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Incredible must read analysis. Take away: the world is going to go "medevil". It's the only way out of this mess. Since the zero hedge layout is so bad, i'm going to post as much of the article as Diigo will allow: Jim Kunstler's 2014 Forecast - Burning Down The House Submitted by Tyler Durden on 01/06/2014 19:36 -0500 Submitted by James H. Kunstler of Kunstler.com , Many of us in the Long Emergency crowd and like-minded brother-and-sisterhoods remain perplexed by the amazing stasis in our national life, despite the gathering tsunami of forces arrayed to rock our economy, our culture, and our politics. Nothing has yielded to these forces already in motion, so far. Nothing changes, nothing gives, yet. It's like being buried alive in Jell-O. It's embarrassing to appear so out-of-tune with the consensus, but we persevere like good soldiers in a just war. Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical "recovery" and the "shale gas miracle" on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations. Life in the USA is like living in a broken-down, cob-jobbed, vermin-infested house that needs to be gutted, disinfected, and rebuilt - with the hope that it might come out of the restoration process retaining the better qualities of our heritage.

Interfluidity has some very "Dark musings" about Treasury Sec Geithner's plan to bailout the big banks with trillions of dollars of taxpayer funds. The plan is "enronic" in that it proposes to use taxpayer funds to create a market for the toxic assets threatening to take down the big banks. The banks need to dump these AAA Fannie-Freddie mortgage securities, but the market has factored in a reality roughly discounting the value by 60% to 70%; Housing values having plummeted across the nation. If the Banks were to take the hit, and sell this GSA crap at true market value, they would not only suffer enormous losses for their high risk gambling, bu they would also be taken out of the lending market. Banks regulations require strict ratios between assets and lending funds.

So the idea is to have the taxpayers create a toxic asset market enabling banks to dump their crap at above market prices, with taxpayers takign the hit. This hit is masked by a tricky equation; Taxpayers will put up 97% of the funds for the overpriced purchase of crap, with private sector banks, hedge funds, and bond holders contributing 3%. Such a deal!

Heads the banks and Hedge funds win; tails the taxpayer loses. And loses to the tune of over $10 Trillion. GSA wonderkinds Fannie and Freddie have put $5 Trillion of securitized mortgages into the secondary money markets. Leverage that out at 40 : 1, and you have a $200 Trillion problem. Hummm, $10 Trillion looks cheap. "....I am filled with despair, not because what we are doing cannot "work", but because it is too unjust. This is not my country. The news of today is the Geithner plan. I think this plan might work very well in terms of repairing bank balance sheets...." Of course the whole notion of repairing bank balance sheet is a lie and misdirection. The balance sheets we should want to see repaired are household balance sheets. Banks have failed us profoundly. We want them reorganized, not repair

Excerpt: After 2000, the national push toward home ownership intensified in three dimensions, leading to a doubling of housing prices in just five years' time. First, the Federal Reserve Board's interest-rate policy drove down the cost of borrowing money to unprecedented lows. Second, a common conviction arose that home ownership should be available even to those who, under prevailing conditions, could not afford it. Finally, private agencies charged with determining the risk and value of securities were exceptionally generous in their assessment of the financial products known as "derivatives" whose collateral resided in the value of thousands of mortgages bundled together. The rating agencies understated the risks from these bundled mortgages by assuming that home prices were simply going to rise forever. When the housing bubble burst in 2006, the damage to the financial system pushed the global economy into the worst contraction since the Great Depression. In the midst of the pain and suffering that have accompanied financial collapse and economic contraction-over $15 trillion in wealth has been lost by American households alone while, to date, more than 6 million job losses have boosted the unemployment rate to 9.4 percent-much of the blame has been placed on unregulated financial markets whose behavior is said to have revealed a terrible flaw in the foundation of capitalism itself. This was a market failure, we are told, and the promise of capitalism has always been that the self-correcting mechanisms built into the system would preclude the possibility of a systemic market failure. But the housing bubble only burst after government subsidies pushed house prices up so fast that marginal buyers could no longer afford to chase prices even higher. A bubble created by rigged financial markets and a government-sponsored obsession with home ownership is not a result of market failure, but rather, a result of bad public policy. The belief that home ownership,

Marbux sent me this link to series of videos explaining the LiBOR bankster crisis.  The awesome Bill Black is featured in two of the video interviews.  Others include Matt Taibi of the Rolling Stone Magazine.  Matt's work on bankster criminals is legendary.  This is incredible stuff.  Very heated.  Clearly we are at the heart of the largest criminal fraud ever perpetrated, and it involves the worlds largest banksters.  Including the Queen of England (Bank of England).  $800 Trillion in fraud.  Incredible. Yes, the Libor Scandal Affects You By Jack Hough July 06, 2012 "Smart Money" - -A liger is a cross between a lion and a tiger. Libor, on the other hand, is a daily approximation of what banks charge each other for loans. It turns out only one of these things is real. Awkwardly, it's not the one used to set prices on an estimated $800 trillion in global financial instruments, or $116,000 worth for each person on earth, ranging from complex derivatives to student loans. That's a problem for holders of bank stocks - which includes just about anyone who owns a mutual fund or 401(k). Barclays (BCS) agreed last week to pay $453 million to settle allegations that it manipulated Libor, which stands for London interbank offered rate. As The Wall Street Journal reported Thursday, it's likely only the first: More than a dozen banks on three continents are under investigation. Libor is compiled by asking 18 banks what they think they would pay if they needed money. Some banks may have submitted artificially low responses during the global financial crisis to give the appearance of high creditworthiness. Others may have tinkered with the reading to profit from trades, or avoid losses. The Barclays settlement is affordable, at less than 7% of the company's projected profits this year, but the size of legal claims it and other banks face is difficult to imagine. Trial lawyers will do their best to work out the sums, of course. Libor may have been subject

The banking crisis that began in August 2007 shocked markets and precipitated the Great Recession. To fully explain the banking crisis, one must account for its timing, severity, and global impact. One must also confront a startling historical contrast. If we define "banking crisis" to mean bank failures and system losses exceeding 1 percent of a country's gross domestic product (GDP), we find that in the period 1875-1913, a period of marked expansion in international trade and capital flows comparable to the last three decades, there were only four banking crises worldwide.1 By contrast, in the period 1978-2009, a period of much more extensive bank regulation, central bank intervention, government protection of depositors and other bank creditors, and government control of mortgage markets, about 140 banking crises occurred worldwide. Of these, 20 were more severe than any crisis from the earlier period of 1875-1913, in terms of total bank losses as a percent of GDP. Leading financial economists such as Charles Calomiris have argued that a necessary condition for a banking crisis is government policy that distorts the micro-incentives of banks. Likewise, University of Chicago scholar Richard Posner has argued the banks that got into trouble during the recent crisis were simply taking "risks that seemed appropriate in the environment in which they found themselves."2 In the period 1978-2009, about 140 banking crises occurred worldwide. But then why didn't a banking crisis erupt sooner-say, in the recession years of 1990-1991 or 2001-2002? What changed in recent years that led to business risk-taking capable of wrecking the U.S. housing market and the U.S. banking system and other banking systems throughout the world? Further, why were prudent credit practices reasonably maintained in credit card and commercial mortgage securitization in recent years, but wholly abandoned in residential mortgage securitization?

Why are Markets still Falling? The Tsunami caused by Derivatives and Deleveraging The invisible elephant in the room causing continuous falls in global financial markets is the link to the privately traded Credit Default Swaps (CDS) and the financial uncertainty they have created whilst synchronised deleveraging takes place across the world. ... Credit default swaps are unregulated financial derivatives which act as debt insurance on risky assets like mortgages, corporate and government bonds. But unlike a normal insurance policy, financial institutions that sell credit default swaps are not required to have enough funds in reserve should those risky loans turn bad. Since the US Congress in 2000 declined to regulate these contracts as it does insurance, the companies that guarantee the assets are not required by law to keep enough capital on hand to pay them off in the event of a default.

The Cantor defeat was not a Tea Party upset victory as claimed by MSM, according to this article. Instead, Brat's stump speeches were about crony capitalism, bankster corruption of Congress, and libertarian principles. So if this article is correct, then MSM would rather claim that Cantor was a victim of the Tea Party than acknowledge the issues that Brat actually raised, Congressional corruption and big government/big corporation cronyism.  Very interesting food for thought.

Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time. Some Americans are afraid that the government might temporarily "nationalize" the banks, but that option would be preferable to the Geithner plan. After all, the F.D.I.C. has taken control of failing banks before, and done it well. It has even nationalized large institutions like Continental Illinois (taken over in 1984, back in private hands a few years later), and Washington Mutual (seized last September, and immediately resold). What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a "partnership" in which one partner robs the other. And such partnerships - with the private sector in control - have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it's the kind of Rube Goldberg device that Wall Street loves - clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization. But we are already suffering from a crisis of confidence. When the high costs of the administration's plan become apparent, confidence will be eroded further. At that point the task of recreating a vibrant financial sector, and resuscitating the economy, will be even harder.

the Fed is now engaging in unlegislated, back-door fiscal policy. excerpt:  "The best way to destroy the capitalist system is to debauch the currency." Vladimir Lenin, leader of the 1917 Russian Revolution Last week, while Congress and the nation were preoccupied with the holidays, the Treasury made a Christmas eve announcement that it would be providing Fannie Mae and Freddie Mac unlimited financial support for the next three years. Put simply, in a single, coordinated stroke, the Treasury and the Federal Reserve have encroached on spending powers that are enumerated for the Congress alone. Under the Housing and Economic Recovery Act of 2008 (HERA), the Treasury has no such open-ended authority. Indeed, the applicable portion of the Act explicitly limits the total amount of mortgage principal (not losses, but total principal) as follows: .......... In a sharp break from the past, the issuance of these Treasury securities will not be accompanied by any revenue to the government for Congressionally approved programs. The Treasuries will be issued, the money will be handed over the Fannie Mae and Freddie Mac, and those funds will go largely to the Federal Reserve and other holders of existing mortgage debt simply to replace the bad, but bailed-out agency securities with cash as they mature. The public gets nothing for something - the issuance of the Treasuries is in itself their expenditure.

"Who owns the Bank of England? A brief history of World Banksters By Dark Politricks First a few historical comments by people who helped create two of the worlds most famous central banks, the Bank of England and the Federal Reserve. "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." - Woodrow Wilson, after signing the Federal Reserve into existence The Bank of England was created in 1694 by a Scotsman William Paterson who famously said: The bank hath benefit of interest on all moneys which it creates out of nothing. - William Paterson The history of the Bank of England and how it was taken over by one powerful family hundreds of years ago. Up until 1946 when it was nationalised the Bank of England was a private run bank that lent money it created out of nothing to the English government and was paid back with interest. A very famous story relates to the Bank of England and the infamous Rothschilds, that all powerful banking family. This story was re-told recently in a BBC documentary about the creation of money and the Bank of England. It revolves around the Battle of Waterloo in which Nathan Rothschild used his inside knowledge of the outcome and his faster horses and couriers to play the market by getting the result of the battle before anyone else knew the outcome. He quickly sold his English bonds and gave all the traders who looked to him for guidance the impression that the French had won at Waterloo. The other traders all rus

One I missed from late October.

Wow!  This is the best response to the financial collapse i have read to date.  Exceptional in clarity, but written with a tone of mixed sorrow and shame.  Mr. Gallow places the blame exactly where it should be placed.  It's a generational thing with one exception Mr. Gallow overlooks - the Obama margin of victory was very much due to the massive turnout and votes of post baby boomer generations.  We boomers may have created and caused the financial collapse and destruction of America, but they were dumb enough to put the decline of capitalism and ordered liberty on marxist steroids. excerpt:  .... this is the first time that I have been so angered by incompetence and greed in government and Wall Street to express publicly my own thoughts.  In simple terms, what has dawned on me is that my generation, the "Baby Boomers" between the ages of 45 and 65, has emerged not as not the most significant or talented generation in our history (as we thought we were), but rather as the most self-absorbed and reckless. Because ours will be the first generation in the history of this country to leave to its successors a nation in worse shape than that which it inherited; put differently, we will be the first generation in this nation to have taken from our parents and stolen from our children. .. it is hard to avoid the reality that my generation, the baby boomers who are now approaching retirement, have caused the greatest collapse of the world economy since the 1930s, and in the process damaged this country in ways we are now only beginning to understand. ... Looking back more eighteen months after the first signs of distress in our economy appeared, it seems that leaders in Congress and Wall Street have erred in a manner never before witnessed in this nation.  In the process, they have conspired through their collective arrogance, greed, and ignorance to damage the economy of the country (if not the world), make many themselves rich beyond the imaginations of mo

Incredible.  The Banksters were caught perpetrating a massive fraud on mortgage holders in default.  They set up document mills packed with "robo" signers forging legal documents to prove in a foreclosure procedure that they are in fact the mortgage provider for that property.  The fraud itself revelas the essentials of what went wrong with the entire mortgage securities scam that brought down the worlds financial structures in 2008. The MERS (Mortgage Electronic Registration systems, Inc.) electronic database was set up in 1995 as a means to enable participating Banksters to side step the quilt of State and County laws governing real estate transactions, non judicial foreclosure rights, and property ownership recording requirements.  MERS was essential to the bundling and trade in mortgage-backed securities.  In essence, MERS replaced public recordation requirements with a private, Bankster owned one. This all sounded good until waves of home owners facing default began to take their banksters to court.  Turns out that MERS mortgages lacked the legal documentation to establish a legal chain of ownership.  Realizing their mistake, and with thousands upon thousands of foreclosures hanging in the balance, the Banksters created the robo document industry, forging millions of foreclosure documents overnight.  Criminal fraud on steroids. The banksters got caught, with State Attorney Generals launching massive consumer protection law suits against the big banksters.  This put a halt to the illegal foreclosures, forcing banksters to turn to short sales on homes in default.  The short sale industry rocketed in 2011, but the to perfect a short sale, the banksters were taking the loss; sometimes as much as $100K to $250K per home.  But the real estate market inventory was effectively being cleared and market pricing corrected. The Banksters were unhappy.  Seeking to get back on the foreclosure track but facing what amounted to across the boards class action la

This isn't surprising. But why does the author think the NSA or anyone else in the US government would care? The political extortion benefits of the massive global spying program to government and politicians far outweigh the profit/loss consequences to private cloud computing companies. excerpt: "Foreign competitors think they can grow market share in cloud computing because of concerns raised by the National Security Agency's PRISM program and other government collection of electronic data from third parties. U.S. cloud computing companies could lose $22 billion to $35 billion in revenue over the next three years because of foreign customers' concerns about the privacy of their data, according to Daniel Castro, a senior analyst at the Information Technology & Innovation Forum. Foreign companies, particularly in Europe, already were making aggressive moves to win more of the cloud market, which is expected to be a $207 billion industry by 2016. Now they've got a compelling argument to make, especially to Europeans who currently are using U.S. cloud companies. "If European cloud customers cannot trust the United States government, then maybe they won't trust U.S. cloud providers either," Nellie Kroes, European commissioner for digital affairs, told The Guardian last month. "If I were an American cloud provider, I would be quite frustrated with my government right now." A survey conducted in June and July by the Cloud Security Alliance found that 10 percent of foreign cloud industry participants had cancelled a project with a U.S. cloud computing provider, and 56 percent said they would be less likely to use an American company."

The underlying assumption of the Dodd-Frank Act (DFA) is that the 2008 financial crisis was caused by the disorderly bankruptcy of Lehman Brothers. This is evident in the statements of officials and the principal elements of the act, which would tighten the regulation of large financial institutions to prevent their failing, and establish an "orderly resolution" system outside of bankruptcy if they do. The financial crisis, however, was caused by the mortgage meltdown, a sudden and sharp decline in housing and mortgage values as a massive housing bubble collapsed in 2007. This scenario is known to scholars as a "common shock"-a sudden decline in the value of a widely held asset-which causes instability or insolvency among many financial institutions. In this light, the principal elements of Dodd-Frank turn out to be useless as a defense against a future crisis. Lehman's bankruptcy shows that in the absence of a common shock that weakens all or most financial institutions, the bankruptcy of one or a few firms would not cause a crisis; on the other hand, given a similarly severe common shock in the future, subjecting a few financial institutions to the act's orderly resolution process will not prevent a crisis. Apart from its likely ineffectiveness, moreover, the orderly resolution process in the act impairs the current insolvency system and will raise the cost of credit for all financial institutions. 

Is the ObamaCare train wreck a wreck by design? Another notch in the Bankster belt marking another step in the bankrupting of America? Revealed: Obama's Immense Shadow Army & Its Shocking Takeover Plan October 26, 2013  //  By: Eric Odom  //   The ObamaCare train wreck - it's awful, possibly purposeful, certainly useful for team Obama and its growing army of community activists and organizers. In a previous report, we explored the question, "What if the ObamaCare debacle is really a diversion, using a military term a "feint" - a tactical distraction to draw our attention, our focus and our fire away from the real point of attack on liberty?" Remember that horrible train wreck in Spain not long ago, captured on video? As tragic as it was, watching the crash and its gruesome aftermath was almost irresistible, wasn't it? Well, what if the disastrous rollout of the President's signature legislative achievement - what if this spectacular slow motion ObamaCare train wreck has been and is being allowed to happen so that what's going on around the bend from the fiery crash site gets little attention, from the public, from the media or from Congressional investigators? Think about it, friends. How could Barack Obama and his celebrated team of incredibly proficient, plugged in techies - the team that twice got him elected - be behind the utterly disastrous launch of the ObamaCare online storefront, healthcare.gov - arguably the biggest website failure in history? How could so much money have been spent to produce such a problem-plagued site that apparently was doomed in its developmental confusion? And how to fix this monumental mess, well, there doesn't seem to be any clear plan…other than hope. And now we learn that many, if not most, of the people actually signing up for ObamaCare through the website are enrolling in Medicaid, not signing up for private insurance policies they pay for, but adding their names onto government roll

There is no doubt in my mind that corporations (and their Chamber of Commerce boot licking lackys) believe that employer provided healthcare benefits was a HUGE MISTAKE. The key feature of ObamaCare is that of ENDING the HMO-Employee Healthcare profit draining quagmire these corporations somehow stumbled into. (Hint: they traded healthcare benefits for wide open government assisted Globalization - the new world order Merchantilism). IMHO, the insurance companies know full well that the entire HMO-Employee Healthcare bandwagon is going to end. Not because of socialism; because of profit hungry out of control mercantilism. So they are trying to cut the best deal possible with the government. The merchantilist doesn't care that their employees are going to suffer. They only care that this cost and the blame for losing the benefit is moved from their books to the government. Nor does the merchantilist care about protecting our borders. They want cheap labor. Even if the social cost of that cheap labor lands on the government and destroys the nation. That's why the merchantilist and his Bankster financiers support Open Borders. The merchantilist could care less about the trade deficit and the massive transfer of American manufacturing jobs overseas. As long as they can sell their junk back into the USA market without a 33% import tax these bastardos are happy to destroy their country. I wonder whose army and navy will secure their investments when the USA no longer can? Are their private armies enough? Just wondering.