The Quick Fix Culture

March 31, 2013

This hilarious and yet so true article (below) shows how we live in such a superficial world, where we have become accustomed to quick fixes for everything.  We do not want to sacrifice or wait for real solutions that might involve denial to achieve a long term goal.  Instead we want it now.  The reason that so little meaningful reform has been achieved is because politicians are always looking for the quick and easy fix to our problems.  Instead of confronting debt, overspending and waste, let´s just have more debt, overspending and waste.  That should fix the problem.  It is not a wonder that 5 years after the collapse in 2008 the economy continues to drag along in recession mode with chronic high unemployment.  No serious solutions have been presented to correct this.  instead all we get are gimmicks.

This from NaturalNews.

America, land of the ‘quick fix’ culture

by Mike Adams, the Health Ranger, NaturalNews Editor

(NaturalNews) Think you might someday get breast cancer? There’s a quick fix for that: Chop ’em off! It’s called a “preventive double mastectomy” and surgeons are right now successfully convincing women who don’t even have breast cancer to have both their breasts surgically removed.

Is your government drowning in debt? There’s a quick fix for that: Print more money! Don’t worry about currency debasement and the long-term blowout collapse of the U.S. dollar that will bankrupt the nation. We need another hit of that bailout money!

Is your kid too hyperactive at home and at school? Don’t bother changing his diet, removing corn syrup and artificial food colors from his daily intake. No, that would take too much time. Instead, turn your kid into a pill-popping psych drug patient by having him diagnosed by a psychiatrist!

Welcome to the “quick fix” culture of America. For every problem that demands a mature, well-planned solution, there’s a much more seductive quick-fix solution that completely ignores the problem but temporarily makes the symptoms go away.

Are you eating way too much food to the point of runaway obesity? Don’t worry, we can have most of your stomach surgically removed!

Are you dying from cancer tumors? Don’t bother changing your diet, increasing your intake of vitamin D, or reducing your exposure to synthetic chemicals and pesticides. Nope, we can visibly shrink your tumors thanks to chemotherapy! Never mind the fact that chemotherapy will cause yet more tumors to grow all over your body because the No. 1 side effect of chemotherapy is, admittedly, cancer.

Got a problem in your community with whacko kids shooting up schools? Don’t address psychiatric drug abuse, bad parenting, violent video games and other behavioral causes. Just blame all the gun owners and make everybody turn in their guns! Problem solved, right? It’s yet another quick fix snow job.

Worried about your kid getting the flu or the whooping cough? Don’t bother giving them more nutrition: vitamin D, vitamin C, zinc, magnesium and superfoods. Nope, just jab them with a needle, call it “immunization” and be happy with the quick fix!

Why the “quick fix” culture will destroy America

If you look around America today, everything is a quick fix solution; sweeping the problem under the rug; ignoring the causes and treating the symptoms. Whether you’re talking about banking and finance, agriculture, public health, foreign policy, government spending or even public education, it’s all one grand quick-fix snow job.

This quick-fix approach is, of course, childish and immature. It is the abandonment of mature, adult planning for the future. A successful society (and nation) needs wisdom, foresight and planning. It needs leaders who have the courage to address core solutions rather than settling for short-term symptom reductions.

But America has become the land of the quick fix, and the quick fix inevitably leads to collapse. That’s because quick fixes do not solve underlying problems, and so the problems only get worse and worse.

For example, instead of solving the underlying causes of health problems, Obamacare merely handed Big Pharma and the health insurance companies an illegal monopoly that makes everybody in the nation pay for yet more “disease management.”

Instead of working on ways to actually pay down the U.S. debt, Obama has blown the national debt sky high by trillions of dollars in just the last four years.

Instead of decriminalizing marijuana and ending the police state prison culture that only breeds more crime, Obama signed the NDAA, authorizing yet more secret arrests and indefinite detainment of American citizens. He made the police state even worse than Bush did!

Obama is a quick-fix President ruling over a quick-fix culture that’s dying thanks to quick-fix medicine and going broke under a quick-fix economy. Yep, the fix is in, and we’re all royally screwed!

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More Corruption with GMOs

March 31, 2013

It seems that the corruption and buying of government will not stop.  The only way to save our country is to reform the way that campaigns are financed.  Without fundamental reform, trying to stop the waves of betrayal by our leaders will be a constant and often failed struggle.  Yes we fight and even win sometimes, but in this case (see below about the recently passed GMO rider) we lost scandalously.  And it never ends.  It is like trying to save a sinking ship with a hole in the side by bailing out the water.

For an example of how moneyed special interests have taken over the government read this article below by Alliance for Natural Health.

http://www.anh-usa.org/the-latest-on-the-gmo-rider/

The Latest on the GMO Rider

March 26, 2013

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Where do we go from here?

The Continuing Resolution (CR) to fund the federal government passed both the Senate and the House last week—and despite all our mutual efforts, it still contained the dangerous GMO rider we’ve been telling you about. The Senate, and in particular, the Senate Appropriations Committee leadership, let us down, despite earlier signals they would stand up to Monsanto on this one. Senate Democrats were unwilling to remove the biotech rider, despite the efforts of hundreds of organizations and businesses and tens of thousands of phone calls and Action Alert messages sent.

As you’ll recall, the newly passed rider will strip federal courts of the authority to halt the sale and planting of illegal, potentially hazardous genetically engineered crops while USDA is performing an environmental impact statement. It will not only affect future judicial orders—it will also invalidate several recent orders that found the approval of GMO crops were unlawful, and will allow the planting of those GMO crops even while the USDA assesses environmental hazards.

Since the USDA is totally behind GMO crops, removing court restraints really means that there are no controls on GMO planting at all. No safety reviews (USDA can’t even do them, only FDA, which refuses), and not even any real environmental assessments. This is one of the most blatant examples of money talking in politics that we have seen, and we have seen plenty of them in recent years.

There is also a real question whether the rider is constitutional—how can Congress contravene judicial actions? That would seem to contradict the separation of powers doctrine. We will be reviewing this and other questions with legal counsel.

Unfortunately, the Democrats were the ones who pushed this rider and allowed it to go through unhindered. What did they receive in return? This is the big unanswered question, as no one is willing to “take credit” for the rider. We spoke to the office of Sen. Richard Shelby (R-AL), the ranking member of the Appropriations Committee, and asked our lobbyists to see what they could find out, but we still did not get any answers. Barbara Mikulski, the Senate Appropriations Committee chairwoman, is not a big recipient of biotech funds, and she’s usually our ally on this issue—so it is even stranger that the rider’s language would arise out of her committee. Procedurally, it is irregular for a rider to become law that was not passed through the committee of jurisdiction first—in this case, the Judiciary or Agriculture Committee. In fact, Congress held no hearings on the biotech rider, and many Democrats on the committee were initially unaware of its presence in the CR in the first place.

We do know that Monsanto and other biotech companies give a great deal of money to politicians. Opensecrets.org has not collated the information for 2013 as yet, but their figures reveal that contributions to both parties have increased dramatically in recent years. From 2011 to 2012, the agribusiness industry contributed $89,675,179 to political campaigns—65.9% to Republicans, 22.3% to Democrats—with Monsanto topping the list of contributors. The biggest recipients? In the Senate, it was Debbie Stabenow (D-MI) with $739,926 in agribusiness donations, and in the House, Frank Lucas (R-OK) with $720,590. However, neither of these individuals serve on the Senate Appropriations Committee, where the rider language was inserted.

Technically, this CR will be in effect only for six months—its purpose is to fund the government just through September 30—and the GMO provision will expire when the CR expires. In practice, however, this will happen only when Congress enacts a 2014 Appropriations Bill, and it’s not likely they’ll have one written, debated, and enacted by September 30, the end of the 2013 fiscal year. If they don’t have a new bill by then, they will simply change the date on the CR and extend it once again—and everything will remain as it is, including the GMO rider.

In other words, it’s extremely unlikely that the GMO rider will simply go away. Our only chance to end this provision is to make sure it doesn’t get included in the 2014 Appropriations Bill. This will require a huge and sustained grassroots effort—and a strong message to Congress to stop trying to sneak biotech riders by us. We as concerned citizens shouldn’t stand for it! ANH-USA will continue to work on lobbying, strategizing with various grassroots partners, and doing outreach. And we will, as always, keep you posted every step along the way.

Editor’s Note: It was revealed this week in a Poltico article that Senator Ron Blunt (R-MO) was behind the insertion of the Monsanto Rider into the passed government funding bill.


Problems with the Veterans Administration

March 31, 2013

Even Jon Stewart, a normally left of center Jew, is criticizing Obama.  He must be motivated by racism and HATE.  There is not other explanation for daring to criticize the Oh-Great-One.  Seriously tho, if people like Jon are willing to criticize Obama then the facade of adoration by the left towards Obama may be cracking.

The second point of the video is that the VA is riddled with bureaucratic incompetence.  Just another example of why big government is not the solution to our problems.

<div style=”background-color:#000000;width:520px;”><div style=”padding:4px;”><p style=”text-align:left;background-color:#FFFFFF;padding:4px;margin-top:4px;margin-bottom:0px;font-family:Arial, Helvetica, sans-serif;font-size:12px;”><b><a href=”http://www.thedailyshow.com/watch/wed-march-27-2013/the-red-tape-diaries—veteran-benefits”>The Daily Show with Jon Stewart</a></b><br/>Get More: <a href=’http://www.thedailyshow.com/full-episodes/’>Daily Show Full Episodes</a>,<a href=’http://www.comedycentral.com/indecision’>Indecision Political Humor</a>,<a href=’http://www.facebook.com/thedailyshow’>The Daily Show on Facebook</a></p></div></div>


What was the EU thinking with Cyprus?

March 22, 2013

The Cyprus banking fiasco seems so obvious that I wonder why the wise rulers at the EU did not see it coming.  Did the EU, in their infinite wisdom, really think that they could confiscate part of people´s bank accounts and nothing would happen?  Property rights and due process are the corner stone of a capitalist society.  Without that there is no trust and little investment and the economy suffers.  Now because of the proposed confiscation, Cypriot banking is ruined, there will almost certainly be a run on the banks when the bank holiday ends next Tuesday, and the entire EU banking system has taken a hit in confidence.  After all stealing money it can be mandated by the EU in Cyprus, why not Greece or Italy or Spain?  In the end one gets the feeling that no one´s money is safe. Trust is the foundation of modern banking and the only way to prevent massive runs on the banks.  The EU decided to take money from Cypriot account to prevent contagion.  Instead they have sowed outrage and distrust of the whole system.

This latest crisis has shown that the EU is totally lacking in normal procedures to deal with these constant crisises.  Instead every crisis is treated in a make it up as they go along, ad hoc manner by a select group of power players who come to decisions behind closed doors according to whatever criteria they think is best at the moment.  There is a total lack of transparency, accountability or representative democracy in these decisions.  It is not wonder that people in Ireland, Cyprus or Greece feel that decisions are being made that affect them greatly by undemocratic and unaccountable powers from far away.

The EU made such a boneheaded decision regarding Cyprus precisely because of a lack of democracy, accountability and established procedures.  I am sure that the EU negotiators were desperate for a solution concerning the Cypriot rescue package, the idea was raised to raid bank accounts to pay for it, and it seemed good at the time.  No one thought through the obvious unintended consequences of their decision, and frankly the fact the Cyprus is a small far away country made such heavy handed measures seem more palatable.  They would never dare do such a thing to a country like France.  What the EU did not think about is that Cyprus may be small and powerless, but what happens there also matters to the rest of the EU, and everyone is to some degree (often to a large degree) interconnected.  Cyprus is an island but not an island in terms of banking.

The other aspect of this whole deal that irritates me (and a lot of other people to) is the mentality that bondholders and banks should not suffer.  Instead the common people should pay the price for incompetent banks, speculators and government.  The justification for taking people´s money is that there are many Russians of dubious origin who have Cypriot bank accounts.  That is true to an extent, but there is are also many perfectly legal people of modest means who have accounts in Cypriot banks.  If they want to get the Russian money laundering they should have to prosecute those people with due process, not do a blanket seizure of everyone´s money.  That is like arresting and throwing everyone in jail who lives in a neighborhood with a high crime rate just because there are many criminals there.  There are also many innocent people there and they deserve not to be prosecuted just because they happen to live in an area with a high crime rate.

What further irritates me is that Cyprus has to pay for the rescue, but why only bank account holders?  Why are people who have account in foreign banks, those who keep their money at home, those who have gold or stocks or wealth tied up in property, why are the not required to contribute to the rescue?  The reality is that it is often the simple modest people who keep their wealth in the bank.  It is more often the well to do who invest their savings in stock and real estate.  But they will be untouched by this confiscation.  Taking money from people´s bank account often hurts normal people more than the well off who have riches tied up in more sophisticated investment vehicles.

In sum this whole fiasco is just another example of people of modest means having to bail out-yet again-powerful wealthy interests who created the problem in the first place.  I really believe that the bankers rule the world. Everyone hates the banks.  It is not a left versus right issue.  Everyone agrees that the banks and their bailouts are wrong.  And yet in country after country, no matter if the left or the right, or a new or old government is in power, governments always take public money to reward incompetent and criminal bankers.  The politicians promise that if  elected things will change. But they never do. How can this happen in a democratic society.  How can such universally unpopular policies be shoved down the throats of the people years after year, no matter who is in power?  It sounds like bankers have taken over governments in country after country.  The only place that has not followed this pattern is little Iceland, which has done well since telling the banks to take their lumps.  Everywhere else it has been privatized gains and public loses.

Charles Hugh Smith has some insightful comments in his blog about what is really going on in Europe.

The Deeper Meanings of Cyprus   (March 18, 2013)

The deposit-confiscation “bailout” of Cyprus reveals much about the Eurozone’s fundamental neocolonial, neofeudal structure.

At long last, Europe’s flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone’s political-financial Aristocracy will stripmine every nation’s citizenry to preserve their power and protect the banks and bondholders from absorbing losses.

The deposit-confiscation “bailout” of Cyprus confirms the Eurozone’s fundamental neocolonial, neofeudal structure and the region’s political surrender to financialization.

The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

Let’s list what Cyprus reveals about the true state of financial-political power in Europe:

1. The Core-Periphery terminology masks the real structure: the E.U. operates on a neocolonial model. In the old Colonialism 1.0 model, the colonizing power conquered or co-opted the Power Elites of the periphery regions, and proceeded to exploit the new colonies’ resources and labor to enrich the Imperial core.

In Neocolonialism, the forces of financialization (debt and leverage controlled by State-enforced banking cartels) are used to indenture the local Elites and populace to the financial core: the peripheral “colonials” borrow money to buy the finished goods manufactured in the core economies, enriching the Imperial Elites with A) the profits made selling goods to the debtors B) interest on credit extended to the peripheral colonies to buy the core economies’ goods and “live large”, and C) the transactional skim of financializing peripheral assets such as real estate and State debt.

In essence, the core banks of the E.U. colonized the peripheral nations via the financializing euro, which enabled a massive expansion of debt and consumption in the periphery. The banks and exporters of the core exacted enormous profits from this expansion of debt and consumption.

Now that the financialization scheme of the euro has run its course, the periphery’s neocolonial standing is starkly revealed: the assets and income of the periphery are flowing to the core as interest on the private and sovereign debts that are owed to the core’s central bank and its crony money-center private banks.

This is not just the perfection of neocolonialism but of neofeudalism as well. The peripheral nations of the E.U. are effectively neocolonial debtors of the core (quasi-Imperial) banks, and the taxpayers of the core nations (now reduced to Germany and The Netherlands) are now feudal serfs whose labor is devoted to making good on any bank loans to the periphery that go bad.

Though we can term the E.U. a plutocracy or oligarchy, the neofeudal structure compels us to distinguish a class of those holding wealth and political power that is not limited to national border: this is an Aristocracy.

Serving the Aristocracy is a well-paid technocrat class of factotums, lackeys, toadies and enforcers. Below this well-compensated caste of technocrats is the larger class of debt-serfs, enslaved to interest payments on either their own debts or the debts of others, and bound by their class powerlessness to protecting banks and bondholders from losses.

Cyprus merely adds an expropriation twist to this well-oiled plunder: deposits will be expropriated directly to insure no Imperial (core) banks or bond holders lose money on their absurdly risky loans to periphery nations and serfs.

2. This is a supranational plunder. While commentators can wile away years debating how much Germany benefited from the euro, the real core is not national, it is supranational banks and the political machinery of the E.U. the banks have effectively captured.

The citizenry of Germany may approve or disapprove of the Cyprus expropriation, but it doesn’t matter either way: their own serfdom to banks and bondholders is simply being masked: the bailouts of periphery nations are transparently bailouts of core banks and bondholders.

The nation-states of the neocolonial periphery are simply convenient propaganda placeholders, useful misdirections aimed at the naive and sentimental, hollowed-out national structures propped up to mask the ugly neocolonial reality of servitude and plunder.

3. Democracy is a fiction when no matter who you vote for, the banks and bondholders win control of the national income stream and private wealth. Democracy in Europe is a travesty of a mockery of a sham, an absurd play which is acted out as a form of blood-sport circus to distract the masses from their powerlessness and debt-serfdom.

Democracy is a fiction when the policies protecting banks and bondholders from losses remain in place regardless of which political party, coalition or politico is nominally in power.

The German taxpayers’ private wealth is being expropriated via taxes to bail out core banks and bondholders; how is this any different from the blatant expropriation of private assets in Cyprus?

It is only a difference in technique; the result is the same: the forced transfer of wealth from those who earned it from their labor to banks and bondholders which in a truly capitalist economy would be immediately forced to absorb the losses of their leveraged, highly risky bets.

4. The ideological fiction of capitalism is dead in Europe. Capitalism is a fiction if capital that is placed at risk for a return cannot be lost.

5. Cyprus is a test to see how blatant the expropriation of private assets can become without triggering overthrow and revolution. If the furor dies down soon enough, then the same technique of expropriation will be imposed elsewhere. If the reaction is sustained and threatening to the Aristocracy, other less blatant expropriations will be tested in other neocolonies.

6. Divide and conquer is the propaganda order of the day. The Power Elites are attempting to set the serfs of the periphery against the serfs of the core, the goal being to keep both sets of serfs from realizing they are equally indentured to the core’s pathological political-financial Aristocracy.

I expect that it will be a bumpy ride next week when Cyprus lifts the bank holiday and account holders rush to get their money out, causing a probably run on the banks?  What are Greek, Spanish and Italian banks going to do if confidence in the system breaks down and their banks have run.  In trying to solve a problem they have created a much bigger one.  This from NaturalNews.

Until then, the banks remain closed, and everybody knows the minute they open, every account holder will immediately transfer their money out of the banks, causing a near-instant bank run and a collapse.

The worry across the eurozone now is that this imminent bank collapse will trigger account holders in Greece to start taking their money out of the bank, too. The Greek banking system is already in such sad shape that it only takes a very small percentage of account holders withdrawing their funds — perhaps 5% or so — to topple Greek banks. That’s because the banks are roughly 95% leveraged with fractional reserve accounts and complex debt instruments.


Beware 3D breast cancer machines

March 21, 2013

 

This article describes how the new 3D breast scans promote even more breast cancer.  It has become even more clear to me how the cancer industry is utterly against curing Cancer.  The profits are just too lucrative and there are too many people whose whole careers are utterly dependent on the current Cancer establishment.  And they don´t want that to change.

http://articles.mercola.com/sites/articles/archive/2013/02/19/tomosynthesis-mammography.aspx?e_cid=20130219_DNL_art_1&utm_source=dnl&utm_medium=email&utm_campaign=20130219

 

New 3D Mammography Significantly Increases Radiation Exposure, and Your Risk of Radiation-Induced Cancer

February 19, 2013 | 181,532 views |  

By Dr. Mercola

Breast cancer is big business, and mammography is one of its primary profit centers. This is why the industry is fighting tooth and nail to keep it, by downplaying or outright ignoring its significant risks.

In the US, women are still urged to get an annual mammogram starting at the age of 40, completely ignoring the updated guidelines set forth by the U.S. Preventive Services Task Force in 2009.

Unfortunately, many women are completely unaware that the science simply does not back up the use of routine mammograms as a means to prevent breast cancer death.

As was revealed in a 2011 meta-analysis by the Cochrane Database of Systemic Reviews, mammography breast cancer screening led to 30 percent overdiagnosis and overtreatment, which equates to an absolute risk increase of 0.5 percent.

There’s also the risk of getting a false negative, meaning that a life-threatening cancer is missed.

Unfortunately, many choose to ignore the science and continue to campaign for annual screenings without so much as a hint at the risks involved. What’s worse, in a shocking disregard for women’s health, instead of admitting there are marked flaws in mammography, they’ve now unveiled a “new and improved” type of mammogram, called 3D tomosynthesis.

Tomosynthesis is a clever re-branding of the status quo. The multi-millions of dollars spent on creating these invasive machines could have been better utilized on continuing the development of less- or non-invasive technologies such as ultrasound and infrared imaging, inventing new technologies, and on educating women on preventative strategies.

Not only does tomosynthesis still require mechanical compression, it actually exposes you to even HIGHER doses of radiation than a standard mammogram! They also still recommend you continue to receive your traditional 2D mammogram, further multiplying radiation exposure. What kind of insanity is at play here, really? This is not progress in “the war on cancer.”

New 3-D Mammography is Basically a CT Scan for Breasts

To achieve a three-dimensional image, the machine moves in an arc around your breast, taking multiple x-rays along the way, which are then computed together into a 3D image. The technology received FDA approval in 2011, and is now available in 46 states around the US. But should it be?

The most effective way to decrease women’s risk of becoming a breast cancer patient is to avoid attending screening. Mammography screening is one of the greatest controversies in healthcare, and the extent to which some scientists have sacrificed sound scientific principles in order to arrive at politically acceptable results in their research is extraordinary.

In contrast, neutral observers increasingly find that the benefit has been much oversold and that the harms are much greater than previously believed.” writes Peter C. Gotzche, MD of The Nordic Cochrane Centre and author of Mammography Screening: Truth, Lies and Controvesy

As reported by USA Today1 last year:

‘The procedures give women twice as much radiation as a standard mammogram, notes surgeon Susan Love, author of Dr. Susan Love’s Breast Book. That’s because women who get 3-D imaging still undergo traditional 2-D mammography, as well.

Radiation is a known cause of breast cancer. Researchers in recent years have become concerned about radiation exposure from medical imaging, particularly CT scans. A 2009 analysis estimated that CT scans cause about 29,000 cancers and 14,500 deaths a year.

 


Peter Schiff on the economy

March 20, 2013

Eventho I don´t agree with everything that Peter Schiff says he is definitely worth listening too because he is a nice anti-dote of common sense to the constant corrupt Keynesianism we are subjected to all the time from our political class and media.

In the following article Peter Schiff details how the government has become addicted to cheap stimulus, and now cannot live without it.  The second article describes how the Stock Market has similarly become addicted to endless QE.  The articles are a bit long, but summarize well our current situation.

stimulusThe Stimulus Trap

By: Peter Schiff, CEO and Chief Global Strategist

For years we have been warned by Keynesian economists to fear the so-called “liquidity trap,” an economic cul-de-sac that can suck down an economy like a tar pit swallowing a mastodon. They argue that economies grow because banks lend and consumers spend. But a “liquidity trap” convinces consumers not to consume and businesses not to borrow. The resulting combination of slack demand and falling prices creates a pernicious cycle that cannot be overcome by the ordinary forces that create growth, like savings or investment. They argue that a liquidity trap can even resist the extraordinary force of monetary stimulus by rendering cash injections into useless “string pushing.” Some of these economists suggest that its power can only be countered by massive fiscal stimulus (in the form of a world war or other fortunately timed event) that leads to otherwise unattainable levels of government spending.

Putting aside the dubious proposition that the human desire to strive and succeed can be permanently short-circuited by an economic contraction, and that modest price declines can make penny pinchers of us all, the Keynesians have overlooked a much more dangerous and demonstrable pitfall of their own creation: something that I call “The Stimulus Trap.” This condition occurs when an economy becomes addicted to the monetary stimulus provided by a central bank, and as a result fails to restructure itself in a manner that will allow for robust, and sustainable, growth. The trap redirects capital into non-productive sectors and starves those areas of the economy that could lead an economic rebirth. The condition is characterized by anemic growth (masked by the delivery of perpetual stimulus) and deteriorating underlying economic fundamentals.

Japan has been caught in such a stimulus trap for more than a decade. Following a stock and housing market boom of unsustainable proportions in the 1980s, the Japanese economy spectacularly imploded in 1991. The crash initiated a “lost decade” of de-leveraging and contraction. But beginning in 2001, the Bank of Japan unveiled a series of unconventional policies that it describes as “quantitative easing,” which involved pushing interest rates to zero, flooding commercial banks with excess liquidity, and buying unprecedented quantities of government bonds, asset-backed securities, and corporate debt. Although Japan has been technically in recovery ever since, its performance is but a shadow of the roaring growth that typified the 40 years prior to 1991. Recently, conditions in Japan have deteriorated further and the underlying imbalances have gotten progressively worse. Yet despite this, the new government is set to double down on the failed policies of the last decade.

I believe that the United States is now following Japan into the mire. After the crash of 2008, we implemented nearly the same set of policies as did Japan in 2001. In the past two years, despite the surging stock market and apparently declining unemployment rate, the size and scope of these efforts have increased. But as is the case in Japan, we can clearly witness how the stimulus has perpetuated stagnation.

In 2008, one of the country’s biggest problems was that we had over-leveraged too many non-productive sectors of the economy. For instance, we irresponsibly lent far too much money to people to buy over-priced real estate. Since then, the problem has gotten worse. Currently the process of writing, securitizing, and buying home mortgages has been essentially nationalized. Fannie Mae and Freddie Mac (which are now officially government agencies) write and package the vast majority of new home mortgages, which are then guaranteed (almost exclusively) through the Federal Housing Administration, and then sold to the Federal Reserve. According to a tally by ProPublica, these government entities bought or insured more than nine out of 10 home mortgages originated last year, a $1.3 trillion business. Compare this to 2006, when the government share was only three in 10. As a result of this, our lending is far more irresponsible than it has ever been.

In the fourth quarter of 2012, 44% of all FHA borrowers either had no credit score or a score of 679 or lower. In addition, the overwhelming majority of FHA guaranteed loans are being made at 95% or greater loan-to-value. This means down payments are an afterthought. Under the FHA’s Home Affordable Refinance Program (HARP), loans are now even extended to underwater borrowers whose mortgages may be worth far more than their homes. As a result, the FHA could be exposed to enormous losses in the event of future housing market downturns. Such an outcome would be likely if mortgage interest rates were ever to rise even modestly from their current low levels.

In fact, losses on low-quality mortgages have already left the FHA with $16 billion in losses. To close the gap, it has had to raise the insurance premiums it charges to borrowers. With those premiums expected to rise again next month, many fear that marginal borrowers could be priced out of the market. But rather than learning from its mistakes, the government just announced that Fannie Mae would pick up the slack, lowering its lending standards to match the ones that had led to losses at the FHA. In other words, we haven’t solved the problem of bad lending – we have simply made it bigger and nationalized it.

The overall financial sector is equally addicted to cheap money. Banks have seen strong earnings and rising share prices in recent years. But their businesses have largely focused on the simple process of capturing the spread between the zero percent cost of Fed capital and the 3% yield of long term Treasury debt and government insured mortgage backed securities. As a result, banks are not making productive private sector loans to businesses. Instead, the capital is being used to pump up the already bloated housing and government sectors.

Corporate profits are indeed high at the moment, but much of that success comes from the extremely low borrowing costs and extremely high leverage. Investors chasing any kind of yield they can find are pouring money into companies with dubious prospects. This January, yields on junk rated debt fell below 6% for the first time. Currently they are approaching 5.5%. Consumers are using cheap money to buy on credit. Savings rates are now hitting post-recession lows.

Lastly (but certainly not least), the Federal government is now totally dependent on the Fed’s largess.  Without the Fed buying the bulk of Treasury debt, interest rates would likely rise, thereby increasing the cost of servicing the massive national debt.  While Congress and the media have focused on the $85 billion in annual cuts earmarked in the “Sequester,” an increase of Treasury yields to 5% (3% higher than current levels) on the $16 trillion in outstanding government debt would translate to $480 billion per year of increased interest payments. Such an increase would force a tough choice between raising taxes, cutting domestic spending or reducing interest payments sent abroad for debt service. If foreign creditors begin to doubt that America has the resolve to make the hard choices, they may refuse to roll-over maturing obligations, forcing the government to actually repay principal.  With trillions maturing each year, actual repayment is mathematically impossible.

But for now most people feel that the transition is underway to a healthy economy. The prevailing debate is when and how the Fed will let the economy fly on its own. Many of the top market analysts have great faith that Ben Bernanke can pull the monetary tablecloth off the table without disturbing the dishes. Those who hold this view fail to understand that the United States is caught in a stimulus trap from which there is no easy exit. How can the Fed wean the economy from stimulus when stimulus IS the economy?  In truth, the trick Bernanke must actually perform is to pull the table out from beneath the cloth, leaving both the cloth and the dishes suspended in air.

What would happen to the Treasury market if the Federal Reserve, by far the biggest buyer and largest holder of Treasury bonds, became a net seller? Who will be there to keep the sell off from becoming an interest rate spiking rout? It may sound absurd to those of us who remember the economy before the crash, but our new economy can’t tolerate “sky high” rates of four or five percent. What would happen to the housing market and the stock market if interest rates were to return to those traditional levels? The red ink would flow in rivers. With yields rising and asset prices falling, how long would it take before the Fed reverses course and serves up another round of stimulus? Not long at all.

That means any talk of an exit strategy is just that, talk.  Not only can the Fed not exit, but it will have to delve further into the stimulus abyss.  While doing so, the Fed will continuously insist that the exit lies just behind an ever moving horizon. It will repeat this mantra until a currency crisis finally forces a painful exit.

Unfortunately, the longer the Fed waits to exit, the more painful the exit will be. But trading long-term pain for short-term gain is the Fed’s specialty. In the meantime, Wall Street watches in uncomprehending stupor as the economy settles deeper and deeper into the stimulus trap.

flyingFlying High on Borrowed Wings

By: Peter Schiff, CEO and Chief Global Strategist

After selling off an astounding 56% between October of 2007 and March 2009, the S&P 500 has staged a rally for the ages, surging 120% and recovering all of its lost ground too. This stunning turnaround certainly qualifies as one of the more memorable, and unusual, stock market rallies in history. The problem is that the rally has been underwritten by the Federal Reserve’s unconventional monetary policies. But for some reason, this belief has not weakened the celebration.

Although the Fed has been tinkering with interest rates and liquidity for a century, nothing in its history could prepare the markets for its activities over the last four years. And while most market analysts give credit to Ben Bernanke for saving the economy and sparking the rally, they have not fully grasped that market performance is now almost completely correlated to Fed activism. A detailed look at stock market movements over the past four years reveals a clear pattern: upward movements are directly tied to the delivery of fresh stimulants from the Fed. Downward movements occur when markets perceive that the deliveries will stop. In other words, the rally is really just a bender. The rest is commentary.

Since 2008, the Fed has injected fresh cash into the economy with four distinct shots of quantitative easing and has added two kickers of Operation Twist. In recent months, the Fed has dispensed with the pretense of designing, announcing, and serving new rounds of stimulus and is now continuously monetizing over $85 billion per month of Treasury and mortgage-backed debt. The new cash needs a place to go, and stocks, which now often provide higher yields than long term Treasury bonds, and which offer much better protections against inflation, provide the best outlet.

But the four year rally has been punctuated by several sharp and brief drops. It is no coincidence that these episodes occurred during periods in which the delivery of fresh stimulus was in doubt. If the Fed were ever to follow through on its promise to exit the bond market, we believe the current rally would come to an immediate halt. This provides yet another reason to believe that stimulus is now permanent…


CICPA is back

March 20, 2013

Here is a petition from Electronic Frontier Foundation.  The forces of evil will not stop in their effort to censor the internet and control the flow of information and bend it to their needs.  We must also be vigilant in our efforts to keep the internet free and open.  Please sign the petition below.

https://action.eff.org/o/9042/p/dia/action/public/?action_KEY=9048

Send a message to your representatives asking them to oppose this dangerous bill.
Dangerous Cybersecurity Legislation Threatens Online Privacy

Not in the United States? Take action here instead.

The Cyber Intelligence Sharing and Protection Act (CISPA) is back.

Last year, Representatives Rogers and Ruppersberger introduced CISPA, which would create a gaping new exemption to existing privacy law. CISPA would grant companies more power to obtain “threat” information (such as from private communications of users) and to disclose that data to the government without a warrant — including sending data to the National Security Agency.

CISPA was recently reintroduced in the House of Representatives. EFF is joining groups like ACLU and Fight for the Future in combating this legislation.

Last year, tens of thousands of concerned individuals used the EFF action center to speak out against overbroad and ineffective cybersecurity proposals. Together, we substantially changed the debate around cybersecurity in the U.S., moving forward a range of privacy-protective amendments and ultimately helping to defeat the Senate bill.

Now we need your help again. Can you send a message to your Representatives asking them to oppose this bill?