by ilene - January 20th, 2011 12:56 pm
Courtesy of Michael Snyder at Economic Collapse
What could cause an economic collapse in 2011? Well, unfortunately there are quite a few "nightmare scenarios" that could plunge the entire globe into another massive financial crisis. The United States, Japan and most of the nations in Europe are absolutely drowning in debt. The Federal Reserve continues to play reckless games with the U.S. dollar. The price of oil is skyrocketing and the global price of food just hit a new record high. Food riots are already breaking out all over the world. Meanwhile, the rampant fraud and corruption going on in world financial markets is starting to be exposed and the whole house of cards could come crashing down at any time. Most Americans have no idea that a horrific economic collapse could happen at literally any time. There is no way that all of this debt and all of this financial corruption is sustainable. At some point we are going to reach a moment of "total system failure".
So will it be soon? Let’s hope not. Let’s certainly hope that it does not happen in 2011. Many of us need more time to prepare. Most of our families and friends need more time to prepare. Once this thing implodes there isn’t going to be an opportunity to have a "do over". We simply will not be able to put the toothpaste back into the tube again.
So we had all better be getting prepared for hard times. The following are 12 economic collapse scenarios that we could potentially see in 2011….
#1 U.S. debt could become a massive crisis at any moment. China is saying all of the right things at the moment, but many analysts are openly worried about what could happen if China suddenly decides to start dumping all of the U.S. debt that they have accumulated. Right now about the only thing keeping U.S. government finances going is the ability to borrow gigantic amounts of money at extremely low interest rates. If anything upsets that paradigm, it could potentially have enormous consequences for the entire world financial system.
#2 Speaking of threats to the global financial system, it turns out that "quantitative easing 2" has had the exact opposite effect that Ben Bernanke planned for it to have. Bernanke insisted that the main goal of QE2 was to lower interest rates, but instead all it has done is…
by ilene - December 23rd, 2010 11:50 am
HONG KONG — North Korea, breaking from the restraint it showed this week during military exercises by the South, said Thursday that it was prepared to use its nuclear weapons if it was attacked.
The North is “fully prepared to launch a sacred war,” Minister of the People’s Armed Forces Kim Young-chun said in comments carried by the North’s official Korean Central News Agency and quoted by Western news media. North Korea’s comments are typically bellicose, but they had been low-key this week as South Korea staged military exercises across its territory.
On Monday, the South staged live-fire artillery drills on Yeonpyeong Island, which was shelled by the North’s artillery on Nov. 23. Four South Koreans were killed. North Korea claims the waters around Yeonpyeong and disputes the maritime border known as the Northern Limit Line.
Continue reading here: North Korea Resumes War Threats as South Stages Drills – NYTimes.com.
by ilene - December 7th, 2010 3:55 am
Courtesy of Michael Hudson
What would Adam Smith have said about the Bowles-Simpson economic report last week?
What a pity the great free marketer was not around to serve on the Deficit Reduction Commission. He not only would have rolled over in his grave, he would have risen up wielding an ax to the fiscal proposals that are diametrically opposite to the fiscal principles that he and his original free market contemporaries urged.
Writing in the wake of the French Physiocrats with their Impôt Unique to collect the revenues that France’s landed aristocracy drained from the countryside and towns, Smith endorsed the idea that the least burdensome tax was one that fell on land rent:
A more equal land-tax, a more equal tax upon the rent of houses, and such alterations in the present system of customs and excise as those which have been mentioned in the foregoing chapter might, perhaps, without increasing the burden of the greater part of the people, but only distributing the weight of it more equally upon the whole, produce a considerable augmentation of revenue.
(Wealth of Nations, Book V.3.68)
If Britain were to become a dominant economic power, Smith argued, its industrial capitalism would have to shed the vestiges of feudalism. Groundrent charged by its landed aristocracy should be taxed away, on the logic that it was the prototypical “free lunch” revenue with no counterpart cost of production. He noted at the outset (Book I, ch. xi) that there were “some parts of the produce of land for which the demand must always be such as to afford a greater price than what is sufficient to bring them to market.”
In 1814, David Buchanan published an edition of The Wealth of Nations with a volume of his own notes and commentary, attributing rent to monopoly (III:272n), and concluding that it represented a mere transfer payment, not actually reimbursing the production of value. High rents enriched landlords at the expense of food consumers – what economists call a zero-sum game at another’s expense.
The 19th century elaborated the concept of economic rent as that element of price which found no counterpart in actual cost of production. and hence was “unearned.” It was a form of economic overhead that added unnecessarily to prices. In 1817, David Ricardo’s Principles of Political Economy and Taxation elaborated the concept of economic rent. Under conditions of
by ilene - September 12th, 2010 1:02 pm
David Walker With Jon Stewart: "There Is No Party Of Fiscal Responsibility In Washington." (Daily Show Video)
Courtesy of The Daily Bail
|The Daily Show With Jon Stewart||Mon – Thurs 11p / 10c|
Video: David Walker with Jon Stewart
Originally aired in January, but it has never been posted here before. Walker is the former Comptroller General of the Untied States and is now President of the Peterson Foundation.
- "There is no party of fiscal responsibility in Washington."
- "When the statutory budget controls expired in 2002, Washington lost total control. Unfunded tax cuts, unfunded war costs, expansion of entitlement benefits. And we are where we are today."
by ilene - July 3rd, 2010 3:17 am
Courtesy of Mish
I did not vote for President Obama, I wrote in Ron Paul.
Nonetheless, the two things I was confident President Obama would do right were reduce military spending and get us out of Guantanamo Bay Cuba.
I was wrong on both counts. Worse yet, the President appears to be as much a warmonger as Bush although admittedly he did not start any wars.
The one thing that bothers me most is how the Democratic sheep go along with anything Obama wants, even if it is against their core beliefs.
Here is a stunning example to prove that charge. Please consider House-OK’d war funding bill faces Senate trouble.
Despite pessimism that the war in Afghanistan is turning out to be a quagmire, Democrats controlling the House muscled through a plan Thursday to finance President Barack Obama’s troop surge, but only after sweetening the measure with last-ditch moves to salvage their faltering jobs agenda.
Long delayed, the approximately $80 billion bill was passed amid building pressure on Democrats to act before their weeklong Fourth of July break begins. But the Senate approved a significantly slimmer measure in May and it’ll take additional weeks to reconcile the differences between the two battling chambers.
The crucial vote to advance the measure under unusually convoluted floor rules came on a 215-210 tally to bring up the nearly $60 billion Senate-passed measure for debate. Democrats added more than $20 billion for domestic programs late Thursday, including $10 billion in grants to school districts to avoid teacher layoffs, $5 billion for Pell Grants to low-income college students and $700 million to improve security along the U.S.-Mexico border.
House Republicans supportive of the Afghanistan effort voted against the measure, angered that Democrats were using the must-pass legislation to try to advance unrelated spending.
"The Democrat majority is treating this troop funding bill like a cash-cow for their election-year wish-list," said Rep. Jerry Lewis, R-Calif.
But top Democrats such as Obey and Speaker Nancy Pelosi, D-Calif., insisted on adding the domestic dollars, viewing the war funding bill as their last, best shot to resuscitate their faltering jobs agenda. The money was critical to winning support from Democrats frustrated over deepening Senate gridlock that has killed, among other ideas, $24 billion in aid to cash-starved states
Global Peace Index: World Less Peaceful in 2010 Report, Violence Impacting Global Economy $7 Trillion Annually
by ilene - June 8th, 2010 5:49 am
Global Peace Index: World Less Peaceful in 2010 Report, Violence Impacting Global Economy $7 Trillion Annually
LONDON, June 8, 2010/PRNewswire/ --
- New Zealand Tops Rankings for Second Consecutive Year
- Drop in Peace Due Largely to 5% Increase in Homicides, More Violent Demonstrations and Fear of Crime
- 4-Year Trends Show Middle East and Africa With Most Gains in Peacefulness
- South Asia Sees Sharpest Fall in Peace
- Military Spending as a % of GDP Reaches its Lowest Point in 4 Years
The world became less peaceful for the second consecutive year, according to the fourth annual Global Peace Index (GPI) published today. As the global economy continues to falter, this year’s data shows an intensification of conflicts and growing instability linked to the downturn that began in 2008, with several countries seeing sharp increases in homicides, violent demonstrations and fear of crime.
To view the Multimedia News Release, please click: http://multivu.prnewswire.com/mnr/prne/iep/42434
The increase in violence is depriving the global economy of assets when they are needed most. A 25 percent reduction in global violence would free up $1.8 trillion USD annually – enough to pay off Greece’s debt, fund the achievement of the Millennium Development Goals (MDGs) and meet the EU’s 20-20-20 climate and energy targets.
The only study to quantify global peacefulness, the GPI is produced by the Institute for Economics and Peace (IEP). This year it has expanded to rank 149 independent states. Composed of 23 qualitative and quantitative indicators, it combines internal and external factors ranging from military expenditure to relations with neighbouring countries and levels of violent crime.
"The research carried out by the IEP based on 4 years of GPI data provides a quantifiable demonstration that improving peace can transform the global economy and unleash the wealth needed to tackle debt, fund economic expansion and create a more sustainable environment," said Steve Killelea, founder of the GPI.
Top-ranked New Zealand was one of only three countries in the top ten to improve in peacefulness in the 2010 Index. Iceland moved into the #2 spot as the country’s economy stabilised after falling to #4 in last year’s ranking, the improvement demonstrating the resilience of peaceful nations.
Commenting on the results, Prof. Jeff Sachs, Director of the Earth Institute at Columbia University said: "The GPI continues its pioneering work in drawing the world’s attention to the massive resources we…
by ilene - May 25th, 2010 1:00 pm
Tensions Mount in Asia; North Korea Prepares for Combat; South Korea Won Sinks to 8-Month Low; Futures Sink, Nikkei Hammered Again
Courtesy of Mish
Smack in the midst of a "global recovery" tensions are heating up in Asia. Please consider Kim Jong II Orders Military to Get Ready for Combat
North Korean leader Kim Jong II ordered the country’s military to get ready for combat in a message televised nationwide last week following South Korea’s announcement that North Korea torpedoed the South’s warship.
South Korea’s President Lee Myung Bak said yesterday the country will push for United Nations censure against North Korea for the March 26 sinking of a naval ship, which killed 46 sailors. A multinational team concluded on May 20 that North Korea fired a torpedo to split apart the 1,200-ton Cheonan.
Tensions are rising in the Korean peninsula following the report, with both sides threatening counter-measures should they come under attack. South Korea plans to define North Korea as its “main enemy” when it maps out military strategy, Yonhap reported today, citing a government official it didn’t identify.
South Korea’s Won Sinks to 8-Month Low
Inquiring minds may be interested to note South Korea’s Won Sinks to 8-Month Low on Tensions With North.
South Korea’s won slumped to an eight-month low on growing hostilities with the North over the sinking of one of the South’s warships with the loss of 46 lives.
The U.S. yesterday announced plans to conduct joint anti- submarine exercises with South Korea as “a result of the findings of this recent incident.” Japan will consider imposing financial sanctions on North Korea, Finance Minister Naoto Kan said at a news conference in Tokyo today.
“We won’t see the bottom of this fall until we hear some good news on North Korea,” said Cho Hyun Seok, a currency dealer at Kookmin Bank in Seoul. “The won’s exchange rate can go as high as 1,260 won per dollar.”
The military exercises are among steps the U.S. and South Korea are pursuing, including possible further United Nations sanctions, in response to the March sinking of the 1,200-ton Cheonan. The U.S. and South Korea say evidence shows the explosion was caused by a North Korean torpedo.
Asian Stocks Fall to 10-Month Low, Won Dives, Commodities Drop
Please consider Asian Stocks Fall to 10-Month Low, Won Dives, Commodities Drop
The MSCI Asia Pacific Index
by ilene - November 16th, 2009 12:06 am
I believe Washington is arguing that the U.S. simply has no credibility left to start a war for any good reason, nor is a war a cure for a recession. Thus a war is not a good idea. Not to say that economic reasons are moral and ethical justifications for starting wars, regardless. – Ilene
Courtesy of Washington’s Blog
PhD economist Marc Faber predicts that the U.S. will launch a war to distract people from the bad economy.
China’s largest media outlets – Sohu.com – wrote in October 2008 that the Rand corporation, a leading U.S. military advisor, lobbied the Pentagon for a war to be started with a major foreign power in an attempt to stimulate the American economy:
According to French media, well-known U.S. think tank RAND Corporation … has submitted [to the Pentagon] an evaluation report assessing the wage a war to shift the feasibility of the current economic crisis…
Continued deepening of the U.S. sub-prime mortgage crisis and economic downturn, developed to a certain extent, is likely to trigger a war in order to achieve the purpose of the crisis passed.
(Google’s translation services are crude approximations, but Yihan Dai confirmed the translation of the original).
Is Faber right? Is the Sohu.com report accurate?
I don’t know.
However, "military Keynesianism" – using military spending to stimulate the economy – has been U.S. policy for half a century. And the economist who coined that term said that such a policy always and "inexorably" leads to "an actual war" in order to justify all of the military spending.
In addition, contrary to popular belief, some writers say that the reason that WWII actually stimulated the U.S. economy was not because of America fighting the war. Specifically, they argue that America’s ramped-up production of armaments for the British before the U.S. entered the war was the thing which stimulated our economy.
by ilene - November 12th, 2009 12:27 pm
Courtesy of Washington’s Blog
Yesterday, I pointed out that a study by one of the leading economic modeling companies shows that military spending increases unemployment and decreases economic growth.
Indeed, an economic paper published in 2007 by The Political Economy Research Institute at the University of Massachusetts, Amherst – entitled "The U.S. Employment Effects of Military and Domestic Spending Priorities" – concludes:
We present in Table 1 our estimate of the relative effects of spending $1 billion on alternative uses, including military spending, health care, education, mass transit, and construction for home weatherization and infrastructure repair.
[Click for larger image]
The table first shows in column 1 the data on the total number of jobs created by $1 billion in spending for alternative end uses. As we see, defense spending creates 8,555 total jobs with $1 billion in spending. This is the fewest number of jobs of any of the alternative uses that we present. Thus, personal consumption generates 10,779 jobs, 26.2 percent more than defense, health care generates 12,883 jobs, education generates 17,687, mass transit is at 19,795, and construction for weatherization/infrastructure is 12,804. From this list we see that with two of the categories, education and mass transit, the total number of jobs created with $1 billion in spending is more than twice as many as with defense.
"Military Keynesianism" – the idea that war is the best economic stimulus – is false.
Thanks to Gordon for the tip.
by ilene - November 11th, 2009 10:29 pm
Jim believes the worst is yet to come and paints a very frightening picture, like nothing most of us have ever seen. – Ilene
Courtesy of Jim Quinn at The Burning Platform
Stephen Stills wrote the song For What It’s Worth in 1967. It was composed three years into the Second Turning, the Consciousness Revolution. The song has come to symbolize the turbulence, mistrust, rage, paranoia, anti-war spirit, and the anti-establishment mood of the 1960’s. An Awakening era has many parallels to a Crisis era at the outset. A traumatic event or events triggers the mood alteration in the country which sets the next twenty years in motion. In 1929 the stock market crash triggered a 17 year Crisis. In 1963, the assassination of John F. Kennedy triggered a 20 year Awakening. In 2005, the housing collapse has triggered the next American Crisis which we are living through today.