Month: September 2014

The mass demonstrations in Hong Kong are dramatic, indeed. And given that Hong Kong has long enjoyed a more liberal existence under British rule, protests against a more authoritarian Chinese government (at least it used to be more authoritarian) are not entirely surprising.

But Chinese officials accuse the U.S. of egging on the protests.  As the Wall Street Journal’s China Real Time blog reports:

On Thursday, Wen Wei Po published an “expose” into what it described as the U.S. connections of Joshua Wong, the 17 year-old leader of student group Scholarism.

 

The story asserts that “U.S. forces” identified Mr. Wong’s potential three years ago, and have worked since then to cultivate him as a “political superstar.”

 

Evidence for Mr. Wong’s close ties to the U.S. that the paper cited included what the report described as frequent meetings with U.S. consulate personnel in Hong Kong and covert donations from Americans to Mr. Wong. As evidence, the paper cited photographs leaked by “netizens.” The story also said Mr. Wong’s family visited Macau in 2011 at the invitation of the American Chamber of Commerce, where they stayed at the “U.S.-owned” Venetian Macao, which is owned by Las Vegas Sands Corp.

 

***

 

This isn’t the first time that Beijing-friendly media have accused foreign countries of covert meddling in the former British colony. China’s government has long been concerned that Western intelligence agencies might try to exploit the city’s relatively more open political environment to push democracy in the rest of the country. The various “color revolutions” that ushered in democratic governments across the former Soviet Union in the early 2000s, and which were partly organized by foreign-funded NGOs, heightened those concerns.

 

Allegations of foreign intervention in Hong Kong have become particularly intense in the run-up to 2017, the earliest that Beijing has said Hong Kong residents can begin to directly elect their leaders. Wen Wei Po and another Beijing-leaning Hong Kong newspaper Ta Kung Pao, for example, have accused the U.K. of stationing British spies across Hong Kong institutions. Pro-Beijing publications have also accused Hong Kong media mogul and staunch Beijing critic Jimmy Lai of having connections with the CIA. Mr. Lai is the founder of Next Media Ltd., which owns the Apple Daily newspapers in Taiwan and Hong Kong, and is a major donor to pro-democracy groups in Hong Kong.

 

In its report on Mr. Wang, Wen Wei Po said that the U.S. Central Intelligence Agency is making a pointed effort to infiltrate Hong Kong schools, for example through the Hong Kong-America Center, a group headed by former U.S. diplomat Morton Holbrook that promotes H.K.-U.S. ties. It also alleged that the CIA is actively training a new generation of protest leaders in Hong Kong through sponsoring students to study in the U.S., with an aim of stoking future “color revolutions” in the city.

Tony Cartalucci writes:

Behind the so-called “Occupy Central” protests … is a deep and insidious network of foreign financial, political, and media support. Prominent among them is the US State Department and its National Endowment for Democracy (NED) as well as NED’s subsidiary, the National Democratic Institute (NDI).

 

Now, the US has taken a much more overt stance in supporting the chaos their own manipulative networks have prepared and are now orchestrating. The White House has now officially backed “Occupy Central.” Reuters in its article, “White House Shows Support For Aspirations Of Hong Kong People,” would claim:

The White House is watching democracy protests in Hong Kong closely and supports the “aspirations of the Hong Kong people,” White House spokesman Josh Earnest said on Monday. “

The United States supports universal suffrage in Hong Kong in accordance with the Basic Law and we support the aspirations of the Hong Kong people,” said Earnest, who also urged restraint on both sides.

US State Department Has Built Up and Directs “Occupy Central”

Image: The US through NED and its subsidiaries have a long history of promoting subversion and division within China.

 

Earnest’s comments are verbatim the demands of “Occupy Central” protest leaders, but more importantly, verbatim the long-laid designs the US State Department’s NDI articulates on its own webpage dedicated to its ongoing meddling in Hong Kong. The term “universal suffrage”and reference to “Basic Law” and its “interpretation” to mean “genuine democracy” is stated clearly on NDI’s website which claims:

The Basic Law put in place a framework of governance, whereby special interest groups, or “functional constituencies,” maintain half of the seats in the Legislative Council (LegCo). At present, Hong Kong’s chief executive is also chosen by an undemocratically selected committee. According to the language of the Basic Law, however, “universal suffrage” is the “ultimate aim.” While “universal suffrage” remains undefined in the law, Hong Kong citizens have interpreted it to mean genuine democracy.

To push this agenda – which essentially is to prevent Beijing from vetting candidates running for office in Hong Kong, thus opening the door to politicians openly backed, funded, and directed by the US State Department – NDI lists an array of ongoing meddling it is carrying out on the island. It states:

Since 1997, NDI has conducted a series of missions to Hong Kong to consider the development of Hong Kong’s “post-reversion” election framework, the status of autonomy, rule of law and civil liberties under Chinese sovereignty, and the prospects for, and challenges to democratization.

It also claims:

In 2005, NDI initiated a six-month young political leaders program focused on training a group of rising party and political group members in political communications skills.

And:

NDI has also worked to bring political parties, government leaders and civil society actors together in public forums to discuss political party development, the role of parties in Hong Kong and political reform. In 2012, for example, a conference by Hong Kong think tank SynergyNet supported by NDI featured panelists from parties across the ideological spectrum and explored how adopting a system of coalition government might lead to a more responsive legislative process.

NDI also admits it has created, funded, and backed other organizations operating in Hong Kong toward achieving the US State Department’s goals of subverting Beijing’s control over the island:

In 2007, the Institute launched a women’s political participation program that worked with the Women’s Political Participation Network (WPPN) and the Hong Kong Federation of Women’s Centres (HKFWC) to enhance women’s participation in policy-making, encourage increased participation in politics and ensure that women’s issues are taken into account in the policy-making process.

And on a separate page, NDI describes programs it is conducting with the University of Hong Kong to achieve its agenda:

The Centre for Comparative and Public Law (CCPL) at the University of Hong Kong, with support from NDI, is working to amplify citizens’ voices in that consultation process by creating Design Democracy Hong Kong (http://ift.tt/1wWIVpZ), a unique and neutral website that gives citizens a place to discuss the future of Hong Kong’s electoral system.

It should be no surprise to readers then, to find out each and every “Occupy Central” leader is either directly linked to the US State Department, NED, and NDI, or involved in one of NDI’s many schemes.

Image: Benny Tai, “Occupy Central’s” leader, has spent years associated with and benefiting from US State Department cash and support.

“Occupy Central’s” self-proclaimed leader, Benny Tai, is a law professor at the aforementioned University of Hong Kong and a regular collaborator with the NDI-funded CCPL. In 2006-2007 (annual report, .pdf) he was named as a board member – a position he has held until at least as recently as last year. In CCPL’s 2011-2013 annual report (.pdf), NDI is listed as having provided funding to the organization to “design and implement an online Models of Universal Suffrage portal where the general public can discuss and provide feedback and ideas on which method of universal suffrage is most suitable for Hong Kong.”

 

Curiously, in CCPL’s most recent annual report for 2013-2014 (.pdf), Tai is not listed as a board member. However, he is listed as participating in at least 3 conferences organized by CCPL, and as heading at least one of CCPL’s projects. At least one conference has him speaking side-by-side another prominent “Occupy Central” figure, Audrey Eu. The 2013-2014 annual report also lists NDI as funding CCPL’s “Design Democracy Hong Kong” website.

 

Civic Party chairwoman Audrey Eu Yuet-mee, in addition to speaking at CCPL-NDI functions side-by-side with Benny Tai, is entwined with the US State Department and its NDI elsewhere. She regularly attends forums sponsored by NED and its subsidiary NDI. In 2009 she was a featured speaker at an NDI sponsored public policy forum hosted by “SynergyNet,” also funded by NDI. In 2012 she was a guest speaker at the NDI-funded Women’s Centre “International Women’s Day” event, hosted by the Hong Kong Council of Women (HKCW) which is also annually funded by the NDI.

Image: Martin Lee and Anson Chan belly up to the table with US Vice President Joseph Biden in Washington DC earlier this year. During their trip, both Lee and Chan would attend a NED-hosted talk about the future of “democracy” in Hong Kong. Undoubtedly, “Occupy Central” and Washington’s support of it was a topic reserved for behind closed doors.

 

There is also Martin Lee, founding chairman of Hong Kong’s Democrat Party and another prominent figure who has come out in support of “Occupy Central.” Just this year, Lee was in Washington meeting directly with US Vice President Joseph Biden, US Congresswoman Nancy Pelosi, and even took part in an NED talk hosted specifically for him and his agenda of “democracy” in Hong Kong. Lee even has a NED page dedicated to him after he was awarded in 1997 NED’s “Democracy Award.” With him in Washington was Anson Chan, another prominent figure currently supporting the ongoing unrest in Hong Kong’s streets.

The U.S. has certainly promoted regime change worldwide, often by using non-governmental organizations as front groups to funnel money to dissidents who will overthrow the government.

For example, USAID has been called the “new CIA”, and FBI whistleblower Sibel Edmonds told Washington’s Blog that the U.S. State Department is involved in many “hard power” operations, often coordinating through well-known “Non-Governmental Organizations” (NGOs).    Specifically, Edmonds explained that numerous well-known NGOs – which claim to focus on development, birth control, women’s rights, fighting oppression and other “magnif
icent sounding” purposes or seemingly benign issues – act as covers for State Department operations. She said that the State Department directly places operatives inside the NGOs.

Edmonds also told us that – during the late 90s and early 2000s – perhaps 30-40% of the people working for NGOs operated by George Soros were actually working for the U.S. State Department.

If this all sounds too nutty, remember that historians say that declining empires tend to attack their rising rivals … so the risk of world war is rising because the U.S. feels threatened by the rising empire of China.

The U.S. government considers economic rivalry to be a basis for war. And the U.S. is systematically using the military to contain China’s growing economic influence.

And U.S. sanctions against Russia are not having the desired effect … largely because China is picking up the slack by trading with Russia and even loaning it money.

Indeed, China, Russia, India and Brazil have formed what some top economists say is an alternative to the Western financial institutions, the World Bank and IMF. And China is challenging the petrodollar.

So it’s not beyond the realm of possibility that the U.S. (and the former owner of Hong Kong, Britain) egged on democracy protesters in Hong Kong in order to try to shake up the Chinese regime.

via Zero Hedge http://ift.tt/1mODOHC George Washington

Submitted by David Stockman via Contra Corner blog,

Here come the revisionists with new malarkey about the 2008 financial crisis. No less august a forum than the New York Times today carries a front page piece by journeyman financial reporter James Stewart suggesting that Lehman Brothers was solvent; could and should have been bailed out; and that the entire trauma of the financial crisis and Great Recession might have been avoided or substantially mitigated:

What happened that September was the culmination of circumstances reaching back years – of ordinary people too eager to borrow, of banks too eager to lend and of Wall Street financial engineers reaping multimillion-dollar bonuses. Even so, saving Lehman from complete collapse might have shielded the economy from what turned out to be a crippling blow.

That is not just meretricious nonsense; its a measure of how thoroughly corrupted public discourse about the fundamental financial and economic realities of the present era has become owing to the cult of central banking. For crying out loud, yes, there would have been a Great Recession – even had Lehman been pawned off to Barclays with a taxpayer guarantee or if it had been bailed-out in some other manner.

In fact, the Barclay’s logo did end up on Lehman’s 7th Avenue glass tower shortly after the September 15th screen shot below. Yet the decision to allow Lehman’s stock and bondholders to take a severe haircut first did not cause the thundering collapse of the housing and credit markets, nor the loss of the artificially bloated level of consumption spending, jobs and income that had accompanied the giant financial bubble that finally burst in September 2008.

The villain is the Greenspan Fed and the rampage of debt and speculation its cheap money and “wealth effects” coddling of Wall Street had engendered over the previous two decades. When Greenspan took office in 1987, total credit market debt outstanding was $10.5 trillion, but by the time of the Lehman event it was nearly $53 trillion. This means that the debt burden on the US economy had soared by 5X during a period when nominal GDP grew by only 2.9X. That’s called leveraging up big time—–and it fueled a party of consumption and speculation like the nation had not experienced since the 1920s, or even then.

 

Moreover, within the household sector the explosion of debt was even more stunning owing to the Greenspan policies of cheap mortgage rates and the overt encouragement of American families to raid their home ATM machines. As shown below, household debt ballooned from just $2.7 trillion when Greenspan took charge of the Eccles Building in August 1987 to nearly $14 trillion on the eve of the crisis.

 

And there can be little doubt as to what explains the above mountain of household debt. American households were raiding their home ATM machines – that is, cashing out the equity in their homes – in order to indulge in a massive orgy of consumption spending that they had not earned. In fact, at the peak in 2005-2007, households were extracting cash from their ATMs at nearly a $1 trillion annual rate, ballooning their disposable incomes by upwards of 8%. That is, they were buying flat screen TVs, granite top kitchen counters, restaurant dinners and trips to the mall with money they hadn’t earned, and based on rapidly rising leverage ratios that couldn’t be sustained.

What caused the Great Recession, therefore, was the day of reckoning when the household borrowing mania reached its limit. As shown below, the swing in household spending funded by withdrawals from home ATM machines was massive and violent. At its peak extent between 2006 and 2010 – it amounted to a reversal of nearly $1.4 trillion. Yes, when a gigantic, artificial spending bubble of this magnitude is pricked, the repercussions do cascade through the main street economy taking down sales, jobs and incomes as they go.

Accordingly, the chart below explains the Great Recession, not some revisionist gumming from the bowels of the New York Fed as to how the economy could have been “saved” if only Tiny Tim Geithner had gotten the word on Sunday evening September 14th that Lehman was “solvent” after all. In fact, the name on the glass tower above had nothing to do with the crash of household borrowing at upwards of 30 million home ATMs depicted in the graph below.

Moreover, what caused the recession to be so painful and deep is that the phony prosperity of the Greenspan era could no longer be fueled by pushing households deeper into debt. By the fall of 2008, “peak debt” had been reached in the household sector, and a modest deleveraging was begun owning to upwards of $1 trillion in mortgage defaults. But this wasn’t a recoverable loss of “aggregate demand”  per the Keynesian mantra at the Bernanke Fed. The US economy was drastically squeezed by the Great Recession because artificial mortgage fueled spending was being liquidated all across America, not because punters in Lehman stock and bonds lost their shirts, and deservedly so.

 

 

In short, the Great Recession was about the abrupt end of the great financial party conducted by the Maestro. During his 19 year reign, the nation underwent a collective LBO, raising it leverage ratio from a historically sound and sustainable 1.5X national income to 3.5X on the eve of the Lehman collapse. Those two extra turns of debt amounted to $30 trillion at the time the US economy buckled in 2008; they were a measure of both the folly of the Greenspan/Bernanke spending party that had been financed by the Fed’s cheap money policies, and the enormity of the adjustment that was brought to bear on the US economy when the bubble finally collapsed.

 

Not surprisingly, upwards of $12 trillion in household wealth was destroyed by the financial crisis and the deep recession which followed. But given the enormous inflation of housing prices and risk asset values which had been driven by the debt bubble, it is ludicrous to suggest that save for not saving Lehman, the housing crash pictured below would not have happened. In fact, between late 1994 and early 2006 home prices in America rose each and every month for about 125 straight months, rising by nearly 140% over the period.

 

Needless to say, the above wasn’t sustainable and didn’t reflect either the free market at work or greed running rampant in the towns and cities of America. It was the cheap money and Wall Street coddling policies of the Fed which generated the housing binge, and the gambling hall known as Lehman Brothers that had gone along for the ride.

It is therefore especially misfortunate that mainstream journalists like Stewart take up the revisionist line that Lehman was “solvent”, and that a great mistake was made in not throwing it a life line. Well, it just doesn’t fricking matter whether it was “solvent”.  It was self-evidently illiquid because it – like the rest of Wall Street – had funded tens of billions of illiquid, opaque and drastically over-valued long-term assets in the short-term money markets. It was a classic, massive funding mismatch and there is no doubt whatsoever about what caused it, and why it happened.

What caused it, of course, is the fundamental tool of Fed policy – that is, pegging the money market rate (federal funds) and holding it rigidly in place until a well telegraphed decision to change it is announced from the Eccles Building.  Stated differently, Fed policy inherently offers a big fat yield curve arbitrage to Wall Street and a guarantee that it can be taken to the bank day after day.

By contrast, in the pre-Fed era money market rates could move by hundreds of basis points per day, and that most definitely did deter large banks from loading up on illiquid assets and funding their books with hot money. To be sure, there were plenty of punters prior to 1913, but the game was played in the call money market and their were no illusions among the participants.

Broker loans were instantly callable, and were called without hesitation by the street’s bankers when frothy markets took a dive. Needless to say, speculation was held in check by the discipline of the call money market and no one proposed to make a living by generating giant balance sheets with recklessly mismatched funding.

The latter is a disease of the Greenspan/Bernanke/Yellen era of Keynesian central banking and massive manipulation of financial market prices and rates. Its why the balance sheet of Goldman and Morgan had reached $2 trillion with hundreds of billions of hot money funding, and why Lehman’s $800 billion balance sheet was not even remotely liquid. Indeed, the idea that the Wall Street gambling houses were “solvent” but only needed a liquidity injection goes to the very heart of the matter, explains why financial crises have become endemic in the current era and why bailouts have become standard operating procedure.

Central bank apparatchiks like Tim Geithner and journalist fellow travelers like Stewart would have viewed the call market panics of the pre-Fed era as “bank runs” that needed to be stopped at all hazards. By contrast, they were, in fact, a healthy financial therapeutic that kept speculation reasonably in check.

But money market pegging by the central bank, to use Friedman’s phrase, always and everywhere causes bank runs and liquidity crises in the canyons of Wall Street. Tempt the titans of finance with the opportunity to scalp prodigious profits by ballooning their balance sheets with sticky assets that yield more than the pegged cost of hot money, and they will do it every time.

And when a black swan comes calling, the value of all those sticky assets will not be what’s on the books, but what can be salvaged in a plunging market when hot money lenders want their money back….and now.  So of course Lehman was insolvent and massively so. It had funded itself so that its assets were only worth their fire sale price.

The great error of September 2008, therefore, was not in failing to bailout Lehman. It was in providing a $100 billion liquidity hose to Morgan Stanley and an even larger one to Goldman.  They too were insolvent. That was the essence of their business model.

Not surprisingly, Greenspan co-architect in creating this madness was Alan Blinder. As he told Stewart in today’s article,  there was no doubt that the Fed could have saved Lehman and should have:

"Of course the Fed can stop a run,” said Mr. Blinder, the economist. “That’s what it’s all about.”

That’s right. Its policies inherently generate runs, and then it stands ready with limitless free money to rescue the gamblers.  You can call that pragmatism, if you like. But don’t call it capitalism.

via Zero Hedge http://ift.tt/1uA7HOy Tyler Durden

While Greek government yields (and political leaders) proclaim the troubled peripheral European nation is ‘recovering’, the risk of major political upheaval in Greece has not gone away ahead of next year’s presidential vote next year. As Reuters notes, under growing pressure from anti-bailout leftists, Greek Prime Minister Antonis Samaras desperately needs a new narrative to get the backing of lawmakers and rally Greeks fed up with four years of austerity. We wish him luck as Keep Talking Greece notes, it is high time that the real data of the economic situation of the Greek society come to the surface and so it did this week. A report from Greece’s State Budget Office found that three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment.

As we noted previously, poverty rates are disturbing in Greece

 

As Reuters reports,

Four years after a messy descent into emergency funding to stave off bankruptcy, Greece’s government is trying to pull the plug on a deeply unpopular bailout program to secure its own survival.

Under growing pressure from anti-bailout leftists, Greek Prime Minister Antonis Samaras desperately needs a new narrative to get the backing of lawmakers in a crucial presidential vote next year and rally Greeks fed up with four years of austerity.

It is a gamble with high stakes for the Greek economy and Athens’ relations with its euro zone peers. Failure by Samaras to get his presidential nominee elected would trigger new polls that his anti-austerity rivals would almost certainly win.

He better try hard as the situation is dismal… (as ekathimerini reports,)

Three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment, a report by Parliament’s State Budget Office showed on Thursday.

 

Using data on household incomes and living conditions, the report – titled “Minimum Income Policies in the European Union and Greece: A Comparative Analysis” – found that “some 2.5 million people are below the threshold of relative poverty, which is set at 60 percent of the average household income.” It added that “3.8 million people are facing the threat of poverty due to material deprivation and unemployment,” resulting in a total of 6.3 million people.

 

The State Budget Office’s economists who drafted the report argued that in contrast with other European countries “which implement programs to handle social inequalities, Greece, which faces huge phenomena of extreme poverty and social exclusion, is acting slowly.” They added that there is high demand for social assistance, while its supply by the state is “fragmented and full of administrative malfunctions.”

 

In that context “the social safety net is inefficient, while there is no prospect for the recovery of income losses resulting from the economic recession in the near future,” the report noted, reminding readers that the measure of the minimum guaranteed income “arrived in Greece belatedly.”

 

According to Eurostat Greece ranks top among the 28 European Union countries in terms of poverty risk and also has the highest poverty share in the population (23.1 percent). Greece also ranks fourth among EU states in poverty disparity, after Spain, Romania and Bulgaria.

h/t Keep Talking Greece

*  *  *

But, of course, none of that matters – bond yields are low and the ECB-collateralized cash is flowing.

 

As for Greece: don’t cry for it – it still has the euro – that symbol of successful European integration – so all is well.

via Zero Hedge http://ift.tt/1v2P7Ll Tyler Durden

Two classes of warships kicked off the U.S.-led attacks on Islamic State and the al Qaeda-linked Khorasan group.

 

WSJ’s Jason Bellini explains what are these ships’ capabilities?

 

Source: WSJ Video

via Zero Hedge http://ift.tt/ZpNn5G Tyler Durden

Submitted by Michael Snyder of The Economic Collapse blog,

I know that headline sounds completely outrageous.  But it is actually true.  The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this.  When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months.  And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.  But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year.  When these debt instruments hit their maturity date, the U.S. government must pay them off.  This is done by borrowing more money to pay off the previous debts.  In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued.  The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So why does so much government debt come due each year?

Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames.  For example, it costs the government far more to borrow money for 10 years than it does for 1 year.  So a strategy was hatched to borrow money for very short periods of time and to keep "rolling it over" again and again and again.

This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.

So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?

Well, the game will be over and we will be in a massive amount of trouble.

I am about to share with you some numbers that were originally reported by CNS News.  As you can see, far more debt is being redeemed and issued today than back during the middle part of the last decade…

2013

Redeemed: $7,546,726,000,000

Issued: $8,323,949,000,000

Increase: $777,223,000,000

2012

Redeemed: $6,804,956,000,000

Issued: $7,924,651,000,000

Increase: $1,119,695,000,000

2011

Redeemed: $7,026,617,000,000

Issued: $8,078,266,000,000

Increase: $1,051,649,000,000

2010

Redeemed: $7,206,965,000,000

Issued: $8,649,171,000,000

Increase: $1,442,206,000,000

2009

Redeemed: $7,306,512,000,000

Issued: $9,027,399,000,000

Increase: $1,720,887,000,000

2008

Redeemed: $4,898,607,000,000

Issued: $5,580,644,000,000

Increase: $682,037,000,000

2007

Redeemed: $4,402,395,000,000

Issued: $4,532,698,000,000

Increase: $130,303,000,000

2006

Redeemed: $4,297,869,000,000

Issued: $4,459,341,000,000

Increase: $161,472,000,000

The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.

And our current standard of living greatly depends on the continuation of this game.

If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.

In the United States today, we have a heavily socialized system that hands out checks to nearly half the population.  In fact, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau.  And it is hard to believe, but Americans received more than 2 trillion dollars in benefits from the federal government last year alone.  At this point, the primary function of the federal government is taking money from some people and giving it to others.  In fact, more than 70 percent of all federal spending goes to "dependence-creating programs", and the government runs approximately 80 different "means-tested welfare programs" right now.  But the big problem is that the government is giving out far more money than it is taking in, so it has to borrow the difference.  As long as we can continue to borrow at super low interest rates, the status quo can continue.

But a Ponzi scheme like this can only last for so long.

It has been said that when the checks stop coming in, chaos will begin in the streets of America.

The looting that took place when a technical glitch caused the EBT system to go down for a short time in some areas last year and the rioting in the streets of Ferguson, Missouri this year were both small previews of what we will see in the future.

And there is no way that we will be able to "grow" our way out of this problem.

As the Baby Boomers continue to retire, the amount of money that the federal government is handing out each year is projected to absolutely skyrocket.  Just consider the following numbers…

–Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

 

–When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around.  Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.

 

–It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

 

–At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

 

–In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

 

–Right now, there are approximately 63 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.

 

–Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

 

–The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead.  Social Security and Medicare make up the bulk of that.

Yes, things seem somewhat stable for the moment in America today.

But the same thing could have been said about 2007.  The stock market was soaring, the economy seemed like it was rolling right along and people were generally optimistic about the future.

Then the financial crisis of 2008 erupted and it seemed like the world was going to end.

Well, the truth is that another great crisis is rapidly approaching, and we are in far worse shape financially than we were back in 2008.

Don't get blindsided by what is ahead.  Evidence of the coming catastrophe is all around you.

via Zero Hedge http://ift.tt/1vt90vD Tyler Durden

Submitted by Michael Snyder of The Economic Collapse blog,

I know that headline sounds completely outrageous.  But it is actually true.  The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this.  When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months.  And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.  But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year.  When these debt instruments hit their maturity date, the U.S. government must pay them off.  This is done by borrowing more money to pay off the previous debts.  In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued.  The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So why does so much government debt come due each year?

Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames.  For example, it costs the government far more to borrow money for 10 years than it does for 1 year.  So a strategy was hatched to borrow money for very short periods of time and to keep "rolling it over" again and again and again.

This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.

So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?

Well, the game will be over and we will be in a massive amount of trouble.

I am about to share with you some numbers that were originally reported by CNS News.  As you can see, far more debt is being redeemed and issued today than back during the middle part of the last decade…

2013

Redeemed: $7,546,726,000,000

Issued: $8,323,949,000,000

Increase: $777,223,000,000

2012

Redeemed: $6,804,956,000,000

Issued: $7,924,651,000,000

Increase: $1,119,695,000,000

2011

Redeemed: $7,026,617,000,000

Issued: $8,078,266,000,000

Increase: $1,051,649,000,000

2010

Redeemed: $7,206,965,000,000

Issued: $8,649,171,000,000

Increase: $1,442,206,000,000

2009

Redeemed: $7,306,512,000,000

Issued: $9,027,399,000,000

Increase: $1,720,887,000,000

2008

Redeemed: $4,898,607,000,000

Issued: $5,580,644,000,000

Increase: $682,037,000,000

2007

Redeemed: $4,402,395,000,000

Issued: $4,532,698,000,000

Increase: $130,303,000,000

2006

Redeemed: $4,297,869,000,000

Issued: $4,459,341,000,000

Increase: $161,472,000,000

The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.

And our current standard of living greatly depends on the continuation of this game.

If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.

In the United States today, we have a heavily socialized system that hands out checks to nearly half the population.  In fact, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau.  And it is hard to believe, but Americans received more than 2 trillion dollars in benefits from the federal government last year alone.  At this point, the primary function of the federal government is taking money from some people and giving it to others.  In fact, more than 70 percent of all federal spending goes to "dependence-creating programs", and the government runs approximately 80 different "means-tested welfare programs" right now.  But the big problem is that the government is giving out far more money than it is taking in, so it has to borrow the difference.  As long as we can continue to borrow at super low interest rates, the status quo can continue.

But a Ponzi scheme like this can only last for so long.

It has been said that when the checks stop coming in, chaos will begin in the streets of America.

The looting that took place when a technical glitch caused the EBT system to go down for a short time in some areas last year and the rioting in the streets of Ferguson, Missouri this year were both small previews of what we will see in the future.

And there is no way that we will be able to "grow" our way out of this problem.

As the Baby Boomers continue to retire, the amount of money that the federal government is handing out each year is projected to absolutely skyrocket.  Just consider the following numbers…

–Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

 

–When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around.  Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.

 

–It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

 

–At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

 

–In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that num
ber has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

 

–Right now, there are approximately 63 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.

 

–Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

 

–The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead.  Social Security and Medicare make up the bulk of that.

Yes, things seem somewhat stable for the moment in America today.

But the same thing could have been said about 2007.  The stock market was soaring, the economy seemed like it was rolling right along and people were generally optimistic about the future.

Then the financial crisis of 2008 erupted and it seemed like the world was going to end.

Well, the truth is that another great crisis is rapidly approaching, and we are in far worse shape financially than we were back in 2008.

Don't get blindsided by what is ahead.  Evidence of the coming catastrophe is all around you.

via Zero Hedge http://ift.tt/1vt90vD Tyler Durden

The “confidence” gap between high-income and low-income earners has never been larger… Thank you Ben and Janet…

 

 

Chart: Bloomberg

via Zero Hedge http://ift.tt/1v2yJL4 Tyler Durden

The “confidence” gap between high-income and low-income earners has never been larger… Thank you Ben and Janet…

 

 

Chart: Bloomberg

via Zero Hedge http://ift.tt/1v2yJL4 Tyler Durden