Birth Pangs Of The Coming Great Depression

Birth Pangs Of The Coming Great Depression

January 30, 2015 | Michael Snyder

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The signs of the times are everywhere – all you have to do is open up your eyes and look at them. When a pregnant woman first goes into labor, the birth pangs are usually fairly moderate and are not that close together. But as the time for delivery approaches, they become much more frequent and much more intense. Economically, what we are experiencing right now are birth pangs of the coming Great Depression. 

As we get closer to the crisis that is looming on the horizon, they will become even more powerful. This week, we learned that the Baltic Dry Index has fallen to the lowest level that we have seen in 29 years. The Baltic Dry Index also crashed during the financial collapse of 2008, but right now it is already lower than it was at any point during the last financial crisis. In addition, “Dr. Copper” and other industrial commodities continue to plunge. This almost always happens before we enter an economic downturn. 

Meanwhile, as I mentioned the other day, orders for durable goods are declining. This is also a traditional indicator that a recession is approaching. The warning signs are there – we just have to be open to what they are telling us.

And of course there are so many more parallels between past economic downturns and what is happening right now.

For example, volatility has returned to the markets in a big way. On Tuesday the Dow was down about 300 points, on Wednesday it was down another couple hundred points, and then on Thursday it was up a couple hundred points.

This is precisely how markets behave just before they crash. When markets are calm, they tend to go up. When markets get really choppy and start behaving erratically, that tells us that a big move down is usually coming.

At the same time, almost every major global currency is imploding. For much more on this, see the amazing charts in this article.

In particular, I am greatly concerned about the collapse of the euro. The Swiss would not have decoupled their currency from the euro if it was healthy. And political events in Greece are certainly not going to help things either. Economic conditions across Europe just continue to get worse, and the future of the eurozone itself is very much in doubt at this point. And if the eurozone does break up, a European economic depression is almost virtually assured – at least in the short term.

And I haven’t even mentioned the oil crash yet.

There is only one other time in all of history when the price of oil collapsed by more than 60 dollars, and that was just prior to the horrific financial crisis of 2008.

Since the last financial crisis, the oil industry has been a huge source for job growth in this country. The following is an excerpt from a recent CNN article…

The oil sector has added over a half million jobs — many of them high paying — since the recession ended in June 2009. That’s 13% of all US job growth over that period.

Now energy companies and related sectors are laying off thousands. Expect that trend to continue, bears say.

But losing good jobs is just the tip of the iceberg of this oil crisis.

At this point, the price of oil has already dropped to a catastrophically low level. The longer it stays at this level, the more damage that it is going to do. If the price of oil stays at this level for all of 2015, we are going to have a complete and total financial nightmare on our hands…

For the first time in 18 years, oil exporters are pulling liquidity out of world markets rather than putting money in. The world is now fast approaching a world reserve currency shift. If we see 8 to 12 months at these oil prices; U.S. shale industry will be wiped out. The effect on junk bonds will cascade to the rest of the stock market and U.S. economy.

…and this time there will be nothing left to catch the falling knife before it hits the American economy right in the heart. Not the FED nor the U.S. government can stop what’s coming. Liquidity will freeze up, our credit will be downgraded, the stock market will start to collapse, and then we can expect the FED to come in and hyper-inflate the dollar. This will cause the world to finish abandoning the world reserve currency in the last rungs of trade. This will be the end of the petrodollar.

Something that I have not discussed so far this year is the looming crisis in emerging market debt.

As economic problems spread around the world, a number of “emerging markets” are in danger of having their debt downgraded. And many investment funds have rules that prohibit them from holding any debt that is not “investment grade”. Therefore, we could potentially see some of these giant funds dumping massive amounts of emerging market debt if downgrades happen.

This is a really big deal. As a Business Insider article recently detailed, we could be talking about hundreds of billions of dollars…

Russia this week became the first of the major economies to lose its investment grade status from Standard & Poor’s, falling out off the top ratings category for credits deemed to have a low risk of default for the first time in a decade.

If Moody’s and Fitch follow, conservative investors barred from owning junk securities must sell their holdings. JPMorgan estimates this means they may ditch $6 billion in Russian government rouble and dollar debt.

Russia may have company. Almost $260 billion worth of sovereign and corporate bonds – nearly a tenth of outstanding emerging market (EM) debt – is in danger of being relegated to junk, according to David Spegel, head of emerging debt at BNP Paribas, who calls such credits “falling angels”.

And no article of this nature would be complete without mentioning derivatives.

I could not possibly overemphasize the danger that the 700 trillion dollar derivatives bubble poses to the global financial system.

As we enter the coming Great Depression, derivatives are going to play a starring role. Wall Street has been pumped full of funny money by global central banks, and our financial markets have been transformed into the greatest casino in the history of the world. When this house of cards comes crashing down, and it will, it is going to be a financial disaster unlike anything that the planet has ever seen.

And yes, global central banks are very much responsible for setting the stage for what we are about to experience.

I really like the way that David Stockman put it the other day…

The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.

Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.

What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry trade speculation that can’t get out of its own way because central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero.

Of course I am not the only one warning that a new Great Depression is coming. For instance, just consider what British hedge fund manager Crispin Odey is saying…

British hedge fund manager Crispin Odey thinks we’ve entered an economic downturn that is “likely to be remembered in a hundred years,” and central banks won’t be able to stop it.

In his Odey Asset Management investor letter dated Dec. 31, Odey writes that the shorting opportunity “looks as great as it was in 07/09.”

“My point is that we used all our monetary firepower to avoid the first downturn in 2007-09,” he writes, “so we are really at a dangerous point to try to counter the effects of a slowing China, falling commodities and EM incomes, and the ultimate First World Effects. This is the heart of the message. If economic activity far from picks up, but falters, then there will be a painful round of debt default.”

Even though most average citizens are completely oblivious to what is happening, many among the elite are heeding the warning signs and are feverishly getting prepared. As Robert Johnson told a stunned audience at the World Economic Forum the other day, they are “buying airstrips and farms in places like New Zealand“. They can see the horrifying storm forming on the horizon and they are preparing to get out while the getting is good.

It can be very frustrating to write about economics, because things in the financial world can take an extended period of time to play out. Sadly, most people these days have extremely short attention spans. We live in a world of iPhones, iPads, YouTube videos, Facebook updates and 48 hour news cycles. People no longer are accustomed to thinking in long-term time frames, and if something does not happen right away we tend to get bored with it.

But the economic world is not like a game of “Angry Birds”. Rather, it is very much like a game of chess.

And unfortunately for us, checkmate is right around the corner.

Read more at http://www.prophecynewswatch.com/2015/January30/301.html#ceiQSetZ4BCu6GpU.99

Oil Collapse: “This Could Cause The Most Destructive Economic Situation Since the Great Depression”

Oil Collapse: “This Could Cause The Most Destructive Economic Situation Since the Great Depression”
End result will be widespread defaults in the oil industry... a recipe for disaster
Oil Collapse: “This Could Cause The Most Destructive Economic Situation Since the Great Depression”   

Image Credits: Beatnik Photos / Flickr

by Mac Slavo | SHTFPlan.com | January 29, 2015
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With the price of oil hovering around $44 and U.S. oil inventories at record highs the general consensus is that the economy will soon see a boost in consumer spending as Americans will take their gas savings and spend it at retail stores.

But there’s a lot more going on with oil on a geo-political scale than can be pumped into a 30-second propaganda soundbite from financial pundits and talking heads. While lower prices may seem like a boon for the American economy, what’s been missing from mainstream assessments are the fundamental data points that show just how serious a problem we may be facing.

As you’ll see in the succinct breakdown by Future Money Trends in the micro-documentary below, we’ve got some big problems coming our way. It all starts with the fact that debt in the energy sector over the last six years has exploded to $1.7 Trillion on the hopes that oil would continue to trade at around $80 to $100. As we know, that’s no longer the case, which means that all of the companies who took out large loans are no longer able to service their debt.

The end result will be widespread defaults in the oil industry. It’s a recipe for disaster and one that will likely play out right before our eyes in coming months.

    In the context of current central bank money printing, deflation scares and currency wars; this could cause the most destructive economic situation since the Great Depression. We could see the oil price spike and crash in wild swings of volatility; further scaring already timid capital markets and destroying any thoughts of economic recovery. This will be felt the worst in the United States.

Oil Wars: A sobering assessment of what may be coming in the very near future

    Multi-billion dollar companies like Sanchez Energy and Goodrich Petroleum crashed 80 and 90% since June 2014. Not only will our energy sector be drastically cut down, the rest of the economy may suffer even more. We’ve created financial structures that only function properly under conditions of constant economic growth. The financial system almost went out of control in 2008.

    …

    For the first time in 18 years, oil exporters are pulling liquidity out of world markets rather than putting money in. The world is now fast approaching a world reserve currency shift. If we see 8 to 12 months at these oil prices; U.S. shale industry will be wiped out. The effect on junk bonds will cascade to the rest of the stock market and U.S. economy.

    …and this time there will be nothing left to catch the falling knife before it hits the American economy right in the heart. Not the FED nor the U.S. government can stop what’s coming. Liquidity will freeze up, our credit will be downgraded, the stock market will start to collapse, and then we can expect the FED to come in and hyper-inflate the dollar. This will cause the world to finish abandoning the world reserve currency in the last rungs of trade. This will be the end of the petrodollar.

While lower gas prices have been great for Americans historically, we are now facing a completely different animal because so much debt is tied to an industry that believed it was unstoppable.

We have literally hundreds of thousands of layoffs being predicted across the sector and many analysts are forecasting recessionary environments in states like Texas that are most dependent on the oil boom. Layoffs will have an almost immediate impact on local economies, as well as an already fragile real estate market.

Couple that with the panic that will undoubtedly come when big oil companies start closing up shop and can no longer pay those hundreds of billions of dollars in debts, and you can see how this could well be the trigger for a serious meltdown in global financial markets and debt instruments.
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Trojan Hearse:Greek Elections and the Euro Leper Colony

http://www.informationclearinghouse.info/article40851.htm

Trojan Hearse:Greek Elections and the Euro Leper Colony By Greg Palast for το χωνί (Greece) Europe is stunned, and bankers aghast, that the new party of the Left, Syriza, won Sunday's parliamentary elections in Greece. Syriza won on the promise that it will cure Greece of leprosy. Oddly, Syriza also promises that it will remain in the leper colony.  That is, Syriza wants to rid Greece of the cruelty of austerity imposed by the European Central Bank but insists on staying in the euro zone. The problem is, austerity run wild is merely a symptom of an illness.  The underlying disease is the euro itself. For the last five years, Greeks have been told that, if you cure your disease—that is, if you dump the euro—the sky will fall.  I guess Greeks haven’t noticed, the sky has fallen already.  With unemployment at 25%, with doctors and teachers eating out of garbage cans, there is no further to fall. In 2010, when unemployment was a terrible 10%, a year into the crisis, the “Troika” (the European Central Bank, European Commission and the International Monetary Fund) told the Greeks that brutal austerity measures would restore their economy by 2012. Ask yourself, Was the Troika right? There is a saying in America:  Fool me once, shame on you.  Fool me twice, shame on me. Can Greece survive without the euro?  Greece is already dead, but the Germans won’t even bother to bury the corpse.  Greeks are told that if they leave the euro and renounce its debts, the nation will not be able to access world capital markets.  The reality is, Greece can’t access world markets now:  no one lends to a corpse. There’s a way back across the River Styx.  But it’s not by paddling on a euro. There’s Life after Euro Many nations do quite well without the euro.  Sweden, Denmark and India do just fine without the euro—and so does Turkey, which had the luck to be excluded from the euro-zone.  As long as Turks stick to the lira, even Turkey’s brain-damaged Islamo-fascist President Tayyip Erdoğan cannot destroy their economy. Can Greece just dump the euro?  They have happy precedents to follow.  Argentina was once pegged to the US dollar much as Greece is tied to the euro today.  In 2000, Argentines, hungry and angry, revolted.  Argentina ultimately overthrew the dollar dictatorship, the IMF diktats and the threats of creditors, and defaulted on its dollar bonds.  Free at last!  In the decade since, the Argentine economy soared.  Yes, today, Argentina is under attack by financial vultures, but that is only because the nation became so temptingly wealthy. I was in Brazil when its President Luiz Inácio Lula da Silva told the IMF to go to hell—and rejected privatization of the state banks and the state oil company, rejected cutting pensions and thumbed his nose at the rest of the austerity nonsense. Instead, Lula created the bolsa familia, a massive pay-out to the nation’s poor.  The result: Brazil not only survived but thrived during the 2008-10  world financial crisis.  Despite pressure, Brazil never ceded control of its currency. (It is a sad irony that Brazil is only now faltering.  That’s the fault entirely of Lula’s successor, President Dilma Rousseff,  who is beginning to dance the austerity samba.) Austerity:  Religion, Not Economics The euro is simply the deutschmark with little stars on it.  Greece cannot adopt Germany’s currency without adopting Germany’s finance minister, Wolfgang Schäuble, as its own. And Schäuble has determined that Greece must be punished.  As my homey Paul Krugman points out, there is no credible economic theory that says that austerity—that is, cutting government spending, cutting wages, cutting consumer demand—can in any way help a nation in recession, in deflation.  That’s why, in 2009, Obama ordered up stimulus, not a sleeping pill. But austerity has nothing to do with economics.  It is religion:  the belief by the stern Lutheran Germans that Greeks have had too much fun, spent too much money, and spent too much lazy time in the sun—and now Greeks must pay a price for their sins. Oddly, I hear this self-flagellating nonsense from Greeks themselves:  we are lazy.  We deserve our punishment.  Nonsense.  The average Greek works more hours in a year than any other worker in the 34 nations of the OECD; Germans the least. The Euro’s Father Describes his Little Bastard Alexis Tsipras, the leader of Syriza, would like to pretend that austerity and the euro are two different things, that you can marry the pretty girl but not invite her ugly sister to the wedding. Apparently, the Syriza chief is blissfully ignorant of the history of the euro.  The horror of austerity is not the consequence of Greek profligacy:  it was designed into the euro’s plan from the beginning. This was explained to me by the father of the euro himself, economist Robert Mundell of Columbia University.  (I studied economics with Mundell’s buddy, Milton Friedman.)  Mundell not only invented the euro, he also fathered the misery-making policies of Thatcher and Reagan, known as “supply-side economics” – or, as George Bush Sr. called it, “voodoo economics.”  Supply-side voodoo is the long-discredited belief that if a nation demolishes the power of unions, cuts business taxes, eliminates government regulation and public ownership of utilities, economic prosperity will follow. The euro is simply the other side of the supply-side coin.  As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy.  Bothersome democracy is removed from the economic system.  “Without fiscal policy,” Mundell told me, “the only way nations can keep jobs is by the competitive reduction of rules on business.” Greece, to survive in a euro economy, can only revive employment by reducing wages.  Indeed, the recent tiny reduction in unemployment is the sign that Greeks are slowly accepting a permanent future of low wages serving piña coladas to Germans on holiday cruises. It is argued that Greece owes Germany, the IMF and the European Central Bank for bail-out-billions.  Nonsense.  None of the billions in bail-out funds went into Greek pockets.  It all went to bail out Deutsche Bank and other foreign creditors.  The EU treasuries swallowed 90% of its private bankers’ bonds.  Germany bailed out Germany, not Greece. Nevertheless, Greece must pay Germany back, Mr. Tsipras, if you want to continue to use Germany’s currency, that is. Greece:  Goldman Sacked Greece’s ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the euro zone’s 3%-of-GDP limit.  In 2009, when the truth came out, Greek debt holders realized they had been cheated.  These debt buyers then demanded usurious levels of interest (or, if you prefer, a high “spread”) to insure themselves against future fraud.  The compounding of this interest premium brought the Greek nation to its knees.  In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis. The USA, Brazil and China escaped from depression by increasing their money supply and government spending and taking control of currency exchange rates—crucial tools Greece gave up in return for the euro. Worse, once the Trojan hearse of the euro entered Athens, tourism, Greece’s main industry, drained to Turkey where hotels and souvenirs are priced in cheap lira.  This allowed Dr. Mundell’s remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power. Greece fell to its knees, with no choice but to beg Germany for mercy. But there is no mercy.  As Germany’s Schäuble insists, democracy, this week’s vote, means nothing.  "New elections change nothing in the accords struck with the Greek government,” he says.  “[Greeks] have no alternative.” Ah, but they do, Mr. Schäuble.  They can tell you to take your euro and shove it up your Merkel. Investigative reporter Greg Palast's book, Vultures' Picnic, with the no-BS inside story of the financial collapse, will soon be released in a Greek edition by Livanis. Support the Palast Investigative fund with a tax-deductible donation and get a signed copy Vultures' Picnic or or simply make a tax-deductible contribution to keep our work alive! Greg Palast is also the author of several New York Timesbestsellers includingThe Best Democracy Money Can Buy andBillionaires & Ballot Bandits. Palast is a Puffin Foundation Fellow for Investigative Reporting. Subscribe to Palast's Newsletter and podcasts. - Follow Palast on Facebook and Twitter.

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Mind the Gap

Mind the Gap
Global Affairs
January 28, 2015 | 09:00 GMT Print Text Size

By Jay Ogilvy

The Charlie Hebdo attack and its aftermath in the streets and in the press tempt one to dust off Samuel Huntington's 1996 book, The Clash of Civilizations and the Remaking of World Order. Despite the criticisms he provoked with that book and his earlier 1993 article in Foreign Affairs, recent events would seem to be proving him prescient.

Or was he?

While I am not about to deny the importance of religion and culture as drivers of geopolitical dynamics, I will argue that, more important than the clashes among the great civilizations, there is a clash within each of the great civilizations. This is the clash between those who have "made it" (in a sense yet to be defined) and those who have been "left behind" — a phrase that is rich with ironic resonance.

Before I make my argument, I warn that the point I'm trying to make is fairly subtle. So, in the interest of clarity, let me lay out what I'm not saying before I make that point. I am not saying that Islam as a whole is somehow retrograde. I am not agreeing with author Sam Harris' October 2014 remark on "Real Time with Bill Maher" that "Islam is the mother lode of bad ideas." Nor am I saying that all religions are somehow equal, or that culture is unimportant. The essays in the book Culture Matters, which Huntington helped edit, argue that different cultures have different comparative advantages when it comes to economic competitiveness. These essays build on the foundation laid down by Max Weber's 1905 work, The Protestant Ethic and the Spirit of Capitalism. It is only the "sulfuric odor of race," as Harvard historian David Landes writes on the first page of the first essay in Culture Matters, that has kept scholars from exploring the under-researched linkages between culture and economic performance.
Making It in the Modern World

The issue of the comparative advantages or disadvantages of different cultures is complicated and getting more so because with modernity and globalization, our lives are getting more complicated. We are all in each other's faces today in a way that was simply not the case in earlier centuries. Whether through travel or telecommunications or increasingly ubiquitous and inexpensive media, each and every one of us is more aware of the cultural other than in times past. This is obvious. What is not so obvious are the social and psychological consequences of the inevitable comparisons this awareness invites us to make: How are we measuring up, as individuals and as civilizations?

In the modern world, the development of the individual human, which is tied in part to culture, has become more and more important. If you think of a single human life as a kind of footrace — as if the developmental path from infancy to maturity were spanning a certain distance — then progress over the last several millennia has moved out the goal posts of maturity. It simply takes longer to learn the skills it takes to "make it" as an adult. Surely there were skills our Stone Age ancestors had to acquire that we moderns lack, but they did not have to file income taxes or shop for insurance. Postmodern thinkers have critiqued the idea of progress and perhaps we do need a concept that is forgivingly pluralistic. Still, there have been indisputable improvements in many basic measures of human progress. This is borne out by improved demographic statistics such as birth weight, height and longevity, as well as declining poverty and illiteracy. To put it very simply, we humans have come a long way.

But these historic achievements have come at a price. It is not simple for individuals to master this elaborate structure we call modern civilization with its buildings and institutions and culture and history and science and law. A child can't do it. Babies born into this world are biologically very similar to babies born 10,000 years ago; biological evolution is simply too slow and cannot equip us to manage this structure. And childhood has gotten ever longer. "Neoteny" is the technical term for the prolongation of the period during which an offspring remains dependent on its parent. In some species, such as fish or spiders, newborns can fend for themselves immediately. In other species — ducks, deer, dogs and cats — the young remain dependent on their mothers for a period of weeks. In humans, the period of dependency extends for years. And as the generations and centuries pass, especially recently, that period of dependency keeps getting longer.

As French historian Philippe Aries informed us in Centuries of Childhood, "in medieval society, the idea of childhood did not exist." Prior to modernity, young people were adults in miniature, trying to fit in wherever they could. But then childhood got invented. Child labor laws kept children out of the factories and truancy laws kept them in public schools. For a recent example of the statutory extension of childhood known as neoteny, consider U.S. President Barack Obama's announcement that he intends to make community college available for free to any high school graduate, thus extending studenthood by two years.

The care and feeding and training of your average human cub have become far greater than the single season that bear cubs require. And it seems to be getting ever longer as more 20-somethings and even 30-somethings find it cheaper to live with mom and dad, whether or not they are enrolled in school or college. The curriculum required to flourish as an adult seems to be getting ever longer, the goal posts of meaningful maturity ever further away from the "starting line," which has not moved. Our biology has not changed at anywhere near the rate of our history. And this growing gap between infancy and modern maturity is true for every civilization, not just Islamic civilization.

The picture gets complicated, though, because the vexed history of the relationships among the world's great civilizations leaves little doubt about different levels of development along any number of different scales of achievement. Christian democracies have outperformed the economies and cultures of the rest of the world. Is this an accident? Or is there something in the cultural software of the West that renders it better able to serve the needs of its people than does the cultural software called Islam?
Those Left Behind

Clearly there is a feeling among many in the Islamic world that they, as a civilization, have been "left behind" by history. Consider this passage from Snow, the novel by Nobel Prize-winning Turkish author Orhan Pamuk:

    "We're poor and insignificant," said Fazul, with a strange fury in his voice. "Our wretched lives have no place in human history. One day all of us living now in Kars will be dead and gone. No one will remember us; no one will care what happened to us. We'll spend the rest of our days arguing about what sort of scarf women should wrap around their heads, and no one will care in the slightest because we're eaten up by our own petty, idiotic quarrels. When I see so many people around me leading such stupid lives and then vanishing without a trace, an anger runs through me…"

Earlier I mentioned the ironic resonance of this phrase, "left behind." I think of two other recent uses: first, the education reform legislation in the United States known as the No Child Left Behind Act; the second, the best-selling series of 13 novels by Tim LaHaye and Jerry Jenkins in which true believers are taken up by the Rapture while the sinners are "left behind." In both of these uses, it is clearly a bad thing to be left behind.

This growing divide between those who have made it and those who are being left behind is happening globally, in each of the great civilizations, not just Islam. To quote my fellow Stratfor columnist, Ian Morris, from just last week:

    Culture is something we can change in response to circumstances rather than waiting, as other animals must, for our genes to evolve under the pressures of natural selection. As a result, though we are still basically the same animals that we were when we invented agriculture at the end of the ice age, our societies have evolved faster and faster and will continue to do so at an ever-increasing rate in the 21st century.

And because the fundamental dynamics of this divide are rooted in the mismatch between the pace of change of biological evolution on the one hand (very slow) and historical or technological change on the other (ever faster), it is hard to see how this gap can be closed. We don't want to stop progress, and yet the more progress we make, the further out the goal posts of modern maturity recede and the more significant culture becomes.

There is a link between the "left behind" phenomenon and the rise of the ultra-right in Europe. As the number of unemployed, disaffected, hopeless youth grows, so also does the appeal of extremist rhetoric — to both sides. On the Muslim side, more talk from the Islamic State about slaying the infidels. On the ultra-right, more talk about Islamic extremists. Like a crowded restaurant, the louder the voices get, the louder the voices get.

I use this expression, those who have "made it," because the gap in question is not simply between the rich and the poor. Accomplished intellectuals such as Pamuk feel it as well. The writer Pankaj Mishra, born in Uttar Pradesh, India, in 1969, is another rising star from the East who writes about the dilemma of Asian intellectuals, the Hobson's choice they face between recoiling into the embrace of their ancient cultures or adopting Western ways precisely to gain the strength to resist the West. This is their paradox: Either accept the Trojan horse of Western culture to master its "secrets" — technology, organization, bureaucracy and the power that accrues to a nation-state — or accept the role of underpaid extras in a movie, a very partial "universal" history, that stars the West. In my next column, I'll explore more of Mishra's insights from several of his books.
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Article Author
Jay Ogilvy

Jay Ogilvy joined Stratfor's editorial board in January 2015. In 1979, he left a post as a professor of philosophy at Yale to join SRI, the former Stanford Research Institute, as director of research. Dr. Ogilvy co-founded the Global Business Network of scenario planners in 1987. He is the former dean and chief academic officer of San Francisco’s Presidio Graduate School. Dr. Ogilvy has published nine books, including Many Dimensional Man, Creating Better Futures and Living Without a Goal.
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Will The Next Economic Crisis Lead To World Government?

Will The Next Economic Crisis Lead To World Government?

January 28, 2015 | Daymond Duck

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It is a well-known fact that many of the global elite have long believed that a global economic crisis could be a major step toward the establishment of a New World Order (one-world government).

For example, as far back as 1994, David Rockefeller said, “We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order.” He didn’t identify what this needed “major crisis” would be—but others have indicated that they think a major economic crisis would work.

In 2008, Prime Minister Gordon Brown of England said, “The international financial crisis has given world leaders a unique opportunity to create a truly global society.” Think about it! The Prime Minister of England thought the devastating financial crisis that started in 2008 was a unique opportunity to create a world government.

That is similar to Rham’s Rule (named after Rham Emanuel Pres. Obama’s former Chief of Staff). Simply put: Politicians should use crises to push through unpopular legislation or programs that people wouldn’t accept under normal circumstances. They should use a crisis to do their will instead of the will of the people.

In 2012, Nigel Farage, a member of the EU Parliament said:

It is very, very difficult to ignore those voices, who have been telling me for twenty years that behind all of this [the economic crisis] there are a group of people that want to create “a one world government.” I’ve tried to ignore those arguments and say, “Look, let’s not be too conspiratorial about this.” But goodness me its [a one world government ] beginning to stare us in the face.

It really started staring us in the face in November 2014. That is when the world’s so-called, too-big-to-fail banks (J.P. Morgan, Citigroup, Goldman Sachs Group, Bank of America and Morgan Stanley) got the G-20 to pass legislation that shifts the liability for bank failures from the banks to the bank depositors.

If that kind of legislation at that level is not a clear indication that the world’s largest banks are expecting a global economic crisis, I don’t know what is. The heads of those banks want their depositors and not themselves to be held liable for future bank failures.

About that same time, the price of oil was dropping and the economies of Russia, Iran, Venezuela and several African nations were feeling the impact. In many ways, the lower price of gasoline was a good thing for American citizens. But now we are hearing that the economies of Texas, Louisiana, Oklahoma and North Dakota could be in trouble.

Falling oil prices are cutting into the profits of American companies. Some are losing money because they can’t get oil out of the ground as cheaply as Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and others. Some have stopped purchasing oil permits for new wells. Some are considering large layoffs. Some are having trouble paying the interest on borrowed money. Some won’t have profits to pay stockholders.

And this is spilling over into other sectors of the American economy. American companies need less pipe, fewer pumps, fewer motors, etc. The companies that make these things need fewer employees. And on and on the downward cycle goes.

This is the point: There are powerful people who want a world government and believe a crisis—perhaps an economic crisis— is needed to force through public acceptance. The so-called, too-big-to-fail banks have pushed through legislation to shift the liability for major bank failures. The price of oil has dropped sharply, and although not all agree, some think an economic crisis could be looming.

Finally, the U.S. President is one of those Globalists who wants a world government. Some, such as Henry Kissinger, are even hoping that Pres. Obama will head it up. And if something doesn’t happen to change the situation, Pres. Obama will be out of office in the next two years. We are living in interesting times.

Read more at http://www.prophecynewswatch.com/2015/January28/281.html#ZIaLlfWGFl6OXo7j.99

The New Drivers of Europe's Geopolitics

The New Drivers of Europe's Geopolitics
Geopolitical Weekly
January 27, 2015 | 02:00 GMT Print Text Size
Stratfor

By George Friedman

For the past two weeks, I have focused on the growing fragmentation of Europe. Two weeks ago, the murders in Paris prompted me to write about the fault line between Europe and the Islamic world. Last week, I wrote about the nationalism that is rising in individual European countries after the European Central Bank was forced to allow national banks to participate in quantitative easing so European nations wouldn't be forced to bear the debt of other nations. I am focusing on fragmentation partly because it is happening before our eyes, partly because Stratfor has been forecasting this for a long time and partly because my new book on the fragmentation of Europe — Flashpoints: The Emerging Crisis in Europe — is being released today.

This is the week to speak of the political and social fragmentation within European nations and its impact on Europe as a whole. The coalition of the Radical Left party, known as Syriza, has scored a major victory in Greece. Now the party is forming a ruling coalition and overwhelming the traditional mainstream parties. It is drawing along other left-wing and right-wing parties that are united only in their resistance to the EU's insistence that austerity is the solution to the ongoing economic crisis that began in 2008.
Two Versions of the Same Tale

The story is well known. The financial crisis of 2008, which began as a mortgage default issue in the United States, created a sovereign debt crisis in Europe. Some European countries were unable to make payment on bonds, and this threatened the European banking system. There had to be some sort of state intervention, but there was a fundamental disagreement about what problem had to be solved. Broadly speaking, there were two narratives.

The German version, and the one that became the conventional view in Europe, is that the sovereign debt crisis is the result of irresponsible social policies in Greece, the country with the greatest debt problem. These troublesome policies included early retirement for government workers, excessive unemployment benefits and so on. Politicians had bought votes by squandering resources on social programs the country couldn't afford, did not rigorously collect taxes and failed to promote hard work and industriousness. Therefore, the crisis that was threatening the banking system was rooted in the irresponsibility of the debtors.

Another version, hardly heard in the early days but far more credible today, is that the crisis is the result of Germany's irresponsibility. Germany, the fourth-largest economy in the world, exports the equivalent of about 50 percent of its gross domestic product because German consumers cannot support its oversized industrial output. The result is that Germany survives on an export surge. For Germany, the European Union — with its free-trade zone, the euro and regulations in Brussels — is a means for maintaining exports. The loans German banks made to countries such as Greece after 2009 were designed to maintain demand for its exports. The Germans knew the debts could not be repaid, but they wanted to kick the can down the road and avoid dealing with the fact that their export addiction could not be maintained.

If you accept the German narrative, then the policies that must be followed are the ones that would force Greece to clean up its act. That means continuing to impose austerity on the Greeks. If the Greek narrative is correct, than the problem is with Germany. To end the crisis, Germany would have to curb its appetite for exports and shift Europe's rules on trade, the valuation of the euro and regulation from Brussels while living within its means. This would mean reducing its exports to the free-trade zone that has an industry incapable of competing with Germany's.

The German narrative has been overwhelmingly accepted, and the Greek version has hardly been heard. I describe what happened when austerity was imposed in Flashpoints:

    But the impact on Greece of government cuts was far greater than expected. Like many European countries, the Greeks ran many economic activities, including medicine and other essential services, through the state, making physicians and other health care professionals government employees. When cuts were made in public sector pay and employment, it deeply affected the professional and middle classes.

    Over the course of several years, unemployment in Greece rose to over 25 percent. This was higher than unemployment in the United States during the Depression. Some said that Greece's black economy was making up the difference and things weren't that bad. That was true to some extent but not nearly as much as people thought, since the black economy was simply an extension of the rest of the economy, and business was bad everywhere. In fact the situation was worse than it appeared to be, since there were many government workers who were still employed but had had their wages cut drastically, many by as much as two-thirds.

    The Greek story was repeated in Spain and, to a somewhat lesser extent, in Portugal, southern France and southern Italy. Mediterranean Europe had entered the European Union with the expectation that membership would raise its living standards to the level of northern Europe. The sovereign debt crisis hit them particularly hard because in the free trade zone, this region had found it difficult to develop its economies, as it would have normally. Therefore the first economic crisis devastated them.

Regardless of which version you believe to be true, there is one thing that is certain: Greece was put in an impossible position when it agreed to a debt repayment plan that its economy could not support. These plans plunged it into a depression it still has not recovered from — and the problems have spread to other parts of Europe.
Seeds of Discontent

There was a deep belief in the European Union and beyond that the nations adhering to Europe's rules would, in due course, recover. Europe's mainstream political parties supported the European Union and its policies, and they were elected and re-elected. There was a general feeling that economic dysfunction would pass. But it is 2015 now, the situation has not gotten better and there are growing movements in many countries that are opposed to continuing with austerity. The sense that Europe is shifting was visible in the European Central Bank's decision last week to ease austerity by increasing liquidity in the system. In my view, this is too little too late; although quantitative easing might work for a recession, Southern Europe is in a depression. This is not merely a word. It means that the infrastructure of businesses that are able to utilize the money has been smashed, and therefore, quantitative easing's impact on unemployment will be limited. It takes a generation to recover from a depression. Interestingly, the European Central Bank excluded Greece from the quantitative easing program, saying the country is far too exposed to debt to allow the risk of its central bank lending.

Virtually every European country has developed growing movements that oppose the European Union and its policies. Most of these are on the right of the political spectrum. This means that in addition to their economic grievances, they want to regain control of their borders to limit immigration. Opposition movements have also emerged from the left — Podemos in Spain, for instance, and of course, Syriza in Greece. The left has the same grievances as the right, save for the racial overtones. But what is important is this: Greece has been seen as the outlier, but it is in fact the leading edge of the European crisis. It was the first to face default, the first to impose austerity, the first to experience the brutal weight that resulted and now it is the first to elect a government that pledges to end austerity. Left or right, these parties are threatening Europe's traditional parties, which the middle and lower class see as being complicit with Germany in creating the austerity regime.

Syriza has moderated its position on the European Union, as parties are wont to moderate during an election. But its position is that it will negotiate a new program of Greek debt repayments to its European lenders, one that will relieve the burden on the Greeks. There is reason to believe that it might succeed. The Germans don't care if Greece pulls out of the euro. Germany is, however, terrified that the political movements that are afoot will end or inhibit Europe's free-trade zone. Right-wing parties' goal of limiting the cross-border movement of workers already represents an open demand for an end to the free-trade zone for labor. But Germany, the export addict, needs the free-trade zone badly.

This is one of the points that people miss. They are concerned that countries will withdraw from the euro. As Hungary showed when the forint's decline put its citizens in danger of defaulting on mortgages, a nation-state has the power to protect its citizens from debt if it wishes to do so. The Greeks, inside or outside the eurozone, can also exercise this power. In addition to being unable to repay their debt structurally, they cannot afford to repay it politically. The parties that supported austerity in Greece were crushed. The mainstream parties in other European countries saw what happened in Greece and are aware of the rising force of Euroskepticism in their own countries. The ability of these parties to comply with these burdens is dependent on the voters, and their political base is dissolving. Rational politicians are not dismissing Syriza as an outrider.

The issue then is not the euro. Instead, the first real issue is the effect of structured or unstructured defaults on the European banking system and how the European Central Bank, committed to not making Germany liable for the debts of other countries, will handle that. The second, and more important, issue is now the future of the free-trade zone. Having open borders seemed like a good idea during prosperous times, but the fear of Islamist terrorism and the fear of Italians competing with Bulgarians for scarce jobs make those open borders less and less likely to endure. And if nations can erect walls for people, then why not erect walls for goods to protect their own industries and jobs? In the long run, protectionism hurts the economy, but Europe is dealing with many people who don't have a long run, have fallen from the professional classes and now worry about how they will feed their families.

For Germany, which depends on free access to Europe's markets to help prop up its export-dependent economy, the loss of the euro would be the loss of a tool for managing trade within and outside the eurozone. But the rise of protectionism in Europe would be a calamity. The German economy would stagger without those exports.

From my point of view, the argument about austerity is over. The European Central Bank ended the austerity regime half-heartedly last week, and the Syriza victory sent an earthquake through Europe's political system, although the Eurocratic elite will dismiss it as an outlier. If Europe's defaults — structured or unstructured — surge as a result, the question of the euro becomes an interesting but non-critical issue. What will become the issue, and what is already becoming the issue, is free trade. That is the core of the European concept, and that is the next issue on the agenda as the German narrative loses credibility and the Greek narrative replaces it as the conventional wisdom.

It is not hard to imagine the disaster that would ensue if the United States were to export 50 percent of its GDP, and half of it went to Canada and Mexico. A free-trade zone in which the giant pivot is not a net importer can't work. And that is exactly the situation in Europe. Its pivot is Germany, but rather than serving as the engine of growth by being an importer, it became the world's fourth-largest national economy by exporting half its GDP. That can't possibly be sustainable.
Possible Seismic Changes Ahead

There are then three drivers in Europe now. One is the desire to control borders — nominally to control Islamist terrorists but truthfully to limit the movement of all labor, Muslims included. Second, there is the empowerment of the nation-states in Europe by the European Central Bank, which is making its quantitative easing program run through national banks, which may only buy their own nation's debt. Third, there is the political base, which is dissolving under Europe's feet.

The question about Europe now is not whether it can retain its current form, but how radically that form will change. And the most daunting question is whether Europe, unable to maintain its union, will see a return of nationalism and its possible consequences. As I put it in Flashpoints:

    The most important question in the world is whether conflict and war have actually been banished or whether this is merely an interlude, a seductive illusion. Europe is the single most prosperous region in the world. Its collective GDP is greater than that of the United States. It touches Asia, the Middle East and Africa. Another series of wars would change not only Europe, but the entire world.

To even speak of war in Europe would have been preposterous a few years ago, and to many, it is preposterous today. But Ukraine is very much a part of Europe, as was Yugoslavia. Europeans' confidence that all this is behind them, the sense of European exceptionalism, may well be correct. But as Europe's institutions disintegrate, it is not too early to ask what comes next. History rarely provides the answer you expect — and certainly not the answer you hope for.

Editor's Note: The newest book by Stratfor chairman and founder George Friedman, Flashpoints: The Emerging Crisis in Europe, is being released today. It is now available.
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Jan 27, 2015
The New Drivers of Europe's Geopolitics
Jan 23, 2015
What to Expect From Greek Elections
Jan 23, 2015
Europe Moves Further Apart After Bank Decision
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European Central Bank Announces a New Quantitative Easing Program
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The European Union, Nationalism and the Crisis of Europe
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A Court Opinion Could Shake Up the Eurozone
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Europe Rediscovers Nationalism
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George Friedman

George Friedman is the Chairman of Stratfor, a company he founded in 1996 that is now a leader in the field of global intelligence. Friedman guides Stratfor's strategic vision and oversees the development and training of the company's intelligence unit.

His forthcoming book Flashpoints: The Emerging Crisis in Europe will be released on Jan. 27.
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Widespread Deceptions & Hall of Mirrors

Widespread Deceptions & Hall of Mirrors By: Jim Willie CB, GoldenJackass.com

-- Posted Monday, 5 January 2015 | Share this article | 7 Comments 

As 2014 leaves off and 2015 begins anew, the main theme seems to be the end of the American Empire, the demise of the Petro-Dollar, the blunt of USMilitary over-reach, and the global urgency of putting the King Dollar into a cement casing coffin. The global movement will gain strong momentum to end the dollarized terrorized nightmare. The entire world is coming to realize that the USDollar is wrecking the financial structures, ruining economies, forcing colossal debt abuses, while its defense is a grand threat to world peace. The extension of time before the execution has required pilferage of foreign adversary wealth and confiscation of foreign allied wealth. Shrouded in the entire grand transition is a myriad of deceptions, each playing a special role to maintain the system that favors the exceptional criminal and corrupt nation, the United States. The deceptions carry over into almost every aspect of financial and economic life and times. The hall of mirrors has become the American hallmark, soon to serve as the epitaph of fallen empire.

The Fascist Business Model will soon suffer a closed final chapter, an evitable conclusion to two decades of extraordinary thefts, pilferage, and grabs that have recently been in full view with little attempt to conceal the actions. War to defend the USDollar sounded like crazy talk in 2005 and 2006 when the Jackass made first reference. War crimes have coincided with monetary recklessness and profound bond fraud. Now the bellicose defense of a corrupt crippled cancerous USDollar is utterly obvious, except of course to those who continue wear red white & blue under-garments and continue to salute the captured flag.

Many are the deceptions as features to the diverse and powerful End Game underway and in progress. It is like a pathogenesis for the cancer which has become the USDollar. Any currency supported by hyper monetary inflation on one side, profound bond fraud on a second side, rigged markets on a third side, and war on a fourth side, is no longer honorable or worthy of further viability. The doctors are not treating the cancer; they are spreading it. The bankers and phony statesmen and military agents are the doctors, spreading it to the diverse areas of the world like metastasis. The deceptions deserve some explanation in outline form. The common theme is the grand deceptions committed on a regular frequent basis by the United States, the core of the fascist state movement, the site wishing to preserve he USDollar printing privilege, the home of the economy on a credit card, the headquarters of war with motive to defend the cancerous USDollar and its entire supporting criminal cast, the base where global bank rules are disseminated much like a genetically modified dandelion.

NUMEROUS GRAND DECEPTIONS

• USDollar is described and portrayed as strong, when its higher value relative to other worthless fiat paper currencies indicates the entire financial structures are breaking down in visible terms

• Central banks carry the QE load, while they lie about hidden support for fractured devastated bank derivatives possibly in the $trillions, and while they speak of its stimulus (but it kills capital on Main Street)

• USEconomy in depression with numerous sectors falling, but called 3% growth in aggregate (a grotesque basic contradiction), as Sears approaches bankrupty and numerous major employers announce job cuts due to poor sales

• US-based jobless rate over 22%, as millions fall off the counter, while fewer full-time jobs are in the USEconomy than in 2007, as part-time low level posts dominate

• US stole Ukraine central bank gold, but blamed Russia for annexing Crimea during the simplistic distraction

• US attempting to capture entire European Union set of member states under the NATO flag, forcing compliance by member nations and obedience to its Supreme Commander in a virtual coup d’etat of Europe under the Ukraine War shadow

• US denigrates the value of Gold while the USMilitary and adjunct agencies steal central bank gold across the world, following the standard destabilization activity endorsed by the Langley crew

• US succumbs to European Gold repatriations, when nations in Central Europe prepare to produce a gold hoard toward the Eurasian Trade Zone gold backed currency, the gold hoard submitted for inclusion in the return to the Gold Standard

• The Gold Standard will not be permitted a return via the FOREX platform, so therefore it will arrive by extreme disruptive force via the Trade platform, which will render the USTreasury Bond useless dead weight of the toxic variety in the global banking system (then discarded)

• US pushes the trade pacts with Europe and Asia as positive growth devices, when the pact is loaded with corporate power grabs in patents, legal procedure, and internet censorship (pact being given same reception as a thorny chastity belt)

• US talks about isolating Russia like childlike aggressive morons (with its 13 time zones, huge energy fields and vast metal deposits), while US-led sanctions have backfired to isolate the United States from the 170 nations within the BRICS Alliance

• US blamed North Korea for the SONY hacking, when done as inside job in clear terms by a disgruntled employee after his dismissal (never let a crisis go to waste)

• US makes nice with Cuba after Russia & China invest $billions, with the errant lunatic hope of gathering some lucrative construction contracts, which would mean R&C fund projects done by US corporations (not a ice cube chance in hell)

• US uses ISIS card after Iraq nation building suffered Shiite majority, the Baghdad Parliament becoming unmanageable therefore required the Langley second card of hired hidden mercenaries to capture oil fields and to steal central bank funds while maintaining a high pitched fear level (beheadings on television fully orchestrated, the proof being zero blood spurts from the neck area in doctored films)

• US pretends to push Ruble currency down and USDollar up, when the USD is dying a horrible death from lost control, fractured platforms, and knee-jerk reactions toward safe haven, as the Petro-Dollar has been quietly dismantled without fanfare

• US tells of Russians selling Gold reserves to manage Ruble pain, while the Kremlin acquires Gold from energy trade payments and spends its toxic USTreasury Bonds held in reserves (the exact opposite)

• US debt rating agencies cut Russian debt to junk, while the USGovt suspended the debt limit and runs up debt past the $18 trillion mark, never to be repaid, and while the USGovt debt is supported by QE bond monetization and confiscation of Japanese Govt pension funds (prompting attention on which nation is busted broke and barren, namely the accuser)

• US talks of BRICS as crippled nations destined to falter, when they are strong, with ample resources, not much debt, ample cheap labor, improved education, and utterly huge reserves (like over 65% of global reserve wealth)

• Central banks fight for survival in final Competing Currency War round of devaluations, as nation after nation departs from the USDollar salute support

• Southern European sovereign bonds enjoy ultra-low yields, not from health and fiscal soundness, but from rampant Euro Central Bank coverage

• Germany has been fighting in the open versus the European Central Bank, challenging the legality of super seniority bonds, declaring them illegal in the German High Court, while Germany prepares the fundamental groundwork for departing the common Euro region

• Scotland and Swiss Referendums on independence and gold management fail, but with likely rigged votes by the fascists in power

• Lower oil price described as beneficial to USEconomy on consumer side, but a horrible wet blanket on the oil industry capital budgets, and a total wrecking ball on their shale oil subprime bonds soon to enter failure

• Pretension of fixes for LIBOR, FOREX, and Gold markets when all remain irreparably corrupt, broken, and entrenched, but with some shocks likely to come soon from BAFIN investigations on the Gold market corruption done by Deutsche Bank, in service to London and Wall Street

• US begins with sponsored BitCoin entries, which are controlled by Wall Street and Langley, used to co-opt a legitimate movement which has potential in the near future for gold-backed retail payment system using debit cards

• The West has a lost concept of capitalism and business formation and work, as the US falls into the socialist trap led by fascist warmongering with confiscations, laden by handouts for the lazy, the ignorant, namely the Obama supporters

• 2015 will be the year where the entire system fractures openly in obvious ways that cannot be denied, which will call for meaningful remedy centered on the Gold Standard finally (the last resort, the only true viable solution)

• 2015 will be the year where nations of the world openly call for the retirement and removal of the USDollar, due to its cancerous finances related to QE monetization, forcing a disposition of corrosive reserves sitting in their banking systems, as objections to the war need for sustenance seen in multiple venues

• The month of  February should begin to see open wounds, visible fractures, wrecked platforms, and engineered whacks by the East in numerous venues, making for an exciting but dangerous year, full of promise but loaded with risk

People had better prepare themselves for some conclusion events, certain to occur with fireworks. The USDollar is soon to go away, put to rest, killed off. Its rise signals its demise. The hidden dismantle of the Petro-Dollar mechanism has been eerie, mysterious, and full of intrigue. The Gold Standard will return, but through the trade window. The solution to the untreated Global Financial Crisis is the gold route. The Eurasian Trade Zone will be built upon the gold route, and see a revival of the Silk Road. It cannot be stopped, not even by war. The safe haven is not the USDollar, but rather Gold & Silver bars & coins, otherwise defined as money. The crisis is better described as the Global Monetary War. Any nation wishing to establish trade or a monetary system centered upon gold is branded a rogue nation, subject to extreme propaganda. This is precisely why Russia is being vilified, since they want no more USDollar in trade or banking, and lead a global movement to discard the USD as global reserve currency. The solution is with precious metals as the core to banking, trade, and currency, even wealth preservation. The new 2015 year will be exciting. As the Jackass forecasted, 2014 did indeed end much differently from the way it began. The agents of change are working at hyper-speed now. The USDollar is doomed, and its captains are running for their lives. They are not worth bargaining with in magnanimous cut deals. Better to treat them like fire ants and bothersome fleas and diseased rodents and rabid dogs. The return of Gold to its primacy is long overdue.

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