“Work Harder to Earn Less”

By DIANA JOHNSTONE | CounterPunch | October 21, 2010

The French are at it again – out on strike, blocking transport, raising hell in the streets, and all that merely because the government wants to raise the retirement age from 60 to 62.  They must be crazy.
That, I suppose, is the way the current mass movement in France is seen – or at least shown – in much of the world, and above all in the Anglo-Saxon world.
Perhaps the first thing that needs to be said about the current mass strikes in France is that they are not really about “raising the retirement age from 60 to 62”. This is rather like describing the capitalist free market as a sort of lemonade stand. A propaganda simplification of very complex issues.
It allows the commentators to go crashing through open doors.  After all, they observe sagely, people in other countries work until 65 or beyond, so why should the French balk at 62? The population is aging, and if the retirement age isn’t raised, the pension system will go broke paying out pensions to so many ancients.
However, the current protest movement is not about “raising the retirement age from 60 to 62”. It is about much more.
For one thing, this movement is an expression of exasperation with the government of Nicolas Sarkozy, which blatantly favors the super-rich over the majority of working people in this country.  He was elected on the slogan, “Work more to earn more”, and the reality turns out to be work harder to earn less.  The Labor Minister who introduced the reform, Eric Woerth, got a job for his wife on the office staff of the richest woman in France, Liliane Bettencourt, heir to the Oreal cosmetics giant, at the same time that, as budget minister, he was overlooking her massive tax evasions. While tax benefits for the rich help empty the public coffers, this government is doing what it can to tear down the whole social security system that emerged after World War II on the pretext that “we can’t afford it”.
The retirement issue is far more complex than “the age of retirement”.  The legal age of retirement means the age at which one may retire.  But the pension depends on the number of years worked, or to be more precise, on the number of cotisations (payments) into the joint pension scheme. On the grounds of “saving the system from bankruptcy”, the government is gradually raising the number of years of cotisations from 40 to 43 years, with indications that this will be stretched out further in the future.
As education is prolonged, and employment begins later, to get a full pension most people will have to work until 65 or 67.  A “full pension” comes to about 40 per cent of wages at the time of retirement.
But even so, that may not be possible.  Full time jobs are harder and harder to get, and employers do not necessarily want to retain older employees.  Or the enterprise goes out of business and the 58-year old employee finds himself permanently out of work.  It is becoming harder and harder to work full-time in a salaried job for over 40 years, however much one may want to.  Thus in practice, the Sarkozy-Woerth reform simply means reducing pensions.
That, in fact, is what the European Union has recommended to all member states as an economy measure, intended, as with most current reforms, to reduce social costs in the name of “competitivity” – meaning competition to attract investment capital.
Less qualified workers, who instead of pursuing studies may have entered the work force young, say at age eighteen, will have subscribed to the scheme for forty-two years at age 60 if indeed they manage to be employed all that time. Statistics show that their life expectancy is relatively short, so they need to leave early in order to enjoy any retirement at all.
The French system is based on solidarity between generations, in that the cotisations of  today’s workers go to pay today’s retired people’s pensions.  The government has subtly tried to pit one generation against another, by claiming that it is necessary to protect the future of today’s youth, who are paying for the “baby boom” pensioners. It is therefore extremely significant that this week, high school and university students massively began to enter the protest strike movement.  This solidarity between generations is a major blow to the government.
The youth are even much more radical than the older trade unionists.  They are very aware of the increasing difficulty of building a career.  The trend is for qualified personnel to enter the work force later and later, having spent years getting an education.   With the difficulty of finding a stable, full-time job, many depend on their parents until age 30.  It is simple arithmetic to see that in this case, there will be no full retirement until after age 70.


Productivity and De-industrialization
As has become standard practice, the authors of the neo-liberal reforms present them not as a choice but as a necessity.  There is no alternative.  We must compete on the global market.  Do it our way or we go broke.  And this reform was essentially dictated by the European Union, in a 2003 report, concluding that making people work longer was necessary to cut pension costs.
These dictates prevent any discussion of the two basic factors underlying the pension problem: productivity and de-industrialization.
Jean-Luc Mélenchon, the former Socialist Party man who heads the relatively new Left Party, is about the only political leader to point out that even if there are fewer workers to contribute to pension schemes, the difference can be made up by the rise in productivity.  Indeed, French worker productivity is among the very highest in the world (higher than Germany, for example).  Moreover, although France has the second longest life expectancy in Europe, it also has the highest birth rate.  And even if jobholders are fewer, because of unemployment, the wealth they produce should be adequate to maintain pension levels.
Aha, but here’s the catch:  for decades, as productivity goes up, wages stagnate.  The profits from increased productivity are siphoned off into the financial sector.  The bloating of the financial sector and the stagnation of purchasing power has led to the financial crisis – and the government has preserved the imbalance by bailing out the profligate financiers.
So logically, preserving the pension system basically calls for raising wages to account for higher productivity – a very major policy change.
But there is another critical problem linked to the pension issue: de-industrialization.  In order to maintain the high profits drained by the financial sector, and avoid paying higher wages, one industry after another has moved its production to cheap labor countries.  Profitable enterprises shut down as capital goes looking for even higher profit.
Is this merely the inevitable result of the rise of new industrial powers in Asia?  Is a lowering of living standards in the West inevitable due to their rise in the East?
Perhaps.  However, if shifting industrial production to China ends up lowering purchasing power in the West, then Chinese exports will suffer. China itself is taking the first steps toward strengthening its own domestic market.  “Export-led growth” cannot be a strategy for everyone.  World prosperity actually depends on strengthening both domestic production and domestic markets.  But this requires the sort of deliberate industrial policy which is banned by the bureaucracies of globalization: the World Trade Organization and the European Union.  They operate on the dogmas of “comparative advantage” and “free competition”… The world economy is being treated as a big game, where following the “rules of the free market” are more important than the environment or the basic vital necessities of human beings.
Only the financiers can win this game.  And if they lose, well, they just get more chips for another game from servile governments.
Impasse?
Where will it all end?
It should end in something like a democratic revolution: a complete overhaul of economic policy.  But there are very strong reasons why this will not happen.
For one thing, there is no political leadership in France ready and able to lead a truly radical movement.  Mélenchon comes the closest, but his party is new and its base is still narrow.  The radical left is hamstrung by its chronic sectarianism.  And there is great confusion among people revolting without clear programs and leaders.
Labor leaders are well aware that employees lose a day’s pay for every day they go on strike, and they are in fact always anxious to find ways to end a strike.  Only the students do not suffer from that restraint. The trade unionists and Socialist Party leaders are demanding nothing more drastic than that the government open negotiations about details of the reform.  If Sarkozy weren’t so stubborn, this is a concession the government could make which might restore calm without changing very much.
It would take the miraculous emergence of new leaders to carry the movement forward.
But even if this should happen, there is a more formidable obstacle to basic change: the European Union.  The EU, built on popular dreams of peaceful and prosperous united Europe, has turned into a mechanism of economic and social control on behalf of capital, and especially of financial capital.  Moreover, it is linked to a powerful military alliance, NATO.
If left to its own devices, France might experiment in a more socially just economic system.  But the EU is there precisely to prevent such experiments.


Anglo-Saxon Attitudes
On October 19, the French international TV channel France 24 ran a discussion of the strikes between four non-French observers.  The Portuguese woman and the Indian man seemed to be trying, with moderate success, to understand what was going on.  In contrast, the two Anglo-Americans (the Paris correspondent of Time magazine and Stephen Clarke, author of 1000 Years of Annoying the French) amused themselves demonstrating self-satisfied inability to understand the country they write about for a living.
Their quick and easy explanation: “The French are always going on strike for fun because they enjoy it.”
A little later in the program the moderator showed a brief interview with a lycée student who offered serious comments on pensions issue.  Did that give pause to the Anglo-Saxons?
The response was instantaneous.  How sad to see an 18-year-old thinking about pensions when he should be thinking about girls!
So whether they do it for fun, or whether they do it instead of having fun, the French are absurd to Anglo-Americans accustomed to telling the whole world what it should do.


Diana Johnstone is the author of Fools Crusade: Yugoslavia, NATO and Western Delusions.Write her for the French version of this article, or to comment, at diana.josto@yahoo.fr

Google is leading as always

My humble suggestion is to take the lesson and expatriate your wallet (legally, of course) before it's too late:

Google Pays 2.4% Corporate Tax Rate; $60 Billion Lost to Tax Loopholes

Via: Bloomberg: Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax 

Denninger: Tea Party, My Ass

From Max Keiser:
Stacy Summary: Excellent appearance from Karl Denninger on Dylan Ratigan’s show. (Get ready for the Koch-bots)!

• Tea Party Founder Blasts Palin, Gingrich & ‘Douchebag’ Tea Party Groups
• To the Tea Party: Go Screw Yourself
• Civil War? Tea Party Founder Calls Sarah Palin And Newt Gingrich A Joke 
• More Tea Party Hilarity
• America's Tea Party Phenomenon by Stephen Lendman

As Denninger points out, these groups attaching themselves to the Tea Party have made it all about guns, gays, God. And you can see that in action in the demagogues like Joe Miller and Christine O’Donnell, who publicly claim they are all about defending the Constitution. But, clearly, for them, ‘Constitution’ is a codeword for ‘bible,’ for between Joe Miller violating the First Amendment in arresting a journalist and even worse, having active duty military perform those arrests in a political context; and then this from Christine O’Donnell, who claims to be a constitutional expert and yet, as we see in this compilation from Anderson Cooper, she knows embarrassingly little. Neither talks about “rampant theft” of taxpayers’ dollars going to bailout private oligarchs. Nor do their supporters seem to care.


The demagogues being selected under the banner of Tea Party clearly have little concern with, as Denninger puts it, “the corruption of American Politics and the blatant and outrageous theft from all Americans that has resulted.”


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Jim Willie: The Greek Dollar Swap Window

Must read of the day (my emphasis): The Greek Dollar Swap Window
by Jim Willie CB  
 October 20, 2010
home: Golden Jackass website  subscribe: Hat Trick Letter

Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. 


An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.


The Chinese are clever people. Their leaders play a good game of chess in the global scramble for commodity supply and financial dominance. Their patient strategy has tied the arms and legs of the USGovt, using their own debt securities as the binding rope. The accumulate almost reached a staggering $1000 billion, the ugly fruit of the Low-Cost Solution to invest in China from a decade ago. While much attention has come to saber rattling over currency manipulation and tiny 25 basis point interest rate hikes, even battles over rare earth metals, something has been happening in Europe of importance that involve a Chinese back door to dump USTreasurys. To be sure, the USGovt deficits and monetary policy have invited a selloff in the USDollar. In the latter months of 2009 and early months of 2010, the Jackass wrote frequently about the absurd notion of an Exit Strategy from 0% and Quantitative Easing. The USFed lost heavy credibility and looked just plain obtuse and braindead. The Japanese ZIRP and QE twin diseases were not the monogrammed cufflinks the USFed would choose for sartorial splendor. My forecast was for no Exit from 0%, but rather an embrace of QE2, the exact opposite. We have it. Only the details remain on the QE2 initiative, including lapel pins to match the cufflinks for Bernanke. But the lapel pins are pure gold and silver, in complementary style. Bernanke looks scared, haggard, and a little desperate, like a captain on a ship listing to port and taking on significant water in the lower chambers. At least the water is at zero cost.


The Jackass forecast of QE2 was correct and quite easy, since fundamentals drove the call, not wishful thinking or the errant but popular notion that time heals all financial wounds. Not this time, since almost no effort to reform or debt restructure have occurred. The Financial Regulation Bill handed the USFed more power, not less, another correct Jackass forecast. That too was an easy call, since the banker lobby would obviously write the legislation. What the people start, the bankers finish, as the frustration mounts. The Exit Strategy was shown to be a ruse, pure hope laced with wishful thinking and outright deception. My expectation of a Plaza-2 Accord is that it too will never happen, since it requires significant cooperation among the major and some minor nation central banks. To be sure, an orderly decline in the USDollar is urgently needed. It will not happen since the USGovt and USFed policies are utterly hostile and destructive toward the monetary system and in particular toward the USTreasury Bond holders. They are the USGovt creditors, and the USGovt is spitting in their faces, kicking their shins, and elbowing them in the groin, while making wild accusations at them. The Competing Currency War will continue, accelerate, jump tracks, turn more hostile, and even pit former allies against each other. The spirit of cooperation between Japan and China has been totally de-railed. Europe has grown angry over a higher Euro exchange rate, one certain to slow the EU Economy. The upcoming G-20 Meeting in South Korea already has one member planning to shun, Brazil.


PREPARE FOR TARP-2
The mortgage world is collapsing quickly. The big US banks are facing a fall over the precipice again. My expectation is for a grand TARP-2 initiative to bail out the big banks, soon to come, already introduced as a topic of discussion. The USFed will do its usual denial, then in a few months mention its urgency. This second chapter program will cause much more problems and generate extreme anger even with the USCongress. The first TARP was caused by market declines. This TARP will be motivated to aid in contract and securities fraud. The same old arguments will be trotted out about Too Big To Fail Banks, systemic failure, depression, and an end to American society as we know it. The constant is continued dominance of the USGovt finance ministry and Congressional finance committees by the banking industry and war industry, intertwined. Insolvent if not bankrupt entities control the USGovt finance, including its Printing Pre$. The TARP-2 will pass but not before at least three or four months of haggling. The focal point will be Bank of America and JPMorgan Chase, two important banks. Part of the political cover will be that Bank of America did the USGovt a favor by taking on the Merrill Lynch and Countrywide toxic load of debt, and is weighed down by its burden. Part of the political cover will be that JPMorgan Chase is weighed down by the burden of size and broken businesses. They control the USFed because they run it. The USFed will come out with research on why the TARP-2 is necessary and how the world will end without it, written by JPM analysts. So the USGovt will come to their rescue with TARP-2, perhaps a $1 trillion package of bank aid. One must wonder if Treasury Secy Geithner is being set up for a fall. The put-backs of large blocks of credit portfolios have been demanded by PIMCO, Blackrock, and the Federal Reserve of New York (the Wall Street front). Geithner led the FRB of New York during the entire mortgage bubble episode, the sumo regulator overseeing the bond fraud. The bank mostly on the damaged receiving end is Bank of America.


In the end it will pass with at least $500 billion in new big bank rescue aid, which will require the big banks to provide strong meaningful home loan balance reduction. The package will contain a provision to kick in, which will deliver another $500 billion if and when certain contingencies, all assured to occur, since a ripe $1 trillion bank aid package would cause a firestorm. A key provision to win over public support will be promises by the big banks to finally give home loan balance reductions, what the people demand. That will enable the American public to agree to the package, except one year later they will be shown more revolving doors and dead end corridors. Pennies will be offered to homeowners and their loans, when $100 bills were expected, inciting anger to the point of nationwide demonstrations. The major challenge for the USGovt, and the masters on Wall Street, to interrupt the current flow of cases before the courts, especially the class action RICO cases. They must lure the victims into the revolving doors and dead end corridors. The legal actions have taken center stage, a development that has raised the stakes considerably. Look for Fannie Mae to play a key role in the TARP-2 package. They will likely be the Bad Bank for wrecked home loans to a much greater degree, even the benefactor to court settlements where concessions are given to the victims. They will portray themselves as the New Resolution Trust Corp, from soup to nuts.


Then by the end of 2011, the nation will embark on QE3, since nothing will be fixed and the USEconomy will by then be in a nightmarish whirlwind of price inflation, recession, and declining wages. It was called Stagflation, and it is coming in fierce style. The USFed overlooks the high cost of Quantitative Easing, namely higher price inflation without the benefit of higher wages. In fact, a quantum jump up in the entire cost structure is in the works, along with another wave of corporate shutdowns and failures. So higher costs but lower wages, a monstrous squeeze on corporate profits and household discretionary funds, another chapter in the crisis to be written by architects of failure. Such is the utterly obvious outcome of QE2. Behind closed doors in conference rooms laden with polished marble or hardwood, the banking leaders realize the squeeze coming to the USEconomy from QE2. The movement to have Fannie Mae serve as the Politburo property owner for a sizeable slice of Americana will be in full swing. From capitalism to marxism by way of fascism.


NEW DOLLAR SWAP WINDOW (MADE BY CHINA)
China is dumping USTreasurys by way of the Europe, using a back door whose design was handed to them. Their support of the Greek Govt debt jammed that door wide open. Thus the rising Euro currency without justification, one of a few factors. Usage of the window has led to an indirect Chinese forced devaluation of the USDollar, an extremely clever action. China has never appreciated being improperly called a currency manipulator. From 1999 to 2005, the USGovt gave full support to the Chinese Govt, as the Yuan currency was pegged to the USDollar. The USGovt saw the policy as providing stability to the USDollar at a time when foreign investment by US firms in the Middle Kingdom was brisk and strong. In a three-year period, the US multi-national firms invested $23 billion in Chinese industrial plants, like the 160 Wal-Mart plants. The dimwitted USGovt and nitwit US economists eagerly awaited the great bounty from Low-Cost solutions that exploited cheaper Chinese labor, lower tax structure, even absent regulations. A decade wave of corporate profits evaporated, amidst giant executive bonuses and the housing bust. The US economists did not plan ahead, to a time when the Chinese Govt would accumulate $2.5 trillion in savings, held as USTreasurys for over $800 billion. Suddenly, China is a currency manipulator. However, the vast monetization initiatives enacted by the USGovt and its partner USFed with $1.5 trillion in freshly printed money to support the US$-based bonds which few foreign creditors wanted, that action is highly manipulative to currencies!!


The missing piece is that the Wall Street maestros have tossed gasoline on the currency bonfire is the multi-lateral agreement by USGovt creditors. They have never been consulted on monetary inflation, debt monetization, and austerity measures. The United States acts unilaterally with great privilege, as they claim some of sort of glorified mission to defraud the world. The Chinese apparently have a plan to swap their USDollars for Euros, using the Greek back door. The Greeks have always favored backdoors socially, whether for tax evasion or preservation of certain orientations.


A well placed banker source in Europe passed an opinion along. The Jackass was aware of the Chinese nibbling with purchases of Greek debt. However, the initiative had a clever motive for an expanded role. The German Euro supporters have been caught flat-footed, inattentive to guard the door. By refusing to permit a default in Southern Europe of sovereign debt, the Euro Central Bank and EU leaders have exposed a vulnerable pathway soon possibly to turn into a highway. The banker source wrote, “After having de-facto bought Greece, the Chinese are now members of the Euro system or Greece is now a member of two currency systems, to be used at will. So China will now use its USTreasury Bonds to buy Euros, which will be used to buy Greek Govt bonds. These bonds will be guaranteed by Germany. This is very clever and no one saw the dual usage of the system, except a few very clever people. The politicians in Berlin and bankers in Frankfurt were sleeping at the wheel as usual and now will pay a heavy price.” It goes deeper. Greece has agreed to support EU recognition of full market economy status for China, while China has agreed to support the call by Greece for UN mediation over Cyprus. The Greek narcotics routes to US-run NATO bases will continue.


The Chinese have essentially created a Dollar Swap Window, a small one admittedly. It will grow over time. Imagine a USGovt program started with certain intentions. As the months or years pass, the program is fed, grows, and expands the mandate. Then it flourishes into a huge bureaucratic creature, a monster of sorts. Attempts to rein it in fail, and it receives even fatter budgets and more responsibilities. Everybody questions how it happened. Transfer that runaway thought, the development process of the Greek Dollar Swap Window. The Europeans eagerly opened the window for China to invest money in Greek Govt debt, which European nations did not want to commit to. So China has a small pipeline in which to shove USTreasurys, to convert them to Euros will full blessing and approval of the Euro Central Bank, and to buy a stake in Greece. Beijing could not give a dragon’s big toe of concern for Greece. They wanted a window to dump USDollars. Next look ahead, which is something US economists can never do without deceptive lenses and lying motives. The Chinese might invest in Spanish Govt debt, some Portuguese Govt debt, and later some Italian Govt debt and even some French Govt debt. Leave Ireland alone, a lost cause, too clumsy and foolish in the emerald isle. They adopted the suicidal IMF austerity plan, and are on a crash course with the dustbin. The rescues of their big banks will topple the nation and lead to systemic failure.


So China has found a clever back door Dollar Swap Window. So far it only has a Greek label on the glass with Greek trucks on the dock. Soon the Latin debt will open up adjoining windows in an expanded Dollar Swap Window facility. The USFed and USDept Treasury was not invited to this planned project. The key point upcoming is not the volume of European sovereign debt to be covered by China, even at discount in implied writedowns. The key point is other broader usage of the window. Watch and observe how the Chinese will eventually be accused of swapping far more USTreasurys through the window than purchased Greek Govt debt, or any other sovereign debt. The Chinese will jump to dump as much USTreasurys as they can before the window closes and is shut by Goldman Sachs, errr the USGovt. In the meantime, the Euro currency rose to touch 141 per clownbuck unit two weeks ago. That is a rather impressive run from 127 in early September. The European fundamentals do not justify such a big 11% move. At 140 the exchange rate is still lofty. If the Chinese expand the usage of their clever new Dollar Swap Window, the Euro could rise to 150. Such is the heavy price paid by the EuroCB and EU leadership for refusing to permit a Greek Govt debt default. The Open Door Policy to China found a back door !!!


REVOLT AGAINST THE USDOLLAR
China is dumping USDollars on a relatively hefty scale. They are buying resource properties. The volume is large in absolute standards, but minor when considering the Chinese rack up monthly trade surpluses with the United States over $20 billion. China has agreed to pour another $7 billion into Brazil’s oil industry. A recent deal with Repsol of Spain to buy a 40% of its Brazilian business gave China access to the estimated reserves of 1.2 billion barrels of oil and gas in Brazil. The price premium paid to Repsol Brasil, which values the company at nearly twice previous estimates, is a sign of two factors. China is willing to pay up in order to lock in its future energy supplies. China might regard its USTreasurys as over-valued, and therefore discount them. This year alone, Chinese companies have laid out $billions buying up stakes in Canadian oil sands, a Guinean iron ore mine, oil fields in Angola and Uganda, an Argentinian oil company, and a major Australian coal-bed methane gas company. To be sure, some bids have been interrupted, like with Canada’s Potash Corp and Australian giant mining firms. The aluminium giant Chinalco failed in their attempt to buy Anglo-Australian Rio Tinto in 2009. China must keep itself supplied, and feed its growth. China has grown to become the second largest oil consumer in the world, far outstripping its domestic supplies. The Neptune consultancy estimates that it will need to buy two companies the size of British Petroleum each year for the next 12 years to meet its growing domestic energy demand. Furthermore, its demand for electricity is growing each year equivalent to Britain’s entire output. The volumes in such deals seem big, but compared to USTreasury holdings and monthly trade surpluses, they are small. On the margin, China must find a destination for its new surplus while it dumps some of its bloated US$-based assets. Watch for quiet hidden expansion of their new handy European Dollar Swap Window. It explains in part the Euro currency rise, beyond what many analysts expected, including the Jackass.


The USGovt and USBanking leaders have other USDollar problems. Arab states have launched secret moves with China, Russia, and France to stop using the US currency for oil trading. The demise of the USDollar is clearly an exaggerated claim, but the path toward its long drawn out demise is fast becoming laid out. These nations are planning to move instead to a basket of currencies. It might include the Japanese Yen and Chinese Yuan, the Euro, even Gold and possibly a future unified currency designed by the Persian Gulf states. Confirmation of the talks came to the UK Independent by both Gulf Arab and Chinese banking sources in Hong Kong. Meanwhile, oil revenues to OPEC states have been reduced in value by the USDollar devaluation. OPEC members seek a $100 crude oil price in order to counter US$ exchange rate weakness. The US$ DX index has fallen 13% since June. OPEC member nations are paying little attention to compliance quotas, and much more attention to reduced purchase power of their income. The nominal value of OPEC oil export revenue will be $818 billion in 2011, a nice 10% rise from last year, according to USDept Energy forecasts. However, the entire rise will be eaten up by the US$ devaluation, which no OPEC nation agreed to. They do not vote at Fed Open Market Committee meetings on US monetary policy. That makes them angry, motivated, and defiant. The consensus is growing for a $100 crude oil price, which is considered a reasonable target. Witness the upcoming rise in the entire USEconomy cost structure, led by a rising crude oil price. The only potential detour on the path to $100 oil is the platforms for financial markets eroding, sinking, and possibly collapsing.


GOLD and SILVER BREAKOUT and CONSOLIDATION
Motive should no longer be to capture the cheap artificial price like in 2008 and 2009 under $1000 or $1200 for gold or in the teens for silver. Now the motive is to get out of the USDollar, avoid its sinkhole, and stay clear of dangerous monetary downdrafts and whipsaws. The present day objective should be to preserve money as in avoid the crash. One should prepare potentially for the US$ to lose 30% to 50% more purchase power before end 2013. Gold and Silver are much more than hedges against the lost US$ purchase power, a breakdown in the monetary system, or an insolvent dysfunctional corrupt banking system. They are investments against rigged corrupted controlled Gold and Silver market. Remove the heavy hand in market interference, like with naked short futures contracts, a regular feature on the COMEX and LBMA, and the true equilibrium price for Gold and Silver would be at least double. Gold and Silver are investments that the precious metals can break loose from captured markets. Paradoxically, the same loss of purchase power for all major currencies is in the works. The media wonks are starting to comprehend the risk. They say a rising stock market is required to keep even with the falling USDollar. Exacto mundo!!


One thing for sure, the Western Govts plus the Japanese Govt will go to extraordinary lengths to invest good money after bad in supporting the broken system until it becomes a ruined system. It was clear to the Jackass in September 2008 that the US banks just died. In the last couple months, an increasing number of people among the system control team are realizing the moribund condition bordering on lifeless condition. They recognize the insolvency as growing worse, even for the US Federal Reserve balance sheet. The $1.4 trillion in mortgage related securities held by the USFed, including leveraged mortgage bonds (see Collateralized Debt Obligations) might actually be worth between 60% and 80% less than book value. My rough calculation shows the USFed to be a cool $1 trillion in the hole, an ugly vat of red ink. The role of bond buyer of last resort is very costly. The most insolvent banking institution is not Bank of America, but the USFed itself. The Powerz believes their free money output can bring the big US banks back to life. Each major initiative like QE2 guarantees another $1000 lift to gold and $40 to silver, all in time, as the potential true target. Next up is TARP2, a guarantee, to save the banks whose fraud is being laid out in gory detail for all to see finally.


The MERS property title database has no legal standing. The REMIC mortgage fund vehicle does not achieve assignment and perfection of title. The entire mortgage foundation in the US banking system appears to be fraudulent. Short cuts to enable fast bond trades, short cuts to avoid income taxes, have left the big banks vulnerable to the extreme. When the states imposed moratoriums on home foreclosures, when RICO laws were cited in class action lawsuits, one could safely claim that not only are the big US banks insolvent and dead, but the mortgage securitization industry is dead too. The best protection is Gold and Silver, since sovereign debt paper and mortgage debt paper might soon be recycled into bathroom hygenic paper to wipe hind quarters.





The gold price will consolidate here, enough to enable the powerful buyers in The Dirty Dozen to continue their huge relentless purchases. The group permitted a small pullback in order to grab a much greater volume in the next round of purchases. The $1300 target was met and surpassed. Support can be found at the juncture of the upper rail to the trend channel, meeting the new aggressive trendline from the breakout. Never in 30 years has a breakout occurred with gradual stairstep pattern exhibited in my knowledge for any major price item over a full two month period. A message was made and heard. The message is of the execution of the Gold Cartel in methodical style, without mercy, without respite. Absolutely nothing has been remedied or repaired, no reform whatsoever. In fact, every resistance to reform has been evident, from bankers dug in, with heavy lobby efforts. See the Financial Regulation Bill for instance, at a cost of $200 million in bank lobby costs and worth every cent. The TARP-2 package is being discussed behind closed doors. Instead of liquidating the big banks, they will continue to ruin the USDollar so as to prop the insolvent banks. That is a nice word for dead entities. They do not lend because they suffered a death experience in September and October 2008. They do not lend because they have no equity. They do not lend because their Loan Loss Reserves were indirectly confiscated by the USFed, with interest paid.


THE LAST ASSET BUBBLE
Unlimited USDollars will be devoted to support a broken system, rather than liquidate credit portfolios. They should be plowed under their acidic soil. Some lime would make the soil fertile again, the base of the alkaline being perhaps tears from the millions of households suffering total loss of home equity and next severe loss of pension funds. The USGovt needs the public 401k and IRA funds, and using tax law benefits as inroads, they will someday soon clutch them. They must feed the USTreasury Bond bubble. After that seizure, they will pursue the bank savings. The USGovt needs the public certificates of deposit, and using tax law benefits as inroads, they will someday soon clutch them. The accusations of a Gold bubble are as ludicrous as they are pathetic. They wish to deflect attention from the approved USTreasury bubble.


Given the heavy risk loaded in the mortgage bond arena with all the controversy over home foreclosures, the USAgency Mortgage Bonds are looking highly problematic, as in junk bonds, even worthless bonds. The nationalization of Fannie Mae stretched an umbilical cord from Fannie to Uncle Sam in a marriage made in a Third World chemical factory with massive acid leaks in the pipes. The risk to the USDollar is total and absolute. The USDollar will fall hard, but so will all the major currencies in a round robin of destroyed value. The winner in the Competing Currency War in progress is Gold and Silver. The billboard reads $2000 gold and $50 silver, dead ahead, just a matter of time. The detour only comes with big bank liquidation and debt restructure of their toxic balance sheets. Aint gonna happen!!


THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
From subscribers and readers:


At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.


“Your stuff is compelling, and I really enjoy wading through your writings. I have come to read most of your cited sources regularly. You not only provided me with some good economic education, you expanded my readings.”
(GaryF in California)


“You have the unique ability to sift through the mountains of disparate economic data and hearsay and weave them into a coherent compelling storyline. The amount of unbiased factual information you provide is unparalleled in the industry (and desperately needed in these scary times). I love your no holds barred approach to dealing with the narrow minded purveyors of dis-information in the industry.”
(BobA in North Carolina)


“I think that your newsletter is brilliant. It will also be an excellent chronicle of these times for future researchers.”
(PeterC in England)


Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com
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Related: 

THE FIRST SIGNS OF THE COMING DOLLAR CRASH ARE IN HONG KONG

Is The Euro About To Tank Just Like It Did In 1998, Except At 2.5x Speed?

Gold Will Explode Higher as the U.S. Dollar Bubble Bursts

9-11 VICTIMS - FAKERY?

9/11 story getting weirder and weirder by the day:
From Aangirfan: Image from: http://www.septclues.com/VICSIMS/FLIPbennett_eric.jpg


It has been reported that PASSENGERS ON the 9 11 FLIGHTS WERE LINKED TO THE PENTAGON

Something called the Vicsim Report claims to tell us more about the 9 11 VICTIMS:


The 9/11 Vicsims Report 'analyzes the photographic images, names of victims, and comments posted on CNN’s memorial website for the victims of 9/11.


'It makes a very strong case that many of the alleged 9/11 victims NEVER EXISTED and demonstrates this by showing how names and photographs of “victims” were morphed into each other to create a new victim in a sequential order.


'Many of the photographs on CNN’s site were blatantly 'photoshopped'.' (A sickening piece of evidence in the WTC attacks— The 'Vicsims'.)
'The entire body of victims - from the airplanes, to the Pentagon, to the World Trade Center - had all been created at the same time by an 'identity generating' software program which creates 'digital' people with (oft improbable) fictitious names.

'Anyone armed with a little patience and a discerning attitude should be able to realize that the CNN Victim Memorial is a preposterous list of counterfeit identities.' (The Vicsim Report - SeptemberClues.info.)
More from Aferrismoon on 911 VICSIMS

'I began to look also into the victims in my area ...
'I had found four who went to the Westfield High School and it just happened that my library had put the yearbooks online - as well as our town paper...
'So I passed the info on to Simon. At least on three of them.
'As I went to send info in on the last one, I realized I was 'suspended.' But this is all 100% verifiable info that these people were REAL.' (Humint Events Online: Simon Shack Has an Agenda)
~~
'I would love to see a concise analysis of the claims in the 'Vicsims report'.
'I find much of the material, both in the report and on the forum, superficially unconvincing.
'In particular, the endless comparison of slightly similar looking individuals appears pointless.
'I would love for Simon Shack to say 'Here are my three best bits of evidence - knock them down if you can'.' (Humint Events Online: Simon Shack Has an Agenda)

CONFIRMED: Psychiatric Manual Labels Free-Thinkers, Non-conformers as Mentally Ill

Brian D. Hill
USWGO (hat tip to Activist Post)

It is now confirmed by USWGO News that the DSM-IV-TR Manual labels free thinkers, non conformers, civil disobedient advocates, those that question authority, and people considered hostile toward the government (aka Oath keepers and local militias) as mentally ill with the illness titled “oppositional defiant disorder” or ODD.

It was reported on October 8 2010 from OffTheGrid News that anybody who is disobedient, defiant, a free thinker, or even considered hostile toward authority was to be labeled by psychiatrists as ‘Mentally Ill’.

Now I have got my hands on a ebook version of the year 2000 version of the ‘Diagnostic and Statistical Manual of Mental Disorders DSM-IV-TR Fourth Edition (Text Revision) By the American Psychiatric Association version DSM-TV-TR (The non TR Version was said to be older and so I got the newer one which had the information that Off The Grid News warned about).

Now as I search up the keywords “oppositional defiant disorder” on adobe reader I found exactly what Off The Grid News was talking about. So it is now Confirmed basically that anyone who disobeys authority or even questions authority is now considered mentally ill and can be thrown in a prison-like mental institution under tax payers dollars.
Read Full Article

The "Cyberwar" Is Over and the National Security Agency Has Won

From Antifascist-calling:

Wednesday, October 20, 2010
The "Cyberwar" Is Over and the National Security Agency Has Won 

A "Memorandum of Agreement" struck last week between the Department of Homeland Security (DHS) and the National Security Agency (NSA) promises to increase Pentagon control over America's telecommunications and electronic infrastructure.

It's all in the interest of "cybersecurity" of course, or so we've been told, since much of the Comprehensive National Cybersecurity Initiative (CNCI) driving administration policy is a closely-held state secret.

Authority granted the über spy shop by the Bush and Obama administrations was handed to NSA by the still-classified National Security Presidential Directive 54, Homeland Security Presidential Directive 23 (NSPD 54/HSPD 23) in 2008 by then-President Bush.

The Agreement follows closely on the heels of reports last week by the Electronic Frontier Foundation (EFF) that DHS has been tracking people online and that the agency even established a "Social Networking Monitoring Center" to do so.

Documents obtained by EFF through a Freedom of Information Act lawsuit, revealed that the agency has been vacuuming-up "items of interest," systematically monitoring "citizenship petitioners" and analyzing "online public communication."

The documents suggest that "DHS collected a massive amount of data on individuals and organizations explicitly tied to a political event," the Obama inauguration.

This inevitably raises a troubling question: what other "political events" are being monitored by government snoops? Following last month's raids on antiwar activists by heavily-armed FBI SWAT teams, the answer is painfully obvious.

And with new reports, such as Monday's revelations by The Wall Street Journal that Facebook "apps" have been "transmitting identifying information--in effect, providing access to people's names and, in some cases, their friends' names--to dozens of advertising and Internet tracking companies," online privacy, if such a beast ever existed, is certainly now a thing of the past.
Project 12

With waning national interest in the "terrorism" product line, the "cybersecurity" roll-out (in stores in time for the holidays!) will drive hefty taxpayer investments--and boost the share price--for America's largest defense and security firms; always a sure winner where it counts: on Wall Street.

The DHS-NSA Agreement came just days after publication of a leaked document obtained by the secrecy-shredding web site Public Intelligence (PI).

"In early 2008," a PI analyst writes, "President Bush signed National Security Presidential Directive 54/Homeland Security Presidential Directive 23 (NSPD-54/HSPD-23) formalizing the Comprehensive National Cybersecurity Initiative (CNCI). This initiative created a series of classified programs with a total budget of approximately $30 billion. Many of these programs remain secret and their activities are largely unknown to the public."

Amongst the programs stood up by CNCI "is an effort to encourage information sharing between the public and private sector called 'Project 12'."

The whistleblowing web site "recently acquired the key report from the Project 12 meetings: Improving Protection of Privately Owned Critical Network Infrastructure Through Public-Private Partnerships. This 35-page, For Official Use Only report is a guide to creating public-private partnerships that facilitate the implementation of 'actionable recommendations that [reflect] the reality of shared responsibility between the public and private sectors with respect to securing the nation's cyber assets, networks, systems, and functions'."

According to the document, under the rubric of the National Infrastructure Protection Plan (NIPP), Project 12 recommends that "critical infrastructure and key resources (CIKR) be brought into federal cybersecurity efforts through a variety of means."

As Antifascist Calling readers are well aware, for decades the secret state has outsourced "inherently governmental" functions to private entities. This process has served as a means to both shield illegal activities and avoid public accountability under a cloak of "proprietary business information."

PI's secret spillers tell us that Project 12 stresses the "promotion of public-private partnerships that legalize and facilitate the flow of information between federal entities and private sector critical infrastructure, such as telecommunications and transportation."

"The ultimate goal of these partnerships" the analyst writes, "is not simply to increase the flow of 'threat information' from government agencies to private industry, but to facilitate greater 'information sharing' between those companies and the federal government."

What information is to be shared or what the implications are for civil liberties and privacy rights are not spelled out in the report.

As can readily be seen in the dubious relationships forged amongst retired senior military personnel and the defense industry, a top level Pentagon position is entrée to an exclusive club where salary levels and perks, increase the higher one has climbed the food chain.

Much the same can be said for high-level intelligence officials. Indeed, former officials turned corporate executives constellating the security industry are among the most vociferous advocates for strengthening collaboration between the state and private sectors. And the more powerful players on the field are represented by lobby shops such as the Intelligence and National Security Alliance (INSA) and Business Executives for National Security (BENS).

Last year I reported that BENS are key players driving the national "cybersecurity" panic. In that piece I wrote that the group is a "self-described 'nationwide, non-partisan organization' [that] claims the mantle of functioning as 'the primary channel through which senior business executives can help advance the nation's security'." Project 12 is one area where BENS power-brokers have excelled in mutual backscratching.

We are informed that "the cost of scoping and building a tool that meets the requirements for cyber real-time situational awareness is likely to be significant and would be a high-risk investment of Federal funding." In other words, while taxpayers foot the bill, private corporations will reap the benefits of long-term contracts and future high-tech development projects.

However, "before making that investment, the U.S. Government and its information sharing security partners must define a clear scope and mission for the development of common situational awareness and should evaluate a variety of interim or simplified solutions."

Those "solutions" won't come cheap.
Market Research Media informs us that "the U.S. government sector witnesses a blossoming of investments in cyber security technologies."

We're told that with a "cumulative market valued at $55 billion (2010-2015), the U.S. Federal Cybersecurity market will grow steadily--at about 6.2% CAGR [compound annual growth rate] over the next six years."

Those numbers reflect the merger and acquisition mania amongst America's largest defense and security firms who are gobbling up the competition at ever-accelerating rates.
Washington Technology reported earlier this month that "government contractors specializing in the most attractive niche segments of the market are experiencing much more rapid growth and, accordingly, enjoying much higher valuation multiples upon selling their businesses than their more generalist counterparts."

"The larger companies in the federal market" the insider publication reports, "continue to seek to aggressively position themselves as leaders in the cyber market."

Amongst the "solutions" floated by Project 12 is the notion that "real-time" awareness can be achieved when "government resources" are "co-located with private industry, either virtually or physically, to help monitor security," the PI's analyst avers.

Therefore, "physical or virtual co-location would maximize the U.S. Government's investment in network protection by facilitating collaborative analysis and coordinated protective and response measures and by creating a feedback loop to increase value for private-sector and government participants. Another key outcome would be stronger institutional and personal trust relationships among security practitioners across multiple communities."

One firm, the spooky Science Applications International Corporation (SAIC) "formally opened its seven-story cyber innovation center in Columbia, not far from the site of the new Cyber Command at Fort Meade," NSA headquarters, The Washington Post reported.

Talk about "co-location"! It doesn't get much chummier than this!

In order to valorize secret state investments in the private sector, the development of "Information Sharing and Analysis Centers (ISACs)," or fusion centers, are encouraged. Who would control the information flows and threat assessments are unknown.

However, as the American Civil Liberties Union documented in their report, What's Wrong with Fusion Centers, private sector participation in the intelligence process "break[s] down the arm's length relationship that protects the privacy of innocent Americans who are employees or customers of these companies" while "increasing the risk of a data breach."

This is all the more troubling when the "public-private partnership" envisioned by Project 12 operate under classified annexes of the Comprehensive National Cybersecurity Initiative.
NSA "Power-Grab"

Last year Rod Beckström, director of Homeland Security's National Cybersecurity Center (NCSC), resigned from his post, citing threats of a NSA "power grab."

In a letter highly-critical of government efforts to "secure" the nation's critical infrastructure, Beckström said that NSA "effectively controls DHS cyber efforts through detailees [and] technology insertions."

Citing NSA's role as the secret state's eyes and ears peering into electronic and telecommunications' networks, Beckström warned that handing more power to the agency could significantly threaten "our democratic processes...if all top level government network security and monitoring are handled by any one organization."

The administration claimed last week that the Agreement will "increase interdepartmental collaboration in strategic planning for the Nation's cybersecurity, mutual support for cybersecurity capabilities development, and synchronization of current operational cybersecurity mission activities," and that DHS and NSA will embed personnel in each agency.

We're informed that the Agreement's implementation "will focus national cybersecurity efforts, increasing the overalI capacity and capability of both DHS's homeland security and DoD's national security missions, while providing integral protection for privacy, civil rights, and civil liberties."

Accordingly, the "Agreement is authorized under the provisions of the Homeland Security Act (2002); the Economy Act; U.S. Code Title 10; Executive Order 12333; National Security Directive 42; Homeland Security Presidential Directive-5; Homeland Security Presidential Directive-7; and National Security Presidential Directive* 54/Homeland Security Presidential Directive-23."

What these "authorizations" imply for civil liberties and privacy rights are not stated. Indeed, like NSPD 54/HSPD 23, portions of National Security Directive 42, HSPD 5, and HSPD 7 are also classified.

And, as described above, top secret annexes of NSPD 54/HSPD 23 enabling the Comprehensive National Cybersecurity Initiative means that the American people have no way of knowing what these programs entail, who decides what is considered "actionable intelligence," or where--and for what purpose--private communications land after becoming part of the "critical infrastructure and key resources" landscape.

We're told that the purpose of the Agreement "is to set forth terms by which DHS and DoD will provide personnel, equipment, and facilities in order to increase interdepartmental collaboration in strategic planning for the Nation's cybersecurity, mutual support for cybersecurity capabilities development, and synchronization of current operational cybersecurity mission activities."

The text specifies that the Agreement will "focus national cybersecurity efforts" and provide "integral protection for privacy, civil rights, and civil liberties."

However, as the premier U.S. eavesdropping organization whose "national security mission" is responsible for setting data encryption standards, NSA was ultimately successful in weakening those standards in the interest of facilitating domestic spying.

Indeed, The Wall Street Journal reported in 2008 "the spy agency now monitors huge volumes of records of domestic emails and Internet searches as well as bank transfers, credit-card transactions, travel and telephone records."

Investigative journalist Siobhan Gorman informed us that the "NSA enterprise involves a cluster of powerful intelligence-gathering programs" that include "a Federal Bureau of Investigation program to track telecommunications data once known as Carnivore, now called the Digital Collection System, and a U.S. arrangement with the world's main international banking clearinghouse to track money movements."

"The effort" the Journal revealed, "also ties into data from an ad-hoc collection of so-called 'black programs' whose existence is undisclosed," and include programs that have "been given greater reach" since the 9/11 provocation.

The civilian DHS Cybersecurity Coordinator will take a backseat to the Pentagon since the office "will be located at the National Security Agency (NSA)" and "will also act as the DHS Senior Cybersecurity Representative to U.S. Cyber Command (USCYBERCOM)."

Personnel will be assigned by DHS "to work at NSA as part of a Joint Coordination Element (JCE) performing the functions of joint operational planning, coordination, synchronization, requirement translation, and other DHS mission support for homeland security for cybersecurity," and will "have current security clearances (TS/SCI) upon assignment to NSA, including training on the appropriate handling and dissemination of classified and sensitive information in accordance with DoD, Intelligence Community and NSA regulations."

TS/SCI (Top Secret/Sensitive Compartmented Information) clearances mean that while civilian DHS employees may have access to NSA and Pentagon "black" surveillance programs, they will be restricted from reporting up their chain of command, or to congressional investigators, once they have been "read" into them. This makes a mockery of assertions that the Agreement does "not alter ... command relationships." The mere fact that DHS personnel will have TS/SCI clearances mean just the opposite.

DHS will "provide appropriate access, administrative support, and space for an NSA Cryptologic Services Group (CSO) and a USCYBERCOM Cyber Support Element (CSE) collocated with the National Cybersecurity and Communications Integration Center (NCCIC), at DHS, and integration into DHS's cybersecurity operational activities."

In other words, the civilian, though sprawling DHS bureaucracy will play host for NSA and CYBERCOM personnel answering to the Pentagon, and subject to little or no oversight from congressional committees already asleep at the switch, "to permit both CSG and CSE entities the capability to carry out their respective roles and responsibilities."

Despite boilerplate that "integral protection for privacy, civil rights, and civil liberties" will be guaranteed by the Agreement, there is no hiding the fact that a NSA power-grab has been successfully executed.

The Agreement further specifies that DHS and NSA will engage "in joint operational planning and mission coordination" and that DHS, DoD, NSA and CYBERCOM "maintain cognizance" of "cybersecurity activities, to assist in deconfliction and promote synchronization of those activities."

Following Project 12 revelations, new secret state relationships will assist "in coordinating DoD and DHS efforts to improve cybersecurity threat information sharing between the public and private sectors to aid in preventing, detecting, mitigating, and/or recovering from the effects of an attack, interference, compromise, or incapacitation related to homeland security and national security activities in cyberspace."

However, we do not learn whether "information sharing" includes public access, or even knowledge of, TS/SCI "black programs" which already aim powerful NSA assets at the American people. In fact, the Agreement seems to work against such disclosures.

This is hardly a level playing field since NSA might "receive and coordinate DHS information requests," NSA controls the information flows "as appropriate and consistent with applicable law and NSA mission requirements and authorities, in operational planning and mission coordination." The same strictures apply when it comes to information sharing by U.S. Cyber Command.

As Rod Beckström pointed out in his resignation letter, NSA "effectively controls DHS cyber efforts through detailees [and] technology insertions."

Despite the Agreement's garbled bureaucratese, we can be sure of one thing: the drift towards militarizing control over Americans' private communications will continue.