The Economic Elite Vs. The People of U.S.A: 99% of US Population No Longer Has Political Representation

David DeGraw, AmpedStatus Report

Casualties of Economic Terrorism, Surveying the Damage
“The American oligarchy spares no pains in promoting the belief that it does not exist, but the success of its disappearing act depends on equally strenuous efforts on the part of an American public anxious to believe in egalitarian fictions and unwilling to see what is hidden in plain sight.” — Michael Lind, To Have and to Have Not

It’s time for 99% of Americans to mobilize and aggressively move on common sense political reforms.

Yes, of course, we all have very strong differences of opinion on many issues. However, like our Founding Fathers before us, we must put aside our differences and unite to fight a common enemy.

It has now become evident to a critical mass that the Republican and Democratic parties, along with all three branches of our government, have been bought off by a well-organized Economic Elite who are tactically destroying our way of life. The harsh truth is that 99% of the US population no longer has political representation. The US economy, government and tax system is now blatantly rigged against us.

Current statistical societal indicators clearly demonstrate that a strategic attack has been launched and an analysis of current governmental policies prove that conditions for 99% of Americans will continue to deteriorate. The Economic Elite have engineered a financial coup and have brought war to our doorstep. . . and make no mistake, they have launched a war to eliminate the US middle class.

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The Military and Wall Street Led Economic Elite are Destroying America. Is a Violent U.S. Insurgency in the Making?

David DeGraw, AmpedStatus Report

AF-PAK WAR RACKET: The Obama Illusion Comes Crashing Down

The economic elite have escalated their attack on the U.S. public by surging military operations in Afghanistan and Pakistan.
As Obama announced plans for escalating the war effort, it has become clear that the Obama Illusion has taken yet another horrifying turn. Before explaining how the Af-Pak surge is a direct attack on the US public, let’s peer through the illusion and look at the reality of the situation.

Now that the much despised George W. Bush is out of the way and a more popular figurehead is doing PR for Dick Cheney’s right-hand military leader Gen. Stanley McChrystal, who is leading his second AF-Pak surge now, and with long time Bush family confidant Robert Gates still running the Defense Department, the masters of war have never had it so good.

Barack Obama, the anti-war candidate, has proven to be a perfect decoy for the military industrial complex. Consider all the opposition and bad press Bush received when he announced the surge in Iraq. Then consider this:

I: TROOP DEPLOYMENTS
The Bush surge in Iraq deployed an extra 28,000 US troops. Under Obama, back in March, a surge in Afghanistan, that also further escalated operations inside Pakistan, deployed an extra 21,000 troops. However, in an unannounced and underreported move, Obama added 13,000 more troops to that surge to bring the total to 34,000 troops. Obama actually outdid Bush’s surge by 6000 troops and brought the overall number of US troops in Afghanistan to 68,000, double the number there when Bush left office.

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Economic Death Squad Analysis: Goldman Sachs’ $2.5 Trillion Global Oil Scam

Philip Davis, Phil’s Stock World

$2.5 Trillion - That’s the size of of the global oil scam.

It’s a number so large that, to put it in perspective, we will now begin measuring the damage done to the global economy in “Madoff Units” ($50Bn rip-offs). That’s right - $2.5Tn is 50 TIMES the amount of money that Bernie Madoff scammed from investors in his lifetime, yet it is also LESS than the MONTHLY EXCESS price the global population is being manipulated into paying for a barrel of oil.

Where is the outrage? Where are the investigations?

Goldman Sachs, Morgan Stanley, BP, TOT, Shell, DB and Societe General founded the Intercontinental Exchange in 2000. ICE is an online commodities and futures marketplace. It is outside the US and operates free from the constraints of US laws. The exchange was set up to facilitate ”dark pool” trading in the commodities markets. Billions of dollars are being placed on oil futures contracts at the ICE and the beauty of this scam is that they NEVER take delivery, per se. They just ratchet up the price with leveraged speculation using your TARP money. This year alone they ratcheted up the global cost of oil from $40 to $80 per barrel.

A Congressional investigation into energy trading in 2003 discovered that ICE was being used to facilitate “round-trip” trades. “Round-trip” trades occur when one firm sells energy to another and then the second firm simultaneously sells the same amount of energy back to the first company at exactly the same price. No commodity ever changes hands. But when done on an exchange, these transactions send a price signal to the market and they artificially boost revenue for the company. This is nothing more than a massive fraud, pure and simple.

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Credit Default Swaps The New Weapons of Economic Terrorism

Author: Jeff Nielson, Bullion Bulls

When Wall Street planned and executed the U.S. housing-bubble (and all its related scams), it destroyed the lives of tens of millions of Americans. Then, when it subsequently 'crashed' global markets, it inflicted hardship on most of the world. But the Oligarchs were just getting started.

As governments responded in a totally predictable manner, Wall Street began to collect on its interest-rate swap scam (see “WHO were the WINNERS in Interest Rate Swaps?”). With this scam the Oligarchs progressed from merely destroying companies and individuals to destroying schools, hospitals, towns and even states.

However, as we are now finding out, those were merely Wall Street's “appetizers”. For their “main course”, the Oligarchs have moved up to destroying nations. Here, I must confess to once again underestimating the Oligarchs. I had thought that the latest propaganda campaign was merely a tactic to pull the worthless, U.S. dollar out of yet another nose-dive. How wrong I was!

I should have been tipped-off by the obsessive/excessive “coverage” from the U.S. media of Greece's (and now the rest of the “PIGS”s) financial problems. The indifference of Americans to any and all events which take place outside of their own borders is legendary. Apart from wars, Americans generally have as much curiosity about the “rest of the world” as the average house-fly.

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Testing the Limits of Imagination: If Greece is Fudging its Debt, MOST CERTAINLY U.S.A. is Too!

So it turns out corporations are not the only ones fudging their balance sheet. Entire nations have joined that list. A recent Der Spiegel report outlines that the Greece's government not only knowingly excluded certain debts from the national debt tally, but also used derivatives structured by Goldman Sachs to mask the true extent of its budget deficits. According to the Der Spiegel report:

Since 1999, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.

The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat [the European Union's statistical office] consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009, it exploded to over 12 percent.

"Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products. Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

Of course Greece is "small fry" in this global game of chicken with rating agencies, debt and currency investors. Imagine the extent of fudging that goes on in the maestro balance sheet fudgers (a.k.a. U.S. banks) home base the U.S.A. Consider this little fact: the United States government routinely accounts for Fannie and Freddie activities as off-balance sheet. According to Reuters:

The ultimate off balance sheet vehicles are the GSEs themselves: Fannie, Freddie and Ginnie Mae (which securitizes FHA loans). Though backed by taxpayers, the nearly $5.0 trillion worth of mortgages they guarantee aren’t included on Uncle Sam’s balance sheet.

And this is stuff we know off. Like Greece, Bernanke the currency imagineer's "ring-leader" has many such derivative and currency swap skeletons in his closet, that he is trying his best to not divulge. Not to mention his secret deals with other central banks (primarily the U.K's) to prop up U.S. Treasury purchases at the now weekly auctions.

Now one reason why the U.S. Government has not been tough on the very banks that brought down the global economy, is because they are hand in glove with each other. It is a case of "you scratch my back and I will scratch yours". Bernanke needs Goldman Sachs, JP Morgan and the rest of Wall Street to syndicate/bid for his colossal $1+ Trillion of annual U.S. Treasury auctions. He needs their support to "hide" who actually bids at these auctions.

We know that last year out of the $1.5 trillion U.S. Treasury auction, foreign central banks purchased only $300bn. The Fed purchased the rest through their quantitative easing (QE) operations. As the Fed's QE operations end in March 2010, it will be interesting to see who bids on the next batch of $1 trillion of U.S. Treasuries. Bernanke for sure does not want you to find out. The banks are obviously complicit in the U.S. government's efforts to hiding trillions in liabilities. Were it not for all these gimmicks the U.S. Dollar would have collapsed by now. No wonder Goldman's CEO thinks he is doing God's work.

And regulators and the Fed do their part by turning a blind eye to the banks shenanigans. Consider the most recent.

According to Reuters Wells Fargo alone has over $2 trillion in off balance sheet loans. That is Trillion with a "T". And this is just Wells Fargo...add in Citigroup, JPMorgan and other Wall Street banks and the numbers will soon crash even a supercomputer. (Note that for a bank, the loans that it makes are classified as "assets", since the bank earns interest income on them). Of course when a bank makes a loan it is required to hold regulatory capital (Tier 1 and Tier 2 capital) against those loans.

Now new accounting rules that went into effect on January 1, 2010, require banks to consolidate all off-balance sheet loans and bring them back on their balance sheet. Of course that would require banks to raise billions in new regulatory capital. For example if Wells Fargo were to consolidate the entire $2 trillion of off balance sheet loans, it alone will need to raise $200bn in equity to meet a 10% capital ratio requirement. Now why would Wells Fargo, a masterful fudger, go for a $200bn capital raising headache? It is much too clever a bank for that.

According to Reuters, with a little bit of "hope" mixed in with plenty of accounting "imagination" Wells Fargo has consolidated only $10 billion out of the $2 trillion. Hey Presto! Problem Solved! Or at the very least brushed under the taxpayer carpet. When s**t hits the fan on the off balance sheet loans Wells Fargo will get bailed out.

In conclusion, the one thing this crisis is doing is testing the limits of imagination. The bankers have put even Disney's "imagineers" to shame. At this point we are in the midst of a global financial crisis of unimaginable magnitude. Were it not for all the accounting and derivative tricks, we would have seen a global currency collapse by now. However accounting tricks can take you only so far. The world continues to be a hair's breadth away from systemic collapse.

Which is why we reiterate our older recommendations: The goal for everybody is to become "self-sufficient" - own alternative currency (gold and silver) that cannot be printed away. (Yes Bernanke will try his level best to push gold down this year, but that is all the better, he just lowered your purchase price). Buy a farm or plan a kitchen garden. Keep excess food supply for emergency. Although we are staunchly against guns, in this crisis we are breaking that rule. Buy a gun. You may need it for self-defense.

Will Obama Play the War Card?

Author: Patrick J Buchanan, Antiwar.com

Republicans already counting the seats they will pick up this fall should keep in mind Obama has a big card yet to play.

Should the president declare he has gone the last mile for a negotiated end to Iran’s nuclear program and impose the "crippling" sanctions he promised in 2008, America would be on an escalator to confrontation that could lead straight to war.

And should war come, that would be the end of GOP dreams of adding three-dozen seats in the House and half a dozen in the Senate.

Harry Reid is surely aware a U.S. clash with Iran, with him at the president’s side, could assure his re-election. Last week, Reid whistled through the Senate, by voice vote, a bill to put us on that escalator.

Senate bill 2799 would punish any company exporting gasoline to Iran. Though swimming in oil, Iran has a limited refining capacity and must import 40 percent of the gas to operate its cars and trucks and heat its homes.

And cutting off a country’s oil or gas is a proven path to war.

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Sovereign Alchemy Will Fail

Author: Egon von Greyerz, Matterhorn Asset Management

When we look at the world economy today, wherever we turn we see a wall of risk. And sadly this is an insurmountable wall with risks that are totally unprecedented in history. There has never before been a potentially catastrophic combination of so many virtually bankrupt major sovereign states (US, UK, Spain, Italy Greece, Japan and many more) and a financial system which is bankrupt but is temporarily kept alive with phoney valuations and unlimited money printing. But governments will soon realise that they are not alchemists who can turn printed paper into gold. The consequences of the global financial crisis are potentially catastrophic.

As the Austrian economist von Mises said: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”

In our view, governments like the US and the UK and many others will not abandon further credit expansion. They are committed to printing increasing amounts of worthless paper money in order to finance the growing deficits and the rotten financial system. Therefore there is no chance of Quantitative Easing ending but instead it will accelerate in 2010 and after. The consequence of this will be a hyperinflationary depression in many countries due to many currencies becoming worthless. No economy in the world, including China, will avoid this severe economic downturn which is likely to have a major impact on the world economy for many, many years to come.

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America's Terrorism Derangement Syndrome: Fear, With Good Reason

Author: Barry Eisler, Truthout

Last week, Dahlia Lithwick had a terrific piece in Slate in which she ponders America's "Terrorism Derangement Syndrome [TDS]."

America does seem to be in the grip of morbid fear, doesn't it? Khalid Shaikh Mohammed could irradiate Manhattan if he's given a trial there ... terrorists can melt the walls of supermax prisons ... the Underwear Bomber is so diabolically clever he would laugh off traditional interrogation methods. With all this terror, you might even think ... I don't know, that terrorism is working pretty well.

Lithwick attributed some of the cause of TDS to Republican fear-mongering and to Democratic acquiescence in GOP scare tactics. I agree - but I think there's something more fundamental going on, something that explains both the fear and the fear-mongering.

Something like ... our own policies.

I believe some deep-seated part of our national consciousness is aware there will be consequences for what we've done, and continue to do. The wars, and kidnappings, and illegal imprisonment, and off-the-mark Predator strikes, and, most of all, torture - we sense a reckoning for all this, a conflagration waiting to engulf the combustible materials we insist on piling recklessly, relentlessly higher. Our tactics worsen the danger.

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Colbert: Mr. Spitzer, if Bernanke Can Get Re-elected Despite a Global Screw Up, You Certainly Have a Chance

Fed's "Red Bull" Party Drawing to a Close...If Only Temporarily

In March 2009, with stock markets swooning towards a bottomless abyss, the Fed decided to throw a party. Their theme was Quantitative Easing and they proceeded to pour out $1.75 trillion of freshly minted greenback "Red Bull" for market participants. The party was launched with the announcement that the Fed would purchase $1.25 trillion of agency mortgage backed securities, $200bn of agency debt and $300bn of long term treasuries (a grand total of $1.75 trillion).

Add a comfortable 3-4x leverage on $1.75 trillion and you can see the enormity of the cash that got pumped into the asset markets. Here is how the Fed's Red Bull pump worked:

PIMCO's Classic Pump and Dump Scheme

Now one interesting point to note is that the Fed's $300bn purchase of U.S. Treasuries ended in October 2009. At that time, most sensible people (including us ;-)) had speculated that yields on the long bond would widen (as prices fall since the government bid disappears from the market). However it was not until December 2009 that U.S. treasury prices actually began to fall. Even now the U.S. Treasuries have rallied somewhat as a "flight to quality (i.e. trash)" trade has reemerged on account of the PIIGS crisis. So what happened?

Bill Gross of PIMCO provides the explanation. According to him, although the Fed stopped buying U.S. Treasuries in October, they nevertheless continued buying MBS from the likes of PIMCO etc. And PIMCO, like the old faithful dog was funneling this money provided by the Fed right back into the market to buy what else...U.S. Treasuries. So the U.S. Treasury prices were supported quite well until December 2009.

Of course what PIMCO was actually doing was buying from one hand and quietly offloading with the other. As we have reported earlier, in January 2010, PIMCO announced that it had offload most of its U.S. Treasury portfolio and was now looking to invest in German bonds. This announcement came within 3 months of PIMCO announcing to the world (in October 2009) that everyone should BUY U.S. Treasuries. Talk about pump and dump!

Even the Old Faithful Dog Can Get a Rabies Attack

Ever since January 2010, knowing that the Fed's Quantitative Easing party is coming to a close, PIMCO the Fed's trusted hound has been getting a case of rabies every time someone mentions U.S. Treasuries. Bill Gross is steering clear of them completely and offers a logical explanation, and we believe him this time:

Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve.

Of course they purchased more 30-year Agency mortgages than Treasuries, but PIMCO and others sold them those mortgages and bought – you guessed it – Treasuries with the proceeds. The conclusion of this fairytale is that the government got to run up a 1.5 trillion dollar deficit, didn’t have to sell much of it to private investors, and lived happily ever – ever – well, not ever after, but certainly in 2009. Now, however, the Fed tells us that they’re “fed up,” or that they think the economy is strong enough for them to gracefully “exit,” or that they’re confident that private investors are capable of absorbing the balance. Not likely.

To REPEAT that again: The federal deficit for 2009 was financed by issuance of $1.5 trillion in U.S. Treasuries. Of these only $300bn was purchased by foreigners including the Chinese. The REST $1.2 trillion of U.S Treasury issuance were purchase by OUR OWN GOVERNMENT through the Fed's Quantitative easing pump.

Is this CRAZY or WHAT? And the media says Greece has a problem?

But Fear Not Folks...the Fed Will Soon Throw Another Party

The asset markets propped up since March 2009 by the Fed's gargantuan money supply have off late begun to swoon as the Fed prepares to temporarily shuts off the tap. Stock and commodity markets have already dived and high yield and corporate bond markets will soon follow. However do not expect a repeat of 2008's nose dive performance. If stock market dives too far (say the S&P dives below 1000), the Fed will throw another party. Actually regardless of any stock market dive the only way to finance the never ending stream of $1+ trillion of annual deficits, is for the Fed to throw many more Quantitative Easing parties.

But What About an Economic Recovery?

Anyone still left in the economic recovery camp only have Geithner, Summers and Bernanke for company. Yikes! Everyone else has left that camp, knowing full well that there is going be no recovery because the U.S consumer is completely tapped out. We leave the explanation to Bill Gross who says it best (yeah we dislike PIMCO, but he makes sense here, so bear with us):

There have been numerous changeups and curveballs in the financial markets over the past 15 months or so. Liquidation, reliquification, and the substituting of the government wallet for the invisible hand of the private sector describe the events from 30,000 feet. Now that a semblance of stability has been imparted to the economy and its markets, the attempted detoxification and deleveraging of the private sector is underway. Having survived due to a steady two-trillion-dollar-plus dose of government “Red Bull,” Adderall, or simply strong black coffee, the global private sector is now expected by some to detox and resume a normal cyclical schedule where animal spirits and the willingness to take risk move front and center. But there is a problem.

While corporations may be heading in that direction due to steep yield curves and government check writing that have partially repaired their balance sheets, their consumer customers remain fully levered and undercapitalized with little hope of escaping rehab as long as unemployment and underemployment remain at 10-20% levels worldwide. “Build it and they will come” is an old saw more applicable to Kevin Costner’s Field of Dreams than to today’s economy. “Say’s Law” proclaiming that supply creates its own demand is hardly applicable to a modern day credit-oriented society where credit cards are maxed out, 25% of homeowners are underwater, and job and income creation are nearly invisible.

There is no point in corporations producing any goods if no one has money to buy them. And jobs are certainly not coming back unless Obama decides to move U.S. industries back home from China. There is no other way to create jobs en mass to employ the jobless millions.

From 2000 onwards the entire U.S. economy was running on real estate fuel. Real industrial jobs displaced to China were filled by the growing ranks of real estate brokers, home flippers, home decorators etc. Think of all the people who lost jobs in real estate and related industries. Is there ANY other industry that can absorb the unemployed mortgage brokers, real estate agents and construction folks? Not to mention the jobs lost in peripheral sectors: home appliance, home improvement and finance sectors? We think not. And you certainly cannot retrain real estate brokers to do green jobs, most of which require highly skilled engineers.