatoes, bringing home the bacon
While a handful of overseas bases, like Guantanamo Bay, date to the turn of the twentieth century, most have existed since the construction of thousands of bases during World War II. Although the number of installations and troops ebbed and flowed in the Cold War years and shrank by about 60% once it was over, a significant infrastructure of bases remains.
Scattered from Aruba and Belgium to the United Arab Emirates and Singapore, the Pentagon’s global landholdings are bigger than all of North Korea and represent by far the largest collection of foreign bases in history.
Once upon a time, however, the military, not contractors, built the barracks, cleaned the clothes, and peeled the potatoes at these bases. This started to change during the Vietnam War, when Brown & Root, better known to critics as "Burn & Loot" (later KBR), began building major military installations in South Vietnam as part of a contractor consortium.
The use of contractors accelerated following the Cold War’s end, part of a larger trend toward the privatization of formerly public services. By the first Gulf War, one in 100 deployed personnel was a contractor. Later in the 1990s, during US military operations in Somalia, Rwanda, Haiti, Saudi Arabia, Kuwait, Italy, and especially the Balkans, Brown & Root received more than $2 billion in base-support and logistics contracts for base construction and maintenance, food services, waste removal, water production, transportation services, and much more.
By the second Gulf War, contractors represented roughly one in two deployed personnel in Iraq, with the company now known as KBR employing more than 50,000 people, or enough to staff 100 army battalions. Burger Kings, Starbucks, and car dealerships, as well as air conditioning, steak, and ice cream became regular features of often city-sized bases. However, this wasn’t a phenomenon restricted to war zones. US bases worldwide look much the same, which helps explain the staggering taxpayer dollars they consume.
Calculating costs in a ‘dysfunctional’ system
The problem is, it’s remarkably difficult to figure out who’s been benefiting from all the taxpayer money. The government doesn’t bother to compile such information. This meant I had to pick through hundreds of thousands of contracts and research scores of companies in countries worldwide.
I began with publicly available government contract data and followed a methodology for tracking funds used by the Commission on Wartime Contracting. This allowed me to compile a list of every Pentagon contract with a "place of performance" – that is, the country where most of a contract’s work is performed – outside the United States since the start of the Afghan war (fiscal year 2002).
There were 1.7 million of them.
Scrolling through 1.7 million spreadsheet rows, one for each contract, offered a dizzying feel for the immensity of the Pentagon’s activities and the money spent globally. Generally, the companies winning the largest contracts have been doing one (or more) of four things: building bases, running bases, providing security for bases, and delivering fuel to bases. Among those 1.7 million contracts, there was one for $43 for sand in South Korea and another for a $1.7 million fitness center in Honduras. There was the $23,000 for sports drinks in Kuwait, $53 million in base support services in Afghanistan, and everything from $73 in pens to $301 million for US Army industrial supplies in Iraq.
Cheek by jowl, I found the most basic services, the most banal purchases, and the most ominous acquisitions, including concrete sidewalks, a traffic light system, diesel fuel, insect fogger, shower heads, black toner, a 59" desk, unskilled laborers, chaplain supplies, linen for "distinguished visitor" rooms, easy chairs, gym equipment, flamenco dancers, the rental of six sedans, phone cards, a 50-inch plasma screen, billiards cues, X-Box 360 games and accessories, Slushie machine parts, a hot dog roller, scallops, shrimp, strawberries, asparagus, and toaster pastries, as well as hazardous waste services, a burn pit, ammo and clips, bomb disposal services, blackout goggles for detainees, and confinement buildings.
The $385 billion total is at best a rough estimate; the real totals are surely higher. The Federal Procurement Data System that’s supposed to keep track of government contracts "often contains inaccurate data", according to the Government Accountability Office. Harvard University economist Linda Bilmes calls the system "dysfunctional". For example, hundreds of thousands of contracts have no "place of performance" listed at all. There are 116,527 contracts that list the place of performance as Switzerland, even though the vast majority are for delivering food to troops in Afghanistan and at bases worldwide.
The unreliable and opaque nature of the data becomes clearer when you consider that the top recipient of Pentagon contracts isn’t a company at all, but a category labeled "miscellaneous foreign contractors"; that is, almost 250,000 contracts totaling nearly $50 billion, or 12% of the total, have gone to recipients we can’t identify. As the Commission on Wartime Contracting explains, "miscellaneous foreign contractors" is a catch-all "often used for the purpose of obscuring the identification of the actual contractor[s]".
The reliability of the data only worsens when we consider the Pentagon’s inability to track its own money or pass an audit. Identifying the value of contracts given to specific companies is made more difficult by a general lack of corporate transparency, as well as complicated subcontracting arrangements, the use of foreign subsidiaries, and frequent corporate name changes.
Still, examining the top contractors is illuminating. Let’s start with the top three whose names we know:
1. KBR: Among the companies bringing home billions, the name Kellogg, Brown & Root dominates. It has almost five times the contracts of the next company on the list and is emblematic of broader problems in the contracting system.
KBR is the latest incarnation of Brown & Root, the company that started paving roads in Texas in 1919 and grew into the largest engineering and construction firm in the United States. In 1962, Halliburton, an international oil services company, bought Brown & Root. In 1995, Dick Cheney became Halliburton’s president and CEO after helping jump-start the Pentagon’s ever-greater reliance on private contractors when he was President George H W Bush’s secretary of defense.
Later, while Cheney was vice president, Halliburton and its KBR subsidiary (formed after acquiring Kellogg Industries) won by far the largest wartime contracts in Iraq and Afghanistan. It’s difficult to overstate KBR’s role in the two conflicts. Without its work, there might have been no wars. In a 2005 interview, Paul Cerjan, a former Halliburton vice president, explained that KBR was supporting more than 200,000 coalition forces in Iraq, providing "anything they need to conduct the war". That meant "base support services, which includes all the billeting, the feeding, water supplies, sewage – anything it would take to run a city". It also meant Army "logistics functions, which include transportation, movement of POL [petroleum, oil, and lubricants] supplies, gas… spare parts, ammunition".
Most of KBR’s contracts to support bases and troops overseas have come under the multi-billion dollar Logistics Civilian Augmentation Program (LOGCAP). In 2001, KBR won a one-year LOGCAP contract to provide an undefined quantity and an undefined value of "selected services in wartime". The company subsequently enjoyed nearly eight years of work without facing a competitor’s bid, thanks to a series of one-year contract extensions.
By July 2011, KBR had received more than $37 billion in LOGCAP funds. Its experience reflected the near tripling of Pentagon contracts issued without competitive bidding between 2001 and 2010. "It’s like a gigantic monopoly", a representative from Taxpayers for Common Sense said of LOGCAP.
The work KBR performed under LOGCAP also reflected the Pentagon’s frequent use of "cost-plus" contracts. These reimburse a company for its expenses and then add a fee that’s usually fixed contractually or determined by a performance evaluation board. The Congressional Research Service explained that because "increased costs mean increased fees to the contractor," there is "no incentive for the contractor to limit the government’s costs". As one Halliburton official told a congressional committee bluntly, the company’s unofficial mantra in Iraq became "Don’t worry about price. It’s ‘cost-plus.’"
Not surprisingly, in 2009, the Pentagon’s top auditor testified that KBR accounted for "the vast majority" of wartime fraud. The company has also faced accusations of overcharging for everything from delivering food and fuel and supplying housing for troops to providing base security services.
After years of bad publicity, in 2007, Halliburton spun KBR off as an independent company and moved its headquarters from Houston to Dubai. Despite KBR’s track record and a 2009 guilty plea for bribing Nigerian government officials to win gas contracts (for which its former CEO received prison time), the company has continued to receive massive government contracts. Its latest LOGCAP contract, awarded in 2008, could be worth up to $50 billion through 2018.
2. Supreme Group: Next on the list is the company that’s been described as the KBR for the Afghan War. Supreme Group has won more than $9 billion in contracts for transporting and serving meals to troops in Afghanistan and at other bases worldwide. Its growth perfectly symbolizes the soldiers-to-contractors shift in who peels the potatoes.
Supreme was founded in 1957 by an Army veteran who saw an opportunity to provide food for the hundreds of US bases in Germany. After expanding over several decades into the Middle East, Africa, and the Balkans, the company won multi-billion-dollar "sole source contracts" that gave it a virtual monopoly over wartime food services in Afghanistan.
Today, in a prime example of the revolving door between the Pentagon and its contractors, Supreme’s chief commercial officer is former Lieutenant General Robert Dail. From August 2006 to November 2008, Dail headed the Pentagon’s Defense Logistics Agency (DLA), which awards food contracts. In 2007, Dail presented Supreme with DLA’s "New Contractor of the Year Award". Four months after leaving the Pentagon, he became the president of Supreme Group USA.
Recently, Supreme has faced growing scrutiny over the way it has won competition-free contracts, with service fees as high as 75% of costs and reportedly for more than three-quarters of a billion dollars in over-billing. Last month, Supreme had the chutzpah to sue the Pentagon for awarding a new $10 billion Afghanistan food contract to a competitor that underbid Supreme’s offer by $1.4 billion.
3. Agility Logistics: Next on the list is Agility Logistics, a Kuwaiti company. It won multi-billion-dollar contracts to transport food to troops in Iraq. When the Pentagon decided against awarding similar contracts in Afghanistan to a single firm, Agility partnered with Supreme in exchange for a 3.5% fee on revenues. In 2009 and 2010, grand juries indicted Agility for massive contracting fraud, and the Pentagon suspended the company and 125 related companies from receiving new contracts. In 2012, a judge issued a default judgment against Agility in a whistleblower suit seeking more than $1 billion for overcharging the government.
And the rest …
Things don’t get much better farther down the list. Next come DynCorp International and Fluor Intercontinental, which along with KBR won the latest LOGCAP contracts. Awarding that contract to three companies rather than one was intended to increase competition. In practice, according to the Commission on Wartime Contracting, each corporation has enjoyed a "mini-monopoly" over logistics services in Afghanistan and other locations. DynCorp, which has also won large wartime private security contracts, has a history littered with charges of over-billing, shoddy construction, smuggling laborers onto bases, sexual harassment, and sex trafficking.
Although a Fluor employee pled guilty in 2012 to conspiring to steal and sell military equipment in Iraq, it’s the only defense firm in the world to receive an "A" on Transparency International’s anti-corruption index that rates companies’ efforts to fight corruption. On the other hand, number seven on the list, ITT (now Exelis), received a "C" (along with KBR and DynCorp).
The last three in the top 10 are BP (which tops the Project on Government Oversight’s federal contractor misconduct list) and the petroleum companies of Bahrain and the United Arab Emirates. After all, the US military runs on oil. It consumed five billion gallons in fiscal year 2011 alone, or more than all of Sweden. In total, 10 of the top 25 firms are oil companies, with contracts for delivering oil overseas totaling around $40 billion.
Spreading the love
Contractors are hardly alone in raking in the dollars from the Pentagon’s baseworld. Pentagon officials, military personnel, members of congress, and lobbyists, among others, have all benefited – financially, politically, and professionally – from the giant overseas presence. In particular, contractors have spread the love by making millions in campaign contributions to members of congress. According to the Center for Responsive Politics, military contractors and their employees gave more than $27 million in election donations in 2012 alone, and have donated almost $200 million since 1990.
Most of these have gone to members of the armed services and appropriations committees in the Senate and House of Representatives. These, of course, have primary authority over awarding military dollars. For the 2012 elections, for example, DynCorp International’s political action committee donated $10,000 to both the chair and ranking member of the House Armed Services Committee, and made additional donations to 33 other members of the House and Senate armed services committees and 16 members of the two appropriations committees.
Most contractors also pay lobbyists hundreds of thousands of dollars to sway military budgeteers and policymakers their way. KBR and Halliburton spent nearly $5.5 million on lobbying between 2002 and 2012, including $420,000 in 2008 when KBR won the latest LOGCAP contract and $620,000 the following year when it protested being barred from bidding on contracts in Kuwait. Supreme spent $660,000 on lobbying in 2012 alone. Agility spent $200,000 in 2011, after its second indictment on fraud charges, and Fluor racked up nearly $9.5 million in lobbying fees from 2002 to 2012.
Shrinking the baseworld
Today, there are some signs of baseworld shrinkage. The hundreds of bases built in Iraq are long gone, and many of the hundreds built in Afghanistan are now being shut down as US combat troops prepare to withdraw. The military is downsizing an old base in the Portuguese Azores and studying further base and troop reductions in Europe.
While many in congress are resisting an Obama administration request to reduce "excess capacity" among thousands of domestic bases through two new rounds of the Base Realignment and Closure process, at least some current and former members of congress are calling for a parallel effort to close bases abroad.
At the same time, however, the military is building (or exploring the possibility of building) new bases from Asia and Africa to the Persian Gulf and Latin America. Small drone bases are on the rise from Niger to Saudi Arabia. Even in Europe, the Pentagon is still building bases while closing others.
Much work remains to be done to figure out who’s been benefiting from the Pentagon’s baseworld. The billions in contracts that sustain our bases, however, are a good reminder that there are immediate savings available by reducing troop deployments and Cold War bases abroad. They are also a reminder of where we should look when we’re told there isn’t enough money for Head Start or hospitals or housing.
For decades, tens of billions of dollars in overseas spending have ended up in the coffers of a select few, with many billions leaking out of the US economy entirely. Stemming those leaks by cutting overseas spending and redirecting precious resources toward long-neglected non-military needs is an important way to help revive an economy that has long benefited the few rather than the many.
Statistics: Posted by yoda — Sun May 19, 2013 1:44 am
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Eric Sprott at Mines and Money Hong Kong 2013
If you’ve invested in metals or have money in a bank….. This is a must watch.
Statistics: Posted by DIGGER DAN — Thu May 16, 2013 2:55 pm
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Amazon received more money from UK grants than it paid in corporation tax
Amazon is on a fresh collision course over its contribution to the UK exchequer, after the American internet giant revealed it received more money in government grants last year than it paid in corporation tax in Britain.
Amazon’s British subsidiary employed 4,191 people at the end of 2012, and thousands more via contracting agencies
By Katherine Rushton, US Business Editor6:14PM BST 15 May 2013
Amazon’s UK operation generated £4.2bn of sales last year, but it used a subsidiary in Luxembourg to help it reduce its corporation tax bill in the country to just £2.4m in 2012. According to documents filed at Companies House, the company received £2.5m in government handouts over the same period.
The figures have reignited controversy over the tax paid in Britain by American corporations, such as Amazon, Apple, Starbucks and Google, whose executives have been summoned to appear before the Public Accounts Committee on Thursday to clarify previous evidence they gave about their tax status.
Justin King, chief executive of Sainsbury, has complained the current UK tax laws do not create a “level playing field” for online retailers and their bricks and mortar rivals.
Amazon, like Google and Apple, consistently argue that they operate within the law, and make many other tax contributions to Britain, such as National Insurance payments.
But Margaret Hodge, chairman of the Public Accounts Committee, described Amazon’s tax contribution as “just a joke”.
“What people will find particularly galling is that the amount Amazon is paying in tax is actually less than they are taking from UK taxpayers in the form of government grants. Companies like Amazon should pay their fair share of tax based on their economic activity in this country and the profits they make here.
“Its behaviour is not only unfair, it is anti-competitive, putting British businesses that do pay their proper tax at a disadvantage.”
An Amazon spokesman said: “Amazon pays all applicable taxes in every jurisdiction that it operates within. Like many companies, Amazon has received assistance in relation to major investments in the UK”.
The Seattle-based company would not say which investments the UK Government has helped with, but last year it opened a new distribution plant in Hemel Hempstead, creating 600 jobs, promising to open three more over the next two years.
It also took an eight-storey office in London to act as its global headquarters for “digital media development”. The site is one of the linchpins in TechCity, Prime Minister David Cameron’s project to redevelop the area around Shoreditch and Old Street as a hub for technology companies.
The Government is fearful that a severe crackdown on tax loopholes used by global companies could deter them from investing in Britain. Mr Cameron has called for a coordinated international effort to tighten tax legislation.
Amazon’s British subsidiary employed 4,191 people at the end of 2012, and thousands more via contracting agencies, but the company classed it as a service provider to its Amazon EU Sarl business in Luxembourg to reduce its tax bill. The UK business is funded by fees from Amazon EU Sarl, but these are only just enough to cover its operating costs, leaving little in the way of profits to be taxed.
Statistics: Posted by yoda — Thu May 16, 2013 12:38 am
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Top trader predicts that the end of Fed money printing could be ‘a messy process’ for bonds
Posted on 07 May 2013
David Zervos, head of global fixed income at Jefferies, told Bloomberg TV’s Erik Schatzker and Sara Eisen on ‘Market Makers’ that the Federal Reserve’s QE program is ‘the greatest monetary policy experiment of our lifetime and I do not think that anyone is smart enough, me, any central banker up there’ to figure out how to properly exit.
Mr. Zervos said, ‘I am not criticizing them, I just do not think that we know how to handle this when we need to handle it. We have never done it before and it will be a messy process.’??
Zervos on whether investors should still be running with the bulls:
‘Yes, there is always an end game and there is always doing too much. We should always be cognizant of the fact that this monetary stimulus…The costs are really the inflationary consequences that come in the future from having printed too much money and not being able to pull that monetary base out of the economy fast enough as people decide they want to start lending again.’
On whether investors will lose confidence in the ability of central banks:
‘It could. It could if people’s inflation expectations become unglued. if you believe that ultimately we are putting too much in and we will not be able to get it out and it will create a big drag for businesses because they will have to manage inflation risks as well as all of their other business risks and that has a negative impact on real growth. But i think we are very far away from that.
‘Look at the data in the last three months on inflation. Everywhere around the globe is that it is coming down, not going up. These guys have bullets and they can fire them. The greatest mistake that people make is talking about QE and all these monetary policies as if people are pushing on a string. We are not. This is powerful stuff.’
On whether we’re going to shift to where the cyclicals come out on top because the economy improves:
‘I think you have got to get the consumer back for that. the one balance sheet that still is hindering a recovery is the consumer’s balance sheet. The consumer is still funding a large portion of its debt at very high rates. They have not been able to refinance. Maybe our new man Mel Watt who is going to come in and give everyone principal forgiveness–he might be the savior in that case.
‘But my point is that businesses for four years have ranked problems through the NFIB survey and one of the consistently greatest problems is sales. Poor sales. If businesses just saw people coming back and spending I think we would be in much better shape. We have to get house prices up or figure out a way to get people lower funding costs. Those are the big issues. Those are what will drive business sentiment and I think we are still a ways away from that.’
On whether investors should tune out macro noise as Warren Buffett said he does:
‘I think the world did a lot of that before 2008. A lot of people said I did not need macro. They said I don’t need to look at whether GDP is at four or two per cent, I don’t need to think about the fed or their balance sheets. And I think a lot of people got hurt very badly by not focusing on the macro. Now, Warren has an unbelievable way of doing business that he finds himself quite liquid when other people are not liquid. He has set himself up very well to be — I think he mentioned it in his talk, a lender of last resort type figure in the market, which is a wonderful way to do business.
‘He has been rewarded handsomely for it, but I do not think that he set himself up that way without thinking about some of the macroeconomic costs that could come through. He has seen history repeat itself. We get ahead, we go too far, we get too excited about tech stocks or emerging markets, Mexico. He watches it all go up and says I will be there when it comes crashing down.’
On why Lloyd Blankfein is talking about 1994:
‘A lot of people have made that comparison and there are a lot of valid comparisons that when the Fed pulls the liquidity away and the economy takes off, it will not be good for bonds. It’s going to be ok for equities. Equities didn’t have a great 1994, but they didn’t sell off a lot. 1995 was an amazing year once the economy got traction. Look, people take carry when you give it to them.
‘They took a lot of carry in 1990-1993. They’ve taken a lot of carry now. People who are over levered in interest rates base are going to suffer when the Fed or the rest of the central banks pull back. But we’re a ways away from that.’
On whether he has confidence that the Fed will engineer a fairly orderly exit:
‘Absolutely not. We have said it before on this show and have written about it for years now. This is the greatest monetary policy experiment of our lifetime and I do not think that anyone is smart enough, me, any central banker up there, I do not claim to be smart enough.
‘I am not criticizing them, I just do not think that we know how to handle this when we need to handle it. We have never done it before and it will be a messy process.’
On emerging markets:
‘I am in the process of writing something about emerging markets and it is the parallels between 1995 to 1998, when the bank of japan saw dollar yen go down to 80 and drove and engineered a very aggressive monetary policy response and took the yen back to 140. Between ‘94 and ‘98, the Japanese kind of went nuts and it saved them from really rolling over when they already had from the initial crash, but there was a wake of destruction in the process in emerging markets.
‘When the big developed markets central banks decide to play the competitive devaluation game, the emerging markets start flashing red. We’re early days, but emerging markets have not been great performers in the last few quarters and I worry that those who have decided they can pay back a lot of dollars, yen, or euros are going to find themselves with an inability to do so as we see these economies in the developed world take growth back through competitive devaluation from the emerging world.’
Statistics: Posted by yoda — Tue May 07, 2013 12:11 am
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Wall Street firms have swept in buying up foreclosed homes all over the country with the idea of becoming “super landlords.” If a firm can buy up a a hundred rental units at a reasonable amount with virtually free money (which is likely to remain free for a good while) and then turn around and rent the units to the people who have been foreclosed on, then hey, why not?
This is yet another example of how all the Fed’s printing is benefiting the firms which originally were saved by TARP even though they should have died.
Goldman Sachs, which was over leveraged (to be kind) and which should have perished in 2008 was saved by the US taxpayer. In some cases that taxpayer has now been foreclosed on. Goldman managed its books far worse than most foreclosure victims, but now because the average person doesn’t have direct access to the Fed window, Goldman gets to be the master of the people who paid to save Goldman. This is just sick.
On top of this, in places like Las Vegas housing prices are again lurching skyward as Federal Reserve funny money finds its way into the housing market. So former homeowners, now with terrible credit, are likely to remain former homeowners as Wall Street, enabled by the Fed, bids up prices.
Tell me how the FOMC politburo helps the average person. Tell me why the average person should not want an end to the Federal Reserve.
Local real-estate broker Fafie Moore says private-equity firms and hedge funds have largely “crowded out” local buyers like Marchillo. That’s because the investment firms have broadened beyond their initial focus —buying homes at foreclosure auctions. Now, they are also bidding for homes listed by private owners and banks.
In a sign of how freely the money is flowing, Moore notes around 60 percent of all sales are in cash these days.
Fellow broker Trish Nash said she has seen cases where a home gets listed and quickly draws a dozen bids, many in cash. Realtors are talking about a mini-bubble forming here.
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Recently uncovered documents prove that the Obama administration has been working with the Mexican government to increase the number of illegal immigrants on food stamps, and when more illegal immigrants go on food stamps JP Morgan makes more money. As you will read about below, JP Morgan has made at least 560 million dollars processing Electronic Benefits Transfer cards. Each month, JP Morgan makes between $.31 and $2.30 for every single person on food stamps (and that does not even include things like ATM fees, etc). So JP Morgan has a vested interest in seeing poverty grow and the number of people on food stamps increase. Meanwhile, the Obama administration has been aggressively seeking to expand participation in the food stamp program. Under Obama, the number of people on food stamps has grown from 32 million to more than 47 million. And even though poverty in America is absolutely exploding, that apparently is not good enough for the Obama administration. It has now come out that the U.S. Department of Agriculture has provided the Mexican government with literature that actively encourages illegal immigrants to enroll in food stamps. One flyer contains the following statement in Spanish: “You need not divulge information regarding your immigration status in seeking this benefit for your children.” The bold and the underlining are in the original document in case you were wondering. Overall, federal spending on food stamps increased from 18 billion dollars in 2000 to 85 billion dollars in 2012, and at this point one out of every five U.S. households in now enrolled in the food stamp program. When people illegally or fraudulently enroll in the food stamp program, it makes it harder for those that desperately need the help to be able to get it.
It is certainly a good thing to help fellow Americans that are suffering. It is a crying shame that more than a million public school students in America are homeless. That should not be happening in the “wealthiest nation on earth”.
But today we have a system that has turned poverty into big business. According to an article posted on Breitbart.com, JP Morgan has made at least 560 million dollars (and probably much more) processing EBT cards…
A new report by the Government Accountability Institute finds that JP Morgan has made at least $560,492,596 since 2004 processing the Electronic Benefits Transfer (EBT) cards of 18 of the 24 states it has under contract for the food stamp program.
A Daily Beast article provided some more specifics about the monster profits that JP Morgan is making…
Just how lucrative JP Morgan’s EBT state contracts are is hard to say, because total national data on EBT contracts are not reported. But thanks to a combination of public-records requests and contracts that are available online, here’s what we do know: 18 of the 24 states JP Morgan handles have been contracted to pay the bank up to $560,492,596.02 since 2004. Since 2007, Florida has been contracted to pay JP Morgan $90,351,202.22. Pennsylvania’s seven-year contract totaled $112,541,823.27. New York’s seven-year contract totaled $126,394,917.
These contracts are transactional contracts, meaning they are amendable based on changes in program participation. Each month, the three companies that administer EBT receive a small fee that can range from $.31 to $2.30 (or higher depending upon the number of welfare services on an EBT card and state contractual requirements) for each SNAP recipient.
So the more people that are out of work and that need to turn to the government for food, the bigger profits that JP Morgan makes.
What makes all of this even more insulting is that many of the jobs that JP Morgan could be providing to Americans to help alleviate this poverty are being shipped overseas instead. As I noted in a previous article, many EBT card customer service calls are being routed to call centers in India by JP Morgan.
So why doesn’t anyone do anything about this?
Well, it turns out that JP Morgan has the politicians that oversee the food stamp program in their back pocket. The following is from a recent Money Morning article…
And the bank has taken steps to make sure the SNAP program remains a growing source of revenue. JPMorgan’s political donations to the members of House and Senate agricultural committees, the ones with legislative responsibility for the program, soared from just over $82,000 in 2002 to nearly $333,000 as of 2010.
What a wonderful system we have, eh?
And surely JP Morgan just loves the fact that the Obama administration is actively encouraging illegal immigrants to apply for food stamps.
What you are about to read should absolutely shock you. At a time when the U.S. government is absolutely drowning in debt, the Obama administration is making it abundantly clear to illegal immigrants that their immigration status will not be checked when they apply for food stamps. The following is from a recent Judicial Watch press release…
Judicial Watch today released documents detailing how the U.S. Department of Agriculture (USDA) is working with the Mexican government to promote participation by illegal aliens in the U.S. food stamp program.
The promotion of the food stamp program, now known as “SNAP” (Supplemental Nutrition Assistance Program), includes a Spanish-language flyer provided to the Mexican Embassy by the USDA with a statement advising Mexicans in the U.S. that they do not need to declare their immigration status in order to receive financial assistance. Emphasized in bold and underlined, the statement reads, “You need not divulge information regarding your immigration status in seeking this benefit for your children.”
The documents came in response to a Freedom of Information Act (FOIA) request made to USDA on July 20, 2012. The FOIA request sought: “Any and all records of communication relating to the Supplemental Nutrition Assistance Program (SNAP) to Mexican Americans, Mexican nationals, and migrant communities, including but not limited to, communications with the Mexican government.”
The documents obtained by Judicial Watch show that USDA officials are working closely with their counterparts at the Mexican Embassy to widely broaden the SNAP program in the Mexican immigrant community, with no effort to restrict aid to, identify, or apprehend illegal immigrants who may be on the food stamp rolls.
You can see a copy of the flyer right here.
So who pays for all of this?
You do of course.
The Obama administration is doing all that it can to promote illegal immigration, and big banks such as JP Morgan just make bigger profits the more illegal immigration that we see, but it is you and I that end up with the bill. This was put beautifully in a recent article by Mike Adams of NaturalNews.com…
Nearly $75 billion of taxpayer money is spent each year on federal food stamps, and it turns out some of that is alarmingly being handed out to illegal immigrants — people who contribute nothing to the federal tax base in America but who seem to be experts on collecting social welfare benefits of all kinds. If you are working for a living, you are buying food for illegals who are being actively recruited by Obama and the democratic party so that they will vote more democrats into office.
When we reward illegal immigration, what happens?
That’s right – we are just going to get even more illegal immigration.
According to WND, we have already started seeing a huge increase in illegal immigrants coming across the border since Congress began debating the amnesty bill…
Illegal border crossings have doubled, and possibly even tripled, since the latest congressional push began toward comprehensive immigration reform.
In reporting first published by Townhall.com’s Katie Pavlich, border patrol agents in the Tucson/Nogales sector claim illegals are coming here in much higher numbers in just the past few months.
“We’ve seen the number of illegal aliens double, maybe even triple since amnesty talk started happening,” an unnamed border agent said to Townhall. The data from Customs and Border Protection cited in the report shows 504 illegals were detected crossing in that sector between Feb. 5 and March 1. Only 189 were caught on camera, and just 174 of the 504 were apprehended. Of those spotted on camera, 32 were carrying huge packs believed to contain drugs and several were heavily armed.
If that bill is passed, it is being projected that it will bring 33 million more people into this country…
The pending Senate immigration bill would bring a minimum of 33 million people into the country during its first decade of operation, according to an analysis by NumbersUSA, a group that wants to slow the current immigration rate.
By 2024, the inflow would include an estimated 9.2 million illegal immigrants, plus 2.5 million illegals who arrived as children — dubbed ‘Dreamers’ — plus roughly 3.4 million company-sponsored employees with university degrees, said the unreleased analysis.
The majority of the inflow, or roughly 17 million people, would consist of family members of illegals, recent immigrants and of company-sponsored workers, according to the NumbersUSA analysis provided to The Daily Caller.
We have made legal immigration a complete and total nightmare while leaving the back door completely wide open at the same time.
We greatly punish those who are trying to do things legally while at the same time we are greatly rewarding those that are cheating the system.
What kind of sense does that make?
Shouldn’t we insist that everyone come in through the front door?
Those that are coming over our borders illegally know what the score is…
Linda Vickers, who owns a ranch in Brooks County, which is Ground Zero for the immigration debate, pins the blame directly on talk of ‘amnesty’ and a ‘path to citizenship’ for people who entered the U.S. illegally.
She recalls one man being arrested on her ranch not long ago.
“The Border Patrol agent was loading one man up, and he told the officer in Spanish, ‘Obama’s gonna let me go’.”
Border Patrol agents report that immigrants are crossing the border, and in some cases surrendering while asking, “Where do I go for my amnesty?”
We are already becoming a poverty-stricken nation. We simply can’t afford to feed millions upon millions of illegal immigrants as well.
As I write this, the U.S. national debt is $16,758,107,082,298.63.
We now have a debt to GDP ratio of about 105 percent.
In the United States today, the amount of money that is deposited in our banks is about 9.3 trillion dollars. If we took every penny of that and used it to pay off the national debt, we would still owe more than 7 trillion dollars.
We are stealing more than 100 million dollars from future generations of Americans every single hour of every single day to pay our bills, and yet everyone seems to think that this is “normal” somehow.
The truth is that what we are doing is absolutely criminal, and we should all be ashamed.
For much more on our exploding national debt, please see the following article: “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“.
In the end, it should be apparent to everyone that our system is failing. Our government is corrupt, our big banks are consumed with greed and most average Americans are so addicted to entertainment that they have absolutely no idea what is going on.
What would those that bled and died for this country think about what we have become today?
View full post on The Economic Collapse
The federal government spends nearly $1 million a year on fees for bank accounts with a balance of zero. The Washington Post calls this “one of the oddest spending habits in Washington” and explains how it works.
When federal agencies hand out grants they don’t just send out checks. Rather, they create “an account within a large, government-run depository,” and the federal agency is charged a monthly fee “which goes to the government depository and is used to cover the costs of operating it.” The money eventually runs out but the fees continue because the federal agencies fail to close out the accounts, which “takes work.” Audits and so forth are supposed to happen within 180 days, but they don’t. So the accounts stay open, with a balance of zero and the government paying fees.
By the Post’s count, the federal government has 13,712 such accounts drawing $890,000 in service fees, and about 7 percent of more than 200,000 grant accounts have a balance of zero. A grant administrator at Health and Human Services told the Post “These accounts are a normal part of the grants business cycle and will never be totally eliminated.”
Such “cost untainted by any reward,” is all part of the waste inherent in the system. The Obama administration tried to fix this problem but some agencies have the same number of zero-balance accounts as they did three years ago. So the federal bureaucracy is not only inherently wasteful but essentially reform-proof. A government that can’t close out a bank account will never eliminate an entire agency, however redundant or wasteful it may be. The Post also noted that “six federal government agencies have begun separate projects to do the same thing: build a computer program to track personnel background checks.”
View full post on MyGovCost | Government Cost Calculator
Daughter of Obama’s former pastor charged with fraud
By Mary Wisniewski
CHICAGO | Wed Apr 10, 2013 10:36pm EDT
(Reuters) – The daughter of President Barack Obama’s controversial former pastor was indicted on Wednesday on charges of money laundering and lying to federal authorities, a Justice Department spokeswoman said.
Jeri L. Wright, 47, the daughter of Jeremiah Wright, was accused of participating in a fraud scheme led by a former suburban police chief and the chief’s husband that involved a $1.25 million state grant, according to the Attorney’s office for the Central District of Illinois in Springfield.
Wright, of the Chicago suburb of Hazel Crest, was charged with two counts of money laundering, two counts of making false statements to federal officers, and seven counts of giving false testimony to a grand jury.
The state grant was for a not-for-profit work and education program called We Are Our Brother’s Keeper, owned by Regina Evans, former police chief of Country Club Hills, and her husband, Ronald W. Evans, Jr.
According to the indictment, Wright, a close friend of the couple, received three checks in 2009 worth about $28,000 that were supposed to be for work related to the grant. About $20,000 of that was allegedly deposited back into accounts controlled by the Evanses.
Jeremiah Wright was the Chicago pastor whose inflammatory church sermons, which often condemned U.S. attitudes on race, poverty, the Iraq War and other issues, became a focus during the 2008 presidential campaign.
Obama quieted the controversy with a speech putting the quotes in the context of race relations.
The money laundering count Jeri Wright faces carries a maximum penalty of up to 20 years in prison, while the other charges carry penalties of up to five years in prison.
Jeri Wright could not be reached for comment. Prosecutor’s office spokeswoman Sharon Paul did not know if she had yet retained a lawyer.
Statistics: Posted by yoda — Thu Apr 11, 2013 12:25 am
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The timing couldn’t be any better to ask the question, especially since it follows Burt Abrams’ takedown of Paul Krugman’s “we only owe the national debt to ourselves so it doesn’t matter” argument and the official release of President Obama’s “mind-blowing” budget proposal tomorrow, but here is the answer at least through the end of the federal government’s 2012 fiscal year, depicted graphically:
It turns out that we don’t actually owe at least 34% of the national debt to ourselves, so that would seem to be a major hole in the Nobel Prize winner’s thinking.
More details here, including a neat discussion of the Federal Reserve’s role in lending roughly half of the money the U.S. federal government has borrowed during the last four years, but here’s the bottom line for how the national debt has grown nearly up to the present:
Through 29 March 2013, the halfway point of the U.S. government’s 2013 fiscal year, the total public debt outstanding of the United States has grown to $16.771 trillion – an increase of more than $744 billion in just six months time.
Meanwhile, on 3 April 2013, President Obama pledged to donate an amount equal to 5% of his $33,333 per month salary as President of the United States of America to the U.S. Treasury, which only accepts such voluntary payments to “help reduce the public debt”. Nearly a year earlier, on 10 April 2012, the White House’s official spokesman Jay Carney described such a gesture as a “gimmick” when proposed by opponents of the President’s ongoing calls for higher taxes, which the President later succeeded in obtaining on 3 January 2013.
View full post on MyGovCost | Government Cost Calculator