Expect these eight steps from the government’s playbook
by SIMON BLACK on MARCH 26, 2013
Reporting from Sovereign Valley Farm, Chile
To anyone paying attention, reality is now painfully obvious. These bankrupt, insolvent governments have just about run out of fingers to plug the dikes. And history shows that, once this happens, governments fall back on a very limited playbook:
As Cyprus showed us, bankrupt governments are quite happy to plunder people’s bank accounts, especially if it’s a wealthy minority.
Aside from bank levies, though, this also includes things like seizing retirement accounts (Argentina), increases in civil asset forfeiture (United States), and gold criminalization.
Just another form of confiscation, taxation plunders the hard work and talent of the citizenry. But thanks to decades of brainwashing, it’s more socially acceptable. We’ve come to regard taxes as a ‘necessary evil,’ not realizing that the country existed for decades, even centuries, without an income tax.
Yet when bankrupt governments get desperate enough, they begin imposing new taxes… primarily WEALTH taxes (Argentina) or windfall profits taxes (United States in the 1970s).
This is indirect confiscation– the slow, gradual plundering of people’s savings. Again, governments have been quite successful at inculcating a belief that inflation is also a necessary evil. They’re also adept at fooling people with phony inflation statistics.
Governments can, do, and will restrict the free-flow of capital across borders. They’ll prevent you from moving your own money to a safer jurisdiction, forcing you to keep your hard earned savings at home where it can be plundered and devalued.
We’re seeing this everywhere in the developed world… from withdrawal limits in Europe to cash-sniffing dogs at border checkpoints. And it certainly doesn’t help when everyone from the IMF to Nobel laureate Paul Krugman argue in favor of Capital Controls.
Wage and Price controls
When even the lowest common denominator in society realizes that prices are getting higher, governments step in and ‘fix’ things by imposing price controls.
Occasionally this also includes wage controls… though wage increases tend to be vastly outpaced by price increases.
Of course, as any basic economics textbook can illustrate, price controls never work and typically lead to shortages and massive misallocations.
Wage and Price controls– on STEROIDS
When the first round of price controls don’t work, the next step is to impose severe penalties for not abiding by the terms.
In the days of Diocletian’s Edict on Prices in the 4th century AD, any Roman caught violating the price controls was put to death.
In post-revolutionary France, shopkeepers who violated the “Law of Maximum” were fleeced of their private property… and a national spy system was put into place to enforce the measures.
Despite being completely broke, governments will dramatically expand their ranks in a last desperate gasp to envelop the problem in sheer size.
In the early 1920s, for example, the number of bureaucratic officials in the Weimar Republic increased 242%, even though the country was flat broke from its Great War reparation payments and hyperinflation episode.
The increase in both regulations and government officials criminalizes and/or controls almost every aspect of our existence… from what we can/cannot put in our bodies to how we are allowed to raise our own children.
War and National Emergency
When all else fails, just invade another country. Pick a fight. Keep people distracted by work them into a frenzy over men in caves… or some completely irrelevant island.
Statistics: Posted by yoda — Tue Mar 26, 2013 10:15 am
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P&G steps up job-cutting program
7:14 PM, May. 8, 2012
Procter & Gamble has stepped up the timetable for its job-cutting program.
Selected P&G employees in Cincinnati and the rest of the U.S. received a letter Tuesday inviting them to participate in a voluntary buyout program.
The message marked the start of the second part of P&G’s job-cutting plan. The first phase is expected to be finished by the end of June and result in 1,600 departures worldwide.
The next phase has been accelerated, and should be completed in the U.S. by the end of October, spokesman Paul Fox said. The previous deadline was mid-2013.
The new deadline “will expedite and accelerate the savings we will achieve as a result of all this,” Fox said.
It also will allow eligible employees to plan earlier and better, he said.
Tuesday’s letter was sent only to non-manufacturing employees in the U.S. P&G wants to cut 5,700 jobs worldwide from its non-manufacturing operations, including marketing, product design, logistics and research.
P&G would not say how the cuts will affect employment in Cincinnati, its headquarters city, where it employs 12,000, or in the U.S. P&G employs 129,000 worldwide.
Not all employees are eligible for the buyout. Besides manufacturing employees, top-rated workers are not eligible (employees are ranked on a scale of 1 to 3). Employees hired or promoted after July 1, 2011 are not eligible and neither are those on long-term disability, Fox said.
He wouldn’t disclose terms of the offer, but said it’s partly based on age and length of employment.
Eligible employees who are interested in a buyout will receive a contingent offer by the end of June. They will have 45 days to review it. Employees will be notified by the end of September whether the company has approved their applications. Most of the departures should happen by the end of October, Fox said.
P&G announced its job-cutting plan in February. It’s part of $10 billion in savings the company wants to achieve by mid-2016. The cost-savings plan comes as P&G copes with little or no sales growth in the United States and Europe, rising costs of raw materials, including fuel, and volatile overseas markets.
On April 27, P&G scaled back its profit guidance for its full fiscal year, which ends June 30. The company said it now expects net income of $3.82 to $3.88 per share, down from its previous guidance of $3.93 to $4.03.
Statistics: Posted by yoda — Tue May 08, 2012 9:11 pm
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Australia’s parliamentary speaker temporarily stepped down Sunday amid allegations of sexual harassment and fraud, touching off a political crisis that threatens Prime Minister Julia Gillard’s tenuous grip on power.
House of Representatives Speaker Peter Slipper announced Sunday that he will be temporarily replaced by his deputy Anna Burke, a Labor Party government lawmaker, while police investigate allegations he misused taxi payment vouchers.
According in parliamentary regulations, the move effectively costs Ms. Gillard’s government its single-seat majority.
While the government will face greater difficulty in passing contentious legislation through the House of Representatives, the opposition is still short of the 76 votes it needs in the 150-seat chamber to bring down the government.
Ms. Gillard, who has struggled to maintain her minority government since elections in 2010, welcomed the move.
“It is appropriate that Mr. Slipper has stood aside as Speaker whilst alleged criminal conduct is investigated,” she said in a statement.
An openly gay male former staff member James Ashby, 33, made the fraud allegations and he is also suing Mr. Slipper in the Federal Court claiming sexual harassment. Mr. Slipper denies all the allegations.
Mr. Slipper, 62, who is married with two adult children from a previous relationship, defected from the opposition in November last year to take the speaker’s job in a move that effectively gave Ms. Gillard’s minority government an additional vote — 76 in the chamber.
An independent lawmaker has since withdrawn his support for Labour, leaving Ms. Gillard with command of exactly half the chamber.
Since a speaker can only vote to break a draw, Ms. Burke will effectively be barred from most votes. The rules state that Mr. Slipper cannot vote at all while he stands aside.
The sexual harassment case is a civil matter, while the taxi voucher allegations are criminal. Police have confirmed they are evaluating the criminal allegation.
“Any allegation of criminal behaviour is grave and should be dealt with in a manner that shows appropriate regard to the integrity of our democratic institutions and to precedent,” Mr. Slipper said in a statement after returning from the United States on Sunday.
“As such, I believe it is appropriate for me to stand aside as speaker while this criminal allegation is resolved,” he said.
“The allegation is incorrect, and once it is clear they are untrue, I shall return to the speakership. I would appreciate the relevant bodies dealing with the matter expeditiously,” he added.
http://www.theglobeandmail.com/news/wor … le2410280/
Statistics: Posted by yoda — Sun Apr 22, 2012 10:06 am
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How To Cripple the Real Estate Market in Five Easy Steps
March 19, 2012
Central Planning has crippled the real estate market to "save" their core constituency, the banks.
If you were head of Central Planning (howdy, Ben!) and were tasked with crippling the real estate market, here’s what you would recommend.
1. Choke the market and banking sector with zombie banks. Central Planning creates zombie banks in one easy step: it allows insolvent banks to mark their impaired "real estate owned" to fantasy rather than to market. This enables the banks to survive in a deathless state, propped up by free money from the Federal Reserve and lax regulations that enable fantasy accounting and all sorts of off-balance sheet trickery.
Zombie banks have no incentive to auction off their holdings of real estate with defaulted, underwater or otherwise impaired mortgages, for having the market discover the price of these properties would immediately reveal the insolvency of the bank as properties it held on its books at (say) $400,000 were actually only worth $200,000. Since the mortgage is (say) $350,000, then the bank would be forced to recognize a $150,000 loss (actually more with transaction fees, repair of the derelict property, etc.).
If the bank’s entire portfolio of phantom-value properties was auctioned off or its price discovered by the market, the bank would be declared insolvent and closed.
So instead the zombie banks’ impaired properties clog the market, unlisted, unsold, indefinitely held off the market until unicorns arrive and valuations return to bubblicious 2006 levels where the bank can unload them with no loss.
Since those valuations haven’t arrived, millions of properties are being held off the market. This "shadow inventory" is well-known (tens of thousands of people are living rent and mortgage-free in homes that the banks have yet to even put in the foreclosure pipeline), so no one has any confidence that "the bottom is in." Confidence cannot be restored until the market clears the inventory and a real bottom is established.
This destruction of confidence undermines the entire market. Zombie banks create zombie valuations. Who can say valuations won’t decline once the shadow inventory finally hits the market?
Keeping zombie banks alive via bogus valuations and shadow inventory of derelict and defaulted homes has another consequence: banks themselves cannot be confident that prices won’t decline further, so it makes no sense for them to put capital at risk by issuing mortgages on real estate.
2. Have the central bank (the Federal Reserve) buy up $1 trillion in toxic, impaired mortgages. If these mortgages were such a great deal, then why didn’t private buyers snap them up? Exactly: they were fetid garbage no private buyer would touch except at steep discounts that would have sent the banks into insolvency. (That isn’t allowed in crony-capitalist State-run economies.)
The market was thus denied the opportunity to discover the price of all this mortgage debt, and this effectively destroyed the private market for mortgages. Literally 99% of all mortgages in the U.S. are guaranteed by the Central State. Suppressing market price discovery works just as well in the mortgage market as it does in the housing market.
3. Lower the rate that banks can borrow from the Fed to zero, and then pay the banks interest on all funds deposited at the Fed. I wish we had this option, don’t you? We could borrow $1 billion from the Fed at zero interest, then deposit the $1 billion with the Fed and skim risk-free interest.
But the real-estate effect of ZIRP (zero-interest rate policy) is to lower the mortgage rate to such a low level that it makes no sense to take on the risks and unknowns of real estate valuations for such a paltry return. After all, what if the bank loans $300,000 on a $400,000 home, the value subsequently drops to $300,000 and the buyer defaults? The bank will lose capital it can’t afford to lose dumping the property at auction.
Better to avoid the mortgage market altogether by refusing most applicants as risks–and given the high debt levels of most households, they may indeed be poor risks.
4. Try to prop up the housing market by giving poor credit risk buyers loans with only 3% down. This generates a new pool of ready buyers, but since the government is guaranteeing the loan, qualifying is easy and the buyers only have a few thousand dollars of skin in the game. This means defaulting is not very painful, especially if it takes the lender a few years to foreclose on the property.
The net effect of subsidizing poor credit risks to buy houses is that another pool of uncertainty is created, as these buyers are defaulting in droves, dumping inventory that had just been cleared back on the market. (The default rates of FHA loans is skyrocketing, and now the taxpayers will have to bail out the FHA.)
This is what happens when you try to prop up the market with unqualified buyers and 3% down mortgages–those buyers bail out in huge numbers and the homes return to the inventory. The clearing of inventory was as phantom as the real estate valuations on the banks’ balance sheet.
5. Load young people up with the equivalent of a mortgage in student loans. That insures that the majority of potential new homebuyers won’t be qualified to buy a house–they’re already indentured to the banks for student loans. Those fortunate few who get good-paying jobs will qualify for a mortgage when they’re getting grey hair; most will never qualify, having been buried by impossible-to-default student loans.
OK,let’s see how our Organs of Central Planning are doing: check, check, check, check, check: a perfect score! they’re doing everything possible to cripple the real estate market.
Do they care? Of course not; the only goal is to keep the zombie banks alive, regardless of the cost to the nation. Great work, Ben, Barack, Timmy and the rest of the gang at Central Planning: thanks to your policies, the real estate market will never clear and therefore it can never be restored to health.
Statistics: Posted by yoda — Mon Mar 19, 2012 12:36 am
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