(MartinArmstrong) “Politicians everywhere are sitting on their hands because they believe that if they do nothing and maintain the status quo mixed with austerity to save the bankers somehow we will grow our way out of this one as before. The problem is they fail to distinguish between a private generated financial crisis and a Sovereign Debt Crisis where they are the problem.

The people are just not to be given a right to vote on any of this and if the system can grow out of it, in two years everyone will forget about it – that’s the plan. To clarify why I have been critical of the austerity in Greece and the property taxes, Schumpeter describes the Business Cycle as a force of Creative Destruction. These are periods of tremendous economic transition. It is one thing to impose property taxes and insist upon government reducing its work force that sound like solid conservative economic advice for Greece. However, that presumes there are private sector jobs waiting in the wings.  What is taking place in Greece is that there is no private sector alternatives at this time. Laying people off is one thing. To impose then property taxes that are due irrespective of income then subjects those same people to massive waves of foreclosures for failure to pay the tax. The US Great Depression was so bad NOT because of the stock market crash, but (1) the sovereign debt crisis that wiped out savings and reduced capital in the USA contributing to over 3000 bank failures, and (2) the Dust Bowl that eliminated agrarian jobs when agriculture accounted for 40% of the civil work force resulting in the ‘hobo’ lifestyle.  It was WWII that provided the  ‘transition’ reducing unemployment and transformed farmers into skilled labor. The Great Depression after the Panic of 1857 was followed 4 years later by the US Civil War, which was also the ‘transition’ at that time relieving unemployment.

Today, there is no plan. There is no transition, only austerity. The politicians are doing NOTHING whatsoever for any reforms they reject because it would change the way they have been doing business since WWII. Italy’s debt is bigger than Spain, Portugal, and Greece combined.  It is too big to be bailed out and there is no PLAN B to even address what happens if sitting on their hands blows up in everyone’s face? Stay away from ALL government debt! This is a wave of Creative Destruction. We are in a transition to a completely new world ahead.”

Full Story: Italian Head of State Pledges to Resign Schumpeter’s Creative Destruction? (MartinArmstrong)

(MartinArmstrong) “Government Is Living in a State of Denial.  They speak, see & hear nothing of a debt crisis. .. Italy is the third largest bond issuer and nobody in government has figured out that this a Sovereign Debt Crisis yet?  What Government FAILS to understand is they are the PROBLEM!

Because government is the PROBLEM, they live in a state of denial and cannot correct the situation for they cannot objectively look at themselves. Instead, they attack the people. Fannie Mae asks for $7.8bn as losses continue. Morgan Stanley has been accused over mortgage bond issues and MF Global goes bust exposing the truth that SEC & CFTC never audit the NY banks and are incapable of detecting that they may be trading with client’s money.

.. the whole theory upon which the banking system has been constructed is unsound. Banks take short-term and demand deposits and lend long-term. When a financial crisis unfolds, a run on banks emerges because people want their money. Since the bank’s obligations are short-term to demand but their assets are loans of medium to long-term, they don’t have the cash and fail.  For you see, banks were not supposed to lend out your money.  ..  Banks began as merely a place to store your assets. They were not intended to lend your money out to someone else. When they realized they could make profit doing so, the scam eventually became the standard operational procedure. Formulae were then devised to calculate at any one time how much ‘reserves’ did they have to retain for normal operations. That was worked out with experience settling on 6%. So if they retained 6% of deposits as cash, they could cover normal business withdrawals with no problem. The problem became during a crisis and everyone wanted their cash and the bank simply does not have that cash and you end up with a bank run. It is ironic that what began as a scam simply became institutionalized. This is WHY the entire financial system is dependent upon CONFIDENCE!

What is unraveling even more quickly is the fear that banks will be hit with panic runs because of their holdings in sovereign debt. After a 50% haircut in Greek bonds, now it has become trendy not only to sell Italian bonds but also to publicly announce they have done so to try to maintain CONFIDENCE of their depositors.  The very reason politicians have suppressed the right of the people to vote and have forced austerity upon the people, has been to maintain the confidence of their bankers. But in the end game, the bankers exist based upon the confidence of the people in their sound management of their deposits.

.. The people may be shut out of the polls denied democracy when it is needed most, but the FREE MARKETS will respond as capital votes in its own self-interest that does not match the political nonsense.

SEQUENCE OF AN ECONOMIC PANDEMIC

At first blush, how capital responds depends entirely upon the (1) monetary system and (2) the freedom of capital movement. In a closed economy, the first reaction is to buy ALL tangible assets. These tend to be everything from durable commodities (metals), art, coins, stamps, and gold (assuming it is not a gold standard of some sort). This is the category I refer to as  ‘moveable assets’. The second tier of assets tend to be real estate that I refer to as ‘fixed non-movable assets’ meaning their value is limited to the territorial jurisdiction of the nation. In a non-communist nation, stocks and corporate bonds will also attract capital as a safe place to park funds.  In an open-economy where capital is free to leave, then the first blush is to FLEE to a different land in which case the local assets, including stocks and corporate bonds, will initially crash. This is typically indicated most pronouncedly in the collapse of the local currency against world currencies or in this case rise in the dollar vs decline in euro. They eventually swing back ONLY after the crisis manifests in a new currency or a debased/devaluation of the local currency takes place. The capital-flows will the swing back in the opposite direction.

Under today’s circumstances, the first blush response will be for capital to flee Europe and run to the United States as a safe port parking in US government paper. This is likely to further the deflationary effects within the United States by ensuring interest rates remain low as they did during the Great Depression for the same reason. However, banks are living off of the largest spreads perhaps in modern history so while rates of interest on cash will decline further and move in real terms NEGATIVE after inflation, banks should NOT be expected to lend money more easily. They will maintain their huge profit margins. Therefore, the first blush of the  Sovereign Debt Crisis in an open society tends to be currency based rather than even movable assets.

During the inflationary boom into 1929, gold declined in purchasing power for assets were rising against gold. During the collapse, the value of money rose (gold) as assets declined. Under a gold standard, the value of gold in fact DECLINES with inflation and RISES with deflation.

So for now, we are in the first blush mode where capital will fee to the dollar rather than assets and that may confuse the hell out of a lot of people. Therefore, under the current conditions, gold need not rise on the first blush for the bulk of capital will flee to the dollar. On the second swing where capital flees all currency, then we will see the Private vs Public assets manifest meaning they will rise as expressed in terms of currency.”

Full Story: Government is Living in a State of Debt Denial (MartinArmstrong)

Click for Nov 11, 2011 Martin Armstrong Radio Interview (FSN)

Last week, Reason.tv followed Peter Schiff, prinicipal of the financial firm Euro Pacific Capital, around Occupy Wall Street protesters in Manhattan’s Zuccotti Park as he attempted to debate the the difference between capitalism and cronyism, and how socialism (and communism) only serve to promote more cronyism.

(Reason.TV) “Touring the Occupy Wall Street scene in New York with a sign that read ‘I Am the 1%, Let’s Talk,’ Schiff spent more than three hours on the scene, explaining the difference between cronyism and capitalism, bailouts and balance sheets, and more.  ‘The regulation we want is the market,’ said Schiff. ‘That’s what works.’ Schiff describes himself as ‘sympathetic’ to the plight of the OWS protesters, but thinks their anger is misdirected at legitimate business interests and should be better at the White House, Congress, the Federal Reserve, and the crony capitalists they’ve bailed out.”

It’s sad and disheartening to watch people arguing with him, while blind to the fact that he’s on their side and generally agrees with most of their grievances, but not with their solutions.  Granted, there are also many Ron Paul, “Tea Party”, and sound money-types in the crowd as well, who do likely already better understand these points.  As such, these debates can only serve to bring them closer together against the true common enemies of the people.

Schiff debates a few people who correctly make the point that “Wall Street” TBTF (Too Big To Fail) firms must get their hands out of politics, and shouldn’t be allowed to control and manipulate the government. At the same time, they want to raise taxes and give even more money, power, and control to the government. Somehow they simply don’t make the connection that the same manipulative controlling “rich” people they despise most of all are the greatest benefactors of their rage and “wealth redistribution” agenda. These “elites” are laughing all the way back to the bank while directing the bought-and-paid-for police, judges, politicians, and prosecutors to do their bidding.  Who do OWS protesters think controls the policemen firing flash grenades at their heads (who then deny doing it despite the events being captured on video from a dozen different angles)?  And if the Almighty Obama himself couldn’t even bring the “Change” they were looking for, then who got all those $$trillions?  Must be the same people Obama blamed for “blocking progress”…  Maybe had he thrown all the bankers in jail where they belong, they’d have a harder time at it.

Schiff believes that capitalism is the only hope for young, frustrated people to have a vibrant and prosperous future.  So he went to Occupy Wall Street to engage and debate the protesters, and to help them better understand these key differences.

This anonymous “letter” has been circulating around the Internet for the past few months, and it’s turning out to be more or less right on. Granted, Obama supporters will claim that Obama “inherited” many of the problems he faces. But how does that address Obama surrounding himself with many of the same questionable entrenched politicians from past administrations? And palm-greasing bribery lobbying is still alive and well and going on strong in Washington.

Hitler, Chavez, and any other number of die-hard socialists have made the same claim to sweeping hope and “change”. Unfortunately, it never turns out as most people expect, and tends to lead to a massive power-grab instead, under the guise of “helping the people”. When considering a new employee, one will generally look for references, appropriate qualifications, history of competent performance, honest and ethical behavior, and years of experience, to say the least. When hiring a money manager, most of the time they’ll want to see years of track records, references, etc (and still Madoff managed to bilk his clients for billions).

However, in politics we are always told to “give him a chance, and let’s see what he’ll do”. No big deal that these politicians control the incomprehensibly massive purse strings of the nation — TRILLIONS of dollars worth. But, that’s okay. Obama seems like a nice guy. Of course, I doubt he’s ever run anything so much as a lemonade stand. Let’s have some faith (where’d that suddenly come from?!) and let’s see what he’ll do. Given the limited choice of political nominees (which are selected solely by their parties), many people tend to vote for who they believe will be less “bad” for the country. They’re actually surprised if a politician merely tells fewer lies, breaks fewer promises, or causes fewer problems than they expected.

So, while everyone’s so busy bickering republican over democrat, the people have lost site of the fact that at this point, nearly all politicians are guided by one primary motive: their own self-interest. With the exception of a few politicians such as Ron Paul, I’d say we should place just about all of them on their own rocket ship to the moon. It would be interesting to see how they would handle that move. Of course, as Margaret Thatcher once stated, “socialism only works until you run out of other people’s money“, and without generous, naive, and hopeful peasant slaves citizens to bilk, things will fall apart pretty quickly. Especially since many of them would find more ways to evade paying the taxes they themselves imposed on each other (as they already do in Washington, right Mr. Rangel?!).

Unfortunately, corruption, perversions of the “Rule of Law” by the “untouchable” Judiciary branch, and political self-interest will always usurp all best efforts at such Utopian fantasies. And what politician ever considers the ramifications of their policies if their latest “war” once again turns out to be dead wrong? How is that “War on Poverty” going Mr. Johnson? You would think 45 years should be long enough to win any war, at least any war that can actually be won… If socialism and near-complete government control over everything is such a great prospect, there must most certainly be at least ONE, just ONE single example in 6,000+ years of history leading to a happy ending for all those concerned, right? Anyone, anyone, Ashley? Anyone??

Benjamin Franklin once said “Upon the whole I am much disposed to like the World as I find it, and to doubt my own Judgment as to what would mend it. I see so much Wisdom in what I understand of its Creation and Government, that I suspect equal Wisdom may be in what I do not understand.” Or as St. Francis de Sales perhaps best put it, “The path to Hell is paved with good intentions.”

(read more...)]]> http://www.vlogolution.com/hot/2009-11-21-letter-from-grandpa-to-liberal-granddaughter-ask-obama-to-spread-the-wealth/feed/ 4 http://www.vlogolution.com/hot/2009-08-05-has-anyone-bothered-to-read-the-healthcare-bill/ http://www.vlogolution.com/hot/2009-08-05-has-anyone-bothered-to-read-the-healthcare-bill/#comments Thu, 06 Aug 2009 00:58:47 +0000 http://www.vlogolution.com/hot/?p=527

It’s always fascinating how many people will waste hours upon hours arguing for something such as the national healthcare plan without having bothered to spend 5 minutes reading even one page of the actual bill. Of course, when people don’t even care when their own politicians admit that it’s too much trouble to actually take the time to try and understand it, perhaps people deserve what’s coming to them. According to democrat John Conyers of Michigan, “What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you read the bill?” This guy is chairman of the House Judiciary Committee.

And have you ever noticed that those who endorse higher taxes never seem to be the ones who bother to actually pay them? Consider the odd case of democrat Charlie Rangel, chairman of the powerful House Ways and Means Committee. He’s leading the charge for a new 5.4% income tax surcharge and recently called it “the moral thing to do.” Ironically, this comes from a politician who has more blatant outstanding tax evasion issues — 6 investigations so far and counting! — than our Treasury Secretary Tim Geithner himself. From violating rent-control rules to hiding rental income to tax evasion, one wonders how Rangel has any time to do perform his duties of serving the people…  Serving them with more crappy bills and exorbitant taxes that is.

So, for anyone set on the terrific merits of the ObamaCare healthcare bill, let me help you out with some specific points and details directly from the bill, page numbers included. Mind you, these are just a few of my favorite points from the bill (as compiled by Peter Fleckenstein):

(read more...)]]> http://www.vlogolution.com/hot/2009-08-05-has-anyone-bothered-to-read-the-healthcare-bill/feed/ 6 http://www.vlogolution.com/hot/2009-04-15-to-e-file-or-not-to-e-file-your-tax-returns/ http://www.vlogolution.com/hot/2009-04-15-to-e-file-or-not-to-e-file-your-tax-returns/#comments Wed, 15 Apr 2009 20:53:59 +0000 http://www.vlogolution.com/hot/?p=393

I consider myself to be a modern gal however in years past I’ve always opted to snail mail in those nasty, dreaded tax returns. I flirted with the idea of filing electronically but being the cynic (and okay, neurotic) person that I am I feared that e-filing might up the ante on a very unpleasant word – AUDIT.

And being a modern gal I’m also a do-it-yourselfer. After all, if you don’t need to pay more into the lucrative business of taxes then prepare your own! I’ve found H&R Block’s TaxCut to be super easy and the 2008 Premium Federal + State addition includes five free federal E-files (included in the software price of course).

Once you consider the cost of printing out a full return, the cost of mailing it at least first-class plus certified and the additional time waiting at your local (and usually incompetent) USPS office, E-filing my federal return was less of a hassle, saved time and the likelihood of last minute paper jams and leaky ink cartridge changes.

A daytime phone number is required to submit your federal E-file along with an email address. Once your submission has been accepted by the mafia IRS you’ll receive a notification via email.  A piece of canole! Now as for easy payment of your mandatory donation to Uncle Sam, well that’s NEVER EASY!

What better way to introduce vlogolution’s new PassMeThePork channel than on TAX DAY!  It’s that fun-filled day of the year when Americans aren’t sure if they want to celebrate completing their 25 hour+ annual final exam-like tax forms, or cry and whine over how much of their hard-earned money was just raped from them.

To add insult to injury, isn’t it great to know you’ll be helping pay off just a bit of the huge PORK spending and bailouts of our friendly government and the royal fat-cat elite that control them?!  I guess paying taxes on earnings isn’t so bad if it’s all because of a taxpayer bailout anyway.  Oh wait, how many of these guys haven’t even bother to pay their full taxes anyway!  Eh hem, Mr. Geithner (Treasury Secretary and Head of the IRS).

So maybe by now you’re thinking… with so many crooks, so many schemes, so much sheistery, isn’t it time they Pass Me The Pork, #$%&$! With our brand new channel, along with a completely revamped website, we can now easily blog, create videos, and create a friendly community of Porkypines to “pop the pork”!  By following closely, we’ll find the pork, debunk the pork, slice the pork, and find astute tricks on how best to grab a piece of the pork for ourselves.  So PORK YOU, Hank Paulson, Vikram Pandit – Citigroup, Martin Sullivan – AIG, Franklin Raines – Fannie Mae, Rahm Emanuel – Freddie Mac, Bernie Madoff, Ben Bernanke, Alan Greenspan, oh how we could go on, …

We’re also in the midst of Tax Freedom Day, which is the number of days of the year that an average American works to pay off their “government obligations” as good little lemmings do.  For those in the higher tax brackets, would you believe they work well into June before making a few bucks for themselves?!  Maybe more Americans would wake up if they didn’t get paid at all until Tax Freedom Day.  Those living in Connecticut (120 days), New Jersey (119 days), New York (115 days), and California (110 days) will be proud to know that they are the TOP average tax payers out of all fifty states (congrats to Connecticut for being in first place as the most expensive of all – perhaps all those hedge fund salaries tipped the scale a bit).  On average, this year taxes will amount to 28.2% of our income, or 103 days of work per person.

If this upsets you enough to stretch out of your easy chair, you may want to participate in one of the many Tax Day Tea Parties occurring today.  In New York City, there will be one at City Hall from 7pm to 9pm.  These rallies have been organized in cities and towns across the nation, and it’s amazing how they’ve received almost no press coverage whatsoever!  Gives you a clue to who owns and controls the media…

So far the pundits have still been talking down the stock market.  This has helped many stocks do nothing but continue moving higher while the average investor is frozen like a deer in the headlights.  Just watch out when the pundits start talking again how stocks are the place to be.  Don’t think another test of the lows is out of the question…  Given the market’s current price action, it’s just very unlikely to happen for at least the next few months.  Banks still have yet to pony up true values on many of their holdings, and it’s still amazing how easily the media accepts “brighter outlooks” from the same people who were completely clueless, wrong, and/or outright lied throughout the entire meltdown.

On a final note, talk about how complacent we’ve all become, in 1773 the tea tax that was protested at the Boston Tea Party was approximately 3%.  Today, the average American pays as much as 70% of their total income in taxes (income, sales, gas, utility, etc)!  So, hmmm, beer and TV, or… take a stand…  Well, I dunno, I guess I’ll just have to think about it over a nice cold beer…

Taxes Taxes Everywhere and how our wallets did shrink… Even our Savings are Taxed, and in time it won’t even amount to a drink.
]]> http://www.vlogolution.com/hot/2006-06-04-inflation-and-excess-taxes-the-true-hidden-enemy-of-savings/feed/ 2 http://www.vlogolution.com/hot/2006-05-08-are-the-oil-companies-really-to-blame-for-high-oil-prices/ http://www.vlogolution.com/hot/2006-05-08-are-the-oil-companies-really-to-blame-for-high-oil-prices/#comments Sun, 07 May 2006 22:00:00 +0000 http://www.vlogolution.com/hot/?page_id=24

Forget the Iran and Iraq worries, Iran’s new oil-euro exchange, shortages, increased demand, the OPEC cartel, inflation, and high taxes. Let’s just blame the oil companies for high gasoline prices!
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