Category Archives: economic depression

High stock prices are a danger to the US economy

How could high stock prices be a danger to the US economy? It just can’t be so, but it is. Paradox? Not really. How could persistently rising stock prices be bad for any economy? That is not possible, because people who own stocks feel wealthy. They will spend more, consumption goes up. Firms rev up production, hire more workers, wages rise, and the virtuous cycle is established; if only this were true!

Persistently rising stock prices suck the blood out of the economy and direct financial energy into the stock market. Corporations buy their own stock with cheap borrowed money, close plants, move operations overseas and leave US cities delapidated ghost towns. Tax revenues collapse, infrastructures collapse and the US slowly turns into a third world nation. This is the dark side of persistently rising stock prices.

In rising stock oriented society, wages do not grow.  In fact, the buying power of wages actually falls. Poverty, anxiety, chronic illnesses, obesity, and violence increase.

Economists, academics, decision makers, politicians sing the same ol’ song: “The US economy is resilient!”, and they point to the rising stock market. It is not!

Another component contributing to the rising stock market are persistently low interest rates, draining savers of their deserved interest income.

It would be better if the stock market was at 5000 and the economy was humming with rising wages, job growth, universal single payer health care system, affordable quality education, massive infrastructure renewal programs, quality affordable housing, etc. but this will never happen.

It will never happen as long as the rising stock market sucks the blood out of the economy, turning the country into an economic desert with areas of oases where the 2% ownership class lives with the 5% overseer class.

It will never happen as long the Federal Reserve and US Treasury’s economic policy is to support the stock market. The stock market will continue to suck the blood out of the economy until the final collapse.

No change will occur without the final collapse.

 

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Syrian War II

The ISIS stage of the Syrian war is changing; the US approach is changing. In addition to supporting ISIS it has also thrown its support behind the Kurds of Syria and Iraq. The plan to partition Syria and Lebanon has not changed. The occult plan to remove Assad and Partition Syria should have been accomplished by the end of 2014 but plans did not pan out; even the poison gas trick did not work.

The plan to remove Assad and to implement “Partition Syria” is still the goal, except it now has a sense of urgency. Assad is still in power and the Syrian Army is getting stronger. Assad is resilient and tough like his father Hafez was. Hafez would not buckle under US pressure and recognize the State of Israel, as did Egypt under Anvar Al Sadat and Jordan in the Camp David Accords under President Jimmy Carter. Lebanon would also not recognize Israel. By recognizing Israel, Anwar Al Sadat paid with his life. He was assassinated in 1979.

Israel thought it could partition Lebanon by itself, and get the waters of Lebanon, especially the Litani River. Israel, like any other state, is not viable without an abundance of fresh water, and their attempt did not succeed. The Israeli invasion of Lebanon of 2006 failed. Hesbollah gave Israel a very bloody nose. Israel sustained heavy losses and was forced to withdraw. The US and Israel decided to dismember Syria by proxy and so the Islamic State, ISIS, was created. The Syrian war started in earnest in 2011, the year that Gaddafi of Libya was impaled and killed. Remember what Hillary said: “We came, we saw, and he died. Ha! Ha !” Sick mind. Putting a demented twist on Caesar’s immortal words: Vene, Vidi, Vici.

By 2013, they blamed Assad for a chemical attack; it didn’t work. By 2014, the slogan was: Assad must go. Assad did not go. Russian support of Syria increased as did Iranian and that of Hesbollah of Lebanon. With their help, Assad was able to liberate the ancient Roman city of Palmyra, as well as Aleppo. Israel would bomb the Syrian Army position in support of ISIS. Even during so called peace time, prior to 2011, Israeli jets would regularly fly over Damascus and the summer residence of the President of Syria; Syria would not respond.

The situation today is very critical. The US has realized that the only way to partition Syria is to establish an independent Kurdistan out of North East Syria and North East Iraq. The US has forces in Iraq not to help Iraq fight ISIS but to control it and to delay its victory over ISIS. Independent Iraq would help Assad and the US wants to prevent that; the Iraqis know that, Especially Muqtada al Sader and the Shias. The Syrian war is heating up. Turkey will not tolerate an independent Kurdish state in Syria and Iraq. Severe estrangement is developing between US and Turkey and Turkey will probably leave NATO and abandon the US.

The US shot down a Syrian jet over Syria, an independent state and member of UN. In all honesty, this is a violation of International law. Syria is not an enemy of the US, nor has Syria asked for US help. Also, Syria is not a threat to US security. The actions of the US also violates the morals and ethics of the Universe. There is no justification for such actions except raw power. If the US persists in such actions, there will be a reaction. Remember the Third Law of Motion: for every action there is an equal and opposite reaction. Russia will strengthen Syrian air defenses and US planes and drones will start falling from the sky a la Vietnam War. It is possible that Karma is based on the Third Law of Motion. Iran will also increase its help to Syria.

If the Kurds proclaim their independence with US help, Turkey will enter the fray on the side of Syria. If that happens, the US will lose. Would the US bomb Turkey? Possibly, but not likely. However, again, anything is possible.

Increased Iranian help, let us say, 200,000 Iranian Troops or Irano-Turkish combination of 300,000 troops would arouse US-Israeli-British ire and a huge Middle East War would begin. The war would engulf Lebanon, Egypt, Jordan, Saudi Arabia, GCC (Gulf Cooperation Council), Yemen. The Saudi dynasty and Jordanian monarchy would collapse. The petro dollar would be finished. Oil prices would skyrocket. The EU and the US would enter into super depression. The rest of the world would  not be any better. However, countries connected by land from the Pacific- Indian Ocean to the Atlantic would start to coalesce. Afro-Eurasia would start coalescing. The US and the UK would be excluded.

The plan of the US is partition of Syria via Kurdistan which would become an ally of Israel, supplying it with precious fresh water from the Euphrates as well as oil. The second reason is the humiliating defeat of Russia and its’ eviction from the Middle East. The third reason is the destruction and conquest of Iran, the enemy of Israel and Saudis. By controlling Iran, the US would be able to control the Persian Gulf. It also would enable the US to control Central Asia. Just look the geography of the area.  Extra big war is in the works in the Middle East which may go nuclear.

The Age of Survival Economics

Survival economics have been in existence since life began on Earth. The primary instinct of all life on Earth, be it plant or animal, is survival, and perpetuation of its own kind. Mankind has been no exception.

With the discovery of the New World, the Colonial powers of the West extracted immense wealth from the rest of the World. New settlements and new countries were founded. The new countries rose to immense prominence such as the US, and others such as Brazil, Argentina, Canada, Australia, etc. to lesser prominence. They prospered and grew, along with the US, as the Lands of Opportunity. Nobody, but nobody could equal the growth, the innovation, the power, and the wealth of the US. The dollar became the Reserve and Official currency of the World in 1944, and was proclaimed as such in Bretton-Woods, New Hampshire, USA. All the world’s debt and trade was denominated in US dollars. The dollar was convertible to gold at 35 dollars an ounce. The US became the master of the world. The only country that would not buckle was the war damaged USSR. The Cold War was instituted to destroy USSR. The Soviet Union collapsed in 1989 through it own internal decay and weakness. The End of History was proclaimed and Western Liberal Ideas were proclaimed as supreme and immutable like the Laws of Nature.

But it was not to be so. Man made concepts cannot be compared to the Laws of Nature. Economic systems are concocted to serve the economic interests of the ruling elite. Laws and ideas are created to brainwash the masses. Eventually, the system starts breaking down and no laws or recycled ideas can save it. We are at such a period now.

Despite denials, the world is in recession. Actually, some areas of the world are in depression. Wages have stagnated, especially in the EU, Canada, and the US. Jobs created in the US are low wage and part time. Attempts to stimulate the economy through quantitative easing have not worked. SNAP {food stamps} have been expanded to help the poor. Under President Obama, the SNAP program has expanded from twenty three million in 2008 to nearly forty five million in 2016. The food program is a double edged sword. It keeps the poor from starvation but it entices them to buy junk food and drinks which leads to obesity and ill health. They buy processed food because it is cheap. At the same time, the SNAP program is a huge subsidy for giant Agri business, food processors, and giant food chains.

There can be no recovery because the US is suffering from negative energy flow which is reflected in the growth of debt, individual, corporate, and governmental at all levels. Wages are stagnating. Whatever positive energy there is, goes mostly to one percent of the population, the ownership class. Some energy goes to around five percent of the population, the overseer class. The overseer class faithfully serves the ownership class, and some members are abundantly rewarded. The Precariat Class which is around ninety percent of the population gets very little, if any, of the positive energy flow. The Precariat Class has some positive energy flow in the form SNAP, etc, which is a form of subsidy to giant corporations.

In the end, everything flows to the ownership class. Tax cuts, deregulation, and infrastructure renewal will not help because it will be based on more debt. Survival Economics is already the Modus Vivendi for the Precariat Class. Massive violence in society could be next.

Is the US facing the same problems as Third Century Rome?

The world, but particularly the US, is entering a period of great uncertainty, as did Rome in the third century AD. There were external threats and internal instability. Inflation was destroying the internal fabric. The coinage was diluted of its precious metals, silver and gold. People lost faith in its institutions, its army and its emperors. Through such inflation, the people were getting poorer. The longevity of its emperors was very short after the assassination of the Emperor Alexander Severus in 235 AD  The Empire fragmented and was in danger of collapsing. Two external threats were ever present: the Tribes of Northern and Eastern Europe were pressing on the Empire and in the East, there were Persian threats. Three emperors lost wars with Persia, and one, Emperor Valerian, was even captured by the Persians in 260 AD through a ruse.

The 42nd Emperor Claudius Gothicus, (268-270), stabilized the frontiers by defeating the Alemani and the Goths, but unfortunately, died of some kind of infection.  The 51st Emperor Deocletian, (284-305), further strengthened the Empire by reducing inflation, further stabilizing the frontiers, and introducing tetrarchy to government. Tetrarchy is four person rule.  Deoclitian split the administration into a Western Empire centered in Rome, and an Eastern Empire centered in the future city of Constantinople to be founded by Emperor Constantine the Great in 330 AD. When the Western Empire fell in 476 AD, the Eastern Empire or Byzantine Empire lasted for almost one thousand years until Contantinople fell to the Turks in 1453.

Is the US in a similar situation? Possibly?  The US has been in decline since President Nixon defaulted on the gold obligation of 35 dollars for one ounce of gold. Nixon proclaimed it would be temporary, but almost 50 years later is still going. As a result inflation became rampant, Congress became generous and passed the law that allowed Americans to own gold again. President Roosevelt and Congress banned ownership of gold except in jewelry in 1933.

Economic conditions were deteriorating slowly. Inflation in the seventies, Reaganomics in the eighties, Clintonomics in the nineties, subprime mortgages and the tech bubble in the first decade of the new millennium and a severe bust in 2007-09 that nearly collapsed the entire system. Throughout this period, living standards for Americans were going down. The main culprits were debt, public and private, quality job losses, inflation, lack of affordable universal health care, expensive education, and foreign military interventions.

As I mentioned in my previous posts, the three pillars of paper, all based on debt, are keeping this system afloat, but just barely, and they are the dollar, the stock market, and the bond market. The Federal Reserve and the Treasury are keeping the system going by shunting new money into stocks and bonds creating conditions for a financial shock that is becoming inevitable. Zero interest rates and quantitative easing are propping up the system, but not curing it; it cannot be cured.

One could call the US economy a “mirage” because there has been no actual growth since the late 1960’s. The living standards of the people have been going down and down, but the lies and deceptions have been going up. One does not know whom to believe. In socio-economic terms, three economic classes have developed in the US: the owner class of 1%, the overseer class of 4-5%, and the Precariat class of around 95%. The Precariat Class is composed of all ethnic groups, religions, and races, but it is kept divided by the Ownership Class for its own interests. The Precariat is on the whole totally dispossessed, and they live from pay cheque to pay cheque, with the loan sharking firms eating them in between.

The present recovery after the almost system collapse 0f 2007-8, has been nothing but “a mirage”, a statistical “recovery” propped by a series of quantitative easings and zero interest rates. The ownership class and the overseer class are doing extremely well, but the precariat class is barely surviving.

In foreign policy, the US, a hegemonic power, has become a reactionary force in order to maintain its world wide empire based on dollar indebtedness and exploitation of the rest of the world. Through its policy in the Middle East, it has lost Iran and now may lose Turkey, two large countries dominating the key strategic areas of the Afro-Eurasia. It is true, the US has gained  eastern Europe through the European Union and NATO, but Europe itself has become unstable.

In the Middle East, some claim that the US and Israel have created ISIS and Al-Qaeda  to destroy Syria and Iraq in order to get to Iran, and take total control of the Middle East and its natural resources. If Turkey switches to Eurasia, and a compromise is reached between Syria and Turkey, the US will lose the Middle East. The next shoe to drop will be Saudi Arabia because of its disastrous war in Yemen, as well as internal dissension.

Never before in its history has the US faced such complex problems as a dying economy  reflected in dying cities, dilapidated infrastructure, poor but costly education and health care; city violence could be a precursor to a general revolt.

The world is waiting with bated breath the results of the US presidential elections, The precariat class is flocking to Mr. Trump for salvation and the ownership class is in a panic. How the elections will turn out nobody knows, but if there is a financial collapse Trump would win massively. In that case, it is quite likely that martial law would be proclaimed and the elections postponed. Only time will tell.

The new economic Black Death

The Black Plague, also known as the Black Death, took place in Europe from 1346 to 1353. In a span of seven years almost half the population of Europe was dead. Anywhere from 75 to 200 hundred million people died. It was the most horrible experience since the Fall of the Roman Empire in 476 AD. It was caused by a bacteria, Yersenia Pestis, aka, Pasteurella Pestis. It originated somewhere in China or Central Asia, and via the Black Sea trade entered Europe. The agent of transmission or vector was a rat aboard the trading ships. The population of Europe was estimated at around 250 to 350 million, and the population of the whole, known world was around one billion people. The Western Hemisphere was not known or had been discovered yet. Christopher Columbus discovered the New World in 1492.

In 2016, mankind ( with a world population of over 7 billion people) is facing another Black Death, caused not by bacteria but by human evil. There is no economic recovery in the West, and there will be no recovery until the West restructures totally and completely by embracing  a new system that will cherish life and the environment of the earth.

The economic system of the West, the new Neo-liberalism, has entered a phase of exhaustion from which there is no escape. The reason for the exhaustion is the immense debt which can no longer be sustained. There are several components to this world debt that must be explained.In 1944, the dollar became the official currency of the world as decreed by the Anglo-American Powers. All of the world’s trade would be done in dollars, and, the dollar would be the reserve currency of the world. The US became, in effect, the ruler of the world. The only country who opposed this arrangement was the USSR. That same year, Winston Churchill suggested,                “Operation Unthinkable”, the plan that Anglo-Americans join with Germans in fighting the Russians. The Cold War was in full swing. The official proclamation of Cold War was announced by Churchill in Fulton Head, Missouri in 1947.

The West, aka, the Anglo-American countries, realized that debt could be used as an instrument of power in re-enslaving the newly independent countries of Africa and Asia, by lending them money for so called “development.” The already independent Latin American countries were subjected to the same treatment with similar results, as were the Eastern European countries.

Domestically speaking, Americans were encouraged to go into debt. The reason for this was the fear that the slack in demand would lead into another “Great Depression”, and that was no,no policy in a time of “Cold War.” Wasteful consumption and debt was encouraged. Credit cards were created to increase consumption and debt. Economists glorified debt as good. Debt was no problem, the Americans were told, “after all we owe it to ourselves.”

Debt can be considered “safe and useful” in an economy that is growing, if wages and jobs are also rising. People feel good and secure. Buying houses on a mortgage is a sound economic policy. Also, in a prosperous economy, the crime rate decreases.

Internationally speaking, no effort is spared to indebt as much of the world as possible in dollars. The dollar indebtedness is the “Carte Blanche” for giant Western corporations to exploit the Third World. This situation enhances the power of the West and enslaves the rest.

The largest corporations are moving factories to the Third World because of the very cheap labor, and the cheap products are re-exported to the entire world at immense profits. By this policy, the US has de-industrialized itself, but enriched the trans-national corporations. This was the Age of Globalization which was pushed on the rest of the world. The World Trade Organization was established, which is above the law of each individual member country, as is the City of London above the British law, and the Federal Reserve Bank of the US, a private bank, is above the US laws. The trans-national corporations are modelled after the Dutch East India Company and the British East India Company. These two companies controlled the world trade in slavery, spices, and the opium trade with China. They were progenitors of modern globalization. Nothing has changed in the last five hundred years except technology and the intensity of plunder and exploitation.

The Third World is already in maximum debt and depression where the poor are already dying and the anger is growing. Third World countries are trying to pay the interest on their debt, and some are trying to pay the debt off, so commodities are cheap and the dollar is strong.

Domestically speaking, the West is suffering from lack of consumption, because the vast majority of people are barely making enough to survive. Unemployment rates of the European Union and the US are sky high. According to John Williams of Shadow Stats, the unemployment rate is 23 percent in the US, and the work force participation of 62.8 percent has been the lowest in years. The number of people out of the labor force who can and want to work is around 95,000,000. The number of people on food stamps is around 47,000,000. The velocity of money has collapsed which implies that people have no money to spend. Pay Day Loans with monthly interest rates of 20 percent or more are increasing. One should not wonder why crime, prostitution, and drug use are increasing. ( Incidentally, the Baltic Dry Index is decreasing, which is a sign of collapsing world trade.)

The economic system of the West and the World has entered the phase of exhaustion, and nothing can save it. The ruling elite of the West thinks that a massive war with Russia or China, even nuclear war, will save the system, but nothing will. There will be collapse of the monetary system based on usury, and those responsible will be punished. Hunger, starvation, and deprivation is on the horizon. Violent revolution is inevitable, and nuclear war cannot be excluded. Only time will tell.

 

No te rindas, Venezuela

All of Latin America is in trouble but Venezuela stands out in a way that cannot be ignored. What happens in Venezuela will have a profound effect on the rest of Latin America and the world. The Bolivarian Revolution of Hugo Chavez is under vicious attacks by the domestic oligarchy and the oligarchs are willing to destroy the country in order to win; they also have the unconditional support of London and Wall Street bankers.

Venezuela is a beautiful country whose name means little Venice. It was named Venezuela by Amerigo Vespucci, an Italian explorer in the service of Spain. It is claimed that Amerigo saw houses on stilts on Lake Macaraibo as in Venice and thus came about the name. Others claim that it was named for an Indian tribe of similar name. Whichever story is true, Venezuela is a significant country of Latin America and the world. ( Incidentally, the “Americas” were named after Amerigo Vespucci in early 1500.)

Venezuela is a fairly large country with an area of over 900,000 square kilometers and a population of over 33 million people. It is very rich in natural resources, especially oil, minerals, and land with multiple bio-diversity. President Hugo Chavez changed the character of the country. His Bolivarian Revolution enacted programs that benefited the people. The oligarchy went berserk and attempted a coup d’état in 2002 that failed. He nationalized the Venezuelan oil company and returned gold from abroad. Unfortunately, he died in 2012. Nicholas Maduro, a former foreign minister, was elected president.

In 2014, the price of petroleum collapsed, hitting Venezuela very hard. The oligarchs, or the fifth column and their external supporters rejoiced. Shortages occurred of basic consumer goods such as toilet paper, the result of private corporations hoarding them. Revenues of the government collapsed because the price of oil had collapsed. Inflation ensued and shortages of goods worsened. The value of the Venezuelan currency, the Bolivar, collapsed. Opposition of the lower house of the Venezuelan Congress was won by the oligarchs. The oligarchs want privatization, austerity, and the impeachment of President Maduro. External forces are so happy and they are doing all they can to overthrow the Bolivarian Revolution of Hugo Chavez.

Will they succeed? It is difficult to say, because, since the Bolivarian Revolution, the Venezuelan people are politically awake. They will demand and protect their rights, so the Fifth Column must be careful, because a true revolution might arise that will sweep the oligarchs into the dustbin of history. The people know that the economic depression is due to the collapse of the price of oil which may have been engineered by the same forces who want to destroy Russia. Subsequent shortages of goods caused by private corporations in order to destroy the Bolivarian Revolution. The same process is going on in Brazil with the impeachment of President Dilma Rousseff. The real revolution might just be around the corner, not only in Venezuela, but in Brazil and the rest of Latin America and the Caribbean. Ne te rindas, Venezuela. Only time will tell.

 

 

The Struggle for Brazil

Brazil, a pivotal state of the Western Hemisphere, and one of the pivotal states of the world is in trouble. It is in trouble because it is not totally independent despite the fact that it is a member of the BRICS block and MERCOSUR. Brazil is still controlled by the Wall Street and London banks. The administration of President Dilma Rousseff is not liked by the international banks because her policy of independence threatens the control of the Anglo-Americans, hence President Rousseff on any pretext must go. With the help of a fitfth columnist, including vice president Temer, Dilma is facing a serious possibility of Impeachment.

If President Dilma is impeached, it may not be victory for neo-liberal forces and their external banking allies. President Dilma has immense support amongst the masses of Brazil, as has former president of Brazil, Lula da Silva. (Ex-president Lula is also charged with some corruption concerning some car wash.) Brazilian society is deeply corrupt but in this case, the reactionary forces are making a mountain out of a mole hill. The whole world, and, in particular, the whole of Latin America is watching.

As the world economy is entering recession, if not depression, Brazil has entered depression because of the external debt denominated in dollars, and the subsequent collapse of the commodities on which Brazilian economy is dependent. Domestic, neoliberal media is blaming President Rousseff, yet Dilma cannot be blamed for the economic situation of the world, and, subsequently, of Brazil. If, Brazil were debt free it would be able to manage quite effectively its economic problems, and impeachment of the President would not be possible.

Brazil is a huge country with a surface area of over 3 million square miles and a population of over 200 million people. The biggest problem as I have mentioned is foreign debt denominated in dollars and the collapse of the price of commodities. President Dilma’s foreign and economic policies are a thorn in the side to the banking interests, so why not carry out a ‘legal coup d’etat’ against a popularly elected President by using impeachment based on phony corruption charges. It will backfire badly. The world economy is collapsing, including the US, and the Brazilians know that, and they will turn violently against vice president Temer if he becomes president. Violent revolution in Brazil and the rest of Latin America is inevitable. The true liberation of Latin America has barely begun. Only time will tell.