Free - Beyond Collapse

Thursday, April 28, 2011

The Corporate State of America




By Chris Hedges

When did our democracy die? When did it irrevocably transform itself into a lifeless farce and absurd political theater? When did the press, labor, universities and the Democratic Party—which once made piecemeal and incremental reform possible—wither and atrophy? When did reform through electoral politics become a form of magical thinking? When did the dead hand of the corporate state become unassailable?

The body politic was mortally wounded during the long, slow strangulation of ideas and priorities during the Red Scare and the Cold War. Its bastard child, the war on terror, inherited the iconography and language of permanent war and fear. The battle against internal and external enemies became the excuse to funnel trillions in taxpayer funds and government resources to the war industry, curtail civil liberties and abandon social welfare. Skeptics, critics and dissenters were ridiculed and ignored. The FBI, Homeland Security and the CIA enforced ideological conformity. Debate over the expansion of empire became taboo. Secrecy, the anointing of specialized elites to run our affairs and the steady intrusion of the state into the private lives of citizens conditioned us to totalitarian practices. Sheldon Wolin points out in “Democracy Incorporated” that this configuration of corporate power, which he calls “inverted totalitarianism,” is not like “Mein Kampf” or “The Communist Manifesto,” the result of a premeditated plot. It grew, Wolin writes, from “a set of effects produced by actions or practices undertaken in ignorance of their lasting consequences.”

Corporate capitalism—because it was trumpeted throughout the Cold War as a bulwark against communism—expanded with fewer and fewer government regulations and legal impediments. Capitalism was seen as an unalloyed good. It was not required to be socially responsible. Any impediment to its growth, whether in the form of trust-busting, union activity or regulation, was condemned as a step toward socialism and capitulation. Every corporation is a despotic fiefdom, a mini-dictatorship. And by the end Wal-Mart, Exxon Mobil and Goldman Sachs had grafted their totalitarian structures onto the state.

The Cold War also bequeathed to us the species of the neoliberal. The neoliberal enthusiastically embraces “national security” as the highest good. The neoliberal—composed of the gullible and cynical careerists—parrots back the mantra of endless war and corporate capitalism as an inevitable form of human progress. Globalization, the neoliberal assures us, is the route to a worldwide utopia. Empire and war are vehicles for lofty human values. Greg Mortenson, the disgraced author of “Three Cups of Tea,” tapped into this formula. The deaths of hundreds of thousands of innocents in Iraq or Afghanistan are ignored or dismissed as the cost of progress. We are bringing democracy to Iraq, liberating the women of Afghanistan, defying the evil clerics in Iran, ridding the world of terrorists and protecting Israel. Those who oppose us do not have legitimate grievances. They need to be educated. It is a fantasy. But to name our own evil is to be banished.

We continue to talk about personalities—Ronald Reagan, Bill Clinton, George W. Bush and Barack Obama—although the heads of state or elected officials in Congress have become largely irrelevant. Lobbyists write the bills. Lobbyists get them passed. Lobbyists make sure you get the money to be elected. And lobbyists employ you when you get out of office. Those who hold actual power are the tiny elite who manage the corporations. Jacob S. Hacker and Paul Pierson, in their book “Winner-Take-All Politics,” point out that the share of national income of the top 0.1 percent of Americans since 1974 has grown from 2.7 to 12.3 percent. One in six American workers may be without a job. Some 40 million Americans may live in poverty, with tens of millions more living in a category called “near poverty.” Six million people may be forced from their homes because of foreclosures and bank repossessions. But while the masses suffer, Goldman Sachs, one of the financial firms most responsible for the evaporation of $17 trillion in wages, savings and wealth of small investors and shareholders, is giddily handing out $17.5 billion in compensation to its managers, including $12.6 million to its CEO, Lloyd Blankfein.


The massive redistribution of wealth, as Hacker and Pierson write, happened because lawmakers and public officials were, in essence, hired to permit it to happen. It was not a conspiracy. The process was transparent. It did not require the formation of a new political party or movement. It was the result of inertia by our political and intellectual class, which in the face of expanding corporate power found it personally profitable to facilitate it or look the other way. The armies of lobbyists, who write the legislation, bankroll political campaigns and disseminate propaganda, have been able to short-circuit the electorate. Hacker and Pierson pinpoint the administration of Jimmy Carter as the start of our descent, but I think it began long before with Woodrow Wilson, the ideology of permanent war and the capacity by public relations to manufacture consent. Empires die over such long stretches of time that the exact moment when terminal decline becomes irreversible is probably impossible to document. That we are at the end, however, is beyond dispute.

The rhetoric of the Democratic Party and the neoliberals sustains the illusion of participatory democracy. The Democrats and their liberal apologists offer minor palliatives and a feel-your-pain language to mask the cruelty and goals of the corporate state. The reconfiguration of American society into a form of neofeudalism will be cemented into place whether it is delivered by Democrats, who are pushing us there at 60 miles an hour, or Republicans, who are barreling toward it at 100 miles an hour. Wolin writes, “By fostering an illusion among the powerless classes” that it can make their interests a priority, the Democratic Party “pacifies and thereby defines the style of an opposition party in an inverted totalitarian system.” The Democrats are always able to offer up a least-worst alternative while, in fact, doing little or nothing to thwart the march toward corporate collectivism.

The systems of information, owned or dominated by corporations, keep the public entranced with celebrity meltdowns, gossip, trivia and entertainment. There are no national news or intellectual forums for genuine political discussion and debate. The talking heads on Fox or MSNBC or CNN spin and riff on the same inane statements by Sarah Palin or Donald Trump. They give us lavish updates on the foibles of a Mel Gibson or Charlie Sheen. And they provide venues for the powerful to speak directly to the masses. It is burlesque.

It is not that the public does not want a good health care system, programs that provide employment, quality public education or an end to Wall Street’s looting of the U.S. Treasury. Most polls suggest Americans do. But it has become impossible for most citizens to find out what is happening in the centers of power. Television news celebrities dutifully present two opposing sides to every issue, although each side is usually lying. The viewer can believe whatever he or she wants to believe. Nothing is actually elucidated or explained. The sound bites by Republicans or Democrats are accepted at face value. And once the television lights are turned off, the politicians go back to the business of serving business.

We live in a fragmented society. We are ignorant of what is being done to us. We are diverted by the absurd and political theater. We are afraid of terrorism, of losing our job and of carrying out acts of dissent. We are politically demobilized and paralyzed. We do not question the state religion of patriotic virtue, the war on terror or the military and security state. We are herded like sheep through airports by Homeland Security and, once we get through the metal detectors and body scanners, spontaneously applaud our men and women in uniform. As we become more insecure and afraid, we become more anxious. We are driven by fiercer and fiercer competition. We yearn for stability and protection. This is the genius of all systems of totalitarianism. The citizen’s highest hope finally becomes to be secure and left alone.

Human history, rather than a chronicle of freedom and democracy, is characterized by ruthless domination. Our elites have done what all elites do. They have found sophisticated mechanisms to thwart popular aspirations, disenfranchise the working and increasingly the middle class, keep us passive and make us serve their interests. The brief democratic opening in our society in the early 20th century, made possible by radical movements, unions and a vigorous press, has again been shut tight. We were mesmerized by political charades, cheap consumerism and virtual hallucinations as we were ruthlessly stripped of power.


The game is over. We lost. The corporate state will continue its inexorable advance until two-thirds of the nation is locked into a desperate, permanent underclass. Most Americans will struggle to make a living while the Blankfeins and our political elites wallow in the decadence and greed of the Forbidden City and Versailles. These elites do not have a vision. They know only one word—more. They will continue to exploit the nation, the global economy and the ecosystem. And they will use their money to hide in gated compounds when it all implodes. Do not expect them to take care of us when it starts to unravel. We will have to take care of ourselves. We will have to create small, monastic communities where we can sustain and feed ourselves. It will be up to us to keep alive the intellectual, moral and culture values the corporate state has attempted to snuff out. It is either that or become drones and serfs in a global, corporate dystopia. It is not much of a choice. But at least we still have one.



Original Article

Wednesday, April 27, 2011

Is the US Military America's biggest security threat?




America's Military has become the biggest THREAT to US security.


The USA's military is supposed to make the US more secure. But it has become, for many reasons and in many ways, the biggest threat to American security, the American way of life and even America's future. The leaders-- both military and civilian-- have to be considered part of the threat-- part of the problem, part of the system that is endangering America.


The US Military is a huge cancer on our budget. It weakens our economy, weakens our currency, saps our ability to maintain vital infrastructure. The 700 plus military bases spread throughout the world are supposed to make us more secure. Our wars in Iraq, Afghanistan and Libya are supposed to make us more secure. Instead, the wars have raised the levels of hate for the US to unprecedented levels.


Ron Paul says, today, on CNN, "We have fallen into a terrible trap, doing exactly what Osama Bin Laden wanted us to do."


And this is true. To make matters worse we have a president who, like his predecessor, fails to lead and takes orders from his generals. "I'll listen to what the Generals say," both Dubya and Obama have said. As Dennis Kucinich has observed, that is not leadership.


Of course, it's not a simple matter of telling the generals to stand down. John Perkins, NYTimes best selling author of Confessions of An Economic Hit Man, told me, in an interview about his newest book, Hoodwinked, "It's the career people who are calling all the shots and they are deeply influenced by the corporatocracy."



With the Supreme Court's Citizens United ruling, corporations have been handed even more power, and people like the Koch brothers, who Perkins says are guilty of sedition, are calling more and more of the shots as they buy more and more politicians ways into office.


This gets even more complicated by another problem Perkins describes how now, "There are many, many ways to assassinate a person today. You don't need a bullet anymore."


Perkins points out the indisputable fact that Kennedy went against the Military and was assassinated. Eisenhower is credited with his famous speech about the danger of the military industrial complex, but Perkins points out he "spoke about the military industrial complex on last day of his presidency."


Back in those days, J. Edgar Hoover was suspected to have evidence that could "assassinate" the reputations of everyone in Washington, including the White House. Now, the CIA and FBI are agencies with minimal accountability, incredible funding from un-reported drug and gun sale operations, and that leaves out the massive, secret intelligence operations of the military which are even more unaccountable.


It's understandable that presidents are afraid to truly lead and stand up to the military threat that lurks between the lines. It may be, especially with institutionalized vote theft and with Citizens United in place, that we will be unable to use the voting system to change things. If Obama wins, \the corporations win. He's already their man. If the Koch brothers and friends win, and buy a Republican presidency, same thing-- corporatocracy continues.


For some, it's about oil, or access to shipping routes, or minerals or trade opportunities... there are many corporate uses for the US military.


Traditionally, challenges to the military are greeted with accusations of being unpatriotic. We need to change the narrative, the language and the conversation. The US military is no longer serving the needs of the American people It is serving and has long been serving the needs of the multinational corporations-- the same ones that cut jobs in the US by 2.9 million in the past decade, while increasing non-US jobs by 2.4 million, according the Wall Street Journal.


The US Military is really an arm of multinational corporations. It serves the globalization organizations that enforce the regulations and collections and monetary operations of these multinational corporations. The military may not be privatized, but it has become a form of corporate welfare-- we provide the security for their operations worldwide. I don't think they'd do it, because it would be hard to keep the illusion going, but it would be more accurate to talk about the GE Fleet, the Monsanto Army and the Boeing Air Force, just as sports and entertainment arenas are named.


John Perkins suggests that the answer may be to work through corporations. He Observes:


We've gone from a time when geopolitics was controlled by religious orgs, then governments, now corporations.... the next phase is we the people must take control. It's got to be bottom up.


If it's in our corporations, then we can really address through our shopping habits, through persuasion through embarrassing them, getting them to change. We've seen an amazing example of this in Latin America--- ten countries have voted in leaders standing up to the corporations ."


Glen Beck lost his advertisers and is not off of Fox. Boycotts have had some effects in the past. This article doesn't purport to offer all the answers. The goal is to put it out there that the American Military, as it now stands, is actually not for America and has become a dangerous liability threatening and drastically endangering our near and long term security.


We have a problem. First step is to face it. That's what this article is about. The US military is the number one threat to US security. It's leaders are part of the problem.Yes, we do need some form of military strength, but what we have is a cancerous monster that is totally unaccountable and out of control.



This has nothing to do with the brave soldiers who have volunteered to serve under tragically deceptive circumstances. They are victims just like the rest of we the people of America.


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$ 2 Trillion dollar debt crisis threatens to bring down 100 US cities




Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble










More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned.





Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery.





"Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy," Whitney told the CBS 60 Minutes programme on Sunday night.





"There's not a doubt on my mind that you will see a spate of municipal bond defaults. You can see fifty to a hundred sizeable defaults – more. This will amount to hundreds of billions of dollars' worth of defaults."





New Jersey governor Chris Christie summarised the problem succinctly: "We spent too much on everything. We spent money we didn't have. We borrowed money just crazily. The credit card's maxed out, and it's over. We now have to get to the business of climbing out of the hole. We've been digging it for a decade or more. We've got to climb now, and a climb is harder."





American cities and states have debts in total of as much as $2tn. In Europe, local and regional government borrowing is expected to reach a historical peak of nearly €1.3tn (£1.1tn) this year.





Cities from Detroit to Madrid are struggling to pay creditors, including providers of basic services such as street cleaning. Last week, Moody's ratings agency warned about a possible downgrade for the cities of Florence and Barcelona and cut the rating of the Basque country in northern Spain. Lisbon was downgraded by rival agency Standard & Poor's earlier this year, while the borrowings of Naples and Budapest are on the brink of junk status. Istanbul's debt has already been downgraded to junk.





Whitney's intervention is likely to raise the profile of the issue of municipal debt. While she was an analyst at Oppenheimer, the New York investment bank, in October 2007 she wrote a damning report on Citigroup, then the world's largest bank, predicting it would cut its dividend. She was criticised for being too pessimistic but was vindicated when the bank was forced to seek government support a year later. She has since set up her own advisory firm and is rated one of the most influential women in American business.





US states have spent nearly half a trillion dollars more than they have collected in taxes, and face a $1tn hole in their pension funds, said the CBS programme, apocalyptically titled The Day of Reckoning.





Detroit is cutting police, lighting, road repairs and cleaning services affecting as much as 20% of the population. The city, which has been on the skids for almost two decades with the decline of the US auto industry, does not generate enough wealth to maintain services for its 900,000 inhabitants.





The nearby state of Illinois has spent twice as much money as it has collected and is about six months behind on creditor payments. The University of Illinois alone is owed $400m, the CBS programme said. The state has a 21% chances of default, more than any other, according to CMA Datavision, a derivatives information provider.





California has raised state university tuition fees by 32%. Arizona has sold its state capitol and supreme court buildings to investors, and leases them back.





Potential defaults could also hit Florida, whose booming real estate industry burst two years ago, said Guy J. Benstead, a partner at Cedar Ridge Partners in San Francisco. "We are not out of the woods by any stretch yet," he said.





"It's all part of the same parcel: public sector indebtedness needs to be cut, it needs a lot of austerity, and it hit the central governments first, and now is hitting local bodies," said Philip Brown, managing director at Citigroup in London.





In Europe, where cities have traditionally relied more on bank loans and state transfers than bonds, financing habits are changing. The Spanish regions of Catalonia and Valencia have issued debt to their own citizens after financial markets shut their doors because of the regions' high deficits. Moody's cut to the rating of the Basque country on Friday left it still within investment grade but noted "the rapid deterioration in the region's budgetary performance in recent years". It said it expected it to continue over the medium term.





In Italy, Moody's and S&P have threatened to downgrade Florence, while Venice has been forced over the past few months to put some of the palazzi on its canals up for sale to fund the deficit.





"Cities are on their own. Governments won't come to their rescue as they have problems of their own," said Andres Rodriguez-Pose, professor of economic geography at the London School of Economics. "Cities will have to pay for their debts, and in some cases they will have to carry out dramatic cuts, such as Detroit's."





California crunch





Vallejo, a former US navy town near San Francisco, is still trying to emerge from the Chapter Nine bankruptcy protection it entered in 2008.





The city, now a symbol of distressed local finances, is still negotiating with the unions, which refused to accept a salary cut plan two years ago. Paul Dyson, an analyst with the Standard & Poor's credit agency, said Vallejo, which is mostly a dormitory town for Oakland or San Francisco employees, did not have enough local industry to sustain its finances and property tax – a major source of local income – plunged with the collapse of the real estate market. The S&P credit-rating agency has a C rating on the town – the lowest level.





With a population of about 120,000, Vallejo has $195m (£125m) of unfunded pension obligations and has to present a bankruptcy-exit plan to a Sacramento court by 18 January. Since 1937, 619 local US government bodies, mostly small utilities or districts, have filed for bankruptcy, Bloomberg News recently reported. US cities tend to default more than European municipalities as they usually rely on bonds issued to investors, which enter into a default if the creditor misses payments. European towns, by contrast, traditionally depend on bank loans and government bailouts.

Original Article


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Tuesday, April 26, 2011

Prepare for Collapse – The Destruction of Western Society

People ask me all of the time…when will the economy, society, humanity, etc break down and collapse into chaos. My answer …it is happening right now.

The global economy is in depression and countries around the world are bankrupt, only being kept afloat by printing more money and issuing more debt, deferring repayment to some future date. Throw in wars, natural catastrophes, food shortages, and peak oil, you are met with a cluster fuck of epic proportions that humanity has never faced before.

How that unfolds, I am not sure, but I am sure that mass hysteria, confusion, desperation, and suffering on a global scale are going to cause a large portion of us, as a species, to perish. For a few years I have been preaching about the acquisition of survival supplies, information and places to live that are suitable for long term survival. While precious metals, in particular silver, seem to be a great store of value, this is absolutely not enough.

I can not stress this enough. Collapse is imminent and unless you take steps to protect yourself and your loved ones, no one else is going to do it for you.

It is quite urgent that you acquire emergency food and water supplies, heirloom seeds, water purification equipment, off-the-grid power supplies, medical and basic Information like gardening, first aid, survival, and gun repair. I personally have also obtained animals that will also produce food for my family like Rabbits, Chickens, Ducks, Dairy Goats and Pigs because we don't know how long the coming difficulties may last and it is impossible to store years of food without knowing the time frame endpoint.

If you would like to support this site and our efforts to prepare others and obtain a treasure trove of valuable information, Donate $15 USD or More, Here and we will send you our Ultimate Prepper CD with more than 160 books and manuals of information that will be priceless in the near future. If you do not get the information from us we highly recommend you acquire the survival information anywhere you can because information is you greatest tool. This site itself contains lots of information in past articles that will help you in your quest to prepare, so please browse.

From the History Channel:

Today’s world has troubles unique to its time in history, from the global financial crisis to technological meltdowns to full scale, computerized global war. Observing the convergence of such events, contemporary prophets have begun to emerge from obscurity to suggest that these conditions might be signs of the demise of the modern world.

These men are historians as well, using all manner of information and patterns from the past to provide context for where we are going. Their predictions interpret the current state of affairs in our world as evidence that the America we know may come to an end. The men proposing these ideas are not crackpots living on the streets of New York; they are intelligent, learned men who come armed with the evidence to back up their claims.



WATCH Prophets of Doom A History Channel Documentary


Monday, April 25, 2011

Looting 101 and Counter Strategies for Survival



Law and order will be the first casualty when the shit hits the fan. Recent historical examples the world over, including New Orleans, Haiti, and Chile show that without policing, looting will become an immediate danger.

The following Guide to Looting When the SHTF by Thomas Northrop of No Bullshit Survival shows that survival and preparedness planning does not include just storing food, supplies, guns, and medicine, or creating tactical defense plans for your home and property. There will be organized gangs, whose sole method of acquiring necessities will be through looting. A friend recently mentioned that when discussing possible collapse scenarios at the water cooler, one of his office coworkers suggested that he would simply take what he needs from other people if it came down to it. Thus the looter mentality is not as isolated as we may think. In all likelihood, this person has already considered what he would do, how he would do it, and how far he was willing to go.

This is a reality, so understanding and accepting it as such is important now – so that you are fully prepared to deal with it if ever confronted by such a situation.

If you’re a law abiding citizen I suggest you don’t read this section. In some historical instances extraordinary measures have been taken against looters during times of crisis. It’s not uncommon in some countries for looters to be shot, either by police, army, or business owners. Some governments will justify the shooting of looters with the excuse of “preventing further damage to the economy”. I suggest you get out of countries that value the economy over your life.

Warnings aside… Let’s get down to business!

What is Looting?

Looting is essentially the act of stealing goods during a catastrophe, riot, war, or natural disaster and can also be referred to as sacking, plundering or pillaging. Looting is almost always opportunistic and usually occurs during a collapse in authority.

Looting can be justified in many ways. Some people may feel that if the goods are not stolen, they will be wasted. Another common belief is that if they don’t steal the goods, it will be stolen by someone else. In the aftermath of a large disaster, these beliefs both hold credence and are good reasons for you to be looting!

Preparing

As with any endeavor, preparation is the key to success. In order to take optimal advantage of a disaster and loot effectively you’ll want to get several things handled ahead of time. The next few pages will cover all the information you need to become a master looter.

Make a Looting Kit

There are a few items that will make looting a lot easier. You’ll want to keep these items ready and on hand for when shit hits the fan. They should be kept together in the location for easy access so you just pick them up and go when it’s time.

Crow bar

The ultimate urban survival tool! A nice, heavy crowbar can be used to break into stores, clear your way through rubble and it can be used as a weapon! Don’t underestimate the crowbar. There are a million things you can do with a crowbar, just use your imagination.

Bump keys

These are keys that have been grinded down in such a way that they can be used to open almost any lock. Bump keys are used by locksmiths and they’re relatively easy to use. A crowbar will get you through any door or window but a bump key will get you through without making a mess.

Laundry bag

A strong, large drawstring bag is a definite must for looting. Laundry bags are great for the purpose of looting. They have a large carrying capacity and when empty they can be folded to fit in your pocket. You can always go for a large backpack, duffle bag or rucksack but they’re cumbersome, expensive and made for looks more then anything else.

A dollar coin or quarter

You may be wondering… a dollar coin or quarter? What the hell for? Well the answer may be a lot simpler then you imagine. The coin is for a shopping cart! Just make sure you get one before the other looters! If you don’t want to use a coin, you can always use the crowbar to break the chains holding them together.

Flash light / Lantern

It’s very likely that if the situation permits looting, the power is probably out. Good luck getting over fallen shelves and getting food in the dark. Looting with one hand will also be difficult but there are a few methods around that. I suggest placing the lantern or flash light in the shopping cart, get a head lamp, or just bring someone along to shine the light and push the cart.

Make a Looting Team

Find several friends or family members and make a plan! It’s all about leverage, you can get a lot more done if your work as team. Get everyone together in a room and discuss a plan of action. Here are the questions you’ll want to have answered:

•Under what circumstances will looting take place?
•Where will the goods be kept?
•Who has a vehicle for transportation?
•What are the best locations for looting?
•Should each individual go to a different store?
•Should everyone go as team?
•What goods have priority?

If each person focuses on acquiring a certain type of item, you’ll collectively save a lot of time and effort. What I mean by this is that one person will collect water filters, one person will collect rice and beans, and the other person will collect fuel. That’s just an example and should be customized to fit your team needs.

Mapping and Creating a List of Target Addresses

Get a detailed map of your city and mark off important looting locations. Make a legend with symbols to represent different types of locations, for instance, use a circle for food stores, triangles for hunting/outdoor stores, squares for hospitals and pharmacies etc. A good resource for finding addresses and locations is Google maps, just type in a store name and Google will give you all the addresses for that store in your area. Copy and paste the results into a .txt file and print it out for future use. This map is extremely important and should be kept in a safe area. The map should be copied and distributed among friends and family. Here’s a list of some locations to keep in mind:

•Hospitals
•Restaurants
•Grocery stores
•Large stores and warehouses
•Police stations
•Fire stations
•Factories
•Shipyards
•Pharmacies
•Liquor stores
•Malls
•People’s houses
•Schools
•Sporting good stores
•Outdoor living stores
•Garden stores
•Hardware stores
•Military / Armory bases
•Gas stations
•Air ports
•Shipping container sites
•Hotels

What to Loot

Some items are important to loot and some aren’t. A wide screen TV for instance will not contribute to your chances of survival. The highest priority should be on food and water but depending on location, finding water may be a problem. Water is too heavy to move around so instead of looting water bottles the focus should be on buckets and water filters. The value of money may be worthless in a disaster situation and therefore should not be a high priority. The most important items to loot are as follows:

•Personal medicine (if required)
•Water filters and water
•Rice
•Dried lentils, legumes, beans
•Salt
•Oatmeal
•Whole wheat flour
•Sugar
•Cooking oil
•Coffee
•Money (preferably in change)
•Alcohol
•Cigarettes
•Energy bars
•Coo laid/ electrolytes
•Fuel/oil
•Places to Avoid

The family run corner stores should be avoided as the owners actually have an interest in the store. The best historical example to illustrate this point occurred during the LA riots… remember Korea town?. Go for the Walmarts and Super stores as the employees could care less about you looting (they have no vested interest in the store).

Looting When Shit Hits the Fan

You have a plan and you know what to do but now we’ll going into the details of what happens next.

It’s my personal belief that violence will not break out in the first stages of a disaster since food and supplies are still in relative abundance and people have what they need to survive. This has been proven during hurricane Katrina and many other disasters. The first few weeks of a disaster should be spent looting and acquiring resources. Everyone in your team should loot the area and acquire as much as a possible. It’s only after several weeks of looting that gangs and groups will have formed and violence will erupt. Fighting will most likely occur over food and resources. All looting from that time on should be executed with extreme caution.

We will undoubtedly get flack for publishing this “guide,” so to clear things up, we are posting this not so much as an instructional manual for how to loot, but to reiterate the point that there are those, and they are plentiful, who are fully prepared to take what they need at the expense of others.

You may have stereotypes of what a looter looks like and the people they will be traveling with. Stop stereotyping, because the fact of the matter is, that when people are hungry and under extreme stress the line between right and wrong is blurred and very easily crossed, and color or socioeconomic background will not matter.

With respect to the looting guide above, Mr. Northrop’s list of items to loot are, for the most part, necessities. Some might even suggest that instead of looting, we could call it “foraging,” at least when it comes to the essentials. Imagine for a moment that one of your family members has sustained an injury and requires antibiotics. Would you or would you not break into the pharmacy down the street to gain access to Penicillin? The same goes for food. If you’re food stores were wiped out, for whatever reason, and you knew of a train fully loaded with boxes of dry goods, would you or would you not “loot” that train to acquire the much needed food?

Some would argue that abandoned grocery stores, pharmacies, hospitals or distribution centers don’t belong to any one individual, so looting in those areas is not as bad as, say, breaking into someone’s home.

Supplies at those abandoned locations, however, will eventually and likely very quickly, run dry as everyone who hasn’t prepared (probably north of 90% of the population) will be scrambling to get as much food as they can.

You can probably guess what happens next. This is why it is important to prepare right now. The last place you want to be when the SHTF is out with the rest of the looters and foragers. It would be much more preferable to be at home finalizing your defense preparations – doing things like setting up barbed wire, firing lines, booby traps and coordinating with neighbors – because if the disaster event lasts for more than a week without outside resupply, gangs and looters are going to be headed your way next.

Original Article

Monday, April 11, 2011

Economic Collapse by Summer 2011 as a Result of Japan Crisis

Micheal Ruppert talks about the forthcoming economic collapse from effects of the Great Japanese Earthquake. Surviving the Economic Collapse - Beyond Food Storage
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Friday, April 1, 2011

Migration Of The Black Swans


By Giordano Bruno


The phrase “Black Swan” is really making the rounds these last few months. Uttering the term a year ago would have earned you a collection of confused looks and a general attitude of disinterest. Now, people behave as if they had learned about economic shockwave events and the global domino effect when they were in kindergarten. The problem is that when this kind of terminology hits the mainstream, in most cases it comes prepackaged with dumbed down and diluted definitions which promote an inadequate, cartoonish understanding of the circumstances.


To be sure, most Americans are well aware that the world’s political and economic foundations are about as stable as fresh pudding under a heat lamp. The problem is that they are now being conditioned by the mainstream media to view the idea of collapse as “cinematic”; a kind of live action fantasy in which we all get to play the part of the audience, watching safely from the dark in our cushy theater seats with a bag of overpriced popcorn, Dolby surround sound, and a hot date to keep us company during the boring parts. Three years ago, even mentioning the idea of a breakdown in society or a financial catastrophe beyond a minor recession earned you the label of “doom monger”; a rather inept and na├»ve attempt on the part of the MSM to silence any economic analysis that stepped outside the establishment Keynesian framework. Today, I turn around to look at a magazine stand at the airport and right in front of me is Newsweek openly declaring “Apocalypse Now”!



Is the mainstream finally catching up to the alternative media? No. The MSM is merely adopting pieces of our common language and twisting them to fit a more globalist friendly viewpoint. Because our readership is growing exponentially, and our traffic is skyrocketing while corporatized news sources are floundering, the MSM is losing its ability to obscure our fact based journalism with their over funded and highly sterilized adaptation of reality. So instead, they attempt to co-opt our particular vocabulary, and our news focus, while adding their own subtle spin and sensationalism. When people not familiar with the alternative media and the more in-depth information we provide talk about a “Black Swan event”, a depression, hyperinflation, etc., their concept of the implications of such disasters is far different than ours. They are living in the Disney version of financial and social Armageddon.


Of course, when the curtains raise, the previews are over, and the show begins, none of us will be lounging comfortably outside these calamities to simply watch. We will all be inexorably involved, whether we like it or not. So, carry on with the media war we must. Educating the masses on the ENTIRE story behind international events and their consequences continues to stand as a top priority, until that final straw caves the camel’s back and disseminating the truth becomes a needless exercise in pointing out the horrifyingly obvious.


First, let’s examine the veiled reverberations of recent “Black Swan” events, the wider view of the chain that ties them together, as well as what we should expect in the near future in the wake of their aftermath…


Fukushima Mon Amour


If I could choose only one tragedy to be categorized as a textbook example of a Black Swan, it is the earthquake and subsequent tsunami off the coast of northern Japan which led to the current and precarious meltdown of the nuclear reactors at Fukushima. Now, the immediate concerns of Western nations, especially citizens of the U.S., have automatically turned to the threat of radioactive fallout traveling across the Pacific. Unfortunately, radioactivity is the least of our troubles in the face of Japanese nuclear core exposure. Again, Japan is currently the number three economy in the world, and the effects of the Fukushima incident have contributed to the possibility of a full spectrum crisis.


First, we must always keep in mind that incidents in areas like Japan or the Middle East are NOT the direct cause of global economic or social turmoil; they are only trigger points for an avalanche that has been building for the past three to four years. If Fukushima had occurred in 2007, international markets would have easily absorbed the blow, but today, economies everywhere have been so weakened by the implosion of the banker created derivatives bubble and the inflationary fiat measures of private organizations like the Federal Reserve that they no longer have the capacity to shield themselves from unexpected catastrophes. Big banks have been playing a massive game of Jenga with the global economy, pulling one support after another until the whole construct begins to sway and tremble. One gust of wind, one tremor, one wrong move, and the whole thing comes crashing down. If you want to place blame for the chaos we are about to see in the aftermath of Fukushima, be sure to place it where it belongs; on the doorstep of corporate monstrosities like the Fed, Goldman Sachs, JP Morgan, HSBC, etc.


Second, Japan’s official debt to GDP ratio now stands at 225%, way above the limit usually attributed to a country on the verge of complete debt destruction. The cost of rebuilding the areas damaged by the tsunami alone is estimated at around $300 billion. My primary concern in light of Japanese instability, though, is the severe weakening of their export markets. Japan is almost entirely reliant on its export capacity to support its ailing economy, meaning they are dependent on other countries to continually purchase their goods. However, in 2008, Japanese exports were pummeled, and have not improved anywhere near levels reached previous to the credit collapse, at least according to initial numbers for 2010:



http://www.bloomberg.com/news/2010-11-24/japan-export-growth-slows-more-than-forecast-as-economy-loses-trade-boost.html


The earthquake and nuclear meltdown of 2011 have sealed Japan’s fate. It could take ten, twenty, even thirty years for them to recuperate from this setback. Manufacturing in the Asian nation has already deteriorated at the fastest pace in nearly a decade:


http://www.bloomberg.com/news/2011-03-30/japan-manufacturing-shrinks-most-since-2009-in-first-sign-of-quake-impact.html


Japanese food exports are being shunned by international markets for fear of radioactive contamination. Prime Minister Naoto Khan is now pleading with the WTO to urge its members to avoid curbing imports of Japanese goods, claiming that the government is on top of the Fukushima situation:


http://www.reuters.com/article/2011/03/30/us-japan-quake-idUSTRE72A0SS20110330


This hardly appears to be the case though. Reports of radioactive iodine 10,000 times safe levels in the water table below Fukushima have surfaced; reports which the Tokyo Electric Power Company is now vaguely stating “may be incorrect”:


http://www.bloomberg.com/news/2011-03-31/japan-reviewing-water-tests-showing-iodine-at-10-000-times-limit.html


The secrecy surrounding Japan’s nuclear meltdown is highly disconcerting and reminiscent of the Chernobyl incident in 1986, which the Soviet Union also refused to report honestly. Nearby cities were completely uninformed as to the true danger of the meltdown, and the international community was without a clue as to the extent of the radiation until Sweden, nearly seven hundred miles away, discovered radioactive particulates in its atmosphere. The problem with a containment breach in a nuclear plant is that it releases a steady stream of radioactive materials into the environment until the plant is finally buried under tons of concrete, lead, boric acid, and sand, as opposed to a nuclear weapon, which detonates, irradiating surrounding particles, which then dissipate after around two weeks. Fukushima, if left uncontained, could spew radioactivity for decades. The Japanese government does not seem to be providing forthright information about the real jeopardy involved.


Of course, if they were forthright, there would certainly be alarm amongst the citizenry, but even more so, a flight of investment dollars from Japanese industry and stocks. The only equity in Japan which seems to be attracting investment is the Yen itself, which skyrocketed against the U.S. dollar at the onset of the crisis:


http://www.rttnews.com/ArticleView.aspx?Id=1577203


The Yen has climbed steadily against the dollar since the early 1970’s, from 300 yen per dollar, to only 80 yen per dollar after Fukushima. I find it interesting that now, during times of financial uncertainty, global investors would rather pour their savings into the currency of a country that is about to be radioactive, rather than put their savings into the U.S. Greenback! What does that tell you about the level of trust the world currently has in our currency?


Being that Japan is a dedicated export economy, the higher the Yen goes, the more strenuous the exchange rate, and the less other countries will buy from them. G7 nations have since attempted to artificially knock down the rise of the Yen, but their efforts have yielded little success. The Yen still stands at around 83 per dollar. Hardly an improvement that will make Japanese exports more viable.


So, where is this all leading…? High speed deflationary depression for Japan. But that’s not all! The ASEAN trading bloc, led by China and fueled by the rising Yuan, has been pushing Japan to join the fold for years. Japan has been less than receptive to the proposition for numerous cultural, political, and financial reasons. But now, with the complete downfall of the country underway, and their export capability crumbling, Japan may go begging to join ASEAN. Already, ASEAN is beginning to offer help in Japan’s rebuilding process:


http://ph.news.yahoo.com/asean-benefit-japan-reconstruction-20110329-054529-485.html


What does this mean for the U.S.? It means the Japanese will likely begin a progressive dump of their vast reserves of U.S. Treasuries and dollars, replacing them with Yuan bonds. Its means a severe devaluation of the dollar in the near future along with the possible end to its World Reserve Currency status. It means hyperinflation in America. This is the true nature of a Black Swan event. It is not a single incident, but a chain reaction that spreads like cancer through an economic system, leading to broader misfortune than anyone dared imagine.


Once Upon A Time In The Middle East


The effects of the revolutionary fervor in the land of OPEC are a bit more obvious than those caused by Japan, at least, for the most part. Crude oil is now climbing towards $107 per barrel at the publishing of this piece. World markets are swinging wildly like a cheap carnival ride. Political alliances (especially between the U.S. and its primary oil suppliers) are becoming strained. The dollar’s peg to oil is now under threat. But this is really no surprise. As we have discussed in past articles, it is exactly what happened to the British Empire in the early 1950’s when it attempted to strong arm Middle Eastern governments and maintain the oil trade under the Pound Sterling. Eventually, the British became embroiled in Arab conflicts and revolts they could not possibly untangle, and their main debt holders (one of which was the United States) threatened to dump British Treasuries and the pound sterling as the world reserve currency. Sound familiar….?


So now that America is repeating the blunders of the British (most likely by design), what can we expect from turmoil in the Middle East?


First, crude prices are going to continue expanding. Not so much due to supply concerns (Libya, for instance, makes up only 2% of global oil production), but because of the escalating distrust of the U.S. and its interests in the region, leading to a likely decoupling of oil from the greenback. The Obama Administration’s response to this growing danger has been, interestingly, to focus not on the devaluation of the dollar, but instead, to distract us with more nonsensical supply side theories. The president (and I use that term loosely) has seen fit to present yet another model for “green alternatives” which would supposedly diminish Americas dependence on foreign oil supplies. Unfortunately, this plan’s main drive is to cut oil importation to the U.S by one third over the next ten years while we are at the very onset of an energy crisis. Keep in mind that this plan does NOT include utilizing the extensive crude oil reserves discovered in America’s northwest:


http://www.reuters.com/article/2011/03/30/us-obama-energy-idUSTRE72S3C820110330


http://www.usgs.gov/newsroom/article.asp?ID=1911&from=rss_home


Absolutely brilliant! Let’s cut our oil supply by a third while the dollar is in the midst of losing its reserve status and Obama fumbles about with biofuels that rely mainly on corn, a commodity which is also exploding in cost due to dollar devaluation, and requires more energy to refine than it eventually produces. Does anyone doubt anymore that this government is deliberately sabotaging our economy?! Holy Frijoles!


China’s move over the past two years to purchase more oil from Russia instead of the Middle East while dropping the dollar as a reserve currency in bilateral trade now seems almost clairvoyant, doesn’t it?


As the destabilization of the Middle East spreads, the most volatile situation is not even necessarily that of oil and the dollar, but that of Syria. Due to its alliances and its tensions with Israel, Syria has become the keystone of the Middle East. Any disruption in Syria could lead to widespread war in the region, involving not just the U.S., but also Russia. Protests have begun to rage in the country, just as in the rest of the Arab nations, which has suddenly peaked the interest of the publication ‘Foreign Policy’; the official magazine of the Council on Foreign Relations, a well known globalist think tank. In a recent article, they called the state of affairs in Syria the “Syrian Time Bomb”:


http://www.foreignpolicy.com/articles/2011/03/28/the_syrian_timebomb?page=full


Foreign Policy covers the basics of the Syrian connection, but omits a very important factor; the revamped Russian naval base on the coast of Syria itself. I have written several articles over the past four years covering the possibility of a Syrian chain reaction. Here is a quote from one, published in June, 2010 to illustrate the potential for calamity that could unfold if Syria is invaded or even politically pressured by the U.S. or Israel:


This leads us to what may end up being the most important news of last year besides the “Great Recession”; a defense pact signed between Iran and Syria:


http://www.jpost.com/servlet/Satellite?cid=1260447419513&pagename=JPArticle%2FShowFull


So, what elements are we dealing with here? We have a nuclear armed Israel itching to attack Iran. We have Iran engaged in a defense pact with Syria against Israel. We have Syria with Russian navy bases and weapons on its soil, and we have the U.S. rampaging through the Middle East encroaching on the borders of Pakistan and Yemen, essentially pissing off everyone. What we have is a Globalist made recipe for disaster, using the same ingredients they have used for the last several major wars.


http://neithercorp.us/npress/2010/01/will-globalists-trigger-yet-another-world-war/ There is little doubt, Syria is in the beginning stages of revolution at this very moment. The government has responded with the same murderous tactics that have been attributed to Gaddafi in Libya, including shooting down protesters using snipers (meaning soldiers were not firing in random panic, but deliberately picking targets and killing unarmed citizens in cold blood):


http://www.washingtontimes.com/news/2011/mar/25/violence-erupts-around-syria-protesters-shot/#


Will the U.S. or the UN respond to Syrian upheaval as they have in Libya? If they do, expect a powder keg reaction far more violent than we have yet seen, and also expect Russia to begin taking a much greater interest in the affairs of the Middle East. The hidden consequences of the Black Swan strike again…


Swan Lake, Or Swan Dive?


The flow of events from one into the other, melding and changing like the currents of a river, can become confusing, if not downright terrifying. The underlying rush of economies and political tensions is often obscured by disinformation, as well as the distracting nature of simultaneous cataclysms. What is created in the torrent of this global swell is a kind of ‘factory of fear’; a frenetic blast of winding grinding machinery swirling around us with menacing gears made of panic and dread. A step in the wrong direction, and we lose an arm or a leg. Black Swan incidents are not the source of this pandemonium. In fact, they sometimes shock the masses into clarity. They reveal the hidden landmines strewn about our financial and social landscape. They cause migrations of decline and surprisingly erratic reactions within a system, but also expose the fallacies inherent in that system as well. The key is to not allow fear to drive our response to the now unmistakable problems we face.


Whether we stand in defense against one adversity, or a thousand at once, is irrelevant. The bottom line is that we cannot lose focus, we cannot fail, and we cannot stop. There is no other choice but to move forward, and to prevail.


Original Article

Max Keiser and Dmitry Orlov: Who is Responsible for the Economic Collapse in America

The Crime of the Century - The Looting of America



We now have an economy in which five banks control over 50 percent of the entire banking industry, four or five corporations own most of the mainstream media, and the top one percent of families hold a greater share of the nation’s wealth than any time since 1930. This sort of concentration of wealth and power is a classic setup for the failure of a democratic republic and the stifling of organic economic growth.” - Jesse – http://jessescrossroadscafe.blogspot.com/



Source: Barry Ritholtz


“All of the old-timers knew that subprime mortgages were what we called neutron loans — they killed the people and left the houses.” - Louis S. Barnes, 58, a partner at Boulder West, a mortgage banking firm in Lafayette, Colo



The storyline that has been sold to the public by the Federal government, Wall Street, and the corporate mainstream media over the last two years is the economy is recovering and the banking system has recovered from its near death experience in 2008. Wall Street profits in 2009 & 2010 totaled approximately $80 billion. The stock market has risen almost 100% since the March 2009 lows. Wall Street CEOs were so impressed by this fantastic performance they dished out $43 billion in bonuses over the two year period to their thousands of Harvard MBA paper pushers. It is amazing that an industry that was effectively insolvent in October 2008 has made such a spectacular miraculous recovery. The truth is recovery is simple when you control the politicians and regulators, and own the organization that prints the money.


A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history. The authorities had a choice. This country has bankruptcy laws. The criminally negligent Wall Street banks could have been liquidated in an orderly bankruptcy. Their good assets could have been sold off to banks that did not take their extreme greed based risks. Bond holders and stockholders would have been wiped out. Today, we would have a balanced banking system, with no Too Big To Fail institutions. Instead, the years of placing their cronies within governmental agencies and buying off politicians paid big dividends for Wall Street. Their return on investment has been fantastic.


The plan has been as follows:



  • In April 2009 the FASB caved in to pressure from the Federal Reserve, Treasury, and Wall Street to suspend mark to market rules, allowing the Wall Street banks to value their loans and derivatives as if they were worth 100% of their book value.

  • The Federal Reserve balance sheet consistently totaled about $900 billion until September 2008. By December 2008, the balance sheet had swollen to $2.2 trillion as the Federal Reserve bought $1.3 trillion of toxic assets from the Wall Street banks, paying 100 cents on the dollar for assets worth 50% of that value.



  • In November 2009 the Federal Reserve and IRS loosened the rules for restructuring commercial loans without triggering tax consequences. Banks were urged to extend loans on properties that had fallen 40% in value as if they were still worth 100% of the loan value.

  • By December 2008 the Federal Reserve had moved their discount rate to 0%. For the last two years, the Wall Street banks have been able to borrow from the Federal Reserve for free and earn a risk free return of 2%. The Federal Reserve has essentially handed billions of dollars to Wall Street.

  • When it became clear in October 2010 that after almost two years of unlimited liquidity being injected into the veins of zombie banks was failing, Ben Bernanke announced QE2. He has expanded the Fed balance sheet to $2.6 trillion by injecting $3.5 billion per day into the stock market by buying US Treasury bonds. Bernanke’s stated goal has been to pump up the stock market. While taking credit for driving stock prices higher, he denies any responsibility for the energy and food inflation that is spurring unrest around the world.

  • The Federal Reserve has increased the monetary base by $500 billion in the last three months in a desperate attempt to give the appearance of recovery to a floundering economy.

FRED Graph



  • Beginning on December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. The unlimited insurance coverage is available to all depositors, including consumers, businesses, and government entities. This unlimited insurance coverage is separate from, and in addition to, the insurance coverage provided to a depositor’s other deposit accounts held at an FDIC-insured institution.

When You’re Losing – Change the Rules


Wall Street banks had absolutely no problem with mark to market rules from 2000 through 2007, as the value of all their investments soared. These banks created products (subprime, no-doc, Alt-A mortgages) whose sole purpose was to encourage fraud. Their MBA geniuses created models that showed that if you packaged enough fraudulent loans together and paid Moody’s or S&P a big enough bribe, they magically became AAA products that could be sold to pension plans, municipalities, and insurance companies. These magnets of high finance were so consumed with greed they believed their own lies and loaded their balance sheets with the very toxic derivatives they were peddling to the clueless Europeans. They didn’t follow a basic rule. Don’t crap where you sleep. When the world came to its senses and realized that home prices weren’t really worth twice as much as they were in 2000, investment houses began to collapse like a house of cards. The AAA paper behind the plunging real estate wasn’t worth spit. After Lehman Brothers collapsed and AIG’s bets came up craps for the American people, the financial system rightly froze up.


After using fear and misinformation to ram through a $700 billion payoff to Goldman Sachs and their fellow Wall Street co-conspirators through Congress, it was time begin the game of extend and pretend. Market prices for the “assets” on the Wall Street banks’ books were only worth 30% of their original value. Obscuring the truth was now an absolute necessity for Wall Street. The Financial Accounting Standards Board already allowed banks to use models to value assets which did not have market data to base a valuation upon. The Federal Reserve and Treasury “convinced” the limp wristed accountants at the FASB to fold like a cheap suit. The FASB changed the rules so that when the market prices were not orderly, or where the bank was forced to sell the asset for regulatory purposes, or where the seller was close to bankruptcy, the bank could ignore the market price and make up one of its own. Essentially the banking syndicate got to have it both ways. It drew all the benefits of mark to market pricing when the markets were heading higher, and it was able to abandon mark to market pricing when markets went in the toilet.



“Suspending mark-to-market accounting, in essence, suspends reality.” – Beth Brooke, global vice chair, at Ernst & Young


Wall Street desired all the billions of upside from creating new markets for new products. Their creativity knew no bounds as they crafted MBOs, MBSs, CDOs, CDSs, and then chopped them into tranches, selling them around the world with AAA stamps of approval from the soulless whore rating agencies. When the net result of a flawed system of toxic garbage paper was revealed, there was no room at the exits for the stampede of investment bankers. The toxic paper was on the banks’ books and no one wanted to admit the greed induced decision to purchase these highly risky, volatile “assets”. The trade had not gone bad, the ponzi scheme had unraveled. Suspending FASB 157 has been an attempt to hide this fraudulent business model from investors, regulators and the public. By hiding the true value of these assets, the financial system has never cleared. The banks remain in a zombie vegetative state, with the Federal Reserve providing the IV and the life support system.


Let’s Play Hide the Losses


Part two of the master cover-up plan has been the extending of commercial real estate loans and pretending that they will eventually be repaid. In late 2009 it was clear to the Federal Reserve and the Treasury that the $1.2 trillion in commercial loans maturing between 2010 and 2013 would cause thousands of bank failures if the existing regulations were enforced. The Treasury stepped to the plate first. New rules at the IRS weren’t directly related to banking, but allowed commercial loans that were part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without triggering tax penalties for investors.



The Federal Reserve, which is tasked with making sure banks loans are properly valued, instructed banks throughout the country to “extend and pretend” or “amend and pretend,” in which the bank gives a borrower more time to repay a loan. Banks were “encouraged” to modify loans to help cash strapped borrowers. The hope was that by amending the terms to enable the borrower to avoid a refinancing that would have been impossible, the lender would ultimately be able to collect the balance due on the loan. Ben and his boys also pushed banks to do “troubled debt restructurings.” Such restructurings involved modifying an existing loan by changing the terms or breaking the loan into pieces. Bank, thrift and credit-union regulators very quietly gave lenders flexibility in how they classified distressed commercial mortgages. Banks were able to slice distressed loans into performing and non-performing loans, and institutions were able to magically reduce the total reserves set aside for non-performing loans.


If a mall developer has 40% of their mall vacant and the cash flow from the mall is insufficient to service the loan, the bank would normally need to set aside reserves for the entire loan. Under the new guidelines they could carve the loan into two pieces, with 60% that is covered by cash flow as a good loan and the 40% without sufficient cash flow would be classified as non-performing. The truth is that billions in commercial loans are in distress right now because tenants are dropping like flies. Rather than writing down the loans, banks are extending the terms of the debt with more interest reserves included so they can continue to classify the loans as “performing.” The reality is that the values of the property behind these loans have fallen 43%. Banks are extending loans that they would never make now, because borrowers are already grossly upside-down.



Extending the length of a loan, changing the terms, and pretending that it will be repaid won’t generate real cash flow or keep the value of the property from declining. U.S. banks hold an estimated $156 billion of souring commercial real-estate loans, according to research firm Trepp LLC. About two-thirds of commercial real-estate loans maturing at banks from now through 2015 are underwater. Media shills proclaiming that the market is improving, doesn’t make it so. The chart below details the delinquency rates from 2007 through 2010 as reported by the Federal Reserve:



























































































































































Real estate loansConsumer loans
AllBooked in domestic officesAllCredit cardsOther
ResidentialCommercial
2010 4th Qtr9.01 9.94 7.97 3.71 4.17 3.10
2010 3rd Qtr9.77 10.90 8.69 4.03 4.60 3.39
2010 2nd Qtr10.02 11.32 8.74 4.25 5.07 3.37
2010 1st Qtr9.78 10.97 8.66 4.63 5.76 3.48
2009 4th Qtr9.48 10.29 8.74 4.64 6.36 3.48
2009 3d Qtr9.00 9.67 8.57 4.72 6.51 3.61
2009 2nd Qtr8.19 8.69 7.84 4.85 6.75 3.69
2009 1st Qtr7.19 7.89 6.55 4.62 6.50 3.52
2008 4th Qtr5.99 6.57 5.49 4.29 5.65 3.37
2008 3rd Qtr4.88 5.26 4.66 3.73 4.80 3.05
2008 2nd Qtr4.21 4.39 4.15 3.55 4.89 2.80
2008 1st Qtr3.56 3.70 3.50 3.48 4.76 2.76
2007 4th Qtr2.89 3.06 2.75 3.41 4.60 2.66
2007 3rd Qtr2.40 2.78 1.98 3.20 4.41 2.48
2007 2nd Qtr2.01 2.30 1.63 2.99 4.02 2.37
2007 1st Qtr1.77 2.03 1.43 2.93 3.97 2.29


Delinquency rates on residential and commercial loans in early 2007 were in the range of 1.5% to 2.0%. Now the MSM pundits get excited over a decline from 8.7% to 8.0%. These figures show that even after trillions of Federal Reserve and Federal Government intervention, delinquencies remain four times higher than normal. In the real world, cash flow matters. Payment of interest and principal on a loan matters. Actual market values matter. According to Trepp, LLC, a data firm specializing in commercial data, non-performing commercial real estate loans makes up 72% of the $320 million in non-performing loans reported by banks in February. These figures are after the “extremely” relaxed definition of non-performing allowed by the Federal Reserve. The game is ongoing. Misinformation abounds. The SEC now issues press releases saying they are worried that banks are covering up losses, when they were involved in encouraging the banks to cover-up their losses. Last week the SEC announced they have become concerned that extend and pretend, along with another practice known as “troubled debt restructuring” that allows banks to break loans into pieces, may have been abused in order to diminish the volume of reserves banks are holding. What a shocking revelation. Who could have known?


Are You Smarter than a Wall Street CEO?


The Federal Reserve paid shills and Wall Street front men are out in droves declaring that TARP was a success and the banking system is recovering strongly. Columnists like Robert Samuelson declare TARP was a great investment and will profit the taxpayer. Samuelson says that the Treasury has recouped $244 billion of the $245 billion it invested in banks and that, when it winds down its last investments, it likely will show a $20 billion profit from the banks. This type of propaganda is ludicrous, as Barry Ritholtz succinctly points out:


“No, we are not profitable on the bailouts. TARP has $123B to go before breakeven, and the GSEs are $133B in the hole. All told, the Taxpayers have a long way to go before we are breakeven. That’s before we count lost income from savings, bonds, etc., the increased costs of food stuff and energy due to inflation (the Fed’s has done this on purpose as part of their rescue plan), the higher fees the reduced competition of megabanks has created, and the future costs our Moral Hazard will have wrought in increased risks and disasters.”Barry Ritholtz



Source: Barry Ritholtz


Fannie Mae and Freddie Mac have hundreds of billions in bad loans sitting on their balance sheets. Their total cost to taxpayers will reach $400 billion, and never be repaid. The Federal Reserve has over $1 trillion in toxic assets on its balance sheet, off loaded by the TARP recipient banks in 2009. The taxpayer will never be repaid for this toxic waste. The government is implementing the Big Lie theory. If you tell a big lie often and loud enough, the non-thinking masses will believe it. That leaves us with today’s fantasy world.


The reality on the ground does not match the rhetoric coming from the government, Wall Street and the corporate mainstream media. The truth is as follows:



  • The vacancy rate for office space in the U.S. is currently 16.5%.

  • The vacancy rate for industrial space in the U.S. is currently 14.2%.

  • The vacancy rate for retail space in the U.S. is currently 13%.

  • Delinquencies within collateralized debt obligations in commercial real estate loans rose to 14.6% in February. The increase signals a trend of higher delinquencies in the segment. Signs of pressure surfaced as early as January when the delinquency rate on CDOs within commercial real estate loans hovered well above 13%.

  • According to Moody’s, CRE prices are down 4.3% from a year ago and down about 43% from the peak in 2007.

  • The delinquency rate on loans packaged and sold in commercial mortgage-backed securities rose to a record 9.2% in February, according to a March 15 report by Moody’s.

  • Regional and local community banks have as much as 80% of their balance sheets tied up in commercial real estate, and very few other sources of significant fee income to offset CRE losses.

  • CRE once had an estimated national value of $6.5 trillion. Today it stands at an optimistic $3.5 trillion.

  • There are 1.8 million homes seriously delinquent, in the foreclosure process or REO that are not currently listed for sale.

  • There are about 2 million current negative equity loans that are more than 50% “upside down”.

  • Home prices are off 31.3% from the peak. The Composite 20 is only 0.7% above the May 2009 post-bubble bottom and will probably be at a new post-bubble low soon.

In the face of this data, mouthpieces for the Federal Reserve go before Congress and try to paint an optimistic picture. ”While we expect significant ongoing CRE-related problems, it appears that worst-case scenarios are becoming increasingly unlikely,” Patrick Parkinson, the Federal Reserve’s director of banking supervision and regulation, told Congress. Parkinson said that since the beginning of 2008 through the third quarter of 2010, commercial banks had incurred almost $80 billion of losses from commercial real estate exposures. Banks are estimated to have taken roughly 40% to 50% of losses they will incur over this business cycle, he said.


The Federal Reserve will be forced by the Federal Courts to reveal the banks they have saved from failure since 2008 by funneling billions of practically interest free tax payer dollars into their hands. The Fed is expected to release this week documents related to discount window lending from August 2007 to March 2010, including the peak month of October 2008, when loans hit $111 billion. It will be revealed they kept alive hundreds of banks that should have died. Shockingly, the supposedly taxpayer protecting Dodd-Frank law exempts past discount window lending from an audit by the Government Accountability Office, that’s examining much of the central bank’s other crisis-era programs. That champion of the little people, Barney Frank, said such disclosures might have “a negative market effect. If people saw the data the next day, they come to the conclusion that the bank must be in trouble.” Openness and transparency are evidently grey areas for Mr. Frank. Despite the non-disclosures, free Fed bucks, accounting fraud and uninterested regulators, over 300 banks managed to go out of business in the last two years, essentially bankrupting the FDIC. Have no fear. The Treasury gave the FDIC an unlimited line of credit with your money.



It is fascinating that every Friday afternoon the FDIC announces approximately three bank failures. Steady as she goes. No panic. Just a slow trickle of failure. But the reality is much worse than the show. Despite the gimmicks of extending and pretending, there are 900 banks essentially insolvent sitting on the FDIC “Problem” list. This is after closing the 300 banks. There are at least a couple hundred billion of losses in the pipeline, to be funded by the American people/Chinese lenders. A critical thinking American might ask, if things are getting better, why does the number of troubled banks continue to rise week after week, month after month?



One year ago the website http://www.businessinsider.com/ listed the 10 major regional banks with the highest risk from commercial real estate loans. These 10 banks had $133 billion of commercial real estate loans on their books. Most, if not all, are still in business today. The fact is those real estate loans are worth 30% to 50% less than they are being carried on the books. A true valuation of these loans would put all 10 of these banks out of business. They are dead banks walking. In a world where transparency, honesty, and true free markets reigned supreme, these banks would pay for their poor risk taking choices. They would be liquidated and their assets would be sold off to banks that did not make horrific lending decisions. Failures would fail.






















































BankCRE Loans (bil.)% of Tier 1 Capital
NY Community Bank$22.0915%
Wintrust Financial Corp.$3.4419%
M&T Bank$20.8378%
Synovus$11.2376%
Wilmington Trust$4.0369%
Marshall & Iisley$13.8283%
Zions Bancorporation$13.4253%
Regions Financial$28.3218%
UMB Bank$1.3156%
Comerica$14.397%


How could anyone deny the world is back on track after examining the following chart?



It should warm your heart to know that Financial Profits have amazingly reached their pre-crash highs. All it took was the Federal Reserve taking $1.3 trillion of bad loans off their books, overstating the value of their remaining loans by 40%, borrowing money from the Fed at 0%, relying on the Bernanke Put so their trading operations could gamble without fear of losses, and lastly by pretending their future losses will be lower and relieving their loan loss reserves. The banking industry didn’t need to do any of that stodgy old school stuff like make loans to small businesses. Extending and pretending is much more profitable.


The big four of JP Morgan, Citigroup, Bank of America, and Wells Fargo should have undergone orderly bankruptcy liquidation in 2008. They took on a vast amount of leverage and a vast amount of risk. Their greedy bets went bad. In a true capitalist system, they would have failed. Instead, in our crony capitalist system, they were bailed out by taxpayers and continue to function as zombie banks pretending to be healthy. They reported profits of $34.4 billion in 2010. Every dime of these profits was generated through accounting entries that relieved their provisions for loan losses. These “brilliant” CEOs who virtually destroyed the worldwide financial system in 2008, looked into their crystal balls and decided their loan losses in the future would be dramatically lower. I’ll take the other side of that bet. I dug into their SEC filings to get the information in the chart below. Just the fact that Citicorp and Bank of America have still not filed their 10K reports after 3 months tells a story.

































































Bank SourceCREMortgagesCredit CardTotal LoansLoss Reserve% of Loans
JP Morgan12/31 10K$53,635$174,211$137,676$692,927$32,2664.7%
Citicorp9/30 10Q$79,281$209,678$216,759$654,311$43,6746.7%
Bank of America9/30 10Q$77,062$394,007$142,298$933,910$43,5814.7%
Wells Fargo12/31 10K$129,783$337,105$22,375$757,267$23,0223.0%


These four “Too Big To Fail” bastions of crony capitalism have $340 billion of commercial real estate loans on their books. That’s a lot of extending and pretending. Just properly valuing those loans at their true market value would wipe out most of their loan loss reserves. I wonder if Vikrim and his buddies have noticed that home prices have begun to plunge again. Deciding to not foreclose on home occupiers that haven’t made a mortgage payment in two years is not a long term strategy. These four banks have $1.1 billion of outstanding mortgage debt on their books. I wonder what a 20% further decline in home prices will do to these loans. Throw in another half a billion of credit card loans to Americans being hammered by soaring energy and food prices and you have a toxic mix of future losses. These banks are gonna need a bigger boat.


The game of extend and pretend at the expense of the American working middle class is growing old. When this game is over, Wall Street will be looking for another bailout. The American people will not fall for the lies again. Wall Street’s oppression reeks of greed and disgrace. They are liars and thieves. They have pillaged and stolen all that was left to steal. I will be surprised if they get out alive.


Original Article