Sunday, January 30, 2011
The Nature And Origin Of The State
Guest Post: The Nature And Origin Of The State
Submitted by Tyler Durden on 01/29/2011 12:41 -0500
Guest PostKarl Popper
The next in a continuing series (most recently: Law and the State).
Submitted by Free Radical
The Nature and Origin of the State
The idea that the State originated to serve any kind of social purpose is completely unhistorical. – Albert Jay Nock
It is imperative that we understand, first of all, that “Everything the state is capable of doing it does through compulsion and the application of force.” Even apologists for the state cannot deny this fact.
Neither can its apologists deny (at least convincingly) that “every State has been and is a class State, and every theory of the State has been and is a class theory,”i acknowledgement of which can be found as far back as Plato, who, having addressed the settle-ment of formerly nomadic tribes in The Statesman, depicts – with obvious approval – their conquest and subjugation in The Republic:
Plato gives us a mythological yet very pointed description of the conquest itself, when dealing with the origin of the “earthborn,” the ruling class of the best city. Their victorious march into the city, previously founded by the tradesmen and workers, it described as follows: “After having armed and trained the earthborn, let us now make them advance, under the command of the guardians, till they ar-rive in the city. Then let them look round to find out the best place for their camp – the spot that is most suitable for keeping down the inhabitants, should anyone show unwillingness to obey the law, and for holding back external enemies who may come down like wolves on the fold.” This short but triumphant tale of the subjugation of a sedentary population by a conquering war horde … must be kept in mind when we interpret Plato’s reiterated insistence that good rulers ... are pa-triarchal shepherds of men and that the true political art, the art of ruling, is a kind of herdsmanship, i.e., the art of managing and keeping down human cattle.ii
Even so, Plato’s pupil Aristotle rejected this “art,” placing the origin of the state more palatably, albeit mistakenly, at the end of a purely organic process:
The belief in the kinship origin of the State has been among the most deeply rooted manifestations of the Western faith in development continuity. The popularity of the belief owes much to Aristotle’s celebrated triadic scheme of evolution – from family to community to State – and has been nourished in modern times by frequent appeals to irrelevant and historically unconnected ethnographic materials. As is true in so many other alleged instances of developmental continuity, the fact of logical continui-ty has been converted into the supposition of historical continuity within a specific area or chronology.iii
Moreover, not only was it assumed, following Aristotle, that “from such an original social order … there had developed, through gradual differentiation, the fully developed State with its class hierarchy;”iv it was also assumed that said order developed because all productive land had been settled:
All the teachers of natural law, etc., have unanimously declared that the dif-ferentiation into income-receiving classes and propertyless classes can only take place when all fertile lands have been occupied. For so long as man has ample opportunity to take up unoccupied land, “no one,” says Turgot, “would think of entering the service of another” …
... The philosophers of natural law, then, assumed that complete occupancy of the ground must have occurred quite early, because of the natural increase of an originally small population. They were under the impression that at their time, in the eighteenth century, it had taken place many centuries previous, and they na-ively deduced the existing class aggroupment from the assumed conditions of that long-past point in time. v
Never questioning their assumptions, it simply did not occur to these thinkers that they could
… determine with approximate accuracy the amount of land of average fertility in the temperate zone, and also what amount is sufficient to enable a family of peas-ants to exist comfortably, or how much such a family [could] work with its own forces, without engaging outside help or permanent farm servants. … Let us as-sume that, in these modern times, thirty morgen (equal to twenty acres) for the average peasant suffices to support a family.
… [T]here are still on the earth’s surface, seventy-three billion, two hundred million hectares (equal to on hundred eighty billion, eight hundred eighty million and four hundred sixteen thousand acres); dividing into the first amount the num-ber of human beings [at the time, 1914]…viz., one billion, eight hundred million, every family of five persons could possess about thirty morgen (equal to eighteen and a half acres), and still leave about two-thirds of the planet unoccupied.
If, therefore, purely economic causes are ever to bring about a differentiation into classes by the growth of a propertyless laboring class, the time has not yet ar-rived. …
… As a matter of fact, however, for centuries past, in all parts of the world, we have had a class-state, with possessing classes on top and propertyless laboring classes at the bottom, even when population was much less dense than it is today. Now it is true that the class-state can arise only where all fertile acreage has been occupied completely; and since
… all the ground is not occupied economically, this must mean that it has been preempted politically. Since land could not have acquired “natural scarcity,” the scarcity must have been “legal.” This means that the land has been preempted by a ruling class against its subject class, and settlement prevented. Therefore, the State, as a class-state, can have originated in no other way than through conquest and subjugation.vi
Thus, while it would be too much to say that property is theft, it is not at all be too much to say that insofar as people have historically found themselves without property, it is not because those “best endowed with strength, wisdom, capacity for saving, industry and caution, slowly acquire[d] a basic amount of real or movable property; while the stu-pid and less efficient, and those given to carelessness and waste, remain[ed] without pos-sessions.”vii Rather, it is because one group simply forced itself on another
...with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from abroad. Teleologically, this dominion had no other purpose than the economic ex-ploitation of the vanquished by the victors. viii
And thus do we come once again to the all-important distinction between society and the state:
There are two fundamentally opposed means whereby man, requiring suste-nance, is impelled to obtain the necessary means for satisfying his desires. There are work and robbery, one’s own labor and the forcible appropriation of the labor of others … the “economic means” … and the “political means.”
The state is an organization of the political means. No state, therefore, can come into being until the economic means has created a definite number of objects for the satisfaction of needs, which objects may be taken away or appropriated by warlike robbery. ix
What society giveth, in other words, the state taketh away, first through territorial conquest; then through the establishment of a monopoly on the use of force; and, finally, through the use of said monopoly to confiscate the inhabitants’ property – the “objects” created “for the satisfaction of needs” – via the legalized theft of taxation.
And no matter how successful it has been in indoctrinating its people to believe oth-erwise, the American state is in no way an exception. On the contrary, it is thoroughly an organization of the political means, as were the colonies that preceded it:
The first fortunes on the virgin continent were out-and-out political creations – huge tracts of [conquered] land and lucrative trading privileges arbitrarily bestowed by the British and Dutch crowns upon favorite individuals and com-panies. ... The early royal grants … were the sole property titles of the newly created landed aristocrats.x
While the received truth regarding the subsequent creation of a constitutional republic is decidedly different – nothing less than a miracle, in fact – the real truth is that the United States Constitution, like all constitutions, was “not instituted to limit government but rather to enhance the political power of an elite that [sought] to entrench itself.” After all, the United States Constitution was written by and for a small class of property-owning adult white males, who limited the vote almost exclusively to themselves and, in the process, massively centralized what had been a loose federation of newly independent states.
Thus, instead of the “model for the protection of man in a state of freedom and order” that Jefferson imagined it to be, the American state, both before and after its founding, was a model of conquest and subjugation – not only of the continent’s native inhabitants and the millions of others imported from another continent but of the human detritus endlessly washing up on its shores.xi As such, the American state is simply another state and, like any state, is therefore “an evil inflicted on men by men” that persists solely through the indoctrinated enslavementxii of its people.
And to make matters worse, even some who are not indoctrinated but, on the contrary, recognize the state as the evil that it is, compound that evil by maintaining that the preservation of society nonetheless “justifies the action of the organs of the state.”
This is a very serious proposition – so serious, in fact, that the very foundation of human morality hangs in the balance, and with it the very viability of civil society. If, therefore, humanity is to have any hope of ridding itself of its nemesis, it must be shown that because the state is inherently evil, there can therefore be no justification for its existence.
So to this task we turn next, via another brief foray into metaphysics: “Evil and the State.”
-------------------------------------------------------------------------------
i Franz Oppenheimer, The State, Copley Publishing, 1914, p. 4; online version here.
ii Karl Popper, The Open Society and Its Enemies, Princeton University Press, New Jersey, 1962, 1966, p. 49.
iii Robert Nisbet, The Quest for Community: A Study in the Ethics of Order and Freedom, ICS Press, 1990 (Oxford University, 1953), pp. 90 and 91.
iv Ibid., Oppenheimer, p. xix.
v Ibid., p. 6.
vi Ibid., pp. 6 and 7.
vii Ibid., Oppenheimer, p. 5.
viii Ibid., p. 8.
ix Ibid., pp. 12 and 13.
x Ferdinand Lundberg, America’s Sixty Families, Vanguard Press, 1937, p. 50.
xi “[P]oor laborers will be so plenty as to render slavery useless.” – Revolutionary Connecticutian Oliver Ellsworth replying to revolutionary Virginian George Mason, as quoted by Forrest McDonald in Novus Ordo Seclorum: The Intellectual Origins of the Constitution, the University Press of Kansas, 1985, p. 51.
xii “None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe
Submitted by Tyler Durden on 01/29/2011 12:41 -0500
Guest PostKarl Popper
The next in a continuing series (most recently: Law and the State).
Submitted by Free Radical
The Nature and Origin of the State
The idea that the State originated to serve any kind of social purpose is completely unhistorical. – Albert Jay Nock
It is imperative that we understand, first of all, that “Everything the state is capable of doing it does through compulsion and the application of force.” Even apologists for the state cannot deny this fact.
Neither can its apologists deny (at least convincingly) that “every State has been and is a class State, and every theory of the State has been and is a class theory,”i acknowledgement of which can be found as far back as Plato, who, having addressed the settle-ment of formerly nomadic tribes in The Statesman, depicts – with obvious approval – their conquest and subjugation in The Republic:
Plato gives us a mythological yet very pointed description of the conquest itself, when dealing with the origin of the “earthborn,” the ruling class of the best city. Their victorious march into the city, previously founded by the tradesmen and workers, it described as follows: “After having armed and trained the earthborn, let us now make them advance, under the command of the guardians, till they ar-rive in the city. Then let them look round to find out the best place for their camp – the spot that is most suitable for keeping down the inhabitants, should anyone show unwillingness to obey the law, and for holding back external enemies who may come down like wolves on the fold.” This short but triumphant tale of the subjugation of a sedentary population by a conquering war horde … must be kept in mind when we interpret Plato’s reiterated insistence that good rulers ... are pa-triarchal shepherds of men and that the true political art, the art of ruling, is a kind of herdsmanship, i.e., the art of managing and keeping down human cattle.ii
Even so, Plato’s pupil Aristotle rejected this “art,” placing the origin of the state more palatably, albeit mistakenly, at the end of a purely organic process:
The belief in the kinship origin of the State has been among the most deeply rooted manifestations of the Western faith in development continuity. The popularity of the belief owes much to Aristotle’s celebrated triadic scheme of evolution – from family to community to State – and has been nourished in modern times by frequent appeals to irrelevant and historically unconnected ethnographic materials. As is true in so many other alleged instances of developmental continuity, the fact of logical continui-ty has been converted into the supposition of historical continuity within a specific area or chronology.iii
Moreover, not only was it assumed, following Aristotle, that “from such an original social order … there had developed, through gradual differentiation, the fully developed State with its class hierarchy;”iv it was also assumed that said order developed because all productive land had been settled:
All the teachers of natural law, etc., have unanimously declared that the dif-ferentiation into income-receiving classes and propertyless classes can only take place when all fertile lands have been occupied. For so long as man has ample opportunity to take up unoccupied land, “no one,” says Turgot, “would think of entering the service of another” …
... The philosophers of natural law, then, assumed that complete occupancy of the ground must have occurred quite early, because of the natural increase of an originally small population. They were under the impression that at their time, in the eighteenth century, it had taken place many centuries previous, and they na-ively deduced the existing class aggroupment from the assumed conditions of that long-past point in time. v
Never questioning their assumptions, it simply did not occur to these thinkers that they could
… determine with approximate accuracy the amount of land of average fertility in the temperate zone, and also what amount is sufficient to enable a family of peas-ants to exist comfortably, or how much such a family [could] work with its own forces, without engaging outside help or permanent farm servants. … Let us as-sume that, in these modern times, thirty morgen (equal to twenty acres) for the average peasant suffices to support a family.
… [T]here are still on the earth’s surface, seventy-three billion, two hundred million hectares (equal to on hundred eighty billion, eight hundred eighty million and four hundred sixteen thousand acres); dividing into the first amount the num-ber of human beings [at the time, 1914]…viz., one billion, eight hundred million, every family of five persons could possess about thirty morgen (equal to eighteen and a half acres), and still leave about two-thirds of the planet unoccupied.
If, therefore, purely economic causes are ever to bring about a differentiation into classes by the growth of a propertyless laboring class, the time has not yet ar-rived. …
… As a matter of fact, however, for centuries past, in all parts of the world, we have had a class-state, with possessing classes on top and propertyless laboring classes at the bottom, even when population was much less dense than it is today. Now it is true that the class-state can arise only where all fertile acreage has been occupied completely; and since
… all the ground is not occupied economically, this must mean that it has been preempted politically. Since land could not have acquired “natural scarcity,” the scarcity must have been “legal.” This means that the land has been preempted by a ruling class against its subject class, and settlement prevented. Therefore, the State, as a class-state, can have originated in no other way than through conquest and subjugation.vi
Thus, while it would be too much to say that property is theft, it is not at all be too much to say that insofar as people have historically found themselves without property, it is not because those “best endowed with strength, wisdom, capacity for saving, industry and caution, slowly acquire[d] a basic amount of real or movable property; while the stu-pid and less efficient, and those given to carelessness and waste, remain[ed] without pos-sessions.”vii Rather, it is because one group simply forced itself on another
...with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from abroad. Teleologically, this dominion had no other purpose than the economic ex-ploitation of the vanquished by the victors. viii
And thus do we come once again to the all-important distinction between society and the state:
There are two fundamentally opposed means whereby man, requiring suste-nance, is impelled to obtain the necessary means for satisfying his desires. There are work and robbery, one’s own labor and the forcible appropriation of the labor of others … the “economic means” … and the “political means.”
The state is an organization of the political means. No state, therefore, can come into being until the economic means has created a definite number of objects for the satisfaction of needs, which objects may be taken away or appropriated by warlike robbery. ix
What society giveth, in other words, the state taketh away, first through territorial conquest; then through the establishment of a monopoly on the use of force; and, finally, through the use of said monopoly to confiscate the inhabitants’ property – the “objects” created “for the satisfaction of needs” – via the legalized theft of taxation.
And no matter how successful it has been in indoctrinating its people to believe oth-erwise, the American state is in no way an exception. On the contrary, it is thoroughly an organization of the political means, as were the colonies that preceded it:
The first fortunes on the virgin continent were out-and-out political creations – huge tracts of [conquered] land and lucrative trading privileges arbitrarily bestowed by the British and Dutch crowns upon favorite individuals and com-panies. ... The early royal grants … were the sole property titles of the newly created landed aristocrats.x
While the received truth regarding the subsequent creation of a constitutional republic is decidedly different – nothing less than a miracle, in fact – the real truth is that the United States Constitution, like all constitutions, was “not instituted to limit government but rather to enhance the political power of an elite that [sought] to entrench itself.” After all, the United States Constitution was written by and for a small class of property-owning adult white males, who limited the vote almost exclusively to themselves and, in the process, massively centralized what had been a loose federation of newly independent states.
Thus, instead of the “model for the protection of man in a state of freedom and order” that Jefferson imagined it to be, the American state, both before and after its founding, was a model of conquest and subjugation – not only of the continent’s native inhabitants and the millions of others imported from another continent but of the human detritus endlessly washing up on its shores.xi As such, the American state is simply another state and, like any state, is therefore “an evil inflicted on men by men” that persists solely through the indoctrinated enslavementxii of its people.
And to make matters worse, even some who are not indoctrinated but, on the contrary, recognize the state as the evil that it is, compound that evil by maintaining that the preservation of society nonetheless “justifies the action of the organs of the state.”
This is a very serious proposition – so serious, in fact, that the very foundation of human morality hangs in the balance, and with it the very viability of civil society. If, therefore, humanity is to have any hope of ridding itself of its nemesis, it must be shown that because the state is inherently evil, there can therefore be no justification for its existence.
So to this task we turn next, via another brief foray into metaphysics: “Evil and the State.”
-------------------------------------------------------------------------------
i Franz Oppenheimer, The State, Copley Publishing, 1914, p. 4; online version here.
ii Karl Popper, The Open Society and Its Enemies, Princeton University Press, New Jersey, 1962, 1966, p. 49.
iii Robert Nisbet, The Quest for Community: A Study in the Ethics of Order and Freedom, ICS Press, 1990 (Oxford University, 1953), pp. 90 and 91.
iv Ibid., Oppenheimer, p. xix.
v Ibid., p. 6.
vi Ibid., pp. 6 and 7.
vii Ibid., Oppenheimer, p. 5.
viii Ibid., p. 8.
ix Ibid., pp. 12 and 13.
x Ferdinand Lundberg, America’s Sixty Families, Vanguard Press, 1937, p. 50.
xi “[P]oor laborers will be so plenty as to render slavery useless.” – Revolutionary Connecticutian Oliver Ellsworth replying to revolutionary Virginian George Mason, as quoted by Forrest McDonald in Novus Ordo Seclorum: The Intellectual Origins of the Constitution, the University Press of Kansas, 1985, p. 51.
xii “None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe
Saturday, January 29, 2011
Friday, January 28, 2011
Ron Paul takes second place in New Hampshire straw poll
Ron Paul takes second place in New Hampshire straw poll
By Brent Budowsky - 01/23/11 06:17 PM ET
As The Hill and other media have reported, in the New Hampshire presidential straw poll Mitt Romney came in first and Ron Paul came in second. What does this suggest?
First, the clear front-runner for the Republican nomination is Romney. By comparison, Sarah Palin for president in 2012 is largely a fiction of cable television with too much time to fill and not enough real news to fill it. The big news on the Republican side is the great advantage now held by Romney.
Second and equally interesting, the strong showing by Ron Paul emphasizes a point I have been making for many months, that Paul could make a powerful showing if he runs for the Republican nomination.
Paul, whose visibility and stature will rise as he assumes a subcommittee chairmanship with jurisdiction over the Federal Reserve Board, has a large contingent of very loyal supporters and significant fundraising capability, and his strengths would play well in a Republican primary or caucus system.
I will soon write a column about another underrated Republican possibility (hint: He is now an ambassador). For now, don't underestimate Mitt Romney's strength as the current front-runner, or Ron Paul's potential strength if he enters the presidential campaign.
By Brent Budowsky - 01/23/11 06:17 PM ET
As The Hill and other media have reported, in the New Hampshire presidential straw poll Mitt Romney came in first and Ron Paul came in second. What does this suggest?
First, the clear front-runner for the Republican nomination is Romney. By comparison, Sarah Palin for president in 2012 is largely a fiction of cable television with too much time to fill and not enough real news to fill it. The big news on the Republican side is the great advantage now held by Romney.
Second and equally interesting, the strong showing by Ron Paul emphasizes a point I have been making for many months, that Paul could make a powerful showing if he runs for the Republican nomination.
Paul, whose visibility and stature will rise as he assumes a subcommittee chairmanship with jurisdiction over the Federal Reserve Board, has a large contingent of very loyal supporters and significant fundraising capability, and his strengths would play well in a Republican primary or caucus system.
I will soon write a column about another underrated Republican possibility (hint: He is now an ambassador). For now, don't underestimate Mitt Romney's strength as the current front-runner, or Ron Paul's potential strength if he enters the presidential campaign.
Egypt Shuts Down Internet, Blackberry, Text Messages; Mubarak Rival Returns to Egypt; Protests Rattle Yemen; Only Certainty is Uncertainty
Egypt Shuts Down Internet, Blackberry, Text Messages; Mubarak Rival Returns to Egypt; Protests Rattle Yemen; Only Certainty is Uncertainty
Posted: 27 Jan 2011 10:22 PM PST
Once again it's the unwatched pot that boils over. A revolt that started in Tunisia has spread to other countries in Africa and the Mideast. Protests in Egypt have gotten downright ugly as demonstrators threw firebombs and chanted "Down with Hosni Mubarak, down with the tyrant." Police responded with teargas and bullets.
Mohamed ElBaradei, an Egyptian dissident flew home to claim his stake in the revolution, but no one showed up to cheer.
Egypt Shuts Down Internet, Blackberry, Text Messages
As noted earlier in Blood on Bernanke's Hands; Riots in Egypt over Food Prices and Unemployment; Twitter in the Spotlight, social media outlets, especially Twitter have played a leading role in organizing protests.
In response Egypt's Internet, Blackberry, and Text Mesaging Shut Down
Reports are emerging that Internet has gone down in Cairo and throughout Egypt, only hours before the largest planned protests yet.
According to a report from The Arabist, "Egypt has shut off the internet."
CNN reporter Ben Wedeman confirmed Internet is down in Cairo and writes, "No internet, no SMS, what is next? Mobile phones and land lines? So much for stability.
The Los Angeles Times is also reporting that BlackBerry Internet has been taken offline in Egypt.
All International Connections Shut Down
The Huffington Post has had numerous updates to that story, each confirming additional shutdowns. Here is the 9:45 PM ET update ...
Confirming what a few have reported this evening: in an action unprecedented in Internet history, the Egyptian government appears to have ordered service providers to shut down all international connections to the Internet. Critical European-Asian fiber-optic routes through Egypt appear to be unaffected for now. But every Egyptian provider, every business, bank, Internet cafe, website, school, embassy, and government office that relied on the big four Egyptian ISPs for their Internet connectivity is now cut off from the rest of the world.
World News Yemen
The New York Times discusses World News Headlines on Yemen.
Yemen, home to one of the world's oldest civilizations, is the poorest country in the Arab world as well as a haven for Islamic jihadists and the site of what amounts to a secret American war against leaders of a branch that Al Qaeda has established there.
In January 2011, Yemen became the latest Arab state to see mass protests in the wake of a revolution in Tunisia, as thousands of Yemenis took to the streets in the capital and other regions to demand a change in government.
Until the protests, the world's attention had mainly been focused on fears that Yemen could become Al Qaeda's next operational and training hub, rivaling the lawless tribal areas of Pakistan where the organization's top leaders operate.
Yemen faces a violent separatist movement in the south and an increasingly bold insurgency by Al Qaeda. An intermittent rebellion in northwestern Yemen that flared up again in August 2009, leaving dozens dead and wounded, has added another element of instability.
Al Qaeda's growing presence in Yemen — where it took credit for a deadly attack on the American Embassy in 2008 — is especially troubling because the country's fractious tribes and rugged geography make it notoriously difficult to control.
Much of the violent tribal feuds, banditry and kidnapping appear beyond the control of the central government. Yemen has the region's largest arms market: the country, with roughly 20 million people, is said to have at least 20 million guns.
Grounds for Extremism
Yemen is fertile ground for extremism not only because of its tribal culture and topography, but also because of its deep poverty, high illiteracy and birth rates, and government corruption.
For more on the Al Qaeda connection and the Yemini threat, please see the 10-page New York Times article Is Yemen the Next Afghanistan?
I am pleased to make the NYT global headlines list for my earlier report.
Tens of Thousands of Yemeni Protesters Demand President Resign
The LA Times reports In Yemen, tens of thousands march against president
Demonstrators angry over unemployment and oppression under President Ali Abdullah Saleh demand political change. The unrest worries the U.S., which has been working with the government to defeat an Al Qaeda offshoot.
The current unrest in the Middle East spread to impoverished Yemen on Thursday as tens of thousands of protesters angry over unemployment and political oppression marched in the capital against President Ali Abdullah Saleh.
Instability in Yemen is a major concern for Washington, which has been working with Saleh's government to defeat an entrenched Al Qaeda offshoot that claimed responsibility for last year's attempted bombings of planes over U.S. airspace. Officials fear anarchy in the country would give militants a strategic base in the Arabian Peninsula and the Horn of Africa.
The U.S. has expanded its intelligence and security roles in the country, and American military aid is expected to reach at least $250 million this year, a major increase from previous years. But Washington has long been wary of Saleh, who runs a government based on patronage networks and has a history making questionable deals with enemies, including Islamic militants, who years ago were tolerated.
Only Certainty is Uncertainty
The Washington Post also picked up on the Al Qaeda Yemen connection in As protests swell from Yemen to Egypt, Middle East faces uncertainty
The tumult in Yemen, where more than 10,000 people took to the streets of the capital, Sanaa, on Thursday, added a troubling new dimension to the regional unrest that began nearly two months ago in Tunisia. Yemen, one of the poorest and most heavily armed countries in the Middle East, is home to multiple separatist movements and has its own particularly virulent branch of al-Qaeda.
"Yemen is a different game," said Khairi Abaza, a Middle East expert and a senior fellow at the Washington-based Foundation for the Defense of Democracies. "If things go out of hand in Yemen, you have many players who will be waiting to try to affect the outcome, from al-Qaeda to Iran."
The only certainty, experts said, is uncertainty - an extended and potentially dangerous period of instability that is probably just beginning.
"What happened in Tunisia is completely unprecedented in the Arab world," said Bruce Riedel, a former CIA officer who served as special assistant on the Middle East and South Asia to three presidents. "We've never had a dictator toppled by the street. As a consequence, there is no safety net, no organized opposition ready to move in. . . . No one has a clue what is going to emerge in some of these places."
Riedel said the uncertainty, combined with speed of the change underway, presents the Obama administration with an array of difficult choices as it seeks to show support for democratic expression while working to preserve stability and prevent violence. Historically, U.S. governments "have never gotten these things right," he said.
Washington Post Video
Thankfully, the protests in Yemen have not been violent.
Mubarak Rival Returns to Egypt - No One Cheers
The Telegraph reports Mubarak rival flies to Egypt as the revolt gathers pace
Mohamed ElBaradei, the Egyptian dissident, flew home to Cairo on Thursday night to stake his claim as the leader of the would-be revolution to overthrow President Hosni Mubarak.
"If people, in particular young people, if they want me to lead the transition, I will not let them down," he told reporters in Vienna before boarding his flight.
Mr ElBaradei presented his offer as a gesture of self-sacrifice, yet it is unclear how grateful the protesters will be.
There were no throngs of people to greet him at the airport and many view the former chief of the United Nations nuclear watchdog with a degree of suspicion, seeing him as a rich outsider whose understanding of Egyptian suffering is limited.
As Mr ElBaradei has seized the limelight, so Mr Mubarak has shunned it. There has been no sign of him since protests began. Members of his family are rumoured to have left the country.
With the president looking ever weaker and more isolated, the outlawed Muslim Brotherhood, by far the largest opposition movement in Egypt, chose to make its first move by supporting the protests. "We are not pushing the movement, but we are moving with it," the group said in a statement. "We don't wish to lead it, but we do want to be part of it."
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Posted: 27 Jan 2011 10:22 PM PST
Once again it's the unwatched pot that boils over. A revolt that started in Tunisia has spread to other countries in Africa and the Mideast. Protests in Egypt have gotten downright ugly as demonstrators threw firebombs and chanted "Down with Hosni Mubarak, down with the tyrant." Police responded with teargas and bullets.
Mohamed ElBaradei, an Egyptian dissident flew home to claim his stake in the revolution, but no one showed up to cheer.
Egypt Shuts Down Internet, Blackberry, Text Messages
As noted earlier in Blood on Bernanke's Hands; Riots in Egypt over Food Prices and Unemployment; Twitter in the Spotlight, social media outlets, especially Twitter have played a leading role in organizing protests.
In response Egypt's Internet, Blackberry, and Text Mesaging Shut Down
Reports are emerging that Internet has gone down in Cairo and throughout Egypt, only hours before the largest planned protests yet.
According to a report from The Arabist, "Egypt has shut off the internet."
CNN reporter Ben Wedeman confirmed Internet is down in Cairo and writes, "No internet, no SMS, what is next? Mobile phones and land lines? So much for stability.
The Los Angeles Times is also reporting that BlackBerry Internet has been taken offline in Egypt.
All International Connections Shut Down
The Huffington Post has had numerous updates to that story, each confirming additional shutdowns. Here is the 9:45 PM ET update ...
Confirming what a few have reported this evening: in an action unprecedented in Internet history, the Egyptian government appears to have ordered service providers to shut down all international connections to the Internet. Critical European-Asian fiber-optic routes through Egypt appear to be unaffected for now. But every Egyptian provider, every business, bank, Internet cafe, website, school, embassy, and government office that relied on the big four Egyptian ISPs for their Internet connectivity is now cut off from the rest of the world.
World News Yemen
The New York Times discusses World News Headlines on Yemen.
Yemen, home to one of the world's oldest civilizations, is the poorest country in the Arab world as well as a haven for Islamic jihadists and the site of what amounts to a secret American war against leaders of a branch that Al Qaeda has established there.
In January 2011, Yemen became the latest Arab state to see mass protests in the wake of a revolution in Tunisia, as thousands of Yemenis took to the streets in the capital and other regions to demand a change in government.
Until the protests, the world's attention had mainly been focused on fears that Yemen could become Al Qaeda's next operational and training hub, rivaling the lawless tribal areas of Pakistan where the organization's top leaders operate.
Yemen faces a violent separatist movement in the south and an increasingly bold insurgency by Al Qaeda. An intermittent rebellion in northwestern Yemen that flared up again in August 2009, leaving dozens dead and wounded, has added another element of instability.
Al Qaeda's growing presence in Yemen — where it took credit for a deadly attack on the American Embassy in 2008 — is especially troubling because the country's fractious tribes and rugged geography make it notoriously difficult to control.
Much of the violent tribal feuds, banditry and kidnapping appear beyond the control of the central government. Yemen has the region's largest arms market: the country, with roughly 20 million people, is said to have at least 20 million guns.
Grounds for Extremism
Yemen is fertile ground for extremism not only because of its tribal culture and topography, but also because of its deep poverty, high illiteracy and birth rates, and government corruption.
For more on the Al Qaeda connection and the Yemini threat, please see the 10-page New York Times article Is Yemen the Next Afghanistan?
I am pleased to make the NYT global headlines list for my earlier report.
Tens of Thousands of Yemeni Protesters Demand President Resign
The LA Times reports In Yemen, tens of thousands march against president
Demonstrators angry over unemployment and oppression under President Ali Abdullah Saleh demand political change. The unrest worries the U.S., which has been working with the government to defeat an Al Qaeda offshoot.
The current unrest in the Middle East spread to impoverished Yemen on Thursday as tens of thousands of protesters angry over unemployment and political oppression marched in the capital against President Ali Abdullah Saleh.
Instability in Yemen is a major concern for Washington, which has been working with Saleh's government to defeat an entrenched Al Qaeda offshoot that claimed responsibility for last year's attempted bombings of planes over U.S. airspace. Officials fear anarchy in the country would give militants a strategic base in the Arabian Peninsula and the Horn of Africa.
The U.S. has expanded its intelligence and security roles in the country, and American military aid is expected to reach at least $250 million this year, a major increase from previous years. But Washington has long been wary of Saleh, who runs a government based on patronage networks and has a history making questionable deals with enemies, including Islamic militants, who years ago were tolerated.
Only Certainty is Uncertainty
The Washington Post also picked up on the Al Qaeda Yemen connection in As protests swell from Yemen to Egypt, Middle East faces uncertainty
The tumult in Yemen, where more than 10,000 people took to the streets of the capital, Sanaa, on Thursday, added a troubling new dimension to the regional unrest that began nearly two months ago in Tunisia. Yemen, one of the poorest and most heavily armed countries in the Middle East, is home to multiple separatist movements and has its own particularly virulent branch of al-Qaeda.
"Yemen is a different game," said Khairi Abaza, a Middle East expert and a senior fellow at the Washington-based Foundation for the Defense of Democracies. "If things go out of hand in Yemen, you have many players who will be waiting to try to affect the outcome, from al-Qaeda to Iran."
The only certainty, experts said, is uncertainty - an extended and potentially dangerous period of instability that is probably just beginning.
"What happened in Tunisia is completely unprecedented in the Arab world," said Bruce Riedel, a former CIA officer who served as special assistant on the Middle East and South Asia to three presidents. "We've never had a dictator toppled by the street. As a consequence, there is no safety net, no organized opposition ready to move in. . . . No one has a clue what is going to emerge in some of these places."
Riedel said the uncertainty, combined with speed of the change underway, presents the Obama administration with an array of difficult choices as it seeks to show support for democratic expression while working to preserve stability and prevent violence. Historically, U.S. governments "have never gotten these things right," he said.
Washington Post Video
Thankfully, the protests in Yemen have not been violent.
Mubarak Rival Returns to Egypt - No One Cheers
The Telegraph reports Mubarak rival flies to Egypt as the revolt gathers pace
Mohamed ElBaradei, the Egyptian dissident, flew home to Cairo on Thursday night to stake his claim as the leader of the would-be revolution to overthrow President Hosni Mubarak.
"If people, in particular young people, if they want me to lead the transition, I will not let them down," he told reporters in Vienna before boarding his flight.
Mr ElBaradei presented his offer as a gesture of self-sacrifice, yet it is unclear how grateful the protesters will be.
There were no throngs of people to greet him at the airport and many view the former chief of the United Nations nuclear watchdog with a degree of suspicion, seeing him as a rich outsider whose understanding of Egyptian suffering is limited.
As Mr ElBaradei has seized the limelight, so Mr Mubarak has shunned it. There has been no sign of him since protests began. Members of his family are rumoured to have left the country.
With the president looking ever weaker and more isolated, the outlawed Muslim Brotherhood, by far the largest opposition movement in Egypt, chose to make its first move by supporting the protests. "We are not pushing the movement, but we are moving with it," the group said in a statement. "We don't wish to lead it, but we do want to be part of it."
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
The Global Revolution Is Accelerating - Mike Krieger Explains
The Global Revolution Is Accelerating - Mike Krieger Explains
Submitted by Tyler Durden on 01/27/2011 13:39 -0500
Submitted by Mike Krieger of KAM LP
Terrorism is the best political weapon for nothing drives people harder than a fear of sudden death.
- Adolf Hitler
Sometime around the year 2005, perhaps a few years before or after, America will enter the Fourth Turning. A spark will ignite a new mood. It will catalyze a Crisis. In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. It could be a rapid succession of small events in which the ominous, the ordinary, and the trivial are commingled.
Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression
- Strauss & Howe in “The Fourth Turning” written in 1997
All people who try to get elected to government are in love with government, it’s just that the Democrats are in love with one kind of government and the Republicans are in love with another kind of government, and government is going to continue to grow until there is revulsion for government.
- Jared Dillian (he puts out a great daily piece I would look into it at http://www.dailydirtnap.com/)
The Global Revolution: Welcome to Phase Two
When first I mentioned the food riots in Tunisia and Algeria in my note two weeks ago the former authoritarian leader Zine al-Abidine Ben Ali had yet to flee to Saudi Arabia with much of his nation’s gold. What I find so amazing about this whole situation is why someone in their right mind would take the time to take some shiny little element that is in a bubble and that you can’t eat in the chaos surrounding one’s escape to another nation. Surely he has hidden foreign bank accounts and since gold is just another “fiat” currency according to a Wall Street strategist, why bother? He must be some right-wing radical that likes the Constitution and is therefore anti-American. Isn’t that right Mr. Potok?
So back to the food situation. When I say that we are in Phase Two I am actually not referring to the simple fact that a leader with a 23 year rule under his belt was deposed in weeks seemingly out of nowhere, I am referring to the actions that are being taken and will be taken all over the world in response. As I have said time and time again, government’s today throughout the world could care less about their citizens. When they show signs of caring it is merely to satiate the people back to sleep so that they can stay in control. The leaders of governments throughout the world today consist of the worst humanity has to offer. The most egomaniacal, narcissistic specimens on the planet (with some exceptions of course, Ron Paul for one). They care about power and maintaining it. So what does this have to do with food? A lot. I have stated in the past that we are in revolutionary times. The system that has existed for most of our lives (all of my life) is crumbling under its own weight of insanity, immorality and fraud. The last ditch effort by the global elites has been to flood the world with money and make sure nothing they are invested in ever fails or defaults. This bought them a little time and their hope was that rising asset prices would boost confidence and lead to a recovery that could maybe keep this scam monetary system running for another decade or two. The problem with this strategy is that we are in the Fourth Turning. My generation is coming into its own and we don’t buy the bull shit of our parents’ generation. We don’t believe in Democrat or Republican. We don’t believe in the system itself. We will be the ones making the decisions going forward. We will default on the astronomic promises our parents made to themselves. We will create an entirely new monetary and financial system. Real free-market capitalism will flourish, not this socialism for the rich garbage Obama loves so much. We will focus on doing good while doing well. Not because the government forces us to, rather because we are witness to and victims of this sick, twisted creation of our parents generation that celebrates total greed without the slightest concern of the consequences to others.
With this as a backdrop, the leaders of all nations are scrambling to somehow survive in their positions through this time period. What is happening across the emerging world now is countries that had increased prices for food and energy are reversing policy. Countries such as Saudi Arabia are bidding for world grain supplies. Think about this for a minute. What this means is that what is being employed around the world at a time of global crop failures is essentially price controls. What happens when you have price controls? No elasticity of demand. What does that lead to? Even worse supply/demand imbalances and ultimately food shortages and everything goes to the black market and farmers stop planting as much. So what we now have is the very beginning of a food price spiral that will lead to prices in dollars at unimaginable heights. I would start to be very careful of the quality of food you buy and where it comes from. I assume companies will start mixing in all sort of fillers and garbage into their foods. Especially in emerging markets looks for increases in tainted or corrupt food supplies.
This will also affect oil prices and they should move substantially higher. While people still quote WTI as the oil price and claim it is down, this is total and complete nonsense. Nobody pays WTI prices. Brent is $98/b and Asia Tapis is $101.50/b. Anyone that is telling you oil prices are moving lower are either lying or don’t know what they are talking about. For example while WTI is down 7% from recent highs, gasoline is down only 4% and heating oil is at the highs. Do you pay WTI or do you buy gasoline? There is also this idea that OPEC is going to come out and save the world by boosting production. Good luck with that. First of all, OPEC’s true spare capacity number is highly debatable and I am in the camp of those that thinks they do not have control over the market at this point. Banana Ben Bernanke does. Secondly and most importantly these Arab nations are short food and we are in a food crisis. They are also amongst the most vulnerable governments to overthrow. You think for a second that they will crash oil as food prices are soaring? Oil is their currency. For what it is worth I think many of these regimes will be history within a year. Then the Western governments will fall one by one. This is the Fourth Turning. There is no point trying to stop it, the only thing you can do is prepare. There is precious little time left for that.
U.S. Treasury Bond Holders Will Never Be Paid
Remember the old saying, “if you don’t know who the sucker is in the market, you are the sucker.” Well ladies and gentlemen if you own U.S. treasury bond you are the sucker. There is one way these things will be paid back. With completely worthless pieces of paper, OR not paid back at all. The one thing linearly thinking investors are not appreciating right now is that there is a gigantic awakening occurring in the United States that will develop into a successful and peaceful revolution. The new leaders that will emerge will consider this debt illegitimate as I do personally. It will not be paid. Think it can’t happen? Watch.
Meanwhile, looking at the chart of long term treasury yields what we see is a coiled pattern where rates have been in a tight range ever since breaking to the upside in early December. I think these rates are about to break hard in one direction and I think that direction is higher. When I looked at the commentary from the Fed yesterday and I saw this line “expectations have remained stable, and measures of underlying inflation have been trending downward,” all I could think was if I was a bond investor I would just say “alright I have had ENOUGH.” I think that some of the biggest moves ever in the history of financial markets could be coming within the next 1-2 months. I would focus on treasuries and precious metals.
Silver Disobedience
While the 20th century was a brutal and violent one, some amazing things happened. Two prophets, Martin Luther King Jr. and Mohandas Gandhi we able to usher in a period of tremendous social justice for their respective causes through non-violent means. We are now entering a time where the people (completely and totally sold out by their leaders and masters at the banks) must exercise civil disobedience and non compliance with an evil system. Fortunately for us, the most effective and powerful means of this I can think of is completely legal and consists of buying physical silver and taking possession. Although the comex paper silver price is showing a drop, this is not reflected in the physical market which is tight as a drum. Many major dealers are sold out of product all over the world and the U.S. Mint recently stated that they sold 4.7 million silver eagles in January alone, a new record and the month isn’t even over. If you do not like the way the banks and politicians are robbing you blind in broad daylight buy physical silver and take delivery. I think it is abundantly clear that the raid on the comex silver market is a desperate attempt to shake out some supplies since the actually physical market is being depleted rapidly.
One of the irrational “fears” out there is that the Fed will somehow tighten rates. Get out of the emotional brain for a second and into the logical one. The Fed funds rate is 0-25 basis points. The two year treasury yields 0.60%. If the Fed raised rates even to 0.50% with the two year note at 0.60% total and complete chaos would ensue and the government wouldn’t be able to deal with the rising costs of debt service. It is just not going to happen. They will print and print until the whole corrupt house of cards crumbles to dust.
V for Victory
We are in revolutionary times. The new generation will not accept the Federal Reserve. We will not accept feudalism by an oligarchy of banking criminals. We will not forget the Constitution. We will not accept SDRs or any global fiat currency. We will not accept global government or “governance” (sounds so much better doesn’t it).
As I went to grab dinner last night, I noticed V for victory posters plastered all around downtown (http://www.youtube.com/watch?v=s5GlOeEUyQ4&feature=related). Go Boulder we are winning the infowar!
Turn off the tv and think for yourself,
Submitted by Tyler Durden on 01/27/2011 13:39 -0500
Submitted by Mike Krieger of KAM LP
Terrorism is the best political weapon for nothing drives people harder than a fear of sudden death.
- Adolf Hitler
Sometime around the year 2005, perhaps a few years before or after, America will enter the Fourth Turning. A spark will ignite a new mood. It will catalyze a Crisis. In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. It could be a rapid succession of small events in which the ominous, the ordinary, and the trivial are commingled.
Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression
- Strauss & Howe in “The Fourth Turning” written in 1997
All people who try to get elected to government are in love with government, it’s just that the Democrats are in love with one kind of government and the Republicans are in love with another kind of government, and government is going to continue to grow until there is revulsion for government.
- Jared Dillian (he puts out a great daily piece I would look into it at http://www.dailydirtnap.com/)
The Global Revolution: Welcome to Phase Two
When first I mentioned the food riots in Tunisia and Algeria in my note two weeks ago the former authoritarian leader Zine al-Abidine Ben Ali had yet to flee to Saudi Arabia with much of his nation’s gold. What I find so amazing about this whole situation is why someone in their right mind would take the time to take some shiny little element that is in a bubble and that you can’t eat in the chaos surrounding one’s escape to another nation. Surely he has hidden foreign bank accounts and since gold is just another “fiat” currency according to a Wall Street strategist, why bother? He must be some right-wing radical that likes the Constitution and is therefore anti-American. Isn’t that right Mr. Potok?
So back to the food situation. When I say that we are in Phase Two I am actually not referring to the simple fact that a leader with a 23 year rule under his belt was deposed in weeks seemingly out of nowhere, I am referring to the actions that are being taken and will be taken all over the world in response. As I have said time and time again, government’s today throughout the world could care less about their citizens. When they show signs of caring it is merely to satiate the people back to sleep so that they can stay in control. The leaders of governments throughout the world today consist of the worst humanity has to offer. The most egomaniacal, narcissistic specimens on the planet (with some exceptions of course, Ron Paul for one). They care about power and maintaining it. So what does this have to do with food? A lot. I have stated in the past that we are in revolutionary times. The system that has existed for most of our lives (all of my life) is crumbling under its own weight of insanity, immorality and fraud. The last ditch effort by the global elites has been to flood the world with money and make sure nothing they are invested in ever fails or defaults. This bought them a little time and their hope was that rising asset prices would boost confidence and lead to a recovery that could maybe keep this scam monetary system running for another decade or two. The problem with this strategy is that we are in the Fourth Turning. My generation is coming into its own and we don’t buy the bull shit of our parents’ generation. We don’t believe in Democrat or Republican. We don’t believe in the system itself. We will be the ones making the decisions going forward. We will default on the astronomic promises our parents made to themselves. We will create an entirely new monetary and financial system. Real free-market capitalism will flourish, not this socialism for the rich garbage Obama loves so much. We will focus on doing good while doing well. Not because the government forces us to, rather because we are witness to and victims of this sick, twisted creation of our parents generation that celebrates total greed without the slightest concern of the consequences to others.
With this as a backdrop, the leaders of all nations are scrambling to somehow survive in their positions through this time period. What is happening across the emerging world now is countries that had increased prices for food and energy are reversing policy. Countries such as Saudi Arabia are bidding for world grain supplies. Think about this for a minute. What this means is that what is being employed around the world at a time of global crop failures is essentially price controls. What happens when you have price controls? No elasticity of demand. What does that lead to? Even worse supply/demand imbalances and ultimately food shortages and everything goes to the black market and farmers stop planting as much. So what we now have is the very beginning of a food price spiral that will lead to prices in dollars at unimaginable heights. I would start to be very careful of the quality of food you buy and where it comes from. I assume companies will start mixing in all sort of fillers and garbage into their foods. Especially in emerging markets looks for increases in tainted or corrupt food supplies.
This will also affect oil prices and they should move substantially higher. While people still quote WTI as the oil price and claim it is down, this is total and complete nonsense. Nobody pays WTI prices. Brent is $98/b and Asia Tapis is $101.50/b. Anyone that is telling you oil prices are moving lower are either lying or don’t know what they are talking about. For example while WTI is down 7% from recent highs, gasoline is down only 4% and heating oil is at the highs. Do you pay WTI or do you buy gasoline? There is also this idea that OPEC is going to come out and save the world by boosting production. Good luck with that. First of all, OPEC’s true spare capacity number is highly debatable and I am in the camp of those that thinks they do not have control over the market at this point. Banana Ben Bernanke does. Secondly and most importantly these Arab nations are short food and we are in a food crisis. They are also amongst the most vulnerable governments to overthrow. You think for a second that they will crash oil as food prices are soaring? Oil is their currency. For what it is worth I think many of these regimes will be history within a year. Then the Western governments will fall one by one. This is the Fourth Turning. There is no point trying to stop it, the only thing you can do is prepare. There is precious little time left for that.
U.S. Treasury Bond Holders Will Never Be Paid
Remember the old saying, “if you don’t know who the sucker is in the market, you are the sucker.” Well ladies and gentlemen if you own U.S. treasury bond you are the sucker. There is one way these things will be paid back. With completely worthless pieces of paper, OR not paid back at all. The one thing linearly thinking investors are not appreciating right now is that there is a gigantic awakening occurring in the United States that will develop into a successful and peaceful revolution. The new leaders that will emerge will consider this debt illegitimate as I do personally. It will not be paid. Think it can’t happen? Watch.
Meanwhile, looking at the chart of long term treasury yields what we see is a coiled pattern where rates have been in a tight range ever since breaking to the upside in early December. I think these rates are about to break hard in one direction and I think that direction is higher. When I looked at the commentary from the Fed yesterday and I saw this line “expectations have remained stable, and measures of underlying inflation have been trending downward,” all I could think was if I was a bond investor I would just say “alright I have had ENOUGH.” I think that some of the biggest moves ever in the history of financial markets could be coming within the next 1-2 months. I would focus on treasuries and precious metals.
Silver Disobedience
While the 20th century was a brutal and violent one, some amazing things happened. Two prophets, Martin Luther King Jr. and Mohandas Gandhi we able to usher in a period of tremendous social justice for their respective causes through non-violent means. We are now entering a time where the people (completely and totally sold out by their leaders and masters at the banks) must exercise civil disobedience and non compliance with an evil system. Fortunately for us, the most effective and powerful means of this I can think of is completely legal and consists of buying physical silver and taking possession. Although the comex paper silver price is showing a drop, this is not reflected in the physical market which is tight as a drum. Many major dealers are sold out of product all over the world and the U.S. Mint recently stated that they sold 4.7 million silver eagles in January alone, a new record and the month isn’t even over. If you do not like the way the banks and politicians are robbing you blind in broad daylight buy physical silver and take delivery. I think it is abundantly clear that the raid on the comex silver market is a desperate attempt to shake out some supplies since the actually physical market is being depleted rapidly.
One of the irrational “fears” out there is that the Fed will somehow tighten rates. Get out of the emotional brain for a second and into the logical one. The Fed funds rate is 0-25 basis points. The two year treasury yields 0.60%. If the Fed raised rates even to 0.50% with the two year note at 0.60% total and complete chaos would ensue and the government wouldn’t be able to deal with the rising costs of debt service. It is just not going to happen. They will print and print until the whole corrupt house of cards crumbles to dust.
V for Victory
We are in revolutionary times. The new generation will not accept the Federal Reserve. We will not accept feudalism by an oligarchy of banking criminals. We will not forget the Constitution. We will not accept SDRs or any global fiat currency. We will not accept global government or “governance” (sounds so much better doesn’t it).
As I went to grab dinner last night, I noticed V for victory posters plastered all around downtown (http://www.youtube.com/watch?v=s5GlOeEUyQ4&feature=related). Go Boulder we are winning the infowar!
Turn off the tv and think for yourself,
Wednesday, January 26, 2011
Tunisia Wants Its Gold Back, Issues International Arrest Warrant For Runaway President Ben Ali
Submitted by Tyler Durden on 01/26/2011 08:11 -0500
Saudi ArabiaTextron
Even as the situation in Tunisia continues deteriorating broadly, the country realizes that it needs its shiny assets back, and needs them fast, regardless of edibility or recent market corrections. As such it has just issued an international arrest warrant for deposed president Ben Ali. From the BBC: "Mr Chebbi said Mr Ben Ali should be tried for property theft and transferring foreign currency." We can't repeat enough: any dictatorial or Hewlett Packardian banana republic should make sure all of its gold is secure. In fact, since we are positive all of the gold, pardon, tungsten held at Ft. Knox is right there, it may be a good idea to put tracker beacons in the fake material. We are confident that sooner or later it will lead the broader population to not only the Textron vehicle used for one way transit, but to which non-extradition countries will soon be hosting our very own versions of the Tunisian President.
From the BBC:
Tunisia has issued an international arrest warrant for ousted President Zine al-Abidine Ben Ali and his family, the nation's justice minister has said.
Lazhar Karoui Chebbi said Tunisia had asked Interpol to detain Mr Ben Ali, who fled to Saudi Arabia earlier this month amid mass street protests.
Mr Chebbi said Mr Ben Ali should be tried for property theft and transferring foreign currency.
He was speaking as anti-government protests continued in the country.
In the capital Tunis, some of the protesters had apparently tried to breach barricades around the main government compound, and police responded by firing tear gas.
'Cleaning up'
Mr Chebbi said Mr Ben Ali and his family members were being being sought for "illegal acquisition" of assets and "illicit transfers of funds abroad.
The minister added that seven family members were currently in custody, but several more had fled abroad.
In a separate development, protesters in Tunis clashed with police outside the government building.
The demonstrators - mainly young men and teenagers - demanded the resignation of the interim government led by Prime Minister Mohammed Ghannouchi,.
The protesters said the cabinet was full of Mr Ben Ali's former allies, including Mr Ghannouchi.
"We have only one demand: for the government to fall. They all have to go. Ghannouchi should go first," protester Bassem El Barouni was quoted as saying by the AFP news agency.
Hamid El Gribi, another protester, said: "We have to clean up the rest of the old government."
Mr Ghannouchi has promised elections within six months, saying he will quit "in the shortest possible timeframe".
Saudi ArabiaTextron
Even as the situation in Tunisia continues deteriorating broadly, the country realizes that it needs its shiny assets back, and needs them fast, regardless of edibility or recent market corrections. As such it has just issued an international arrest warrant for deposed president Ben Ali. From the BBC: "Mr Chebbi said Mr Ben Ali should be tried for property theft and transferring foreign currency." We can't repeat enough: any dictatorial or Hewlett Packardian banana republic should make sure all of its gold is secure. In fact, since we are positive all of the gold, pardon, tungsten held at Ft. Knox is right there, it may be a good idea to put tracker beacons in the fake material. We are confident that sooner or later it will lead the broader population to not only the Textron vehicle used for one way transit, but to which non-extradition countries will soon be hosting our very own versions of the Tunisian President.
From the BBC:
Tunisia has issued an international arrest warrant for ousted President Zine al-Abidine Ben Ali and his family, the nation's justice minister has said.
Lazhar Karoui Chebbi said Tunisia had asked Interpol to detain Mr Ben Ali, who fled to Saudi Arabia earlier this month amid mass street protests.
Mr Chebbi said Mr Ben Ali should be tried for property theft and transferring foreign currency.
He was speaking as anti-government protests continued in the country.
In the capital Tunis, some of the protesters had apparently tried to breach barricades around the main government compound, and police responded by firing tear gas.
'Cleaning up'
Mr Chebbi said Mr Ben Ali and his family members were being being sought for "illegal acquisition" of assets and "illicit transfers of funds abroad.
The minister added that seven family members were currently in custody, but several more had fled abroad.
In a separate development, protesters in Tunis clashed with police outside the government building.
The demonstrators - mainly young men and teenagers - demanded the resignation of the interim government led by Prime Minister Mohammed Ghannouchi,.
The protesters said the cabinet was full of Mr Ben Ali's former allies, including Mr Ghannouchi.
"We have only one demand: for the government to fall. They all have to go. Ghannouchi should go first," protester Bassem El Barouni was quoted as saying by the AFP news agency.
Hamid El Gribi, another protester, said: "We have to clean up the rest of the old government."
Mr Ghannouchi has promised elections within six months, saying he will quit "in the shortest possible timeframe".
Marc Faber's Most Provocative Interview Ever: Compares Obama To A Prostitute, Goes Long Treasurys
Earlier, Marc Faber appeared on Bloomberg TV, in what may go down in history as his most scandalous interview ever. When asked, in advance of the SOTU address, what he thinks of the president, Faber, who appears to have had enough with all the bullshit, propaganda, and lies, replies: "I think he's done a horrible job and I think that will continue, I think he is a dishonest person, and nothing has changed... Some politicians are more honest than others. I don't think that I have a very high regard for politicians, I have a high regard for businessmen and for people who work, and not for people who abuse the system continuously. And in comparison to other politicians, I think he came in on a platform as a president that would want to change the government in Washington, and actually he's made it worse... We foreigners, we just laugh at someone like Mr. Obama. I was very critical of Mr. Bush, but at least he had one line and he stuck to that line, and at least he set out to do a thing and he was relatively straight on the thing that he did. He may have been wrong, but at least he didn't change his mind continuously, and didn't prostitute himself." If nothing else, how many other people do you know who will compare, in front of a live Bloomberg audience, the president of the formerly greatest country in the world to a whore?
As for what Faber thinks the real state of the union address should be, he says:
"I think what should happen in the US is for the president to tell the US, you have to tighten your belts. 'We have to go through hard times for 5 years to repair the damage that was committed over 20-25 years by the Federal Reserve, by the Treasury, by the politicians, and somebody has to tell the truth. But the politicians keep on fueling the illusion that you can spend yourself out of the misery, and that by printing money you will improve the economy, which is not the case."
On the topic of the Fed and relative performance:
You don't know. Maybe [Bernanke] will resign. After he sees the disaster he has created he may resign. Or he may be disposed, who knows. But all i want to say is in terms of investments we have a very interesting situation, because from the March lows, the EM universe has performed fantastically well, and industrial commodities have done fantastically well, and the US has underperformed everything. And now we have a change: the US may outperform, it may not go up, but may go down less than emerging markets.
On his latest opinion on Treasurys
In the long-run, for sure US Treasurys and most government bonds are a suicidal investment. But as a shorter-term timeframe, and I think for the next three months or so, I think we have a situation where stock markets have become very overbought, and emerging markets in January, most of them failed to make new highs above the November, December highs, and recently some of them have sold off very considerably, plus the Chinese market is giving you a signal that something is not right in the Chinese economy, because it is going down. For the next three months you have to shift out of the Emerging Markets, they may correct 20-30%, out of industrial commodities, on a relative basis. And I think the sentiment, just recently, was overly optimistic on the reflation trade, and overly negative about treasury bonds, so treasury bonds right now are oversold, and as of tonight I got the buy signal on US Treasurys. I think Treasury are the best place for the next 3 months, as is the US dollar. I think a correction is coming in the range of 10% in the S&P and 20-30% in the emerging markets.
On all the current batch of Davos participants:
I dont think the 'thinkers' are in Davos. I think it's a group of liars, and people that go along with the system, and perpetuate fraud and abuse, and dubious practices in the financial system.
As for what he thinks of Keynesianism, and gold, well, we'll just let you hear that for yourselves.
As for what Faber thinks the real state of the union address should be, he says:
"I think what should happen in the US is for the president to tell the US, you have to tighten your belts. 'We have to go through hard times for 5 years to repair the damage that was committed over 20-25 years by the Federal Reserve, by the Treasury, by the politicians, and somebody has to tell the truth. But the politicians keep on fueling the illusion that you can spend yourself out of the misery, and that by printing money you will improve the economy, which is not the case."
On the topic of the Fed and relative performance:
You don't know. Maybe [Bernanke] will resign. After he sees the disaster he has created he may resign. Or he may be disposed, who knows. But all i want to say is in terms of investments we have a very interesting situation, because from the March lows, the EM universe has performed fantastically well, and industrial commodities have done fantastically well, and the US has underperformed everything. And now we have a change: the US may outperform, it may not go up, but may go down less than emerging markets.
On his latest opinion on Treasurys
In the long-run, for sure US Treasurys and most government bonds are a suicidal investment. But as a shorter-term timeframe, and I think for the next three months or so, I think we have a situation where stock markets have become very overbought, and emerging markets in January, most of them failed to make new highs above the November, December highs, and recently some of them have sold off very considerably, plus the Chinese market is giving you a signal that something is not right in the Chinese economy, because it is going down. For the next three months you have to shift out of the Emerging Markets, they may correct 20-30%, out of industrial commodities, on a relative basis. And I think the sentiment, just recently, was overly optimistic on the reflation trade, and overly negative about treasury bonds, so treasury bonds right now are oversold, and as of tonight I got the buy signal on US Treasurys. I think Treasury are the best place for the next 3 months, as is the US dollar. I think a correction is coming in the range of 10% in the S&P and 20-30% in the emerging markets.
On all the current batch of Davos participants:
I dont think the 'thinkers' are in Davos. I think it's a group of liars, and people that go along with the system, and perpetuate fraud and abuse, and dubious practices in the financial system.
As for what he thinks of Keynesianism, and gold, well, we'll just let you hear that for yourselves.
Tuesday, January 25, 2011
Insurance Companies Sue Bank Of America Over "Massive Mortgage Fraud", Find 91% Of Securitized Loans Are Misrepresented
Insurance Companies Sue Bank Of America Over "Massive Mortgage Fraud", Find 91% Of Securitized Loans Are Misrepresented
Submitted by Tyler Durden on 01/24/2011 17:50 -0500
Bank of AmericaCountrywideInsurance CompaniesMortgage LoansratingsWells FargoWorldCom
The benchmark for documented mortgage originators' lies is getting higher and higher. First it was the Allstate lawsuit, finding massive fraud in most Countrywide/Bank of America loans, then it was quantified at 70% after Wells Fargo sued JPM's EMC division, now it is all the way up to 91% after a just released lawsuit by the bulk of the world's biggest insurance companies has been made public, in a fresh lawsuit again Bank of America/Countrywide over "Massive mortgage fraud."
To wit, from the lawsuit: "In carrying out its review of the approximately 19,000 Countrywide loan files, MBIA found that 91% of the defaulted or delinquent loans in those securitizations contained material deviations from Countrywide’s underwriting guidelines. MBIA’s report showed that the loan applications frequently “(i) lack key documentation, such as verification of borrower assets or income; (ii) include an invalid or incomplete appraisal; (iii) demonstrate fraud by the borrower on the face of the application; or (iv) reflect that any of borrower income, FICO score, debt, DTI [debt-to-income,] or CLTV [combined loan-to-value] ratios, fails to meet stated Countrywide guidelines (without any permissible exception)." The plaintiff counsel is Bernstein Litowitz, which was made famous from the WorldCom litigation. We doubt they will settle for a few measily pennies on the dollar. As for the list of litigants, it is a veritable who's who of the insurance industry: Dexia Holdings, FSA Asset Management, New York Life iInsurance Company, The Mainstay Funds, Teachers Insurance & Annuity, TIAA-CREF Life Insurance, and College Retirement Equities Fund.
And here is why even the recent recent hike to BofA's Representation legal reserve, which Zero Hedge predicted in October, will be woefully insufficient to cover the tens of billions in incremental damages, monetary and punitive.
The Offering Documents for the Certificates at issue, which were relied upon by Plaintiffs, represented, among other things, that (i) the loans packaged into the Certificates were underwritten pursuant to the Countrywide Defendants’ specific loan origination guidelines; (ii) Countrywide Home (defined below) evaluated the prospective borrowers’ credit standing and repayment ability prior to approving any loan; (iii) when the Countrywide Defendants’ made an exception to the stated underwriting guidelines, they did so on “a case-by-case basis” and only if “compensating factors” justifying the exception were present; (iv) almost every mortgaged property received an independent appraisal which conformed to acceptable standards and formed the basis of its loan-to-value (“LTV”) ratio, an important metric to MBS investors; (v) the loans selected for securitization were chosen “in a manner [not] intended to affect the interests of the certificateholders adversely”; (vi) the “AAA” or other investment-grade ratings assigned to the Certificates were accurate reflections of the Certificates’ credit quality; and (vii) the Certificates’ issuing trusts possessed good title to the underlying mortgage loans. Each of these material representations was false when made, and Defendants knew or recklessly disregarded the falsity of these representations. Plaintiffs relied on the misrepresentations andsuffered losses as a result.
Submitted by Tyler Durden on 01/24/2011 17:50 -0500
Bank of AmericaCountrywideInsurance CompaniesMortgage LoansratingsWells FargoWorldCom
The benchmark for documented mortgage originators' lies is getting higher and higher. First it was the Allstate lawsuit, finding massive fraud in most Countrywide/Bank of America loans, then it was quantified at 70% after Wells Fargo sued JPM's EMC division, now it is all the way up to 91% after a just released lawsuit by the bulk of the world's biggest insurance companies has been made public, in a fresh lawsuit again Bank of America/Countrywide over "Massive mortgage fraud."
To wit, from the lawsuit: "In carrying out its review of the approximately 19,000 Countrywide loan files, MBIA found that 91% of the defaulted or delinquent loans in those securitizations contained material deviations from Countrywide’s underwriting guidelines. MBIA’s report showed that the loan applications frequently “(i) lack key documentation, such as verification of borrower assets or income; (ii) include an invalid or incomplete appraisal; (iii) demonstrate fraud by the borrower on the face of the application; or (iv) reflect that any of borrower income, FICO score, debt, DTI [debt-to-income,] or CLTV [combined loan-to-value] ratios, fails to meet stated Countrywide guidelines (without any permissible exception)." The plaintiff counsel is Bernstein Litowitz, which was made famous from the WorldCom litigation. We doubt they will settle for a few measily pennies on the dollar. As for the list of litigants, it is a veritable who's who of the insurance industry: Dexia Holdings, FSA Asset Management, New York Life iInsurance Company, The Mainstay Funds, Teachers Insurance & Annuity, TIAA-CREF Life Insurance, and College Retirement Equities Fund.
And here is why even the recent recent hike to BofA's Representation legal reserve, which Zero Hedge predicted in October, will be woefully insufficient to cover the tens of billions in incremental damages, monetary and punitive.
The Offering Documents for the Certificates at issue, which were relied upon by Plaintiffs, represented, among other things, that (i) the loans packaged into the Certificates were underwritten pursuant to the Countrywide Defendants’ specific loan origination guidelines; (ii) Countrywide Home (defined below) evaluated the prospective borrowers’ credit standing and repayment ability prior to approving any loan; (iii) when the Countrywide Defendants’ made an exception to the stated underwriting guidelines, they did so on “a case-by-case basis” and only if “compensating factors” justifying the exception were present; (iv) almost every mortgaged property received an independent appraisal which conformed to acceptable standards and formed the basis of its loan-to-value (“LTV”) ratio, an important metric to MBS investors; (v) the loans selected for securitization were chosen “in a manner [not] intended to affect the interests of the certificateholders adversely”; (vi) the “AAA” or other investment-grade ratings assigned to the Certificates were accurate reflections of the Certificates’ credit quality; and (vii) the Certificates’ issuing trusts possessed good title to the underlying mortgage loans. Each of these material representations was false when made, and Defendants knew or recklessly disregarded the falsity of these representations. Plaintiffs relied on the misrepresentations andsuffered losses as a result.
Rioting Breaks Out In Egypt
Rioting Breaks Out In Egypt
Submitted by Tyler Durden on 01/25/2011 07:46 -0500
CorruptionMiddle EastRecessionUnemployment
When we reported three days ago that 59 outbound shipments of gold were intercepted at the Egypt airport, we predicted that the country's oligarchs were proactively preparing precisely for what they knew is coming imminently. It has arrived. From Al-Jazeera: "Hundreds of protesters have begun to take to the streets in Cairo, the Egyptian capital, chanting slogans against the police, the interior minister and the government, in scenes that the capital has not seen since the 1970s, Al Jazeera's correspondent reported. Downtown Cairo has come to a standstill, and protesters are now marching towards the headquarters of the ruling National Democracy Party. "It is unprecedented for security forces to let people march like this without trying to stop them," Al Jazeera's Rawya Rageh reported from the site of the protest."
And the government is panicking:
The Egyptian government had earlier warned activists hoping to emulate Tunisian pro-democracy protesters that they face arrest if they go ahead with Tuesday's mass demonstrations, which some have labelled as the "Day of wrath".
The protesters are gathering outside Cairo's largest courthouse, and are marching across downtown Cairo.
The rallies have been promoted online by groups saying they speak for young Egyptians frustrated by the kind of poverty and oppression which triggered the overthrow of Tunisia's president.
Black-clad riot police, backed by armoured vehicles and fire engines, have been deployed in a massive security operation in Cairo, with the biggest concentrations at likely flashpoints, including: the Cairo University campus, the central Tahrir Square and the courthouse where protesters are said to be gathering.
Coinciding with a national holiday in honour of the police, a key force in keeping president Hosni Mubarak in power for 30 years, the outcome in Egypt on Tuesday is seen as a test of whether vibrant Web activism can translate into street action.
Organisers have called for a "day of revolution against torture, poverty, corruption and unemployment".
"Activists said they wanted to use this particular day to highlight the irony of celebrating Egypt's police at a time when police brutality is making headlines," reported Rawya Rageh, Al Jazeera's correspondent in Cairo.
"In fact, the call originated from a Facebook page initially set up to honour a 28-year-old man from Alexandria who activists say was tortured to death by police.
"Witnesses are telling us that there are hundreds on the streets. This is an indication that the protests seem so far to be larger than the usual protests that have taken place here in Egypt over the past few years."
Turns out that not banning the internet (on time) was not such a good idea.
"Our protest on the 25th is the beginning of the end," wrote organisers of a Facebook group with 87,000 followers.
"It is the end of silence, acquiescence and submission to what is happening in our country. It will be the start of a new page in Egypt's history, one of activism and demanding our rights."
Rights watchdog Amnesty International has urged Egypt's authorities "to allow peaceful protests".
Protests in Egypt, the biggest Arab state and a keystone Western ally in the Middle East, tend to be poorly attended and are often quashed swiftly by the police, who prevent marching.
The banned Muslim Brotherhood, seen as having Egypt's biggest grassroots opposition network, has not called on members to take part but said some would join in a personal capacity.
Organisers have called for protesters to not display political or religious affiliations at demonstrations. The Facebook page says: "Today is for all Egyptians."
Commenting on the wave of public unrest in Tunisia, Adli, the interior minister, said talk that the "Tunisian model" could work in other Arab countries was "propaganda" and had been dismissed by politicians as "intellectual immaturity".
"Young people are very excited, and this time there will be much more than any other time," Ahmed Maher, one of the founders of the opposition youth movement said.
"This is going to be a real test of whether online activism in Egypt can translate into real action," Al Jazeera's Rageh reported.
"Anger has been on the rise in Egypt for the past couple of years, but we have seen similar calls fizzle out. The main difference now is that these calls are coming after what happened in Tunisia, which seems to have not only inspired activists, but actually ordinary Egyptians, a dozen of whom we have seen set themselves on fire in copycat self-immolations similar to the one that had sparked the uprising in Tunisia."
Elsewhere, it is not at all surprising that the UNWFR just released a program promoting food subisidies to eliminate the risk of rioting:
Risks of global instability are rising as governments cut subsidies that help the poor cope with surging food and fuel costs to ease budget crunches, the head of the United Nations’ World Food Program said.
“We’re in an era where the world and nations ignore the food issue at their peril,” Josette Sheeran said in an interview yesterday at the agency’s Rome headquarters.
The global recession has eroded government aid that helped people in poorer countries afford bread, cooking oils and other staples. The trend raises the odds of unrest even though prices have improved in many nations from 2007-2009, Sheeran said. During that period, more than 60 food riots occurred worldwide, according to the U.S. State Department.
And so the central planning that brought to us the inflation-driven rioting, which Zero Hedge first predicted in 2011, is about to lead to even more central planning, as governments everywhere jump to provide food subsidies and price caps, as was just announced in Russia overnight.
Below is a video of events transpiring right now in Egypt which is what will soon move out of Africa and into Asia (remember: rice bubble) unless central planning2 promptly becomes the next major paradigm.
Frontrunning: January 25
Frontrunning: January 25
Submitted by Tyler Durden on 01/25/2011 08:19 -0500Ben BernankeConsumer ConfidenceFranceGermanyGross Domestic ProductIndiaInternational Monetary FundKKRMuni BondsNew York Stock ExchangeRobert RubinSwitzerlandTabbTrichetUnited Kingdom
•Who knew: Robert Rubin is a Keynesian - "America must cut its deficit but not in haste" (FT)
•Uncertainty Over Economy Clouds Obama Speech (NYT)
•Stimulus Improves US Outlook, Says IMF (FT)
•Fed Likely to Press On With QE Even as Business Lending Rises (BusinessWeek)
•EFSF first bond issue - 43 Billion Euros of Orders From 500 Investors (Asymptotix, WSJ)
•Madrid Tells Banks to Boost Core Capital (FT), causing Spanish spread weakness
•Japan's central bank keeps lending rate, lifts growth forecast (Xinhua)
•India average inflation during 2010-11 to jump up to 9 per cent (Economic Times)
•KKR Gets Surprise Help in Fundraising From Bernanke, Trichet (BusinessWeek, h/t 5U)
•U.K. Economy Contracts in Fourth Quarter (WSJ)
Monday, January 24, 2011
Intro To The Federal Reserve Bank and Federal Reserve System
Submitted by: Francis Soyer
Intro To The Federal Reserve Bank and Federal Reserve SystemMany investors today, as they learn more about the nature of the Federal Reserve, are asking themselves how the US, the supposed land of the free, permit a non-Government-based cartel to take control of its monetary system? Who controls the Fed? And just how did they attain this unbelievable power to operate with the Government’s approval?
To answer all of these questions, we need to put on our winter coats and step back in time to a New Jersey train platform on a cold wintery night in November 1910…
At first glance, nothing around us would look unusual. The train at the platform was comprised of your standard chair cars which would be converted to sleepers at night. Poorer passengers took the cars closer to the engine, while the more well off sat and slept in cars behind the dining car.
However, one thing was very unusual about this particular train. And that something unusual was a single private train car located at the end of the train.
Unlike the others cars whose interiors were dreary affairs of metal and wood, this car’s interior was filled with rich mahogany, velvet, and polished brass. And unlike the other cars which had regular train porters, this car had private servants who were scurrying about stocking the bar and cigar boxes. Finally, unlike the other railcars whose sides were marked with numbers, this particular car had a single plague reading “Aldrich.”
As in Senator Nelson Aldrich, Republican “whip,” investment associate of JP Morgan, and father in law to John D Rockefeller, Jr.
Aldrich arrived at the train car first, decked out in the finest clothes imaginable and accompanied by several porters carrying his luggage. However, once he arrived, he was soon joined at his private car by six guests.
Each guest arrived separately so as not to imply that they knew each other. Indeed, two of them bumped into each other on the platform, they feigned ignorance of each other’s identity. They only addressed one another by first name both in public and in Aldrich’s private car. In fact, their identities were kept so secret that even Aldrich’s servants didn’t know who the six guests were.
Fortunately for us, G. Edward Griffin, author of The Creature From Jekyll Island has painstakingly proved their identities. As he notes, they were:
1) Nelson Aldrich, Senator of Rhode Island and Republican “whip,” Chairman of the National Monetary Commission business associate of JP Morgan and father-in-law to John D. Rockefeller, Jr.
2) Abraham Andrew, Assistant Secretary of the Treasury.
3) Frank Vanderlip, President of National City Bank of New York, the most powerful US bank at the time, representing William Rockefeller and the international investment house of Kuhn, Loeb, & Co.
4) Henry Davidson, Senior Partner at the JP Morgan Company.
5) Charles Norton, President of JP Morgan’s First National Bank of New York.
6) Benjamin Strong, head of JP Morgan’s Bankers Trust Company.
7) Paul Warburg, partner of Kuhn, Loeb, & Co, a representative of the Rothschild banking dynasty in England and France, and brother to Max Warburg who was head of the Warburg banking consortium in Germany and the Netherlands.
Together, these six men, represented interests that controlled one fourth of the world’s entire wealth. That is not a typo. These individuals represented the
four most powerful groups in the Anglo-American banking world. They were:
From the US From Europe
Rockefellers Rothschilds
Morgans Warburgs
The train took Aldrich’s private car to Georgia where it was unfastened from the rest of the train. The men then boarded a ferry to Jekyll Island: a private vacation resort recently purchased by JP Morgan and several business associates. To maintain secrecy, the resort’s normal staff were put on vacation and all new servants and porters were brought in.
During the next nine days, these seven men (still only using their first names to avoid recognition) hatched out a plan to create the system that would eventually become the Federal Reserve banking system.
The reason for their doing this was simple: competition.
The Nationals Vs. The Non-Nationals
Before the creation of the Federal Reserve banking system, the US’s banking system was divided into two types of banks: national banks and non-national banks.
National banks received their charters from the Federal Government and could issue their own notes, or money. These were the “old money” vanguard of the banking system, the elite banks based in NY and backed by the noble class families mentioned before.
In contrast, non-nationals were private banks that operated without government charters. These were the “upstarts” of the US banking industry, springing up mainly in the south and west.And the nationals were none too pleased about their presence.
The upstarts were not only giving banking a bad name (the industry suffered 1,748 bank failures from 1890 to 1910), but they were also eating into the Old Vanguard’s profits: as early as 1896, non-national banks controlled up to 54% of the US’s savings deposits.
A second, more pressing issue was also on the minds to the Anglo-American banking giants as they journeyed to Jekyll Island: the US monetary system was moving away from debt usage to private capital.
Because there was no centralized system for determining interest rates, banks set their own interest rates. This in turn, kept the money supply relatively tight as there were strict limits on how many loans banks could generate relative to their assets. Because of this, many corporations were seeking funding privately or from operations (cash reserves).
G. Edward Griffin, in The Creature From Jekyll Island, notes that from 1900 to 1910, some 70% of corporate funding was generated internally, rather than taking out loans.
In other words, big business was moving away from dealing with the banks. This was a huge issue for the Anglo-American banking giants as I shall explain.
Let’s say that back in 1900, Joe America makes a deposit of $100 in ABC bank, earning an interest rate of 1%. ABC then turns around and using Joe’s $100 as reserves, lends out as much as $1,000 at an interest rate of 5%.
In essence the bank has just created $900 out of thin air. However, by doing this the bank is now earning $50 in interest (5% on $1,000) while paying out $1 to Joe (1% of $100) thus pocketing $49 in profits.
As you can imagine, this set-up was obscenely profitable for the banks, which is why the Morgans, Rothschilds, et al were so concerned that Corporate America was moving away from borrowing to fund growth.
Moreover, the fractured nature of the banking system (there were no set rates or capital standards) meant that banks had a tendency to go under. Consider that in the early 20th century, banks in general often lent out ten times the amount of money they held in deposits, assuming it unlikely that any large number of customers might decide to cash out at the same time.
Even more insane, more reckless banks typically only had 3% of deposits in actual cash on hand (the rest was often tied up in short-term loans and investments).
This obviously put the bank in a very tenuous position. Suppose Joe decides to withdraw his $100? Or what if Joe wrote a check for $50 to buy some groceries? Well, if the grocery store clerk used the same bank as Joe, there was no problem because no physical cash had to actually leave its vaults.
However, if the Grocer took the check to another bank and cashed it, then $50 in actual physical cash would have to leave Joe’s bank and be transferred to the other bank. Multiply this by a few hundred transactions at a time when most banks only had 3% of reserves in physical cash and you quickly realize why nearly 2,000 banks went under between 1890 and 1910.
A Review And Look At Global Events In The Upcoming Week
Submitted by Tyler Durden on 01/24/2011 06:59 -0500
Bank of EnglandBOEBritish PoundCentral BanksConsumer ConfidenceCPIEuropean Central BankEurozoneGross Domestic ProductHungaryIndiaIsraelMonetary PolicyPresident ObamarecoveryTrade BalanceTrichetUnemploymentUnited KingdomYen
Week in review
Last week, some small downside surprises in US data led to a correction in risky assets. This is not to say that trends in US data demonstrated any sign of a marked deterioration last week but rather that expectations on US data may have risen quite fast and too soon. What is even more interesting, however, is that the EUR traded strong despite equity weakness and despite the fact that the much awaited ECOFIN meeting on Monday/Tuesday did not lead to announcements on policy initiatives to alleviate the crisis. Similarly the visit of China’s President Hu to the US did not lead to any major surprises.
With respect to the EUR/$, markets are starting to focus on the possibility that European leaders may now be more determined to finally agree on more decisive measures to address the debt crisis, even if that decision takes a few more weeks to reach. Moreover, front end Eurozone interest rates shot up following the ECB meeting, after Trichet signalled a shift in focus back to more traditional monetary policy concerns, like growth and inflation. Finally, on Friday, the IFO continued to strengthen to further record highs supporting the EUR upside further. (as of now i.e. this morning the dollar is rallying against the Euro, this will put pressure on U.S. Equities and could be the source of a long awaited pull back 1 to %2)
Week Ahead
The week ahead will have interesting GDP prints out of the UK and the US in store. The market has recently shifted to price in a stronger US recovery and a higher probability for BOE hikes – so both prints will be watched closely and will inform investor decisions. Also worth watching are the German and Eurozone PMIs and if they confirm the signs of ongoing strength by the IFO. Against the strong growth back drop in the Eurozone, political events always the potential to increase uncertainty and the prospect of earlier Irish elections than the previously scheduled March date could be a concern.
The US FOMC is expected to acknowledge the improvement in the macro data but not to change its policy stance. President Obama’s state of the Union address will likely focus on budget consolidation and policy to support employment. Hungary’s and Israel’s central banks are both expected to raise base rates on Monday, and so is India’s on Tuesdsay. The minutes from the recent MPC meeting in the UK should continue to indicate that the MPC will likely see through the volatile nature of the commodity price pressures which have led to higher CPI inflation against the drag that fiscal consolidation may pose on domestic demand ahead. (Francis Soyer is expecting no change in fed direction. If anything the fed will use upcoming non farm payroll numbers which are expected to be horrific with plenty of negative revisions will use this as reason for further easing a possible QE 3)
Monday 24th
German and Eurozone Flash Manufacturing PMI (Jan). German PMI is expected to stay at very high levels of 60.5 very close to the prior reading and consensus. (no one cares)
Hungary Monetary Policy Meeting (Jan): Rates are expected to rise from 5.75% to 6.00%, in line with consensus.
Israel Monetary Policy Meeting (Jan): As core inflation continues to rise, BOI will continue to normalize policy rates by raising rates to 2.25% from 2.0% as consensus anticipates as well.
Tuesday 25th
BOJ Meeting: BOJ Monetary Policy Board is expected to confirm that it is maintaining an accommodative monetary policy stance.
India Monetary Policy Meeting (Jan): Central bank to raise rates by 25bps. (India will follow lockstep Policy with China)
UK GDP (Q4 Prelim): With the recent elevated inflation prints, market expectations have picked up for a BOE hike in the next few months; GBP has also traded strong on the back of this. Growth, however, is likely to be a decisive factor on that front. Market will therefore keep a close watch on the GDP print; consensus expectations of 0.5%.
US Consumer Confidence: Consensus expects small improvement relative to the last print of 52.5 at 54.2 (we have no where to go but up, however as real unnenployment breaches %25 we could see this number take a dive into the low 40's high 30's. From a historical point of view these numbers have been and continue to be abysmal.)
President Obama’s State of the Union Address: Labour markets and the timing of fiscal consolidation will likely the key issues. (all he can really do as of now is speak to long term prospects for economic balance and sanity. He has no real power to make anything happen, his commentary is about as valuable as our dollar, declining and headed to zero. The state of the union address should really be given by Big Ben as spokesman for those who have the real power and authority over U.S. affairs.)
Wednesday 26th
Korea GDP (Q4): We expect Q4 GDP to rise by 0.4% qoq resulting in annual growth of 6.1% for 2010.
UK Minutes of MPC Meeting (Jan). With the recent high headline inflation numbers, the market is focusing on the potential for a policy shift for the UK MPC in the months ahead. Minutes of this last meeting are expected to continue to focus on the volatile nature of commodity prices which have driven inflation higher, the softer trends in core and the impact of fiscal consolidation ahead.
US FOMC Meeting (Jan): The FOMC’s assessment of economic conditions is likely to improve. No changes in policy. (the only improvement is the rise of the S&P etc. as for the real economy, jobs core inflation those things remain in the crapper. Expect the crapper pieces of data to be used for further easing or at least leaving the door open to it in Feds commentary.)
Thursday 27th
Japan Trade Balance (Dec): Exports appear to have remained firm in December, and we are forecasting a reading of +9.6% yoy (+9.2% in November, consensus +9.3%). Export value liekly increased more sharply than import value, and that as a result the trade surplus widened to ¥448.5 billion from ¥161.1 billion in November (consensus ¥465.0bn).
US Durable Goods Orders (Dec): Durable goods orders have likely risen by 1% in December. Consensus anticipates an increase of 1.5%.
US Weekly Claims
Friday 28th
Japanese Labour Market Data (Dec): Employment conditions are improving, but at a slow pace. Expectations for improvements in both the unemployment rate, a lagging economic indicator, to 5.0% in December, better than consensus at 5.1% and from 5.1% in November. The effective ratio of job offers to applicants, a coincident indicator, to 0.58 from 0.57 (same as consensus).
Japanese CPI (Dec): Do not expect any major change in the core-core CPI trend, consensus looking for -0.8% in December (-0.9% in November).
US GDP (Q4 advanced): Consensus expects a 3.5% qoq annualized print (Goldman is at 3%). (These numbers can no longer be trusted at all. They get revised down continually and I will post net numbers (non fabricated) numbers in the articles to come. The long and short of it is that there has been no gain in GDP numbers on the contrary they are negative and substantially so since 2008.)
Submitted by Tyler Durden on 01/24/2011 06:59 -0500
Bank of EnglandBOEBritish PoundCentral BanksConsumer ConfidenceCPIEuropean Central BankEurozoneGross Domestic ProductHungaryIndiaIsraelMonetary PolicyPresident ObamarecoveryTrade BalanceTrichetUnemploymentUnited KingdomYen
Week in review
Last week, some small downside surprises in US data led to a correction in risky assets. This is not to say that trends in US data demonstrated any sign of a marked deterioration last week but rather that expectations on US data may have risen quite fast and too soon. What is even more interesting, however, is that the EUR traded strong despite equity weakness and despite the fact that the much awaited ECOFIN meeting on Monday/Tuesday did not lead to announcements on policy initiatives to alleviate the crisis. Similarly the visit of China’s President Hu to the US did not lead to any major surprises.
With respect to the EUR/$, markets are starting to focus on the possibility that European leaders may now be more determined to finally agree on more decisive measures to address the debt crisis, even if that decision takes a few more weeks to reach. Moreover, front end Eurozone interest rates shot up following the ECB meeting, after Trichet signalled a shift in focus back to more traditional monetary policy concerns, like growth and inflation. Finally, on Friday, the IFO continued to strengthen to further record highs supporting the EUR upside further. (as of now i.e. this morning the dollar is rallying against the Euro, this will put pressure on U.S. Equities and could be the source of a long awaited pull back 1 to %2)
Week Ahead
The week ahead will have interesting GDP prints out of the UK and the US in store. The market has recently shifted to price in a stronger US recovery and a higher probability for BOE hikes – so both prints will be watched closely and will inform investor decisions. Also worth watching are the German and Eurozone PMIs and if they confirm the signs of ongoing strength by the IFO. Against the strong growth back drop in the Eurozone, political events always the potential to increase uncertainty and the prospect of earlier Irish elections than the previously scheduled March date could be a concern.
The US FOMC is expected to acknowledge the improvement in the macro data but not to change its policy stance. President Obama’s state of the Union address will likely focus on budget consolidation and policy to support employment. Hungary’s and Israel’s central banks are both expected to raise base rates on Monday, and so is India’s on Tuesdsay. The minutes from the recent MPC meeting in the UK should continue to indicate that the MPC will likely see through the volatile nature of the commodity price pressures which have led to higher CPI inflation against the drag that fiscal consolidation may pose on domestic demand ahead. (Francis Soyer is expecting no change in fed direction. If anything the fed will use upcoming non farm payroll numbers which are expected to be horrific with plenty of negative revisions will use this as reason for further easing a possible QE 3)
Monday 24th
German and Eurozone Flash Manufacturing PMI (Jan). German PMI is expected to stay at very high levels of 60.5 very close to the prior reading and consensus. (no one cares)
Hungary Monetary Policy Meeting (Jan): Rates are expected to rise from 5.75% to 6.00%, in line with consensus.
Israel Monetary Policy Meeting (Jan): As core inflation continues to rise, BOI will continue to normalize policy rates by raising rates to 2.25% from 2.0% as consensus anticipates as well.
Tuesday 25th
BOJ Meeting: BOJ Monetary Policy Board is expected to confirm that it is maintaining an accommodative monetary policy stance.
India Monetary Policy Meeting (Jan): Central bank to raise rates by 25bps. (India will follow lockstep Policy with China)
UK GDP (Q4 Prelim): With the recent elevated inflation prints, market expectations have picked up for a BOE hike in the next few months; GBP has also traded strong on the back of this. Growth, however, is likely to be a decisive factor on that front. Market will therefore keep a close watch on the GDP print; consensus expectations of 0.5%.
US Consumer Confidence: Consensus expects small improvement relative to the last print of 52.5 at 54.2 (we have no where to go but up, however as real unnenployment breaches %25 we could see this number take a dive into the low 40's high 30's. From a historical point of view these numbers have been and continue to be abysmal.)
President Obama’s State of the Union Address: Labour markets and the timing of fiscal consolidation will likely the key issues. (all he can really do as of now is speak to long term prospects for economic balance and sanity. He has no real power to make anything happen, his commentary is about as valuable as our dollar, declining and headed to zero. The state of the union address should really be given by Big Ben as spokesman for those who have the real power and authority over U.S. affairs.)
Wednesday 26th
Korea GDP (Q4): We expect Q4 GDP to rise by 0.4% qoq resulting in annual growth of 6.1% for 2010.
UK Minutes of MPC Meeting (Jan). With the recent high headline inflation numbers, the market is focusing on the potential for a policy shift for the UK MPC in the months ahead. Minutes of this last meeting are expected to continue to focus on the volatile nature of commodity prices which have driven inflation higher, the softer trends in core and the impact of fiscal consolidation ahead.
US FOMC Meeting (Jan): The FOMC’s assessment of economic conditions is likely to improve. No changes in policy. (the only improvement is the rise of the S&P etc. as for the real economy, jobs core inflation those things remain in the crapper. Expect the crapper pieces of data to be used for further easing or at least leaving the door open to it in Feds commentary.)
Thursday 27th
Japan Trade Balance (Dec): Exports appear to have remained firm in December, and we are forecasting a reading of +9.6% yoy (+9.2% in November, consensus +9.3%). Export value liekly increased more sharply than import value, and that as a result the trade surplus widened to ¥448.5 billion from ¥161.1 billion in November (consensus ¥465.0bn).
US Durable Goods Orders (Dec): Durable goods orders have likely risen by 1% in December. Consensus anticipates an increase of 1.5%.
US Weekly Claims
Friday 28th
Japanese Labour Market Data (Dec): Employment conditions are improving, but at a slow pace. Expectations for improvements in both the unemployment rate, a lagging economic indicator, to 5.0% in December, better than consensus at 5.1% and from 5.1% in November. The effective ratio of job offers to applicants, a coincident indicator, to 0.58 from 0.57 (same as consensus).
Japanese CPI (Dec): Do not expect any major change in the core-core CPI trend, consensus looking for -0.8% in December (-0.9% in November).
US GDP (Q4 advanced): Consensus expects a 3.5% qoq annualized print (Goldman is at 3%). (These numbers can no longer be trusted at all. They get revised down continually and I will post net numbers (non fabricated) numbers in the articles to come. The long and short of it is that there has been no gain in GDP numbers on the contrary they are negative and substantially so since 2008.)
Origin of the Federal Reserve and why the system is broken
Seven Men, Nine Days, One New Monetary Cartel
Submitted by Phoenix Capital Research on 01/23/2011 17:15 -0500
Thus, on a wintery day in November 1910, seven men retreated to JP Morgan’s private Jekyll Island resort to plan a system of banking that would address all of these problems, while simultaneously expanding their power and influence over the US banking system.
G. Edward Griffin, in The Creature From Jekyll Island, puts their primary goals as the following:
1) To stop the growing influence of smaller banks and increase the Anglo-American banking giants’ grip on the US financial system
2) To shift US banking to a more “loan heavy” structure thereby expanding the monetary base more dramatically (making money more “elastic”)
3) To pool all national banks reserves and set nation-wide standards for loans to reserves ratios, thereby minimizing the risks of bank runs and failure
4) To establish a means of shifting the losses from bank failures away from the banks and onto the public
And finally…
5) To develop a PR campaign that would result in the US populace accepting the implementation of a full-scale private banking cartel
I do not have time to detail the precise proceedings of the meetings these men held over their nine day stay at Jekyll Island, nor is there room to explain precisely how they infiltrated the US political system and managed to introduce a banking plan that was written by Frank Vanderlip and Benjamin Strong (who represented the Rockefeller and Morgan families, respectively) as if it were a bill produced by members of Congress.
However, a brief overview is as follows:
Initially Senator Aldrich proposed something quite similar to the Bank of England, in which there would be one single large bank. However, the Rockefeller interests (who had ample experience with the US populace’s reaction to monopolies) thought this would be too much for Americans to stomach. Instead, they proposed the creation of 12 regional banks largely to maintain the illusion that the Fed would be a union, not a single central bank.
This is where the expertise of Paul Warburg, who had the most experience with European-style central banking cartels, came in. Warburg proposed creating a banking structure that would be more conservative at first so that the general public would be more willing to accept it, then stripping away the conservative props once the system was in place.
For instance, Warburg proposed the Federal Reserve Board of Governors, a group of semi-elected officials who would meet and decide Fed policy on interest rates and the like. This created the illusion that the Fed would resemble a normal banking corporation with a board of directors. However, in point of fact the Fed Board was a means to keep all the key decision making centralized at one bank in Washington DC (close to New York where the Bank Oligarchs were headquartered).
Warburg also came up with the name “Federal Reserve” which evoked the sense that the organization was aligned with the Government and was secure. His view was that the words “central” and “bank” must be avoided at all costs.
However, the most daring and provocative of all Warburg’s proposals was that the Fed would take over the issuance of ALL money in the US. For the first time in US history, money would be produced by privately held banks, NOT the US Government.
From then on, US Federal Reserve notes would be legal tender for settling all debts public or private. Thus, if someone was owed money and refused to accept Federal Reserve Notes (Dollars) as payment, he or she could go to jail. The Dollar even says this in the top left corner of its face.
Obviously, getting the public to swallow this proposal wasn’t going to be easy. The bankers put together a special committee to investigate the plan. However, the Pujo Committee was largely a farce in which various members of Congress (all bought out by the banks) questioned the bankers on the more innocuous portions of the proposal.
As part of their PR campaign, the bankers also donated some $5 million to Harvard, Princeton, and the University of Chicago (the last of which was founded using contributions from John D Rockefeller) all of which began turning out studies and academic papers promoting the virtues of the proposed system.
However, the bill remained a tough pill to swallow especially given Senator Aldrich’s close affiliation with Wall Street (remember, he was an associate of JP Morgan). The “Aldrich Bill” as it was known never even made it to vote in the Senate.
Splitting the Vote… and Backing All Three Candidates
Bruised, but not defeated, the bankers knew that in order to get their plan put into action they needed support from the very TOP of the US Government: the President of the United States. Consequently, they engaged in one of the most sophisticated lobbying efforts in history, backing all THREE candidates (Taft, Wilson, and Roosevelt) in the 1912 election.
In fact, it was JP Morgan’s associates who pushed Roosevelt to run in the first place (giving him the monetary backing to do so) in order to pull voters from Taft who was publicly recognized as pro-Wall Street and so would not have been as effective at getting the bankers plan implemented without public outcry.
Thus the 1912 election consisted of three pro-Wall Street candidates, though only one of them (Taft) was publicly recognized as such. Roosevelt and Wilson were both backed by private banking money, though their backers urged them to sound out an “anti Wall Street” bank campaign (which they did with great success).
The results worked as hoped. Roosevelt served as the “anti-bank” foil to Taft’s pro-Wall Street/ Big Business status, splitting the vote and allowing Wilson to win with just 42% of votes (the other 58% were split between Taft and Roosevelt). The bankers now had a supporter in the White House, most importantly, one who was thought by the public to be against the banks and their “Aldrich Plan” plan as it had come to be known.
Officially Backed and Bailed Out By Uncle Sam
Ready to make a second attempt at implementing their plan, the bankers enlisted the Democratic Chairman of the House Banking and Currency Committee, Carter Glass, to draft a new banking bill. Glass, who by his own admission knew nothing about banking, was merely a front, a figurehead who denounced the Aldrich Plan, pointed out its biggest flaws to the public, and the proposed an identical plan with the very same flaws included.
The Glass-Owen bill (it was co-sponsored by Senator Robert Owen) moved along towards becoming law much more quickly than the Aldrich Plan, largely due to the fact that the Wall Street banks engaged in a massive PR campaign in whch they publicly decried it as wrong and evil and against their interests (despite the fact they themselves wrote it).
The final coup was accomplished when William Jennings Bryan, the most powerful Democrat in Congress, met with Glass and said he would pass the bill provided that the money issued by the Federal Reserve was backed by the US Government and that the Governor of the Federal Reserve would be appointed by the President and approved by the Senate: two clauses that the Wall Street bankers wanted but had intentionally left out of the draft so that they could be used as “bargaining chips” to make it appear as though compromises were made.
G. Edward Griffin, repeats a quote Fed mastermind Paul Warburg regarding their success:
While technically and legally the Federal Reserve note is an obligation of the United States Government, in reality it is an obligation, the sole responsibility for which rests on the reserve banks… The Government could only be called to take them up after the reserve banks failed.
Here lies the ultimate triumph of the cartel, not only would the Federal Reserve issue money (collecting interest on the loans since the money was technically being leant to the US), but should the system ever go bust, the US Government would be required to step in and bailout the Federal Reserve’s losses.
It had taken three years and countless strategies and deceptions, but on December 23 1913 the Federal Reserve Act was passed into law. From then on, the US monetary system would be controlled by private interests in a government-backed cartel.
The above account is a very condensed version of the history of the Federal Reserve’s creation. The actual story is even more rife with twists and power struggles. For those of you who are interested in knowing more about it, I highly recommend reading The Creature From Jekyll Island by G. Edward Griffin. It’s a stunning book and full of revelations that range from shocking to outright infuriating.
Best Regards,
Graham Summers
Submitted by Phoenix Capital Research on 01/23/2011 17:15 -0500
Thus, on a wintery day in November 1910, seven men retreated to JP Morgan’s private Jekyll Island resort to plan a system of banking that would address all of these problems, while simultaneously expanding their power and influence over the US banking system.
G. Edward Griffin, in The Creature From Jekyll Island, puts their primary goals as the following:
1) To stop the growing influence of smaller banks and increase the Anglo-American banking giants’ grip on the US financial system
2) To shift US banking to a more “loan heavy” structure thereby expanding the monetary base more dramatically (making money more “elastic”)
3) To pool all national banks reserves and set nation-wide standards for loans to reserves ratios, thereby minimizing the risks of bank runs and failure
4) To establish a means of shifting the losses from bank failures away from the banks and onto the public
And finally…
5) To develop a PR campaign that would result in the US populace accepting the implementation of a full-scale private banking cartel
I do not have time to detail the precise proceedings of the meetings these men held over their nine day stay at Jekyll Island, nor is there room to explain precisely how they infiltrated the US political system and managed to introduce a banking plan that was written by Frank Vanderlip and Benjamin Strong (who represented the Rockefeller and Morgan families, respectively) as if it were a bill produced by members of Congress.
However, a brief overview is as follows:
Initially Senator Aldrich proposed something quite similar to the Bank of England, in which there would be one single large bank. However, the Rockefeller interests (who had ample experience with the US populace’s reaction to monopolies) thought this would be too much for Americans to stomach. Instead, they proposed the creation of 12 regional banks largely to maintain the illusion that the Fed would be a union, not a single central bank.
This is where the expertise of Paul Warburg, who had the most experience with European-style central banking cartels, came in. Warburg proposed creating a banking structure that would be more conservative at first so that the general public would be more willing to accept it, then stripping away the conservative props once the system was in place.
For instance, Warburg proposed the Federal Reserve Board of Governors, a group of semi-elected officials who would meet and decide Fed policy on interest rates and the like. This created the illusion that the Fed would resemble a normal banking corporation with a board of directors. However, in point of fact the Fed Board was a means to keep all the key decision making centralized at one bank in Washington DC (close to New York where the Bank Oligarchs were headquartered).
Warburg also came up with the name “Federal Reserve” which evoked the sense that the organization was aligned with the Government and was secure. His view was that the words “central” and “bank” must be avoided at all costs.
However, the most daring and provocative of all Warburg’s proposals was that the Fed would take over the issuance of ALL money in the US. For the first time in US history, money would be produced by privately held banks, NOT the US Government.
From then on, US Federal Reserve notes would be legal tender for settling all debts public or private. Thus, if someone was owed money and refused to accept Federal Reserve Notes (Dollars) as payment, he or she could go to jail. The Dollar even says this in the top left corner of its face.
Obviously, getting the public to swallow this proposal wasn’t going to be easy. The bankers put together a special committee to investigate the plan. However, the Pujo Committee was largely a farce in which various members of Congress (all bought out by the banks) questioned the bankers on the more innocuous portions of the proposal.
As part of their PR campaign, the bankers also donated some $5 million to Harvard, Princeton, and the University of Chicago (the last of which was founded using contributions from John D Rockefeller) all of which began turning out studies and academic papers promoting the virtues of the proposed system.
However, the bill remained a tough pill to swallow especially given Senator Aldrich’s close affiliation with Wall Street (remember, he was an associate of JP Morgan). The “Aldrich Bill” as it was known never even made it to vote in the Senate.
Splitting the Vote… and Backing All Three Candidates
Bruised, but not defeated, the bankers knew that in order to get their plan put into action they needed support from the very TOP of the US Government: the President of the United States. Consequently, they engaged in one of the most sophisticated lobbying efforts in history, backing all THREE candidates (Taft, Wilson, and Roosevelt) in the 1912 election.
In fact, it was JP Morgan’s associates who pushed Roosevelt to run in the first place (giving him the monetary backing to do so) in order to pull voters from Taft who was publicly recognized as pro-Wall Street and so would not have been as effective at getting the bankers plan implemented without public outcry.
Thus the 1912 election consisted of three pro-Wall Street candidates, though only one of them (Taft) was publicly recognized as such. Roosevelt and Wilson were both backed by private banking money, though their backers urged them to sound out an “anti Wall Street” bank campaign (which they did with great success).
The results worked as hoped. Roosevelt served as the “anti-bank” foil to Taft’s pro-Wall Street/ Big Business status, splitting the vote and allowing Wilson to win with just 42% of votes (the other 58% were split between Taft and Roosevelt). The bankers now had a supporter in the White House, most importantly, one who was thought by the public to be against the banks and their “Aldrich Plan” plan as it had come to be known.
Officially Backed and Bailed Out By Uncle Sam
Ready to make a second attempt at implementing their plan, the bankers enlisted the Democratic Chairman of the House Banking and Currency Committee, Carter Glass, to draft a new banking bill. Glass, who by his own admission knew nothing about banking, was merely a front, a figurehead who denounced the Aldrich Plan, pointed out its biggest flaws to the public, and the proposed an identical plan with the very same flaws included.
The Glass-Owen bill (it was co-sponsored by Senator Robert Owen) moved along towards becoming law much more quickly than the Aldrich Plan, largely due to the fact that the Wall Street banks engaged in a massive PR campaign in whch they publicly decried it as wrong and evil and against their interests (despite the fact they themselves wrote it).
The final coup was accomplished when William Jennings Bryan, the most powerful Democrat in Congress, met with Glass and said he would pass the bill provided that the money issued by the Federal Reserve was backed by the US Government and that the Governor of the Federal Reserve would be appointed by the President and approved by the Senate: two clauses that the Wall Street bankers wanted but had intentionally left out of the draft so that they could be used as “bargaining chips” to make it appear as though compromises were made.
G. Edward Griffin, repeats a quote Fed mastermind Paul Warburg regarding their success:
While technically and legally the Federal Reserve note is an obligation of the United States Government, in reality it is an obligation, the sole responsibility for which rests on the reserve banks… The Government could only be called to take them up after the reserve banks failed.
Here lies the ultimate triumph of the cartel, not only would the Federal Reserve issue money (collecting interest on the loans since the money was technically being leant to the US), but should the system ever go bust, the US Government would be required to step in and bailout the Federal Reserve’s losses.
It had taken three years and countless strategies and deceptions, but on December 23 1913 the Federal Reserve Act was passed into law. From then on, the US monetary system would be controlled by private interests in a government-backed cartel.
The above account is a very condensed version of the history of the Federal Reserve’s creation. The actual story is even more rife with twists and power struggles. For those of you who are interested in knowing more about it, I highly recommend reading The Creature From Jekyll Island by G. Edward Griffin. It’s a stunning book and full of revelations that range from shocking to outright infuriating.
Best Regards,
Graham Summers
Friday, January 21, 2011
Surprise! Surprise! BAC Posts an abysmal Quarter
1/21/11
Surprise! Surprise! BAC Posts an abysmal Quarter
This morning BAC posted fourth (and highly sugar coated) earnings of .04 cents per share on expectations of .14 cents per share (NOT INCLUDING) the write downs for their earlier settlements with Fannie and Freddie Mac which brings a real number of (-.16) cents per share. And of course Brian Monyhan would have us believe that the worst is behind BAC in reference to the mosquito bite settlement mentioned above with Six other government agencies waiting in the wings with their settlement demands, PIMCO suing for ~$57 billion, the Federal Reserve Bank of New York and of course class action lawsuits for fraud and other federal offense type crimes in a couple dozen states. The real risk to the balance sheet being if the DOJ can grow a pair and actually use the “book” and throw it at them, how many of them will serve time? My guess is that if the above were to happen, probably the entire senior management team and for the number of charges they would probably never see day light again for the rest of their natural lives. This is all regardless of Julian Assange’s magic trick supposadely waiting in the wings. From what I can gather Julian and his stalling he is also in need of growing a pair…
Today expect every main stream media outlet CNBC, FOX, Bloomberg you name it to play down all of the above Moral and Morale hazards to the outer most extremes that all is well and nothing to see here to pull in as many retail suckers as possible so major holders listed below can dump their shares as quietly and quickly as possible.
Thomas K. Montag is president, Global Banking and Markets at Bank of America Merrill Lynch. He is based in New York and is a member of the bank’s executive management team. The Global Banking and Global Markets businesses focus on corporations, institutional investors, financial institutions and government entities. The businesses provide innovative services in M&A, equity and debt capital raising, lending, trading, risk management, research, and liquidity and payments management. Bank of America Merrill Lynch serves clients in more than 150 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and nearly 96 percent of the Fortune Global 500.
Before that, Montag was with Goldman Sachs Group, Inc., (Wow, what are the chances of that? what a small world…) where he was co-head of the global securities business and a member of the company’s Management Committee and Equities/FICC Executive Committee.
During his 22 years with Goldman Sachs, Montag held a number of key executive roles. He was co-president of the firm's Japanese operations and co-head of Asian FICC and Equities, before becoming co-head of the global securities business. Earlier in his career, Montag ran the firm’s global derivatives business. He was named a partner at Goldman Sachs in 1994 and managing director in 1996. He began his career with management positions at the First National Bank of Chicago.
Insider Transactions Reported 4Q 2010
Thursday, January 20, 2011
David Rockeffeller persona non grata in Chille
Well, I guess when you are a self serving type, conniving, lying, cheating and have an mo of fuck everybody, and a moral compass so fucked up its a wonder he can find his way to the bathroom in the morning... I suppose it is no wonder that at some point people begin to wake up to who you are and what you stand for and it comes back to bite you in the ass.
Boehner, McConnell skipping state dinner with Chinese leader
Boehner, McConnell skipping state dinner with Chinese leader
- 01/19/11 01:57 PM ET
Three top congressional leaders are skipping a state dinner for Chinese President Hu Jintao in what may be perceived by China as a snub.
House Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) all said "thanks, but no thanks" to White House invitations for the dinner.
House Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) all said "thanks, but no thanks" to White House invitations for the dinner.
Former Rep. Grayson blames Palin for Arizona shooting
Former Rep. Alan Grayson (D-Fla.) blamed Sarah Palin for the Arizona shooting that severely injured Rep. Gabrielle Giffords (D-Ariz.) in an email Wednesday.
Rep. Grayson, who was one of the more fiery House Democrats until he lost reelection in 2010, said in an email to supporters today that former Governor Sarah Palin (R-Alaska) had provoked the shooting that resulted in six deaths and thirteen wounded including Rep. Giffords who suffered a gunshot to the head, the Orlando Sentinel reported.
"As I observed on MSNBC last week, there has been a stream of violence and threats of violence by the right wing against Democrats," Grayson wrote in the email. "Gabby warned against it, and then became a terrible victim of it. Palin has instigated it, and then tried to pretend that it doesn’t exist,” he wrote."
Since the shooting earlier this month, Palin has received criticism for a map posted on her political action committee's website that placed crosshairs over roughly twenty congressional districts that Republicans should try and defeat in the 2010 election. Giffords's was one of the districts.
Grayson is no stranger to provocative statements. Last summer during the healthcare reform debates Grayson said that the alternative to the Obama administration's healthcare plan was to die quickly if you get sick.
"If you get sick, America, the Republican health care plan is this: Die quickly."
Rep. Grayson, who was one of the more fiery House Democrats until he lost reelection in 2010, said in an email to supporters today that former Governor Sarah Palin (R-Alaska) had provoked the shooting that resulted in six deaths and thirteen wounded including Rep. Giffords who suffered a gunshot to the head, the Orlando Sentinel reported.
"As I observed on MSNBC last week, there has been a stream of violence and threats of violence by the right wing against Democrats," Grayson wrote in the email. "Gabby warned against it, and then became a terrible victim of it. Palin has instigated it, and then tried to pretend that it doesn’t exist,” he wrote."
Since the shooting earlier this month, Palin has received criticism for a map posted on her political action committee's website that placed crosshairs over roughly twenty congressional districts that Republicans should try and defeat in the 2010 election. Giffords's was one of the districts.
Grayson is no stranger to provocative statements. Last summer during the healthcare reform debates Grayson said that the alternative to the Obama administration's healthcare plan was to die quickly if you get sick.
"If you get sick, America, the Republican health care plan is this: Die quickly."
House repeals healthcare law
House repeals healthcare law
- 01/19/11 05:54 PM ET
The House voted on Wednesday to repeal the sweeping healthcare law enacted last year, as Republicans made good on a central campaign pledge and laid down the first major policy marker of their new majority.
The party-line vote was 245-189, as three Democrats joined all 242 Republicans in supporting repeal.
Speaker John Boehner (R-Ohio) said the healthcare law on the books would increase spending, raise taxes and eliminate jobs.
“Repeal means paving the way for better solutions that will lower the costs without destroying jobs or bankrupting our government,” Boehner said in remarks on the floor before the vote.
“Let’s stop payment on this check before it can destroy more jobs or put us into a deeper hole.”
The vote to roll back the president’s signature domestic achievement of the 111th Congress just 10 months after its passage underscores the deep divisions that still surround the new law. But whether House action will signal the beginning of a rapid dismantling of the healthcare overhaul or serve merely as a historical footnote remains to be seen.
Democratic leaders in the Senate have vowed to shelve the repeal bill, and President Obama has said he would veto repeal if it ever reached his desk.
With those threats in mind, GOP leaders dared the Senate to take up the measure, and they promised to fight the healthcare law in other ways if repeal failed.
“The American people deserve to see a vote in the Senate, and it ought not to be a place where legislation goes into a dead end,” House Majority Leader Eric Cantor (R-Va.) said.
Julius Baer Whistleblower Who Was Supposed To Hand Over To Wikileaks List Of 2,000 Tax Evaders, Arrested In Switzerland
Julius Baer Whistleblower Who Was Supposed To Hand Over To Wikileaks List Of 2,000 Tax Evaders, Arrested In Switzerland
Headlines from Sky News for now. Swiss police arrest ex-banker Rudolf Elmer on new charges relating to handover of bank client data to WikiLeaks. Just justice being served.
From Reuters:
From Reuters:
Swiss police on Wednesday arrested former banker Rudolf Elmer on fresh charges of breaching Swiss bank secrecy law for giving data to WikiLeaks, hours after he was found guilty of another secrecy offense.
"The state prosecutor's office is checking to see whether Rudolf Elmer has violated Swiss banking law by handing the CD over to WikiLeaks," the Zurich cantonal (state) police and state prosecutor said in a joint statement.
Earlier on Wednesday, a court found Elmer guilty of breaching banking secrecy for publicising private client data. He was also found guilty of threatening an employee at his former firm Julius Baer.
Elmer, who helped bring WikiLeaks to prominence three years ago when he used it to publish secret client details, on Monday handed over new data to the website, which has outraged U.S. authorities by releasing thousands of confidential State Department cables.
Wednesday, January 19, 2011
Bill Fleckenstein: The Race To the Bottom Will Be Won By the Dollar
Bill Fleckenstein: The Race To the Bottom Will Be Won By the Dollar
"This printing money is going to lead to huge trouble. It’s going to lead to higher interest rates. It’s going to lead to more inflation and at some point there is going to be a train wreck in the currency and the bond market."Market commentator and money manager Bill Fleckenstein sat down for a recent interview with ChrisMartenson.com and opened fire with both barrels on the Fed and the monetary policy it's pursuing. He and Chris discuss the factors that enabled Bill to be one of the first to accurately identify and warn of the housing and credit bubbles - and how history is now repeating itself via the profligate printing of US dollars. The interview covers a wide range of topics meaningful to the investor trying to make sense of where things are headed from here - including central banking culture, bubble psychology, high-frequency trading, inflation/deflation, and the true relative value of the dollar vs the Euro.
Click the play button below to listen to Chris' interview with Bill Fleckenstein:
In this podcast, Bill sheds light on why:
- The culture of the Fed reinforces a belief in its infallibility. That blinds it to the fact that its interventions cause market players to adopt irrational behavior leading to misallocations of capital that eventually need to be corrected by the system (e.g., busts).
- Correlation between asset classes is the highest it's been in 60 years. This is a result of the Fed flooding the market with liquidity. It makes it very hard for investors to be anything besides speculators.
- The SEC has been asleep at the switch for the past 15 years, leaving the system vulnerable to exploitation - if which HFT programs are just the latest example.
- A funding crisis looks inevitable: at some point the bond market or the currency market will revolt, resulting in a weak dollar and increasing bond rates - despite whatever the Fed wants
- It's perverse for the US to be rewarded for using a printing press indiscriminately without making any fiscal changes, while Europe is painfully adopting austerity and yet gets penalized.
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