Silver as an investment

Europe Descends Into Tyranny

Be prepared for the next great transfer of wealth and the collapse of fiat currencies around the world. Buy physical silver and storable food.

Europe Descends Into Tyranny

Italian Journalist Maurizio Blondet notes that France has adopted the Soviet Union’s method of dealing with political dissidents.

Tyranny is institutionalized in the EU which has no regard for the opinions of the peoples whose governments signed away their liberties by submerging the identities of countries into a tyrannical European institution. Marine Le Pen opposes the decision of the French government to terminate the existence of France as a sovereign state by making France a mere province in a multinational state.

This is a liberation fight from the Soviet EU
by Maurizio Blondet

Certainly readers already know that the Prosecutor’s Office of Nanterre has ordered that Marine Le Pen, secretary of the Rassemblement National (former FN) and parliamentary to the Assembly, be submitted to psychiatric examination. This, in the context of an indictment for “the dissemination of violent messages on the Internet, Article 706-47-1 of the French Code of Criminal Procedure”. The MP committed the crime of posting photos of atrocities committed by ISIS Islamic terrorists: a Syrian soldier crushed by crawlers, the body of the beheaded journalist James Foley, a Jordanian pilot burned alive.

We must explain why. This happened in December 2015, when France was hit by the bloody attacks signed by Daesh. The journalist of the Jewish TV BFM-TV, Jean-Jacques Bourdin, dedicated the transmission to the following insinuation: the growth of the Front National is accompanied by the growth of jihadism, “the goal of Daesh is to push French society to the withdrawal of identity” and to vote for the Front.

A type of media insinuation that we know well. The Le Pen has judged “an unclean parallel” the juxtaposition between the Front and the ISIS and for demonstrative purposes she posted the atrocious photos, with the words: “Daesh is this”:

Immediately incriminated by “justice”, for having posted this “violent” photo (even if already seen and published), now the Prosecutor’s Office orders her to undergo a mandatory psychiatric visit; the psychiatrist will have to verify if the lady is “hit by a psychic or neuropsychiatric disorder who has abolished her capacity for discernment” in posting those images. It seems that this kind of procedure is “normal” and systematic in these cases of location of violent images on the web.

In posting the tribunal injunction, Le Pen commented: “This regime is REALLY scary.”

It is hardly necessary to remember that psychiatric treatment for opponents was a specialty practiced in the Soviet Union; today it is inaugurated in Western Europe. It will not be limited to France.

In fact, in the general silence of the mainstream media and governments, the European Public Prosecutor’s Office is emerging: it will take away sovereignty even in the criminal field, with the consequences that it is not difficult to imagine:

Salvini at risk. EU Prosecutor’s Office is born. It could decide on Italy and immigration.

Just so “Affari Italiani” writes, the online newspaper that (the only one) has given the news the right importance.

22 States have already surrendered criminal sovereignty to an indictment of prosecution that subtracts the accused to the natural judge – including obviously Italy: the Italy of Gentiloni, of Renzi, of the Italian Democratic Party. But if our government does not hurry to break this further chain, it will have taken a decisive step towards our servitude. And it will have given a terrible weapon in the hands of our factious and already omnipotent procurators, against those politicians whom they judge as ideological adversaries, like Salvini in the eyes of the Prosecutor’s Office of Agrigento. This is exactly what Vladimir Bukovski, writer and former Soviet dissident, has been prophesying for years: the EU is becoming more and more similar to the USSR.

This is exactly what Vladimir Bukovski, writer and former Soviet dissident, has been prophesying for years: the EU is becoming more and more similar to the USSR.

Every day we must become more aware that the fight against the EU is a real fight for liberation – to regain freedom and equality in the European assembly, where we have been reduced to inferiors and subordinates.

Original column by Maurizio Blondet:
Translation by Costantino Ceoldo – Pravda freelance

The post Europe Descends Into Tyranny appeared first on

ZeroHedge: “No You Can’t” – Broad Coalition Rallying Against Obama Center

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

Authored by Mark Glennon via,

Here’s something you don’t see every day: Chicago’s progressive Readeraligned with conservative Breitbart. Both had articles Wednesday slamming the Obama Center to be built in Chicago’s Jackson Park.

And everybody in between, it seems, is upset with the proposed center for one reason or another.

The community organizer has managed to inspire unusual unity:

  • Fiscal conservatives worried about our insolvent state object to how some $200 million was quietly appropriated in Illinois’ recently enacted budget for roadways around the center. Federal taxpayers will reimburse Illinois for 80% of that money, which was the subject of our recent Wall Street Journal article.

  • Local folks have long objected, claiming the Obama Foundation, which is building the center, isn’t directing enough jobs and benefits towards them. No surprise. When I visited the site a few weeks ago it looked like most of the work was being done by the usual Chicago union white guys. The Nation earlier criticized the absence of some form of community benefits agreement.

  • Many University of Chicago graduates, who serve as de facto guardians of the architectural and intellectual standards of the neighborhood, don’t want a scar on the area. (more…)

via zerohedge

ZeroHedge: Winning The War On Drugs? Colombian Cocaine Output Soars To Record Levels

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

Colombia is producing more cocaine now than it ever has, according to a new report by Bloomberg. The amount of land planted with coca shrubs is up 17% last year, rising to 171,000 hectares, which surpasses levels prior to US president Bill Clinton’s “Plan Colombia” counter-narcotics program.

Almost all of the world’s cocaine comes from Colombia, Bolivia and Peru. Colombia produces more than half of the total cocaine in the world. Under Clinton’s plan, the aid provided to Colombia over the course of the last six decades was “stepped up dramatically”. Colombia has repaid the world by cranking out record levels of cocaine – probably not the solution Clinton, or other advocates for aid-giving, were seeking. 

Colombia’s 171,000 hectares is enough raw material to produce 1,379 tons of cocaine, according to the United Nations Office on Drugs and Crime. It’s also more than triple the output of five years ago.

The previous record had been 163,000 hectares in the year 2000. This was the same year that Clinton‘s “Plan Colombia” initiative started. Since then, the United States has supplied Colombia with more than $10 billion in aid – the most of any country outside of Asia and the Middle East.

Those who are experts in Colombia stated that Clinton’s plan didn’t change any conditions in the country’s cocaine producing regions. These very same regions also suffer from an absence of the state, land titles, roads or any type of legal economic opportunities.


via zerohedge

SHTFplan: Prepper Burnout: 5 Healthy Ways To Deal With It

Prepare yourself. Buy physical silver and storable food.

This article was originally published by Jeremiah Johnson at Tess Pennington’s

Tess is the author of The Prepper’s Blueprint: How To Survive ANY Disaster

In many articles, I have stressed the precept “Don’t stop the training!” I still stand by it; however, there are times when as a prepper, a survivalist, a constitutional patriot, or whatever label you wish to apply to yourself…you may feel “burned out,” or lackadaisical. We are having a tremendous amount of people feeling this way since the Presidential elections of 2016. Many are questioning what need is there to prepare for the end of the world or a collapse?

That is an excellent question, yet it is best answered thusly [to paraphrase “Upgrayedd”]: Is the election of President Trump a guarantee that a collapse or a SHTF scenario will no longer happen? The answer is that it is not a guarantee of such. There are plenty of different things happening around the world. North Korea was written off as a threat in the minds of many at the time of the summit meetings, only to be revealing its fangs once again. Russia (every Hollywood film is painting them as the “bogeyman”) is still an issue, as are China and Iran. Ebola is breaking out in the Congo, and the economies of the world are on shaky ground. All the more reason to continue to train and prepare: but how do we deal with burnout?

5 Ways to Deal With Prepper Burn-Out

The answer is simple here and rendered in one word: Balance.

It is not an oversimplification. It is a word that means several different actions in different categories of preparation. Let’s cover a few of them and explore the concept.

  1. Physical Training: Overtraining here can be (potentially) almost self-explanatory, but it is more involved than it appears on the surface. When you work out a muscle group, there are two types of physical recoveries that are taking place after the workout is done: local and systemic. Local involves the muscles themselves, now in a catabolic state that needs the replenishment of nutrients such as proteins and vitamins, and actual rest from physical activity. Systemic involves the organs, such as the liver, heart, kidneys, lungs, and so forth. These, too, need recovery from the toxins produced during the course of the workout. They do not experience the same growth as muscle tissue, yet the demands placed upon them are even more to compensate physically for what you’ve “done” to yourself with a workout. Whether you’re a strength-trainer with weights or an endurance-trainer with marathons and long-distance marches, you need to give your body time to replenish and compensate after the exercise.
  2. Cross-Training:  You may have as your forte and profession the skills of a mechanic, and at the end of the day (or society), that is your main skill and interest. To give your mind a rest and also to explore other areas? You may wish to train in other skills. How about acquiring the skills of a welder? You could even pick up some training on heavy equipment or driving certain types of vehicles.  These would complement your main profession. Or find something to study that is totally different. You can never learn too much, and every skill you pick up is good for you down the road.
  3. Supplies:  Are there ever really enough? No, there are not. Your budget and time constraints, however, may say otherwise, at least temporarily. Then do something different with the existing supplies to improve them…such as store them in a special order or with a new inventory system. Take factors such as time, temperature, humidity, and dates gathered, and fine-tune your warehouse or disaster larders.
  4. Family Time: Give your mind a hiatus by having days where you’re not focused on anything but having a good time and enjoying each other’s company, whether out to dinner, or having a dinner/movie night at home, or activities with your church or any organization you may belong to. Having “normal” (a better word is unstressed) family time is just as important as preparing them for the next disaster to come up.
  5. Activities with Dual Purposes:  Make a project that will have more than one use or benefit, with one being a “Happy Hallmark Family” purpose, and the other a backup for a disaster…a “secondary” purpose. An in-ground swimming pool is a great example of this. Think of all that you guys could do with the pool in your backyard…the barbecues, the family gatherings, and such. Think also of the training that you can do: swimming is excellent for physical training. Disaster wise? Think of the in-ground reservoir you’ve built in the event of an emergency. In this case, one stone gets three birds, right?

Underlying to all of this is your mind. You must continually replenish this most valuable (and finite) resource: through proper diet, through exercise, and through meditation. You must also give your mind a hiatus from too much activity. Be aware, but do not be troubled, alarmed, or worried. Handle things in a controlled fashion and work on mental discipline and concentration to be able to take care of things as they arise.

There is a time for all things, and as such, also a time not for all things. Know when to draw the line on excess, and maintain balance in your life. You can do all of this without relenting or letting up on your prepper posture or being able to shift into action at any given time. Be as the lion: strong and prepared, resting on the grass, yet mindful of the cubs…ready to spring to their defense when danger threatens. Your preparations are an investment, and make sure you take some of that larder before you pack it away…and have a nice dinner with a portion of it with your family. Balance in all areas, and readiness when the time comes. Look to the lion, and look out for one another.  JJ out!


About the Author

Jeremiah Johnson is the Nom de plume of a retired Green Beret of the United States Army Special Forces (Airborne). Mr. Johnson was a Special Forces Medic, EMT and ACLS-certified, with comprehensive training in wilderness survival, rescue, and patient-extraction. He is a Certified Master Herbalist and a graduate of the Global College of Natural Medicine of Santa Ana, CA. A graduate of the U.S. Army’s survival course of SERE school (Survival Evasion Resistance Escape), Mr. Johnson also successfully completed the Montana Master Food Preserver Course for home-canning, smoking, and dehydrating foods.

Mr. Johnson dries and tinctures a wide variety of medicinal herbs taken by wild crafting and cultivation, in addition to preserving and canning his own food. An expert in land navigation, survival, mountaineering, and parachuting as trained by the United States Army, Mr. Johnson is an ardent advocate for preparedness, self-sufficiency, and long-term disaster sustainability for families. He and his wife survived Hurricane Katrina and its aftermath. Cross-trained as a Special Forces Engineer, he is an expert in supply, logistics, transport, and long-term storage of perishable materials, having incorporated many of these techniques plus some unique innovations in his own homestead.

Mr. Johnson brings practical, tested experience firmly rooted in formal education to his writings and to our team. He and his wife live in a cabin in the mountains of Western Montana with their three cats.

(Sign up for our FREE newsletter to get the latest prepping advice, gardening secrets, homesteading tips and more delivered straight to your inbox!)

The Prepper's Blueprint

Tess Pennington is the author of The Prepper’s Blueprint, a comprehensive guide that uses real-life scenarios to help you prepare for any disaster. Because a crisis rarely stops with a triggering event the aftermath can spiral, having the capacity to cripple our normal ways of life. The well-rounded, multi-layered approach outlined in the Blueprint helps you make sense of a wide array of preparedness concepts through easily digestible action items and supply lists.

Tess is also the author of the highly rated Prepper’s Cookbook, which helps you to create a plan for stocking, organizing and maintaining a proper emergency food supply and includes over 300 recipes for nutritious, delicious, life-saving meals. 

Visit her website at for an extensive compilation of free information on preparedness, homesteading, and healthy living.

ZeroHedge: Data Revision Reveals Pensions Buying Far More Treasurys Than Previously Known

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

When we compiled yesterday’s Household Net Worth report for the second quarter, which is contained in the Fed’s quarterly Flow of Funds report, one thing stuck out: extensive data revisions to the nominal dollar amounts in both the Pension Funds and Corporate Bonds category.

We now know the reason: as Bank of America’s Hans Mikkelsen explains, in recent years and most recently in Q1, the Fed indicated that private defined benefit plans bought corporate bonds in recent years “but little Treasuries.” This is shown in the chart below.

However, as BofA observes, the latest data revisions as of 2Q shows the opposite: that Pensions bought Treasuries but little corporate bonds.

Here, BofA makes a good observation:

“We knew that the Fed’s flow of funds data is subject to large revisions, but in light of such revisions we are increasingly pondering whether it is useful at all.”

That is a valid concern since after the GDP and unemployment report, the Flow of Funds is arguably the most report providing a glimpse on the state of everything from the financial sector, to the net worth of US households, which as we explained previously, is merely a “plug” category, yet which is so critical in determining whether US households are getting richer or poorer.

As for the pensions revision, at the very least the revised pick-up in pension buying of Treasuries this year is consistent the odd increase in stripped Treasury volumes which we documented previously.

What may have caused the Fed’s error? One explanation is that stripped Treasuries were previously mis-classified as corporate bonds.


via zerohedge

ZeroHedge: Was Kavanaugh Accusation An Orchestrated Hit Involving Fmr Anita Hill Adviser?

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

An audio recording purportedly from a July conference call suggests that Christine Blasey Ford’s sexual assault accusation against Supreme Court nominee Brett Kavanaugh wasn’t simply a reluctant claim that Diane Feinstein sat on until the 11th hour. 

The recording features Ricki Seidman – a former Clinton and Obama White House official and Democratic operative who advised Anita Hill during the Clarence Thomas hearings, and who was revealed on Thursday as an adviser to Ford by Politico

Christine Blasey Ford, the woman who has accused Supreme Court nominee Brett Kavanaugh of sexually assaulting her when they were both teenagers, is being advised by Democratic operative Ricki Seidman.

Seidman, a senior principal at TSD Communications, in the past worked as an investigator for Sen. Ted Kennedy, and was involved with Anita Hill’s decision to testify against Supreme Court Nominee Clarence Thomas. –Politico

“While I think at the outset, looking at the numbers in the Senate, it’s not extremely likely that the nominee can be defeated,” says Seidman. “I would absolutely withhold judgement as the process goes on. I think that I would not reach any conclusion about the outcome in advance.”

What’s more, the recording makes clear that even if Kavanaugh is confirmed, Democrats can use the doubt cast over him during midterms.

“Over the coming days and weeks, there will be a strategy that will emerge, and I think it’s possible that that strategy might ultimately defeat the nominee… whether or not it ultimately defeats the nominee, it will help people understand why it’s so important that they vote and the deeper principles that are involved in it.


via zerohedge

SHTFplan: Hyperlink Tax and Filters: Is It Time to Dust Off the Mimeo Machine?

Prepare yourself. Buy physical silver and storable food.

This article was originally published by Kurt Nimmo at Another Day in the Empire

The unelected bureaucrats at the European Union are in the process of destroying the web and social media as we know it. In the not too far distant future, we may be obliged to use other technologies to post news and commentary—for instance, a mimeograph machine.

If the EU Copyright Directive, Article 13, becomes law, the following small quote will be illegal.

In response to the campaign, a European Commission spokesperson told Sky News: “The idea behind our copyright proposals is that people should be able to make a living from their creative ideas.”

Are EU apparatchiks really interested in making sure artists, musicians, and writers get paid for their work? Hardly. The law is designed to control the internet and shut down what faceless bureaucrats decide you shouldn’t see. It is also a mechanism that will allow large corporations to squeeze every last penny out of content producers. For long as anybody can remember, content producers have used fair use to quote from copyrighted sources. 

From Techdirt:

Only the most antagonistic of rightsholders would view memes as a destructive force pushing creators into poverty. But the EU’s proposal takes exactly this hard line: it wants platforms to treat every bit of copyrighted material being uploaded as infringing by default. This won’t just bankrupt smaller tech companies and make millions of users miserable. It will also do serious damage to internet communications in general, pushing platforms towards restricting users’ interactions with the service, either by limiting their ability to post content or by suspending/deleting accounts for alleged Article 13 violations. The law is stupid and dangerous. Far too often, so is the EU.

If this law passes and social media and websites are forced to pay tribute to corporations for what is now fair use—quoting a source in a blog entry like this—it will be the end of the internet as we know it. 

I quote corporate news sources every day. But if the EU has its way, quoting a source will not only be illegal, so will hyperlinking to it. 

In the future, those of us who write political commentary may be forced to seek out low tech alternatives, such as a mimeograph machine or photocopier. 

But this too will be illegal since the same rules apply to printed material.

It looks like we may eventually be forced to use the samizdat method of communication—producing content in secret and passing it from reader to reader as it was done in the Soviet Union. 

ZeroHedge: Rickards: “Don’t Miss The Signs Of Another Slow-Motion Meltdown”

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

Authored by James Rickards via The Daily Reckoning,

If you’ve ever lived through a life-threatening emergency – whether a car crash, train wreck or a steep fall (hopefully not) – you have noticed that time seems to slow down.

You witness your personal jeopardy in slow motion. A memorable example of this is the film The Matrix, in which the hero, Neo, could dodge bullets since time moved in slow motion for him.

According to the best science, time does not actually slow down for those in jeopardy, nor do their perceptions slow down. What happens is that the stress and novelty of the experience causes the brain to create extra layers of memory, a saturation effect, compared with everyday experiences.

According to researcher David Eagleman, “The more memory you have of an event, the longer you believe it took.” So yes, time does seem to slow down in a crisis, but it’s a cognitive illusion.

That slowing down effect is important to bear in mind as we encounter the 20th anniversary of the Russia-LTCM financial crisis of September 1998 and the 10th anniversary of the Lehman-AIG financial crisis of September 2008.

For investors, those events were the financial equivalent of falling off a tall building or being strapped in during a plane crash. If you lived through them, you’ll recall some hours that seemed like days and days that seemed like weeks.

Of course, investors recall where they were and what they did during the absolute height of the panics — Sept. 28, 1998 and Sept. (more…)

via zerohedge

Economic Policy Serves The Rich, Not The Economy

Be prepared for the next great transfer of wealth and the collapse of fiat currencies around the world. Buy physical silver and storable food.

Introduction by PCR: In this article economist Michael Hudson points out that in a financialized economy economic growth tends to slow to zero and then enter negative territory as debt service draws away from the purchase of goods and services more and more of consumers’ disposable income. As disposable income shrinks, so does consumer demand for the purchases of goods and services. Without aggregate demand to drive it, the economy stops. Hudson notes that the economics profession is blind to the austerity consequence, because the reigning neoliberal economics counts the cost of debt service as an increase in GDP. Hudson’s article is a response to the self-congratulatory celebration policymakers gave themselves for “saving the economy” on the 10th Anniversary of the collapse of Lehman Brothers.

Economic Policy Serves The Rich, Not The Economy
Michael Hudson

The Lehman 10th Anniversary spin as a Teachable Moment
Wall Street did not let the Lehman Brothers crisis go to waste. The banks that have paid the largest fines for financial fraud are now much bigger and more profitable. The victims of their junk mortgage loans are poorer, and the economy is facing debt deflation.
Was it worth it? What was not saved was the economy.

The malaise that pension funds, state and local budgets and economic growth are experiencing today is a result of the 2008 bailout, not the crash. What was saved was not only the banks – or more to the point, their bondholders – but the financial overhead that continues to burden today’s economy. This overhead takes the form not only of paying more interest, amortization, and penalty or service fees to carry the debt needed to buy a home or to live off a credit card, but also takes the form of higher housing prices inflated on bank credit, and even prices for goods and services that are pushed up by the debt overhead.

Also saved was the idea that the economy needs to keep the financial sector solvent by an exponential growth of new debt – and, when that does not suffice, by government purchase of stocks and bonds to support the balance sheets of the wealthiest layer of society. The internal contradiction in this policy is debt deflation: interest, amortization and late fees divert income away from being spent on goods and services. This diversion of income from consumer purchases to debt service has become so overbearing and dysfunctional that it prevents the economy from growing, thus undermining the economy’s ability to carry the debt burden.

Trying to maintain an excessive debt level by creating more debt, or by using monetary Quantitative Easing to re-inflate real estate, stock and bond prices, protects the asset prices of creditor One Percent class, not the disposable incomes of the 99 percent. Therefore, from the economy’s vantage point, instead of asking how the banks are to be saved “next time,” the question policymakers should be asking is how should we best let them go under – along with their stockholders, bondholders and uninsured depositors whose hubris imagined that their loans (other peoples’ debts) could go on rising without impoverishing society, thereby preventing creditors from being repaid – except from government by gaining control over it.

This basic principle should be the starting point of any macro analysis: The volume of interest-bearing debt tends to grow faster than the economy’s ability to pay. This tendency is inherent in the “magic of compound interest.” The exponential growth of debt expands by its own purely mathematical momentum, independently of the economy’s ability to pay – and faster than the non-financial economy grows.

The higher the debt to income ratio rises, the more interest, amortization payments and late fees are extracted from the economy. The resulting debt burden slows the economy, causing defaults. That is what happened in 2008, and is accelerating today as debt ratios are rising for corporate debt, state and local debt, and student debt.

Neither legislators, academics nor the public at large recognize a corollary Second Principle following from the first: An over-indebted economy cannot be saved unless the banks fail. That means writing down the financial claims of creditors to a level that debtors can service. Otherwise the economy will suffer debt deflation and austerity, like Greece.

“Recovery” since 2008 has been much slower than earlier recoveries because debt deflation is eating away personal and corporate income. To make matters worse, the bailout’s policy of Quantitative Easing to re-inflate asset prices has reduced interest rates on bonds and, therefore, investment income for pension funds, insurance companies and employee retirement savings. This means that more state and local government tax revenues must be diverted to meet retirement commitments and if not retirement pensions have to be cut, further shrinking aggregate demand.

As the economy at large is threatened with an exponentially expanding erosion of disposable income and, thereby, aggregate demand, a debt write-down is a precondition for today’s economy to recover from the rising debt/income and debt/GDP ratios that are burdening the United States, Europe and other regions.

The United States has been able to monetize its budget deficits and subsidize banks to carry its rising debt overhead with new debt. The Eurozone has banned budget deficits of over 3 percent of GDP, imposing austerity that leaves the only response to over-indebtedness to be Greek-style austerity: depopulation, shrinking living standards, wipeouts of retirement income and pensions, mortgage defaults, shortening lifespans, and mass selloffs of public infrastructure such as municipal water companies to foreign interests who repatriate the earnings outside the country, thus further draining income from the country.

None of this was spelled out in the September 15 weekend marking the tenth anniversary of Lehman Brothers’ failure and subsequent rescue of Wall Street. President Obama, Treasury Secretary Tim Geithner and their fellow financial lobbyists at the Federal Reserve and Justice Department are credited with saving “the economy,” as if their donor class on Wall Street constituted the economy. “Saving the economy from a meltdown” has become the euphemism for saving financial sector bondholders and other members of the One Percent from taking losses on bad bank loans. The “rescue” is Orwellian doublespeak for expropriating over nine million indebted Americans from their homes, while leaving surviving homeowners saddled with bubble-mortgage payments to the FIRE sector’s owners.

What has been put in place is not a restoration of traditional status quo, but a reversal of over a century of central bank policy. Failed banks were not taken into the public domain. Instead, they have been enriched beyond their former levels. The perpetrators of the collapse have been rewarded, not penalized, for lending more than could possibly be paid by NINJA (no income, no job or assets) borrowers and speculators whose mortgage applications were doctored by systemic fraud at Countrywide, Washington Mutual, Bank of America, Citigroup and their cohorts.

The $4.3 trillion that could have been used to save debtors was given to the banks and Wall Street firms whose recklessness and outright fraud caused the crisis. The Federal Reserve “cash for trash” swaps with insolvent banks did not restore normalcy or the status quo ante. What occurred was a financial revolution by stealth, reversing the traditional responsibility of creditors to make prudent loans in order to avoid write-downs on bad ones.

Quantitative Easing saved creditors and the largest stockholders and bondholders by lowering the interest rates by enough to raise the price of financial assets on the banks’ books. This revived the value of the collateral backing bank loans and bondholdings. “Saving” the economy in this way actually sacrificed it by leaving the debt-deflation mechanism in place.

Among Democrats, Paul Krugman displayed the most extreme tunnel vision when he claimed that jobs, not debt, was the real problem. Krugman misses the point that 2009 was the beginning of the foreclosure and eviction of 9 million homeowners. Consumers found themselves with less income “freely disposable” after paying their monthly FIRE (finance, insurance, real estate) sector bill off the top of their paycheck – housing charges, credit card charges, medical insurance, student debt, FICA withholding and tax withholding. Krugman says that he would have solved the problem by more deficit spending to pump enough money into the economy to enable debtors to keep paying the banks their growing claim on consumer incomes.

We are still living in the destabilized, debt-ridden aftermath of such pro-bank advocacy. In the New Yorker, John Cassidy celebrates a book by Columbia professor Adam Tooze who promotes the idea that the economy cannot exist without the credit (that is, debt) provided by the financial sector. True enough, but it does not follow that rescuing the economy must involve rescuing Wall Street and enriching the banks at the expense of the rest of the economy. That conflation is an Orwellian rhetoric of deception that has been introduced to the discussion of how the economy was “rescued” by locking in debt deflation.

At the neoliberal/neocon Brookings Institution, Treasury secretaries Hank Paulson and Tim Geithner joined with the Federal Reserve’s Ben Bernanke to explain that the public simply didn’t understand how successful they all were in saving not only the banks, but non-bank financial institutions. Unlike Sheila Bair, they did not point out that behind these institutions were the bondholders, the One Percent of savers who held the rest of the economy in debt. Bernanke wrote a Financial Times piece using junk statistics to show that there was no underlying debt or financial problem at all, merely a “panic.” To paraphrase, he said: “The crisis was all in the mind folks. Nothing to see here. Keep moving on.”

Can a bailout without debt writedowns really bring prosperity? Can economies achieve growth by “borrowing their way out of debt,” by creating enough new credit to cover the interest charges out of capital gains from the asset-price inflation fueled by new bank credit? This is the logic that has guided the Federal Reserve’s net $4.3 trillion in Quantitative Easing, and the parallel credit creation by the European Central Bank under Mario “Whatever it takes” Draghi. Ellen Brown recently published a review, “Central Banks Have Gone Rogue, Putting Us All at Risk,” noting that the ECB has become a major stock buyer. The beneficiaries are the stockholders who are concentrated in the wealthiest percentiles of the population. Governments are not underwriting homeownership or the solvency of labor’s pension plans, but are underwriting the value of collateral backing the savings of the narrow financial class.

The GDP accounts treat debt service as “financial services income.” This overstates GDP by treating a cost as an income and shows the extent to which Wall Street lobbyists have captured economic statistics. The National Income and Product Accounts (NIPA) have been turned into a vehicle for deception. What is celebrated as growth of the GDP since 2008 has been mainly the growth in financial extraction (and the health-insurance sector’s profits from Obamacare).

Glenn Hubbard, chairman of the Council of Economic Advisors under George W. Bush, uses Orwellian doublethink to pretend that “Debt is Wealth.” He concludes a Wall Street Journal op-ed: “An ability to recapitalize banks remains crucial and must be explained to a skeptical Congress and public,” so that wealthy bondholders and speculators will not suffer losses.

The aim of the Lehman 10th Anniversary self-congratulation is to head off debt write downs. The ancients fought civil wars for land redistribution and debt cancellation. Today the demand should be for mortgage writedowns to bring their carrying charges in line with reasonable rent charges, limited to 25 percent of homeowner income.

Today’s financial administrators at the Treasury, Federal Reserve and regulatory agencies are no more inclined to halt the economy-destroying debt deflation mechanism than they are to enforce laws against criminal financial fraud and punish individuals rather than institutions.

The key financial point is that the expansion of interest-bearing debt absorbs more and more of disposable income until consumer incomes are exhausted with nothing left to purchase goods and services produced by the economy. Economic growth comes to a halt. The solution therefore requires debt write-downs. That is what is supposed to result from an economic crash, but it was not done in 2008. That is why the status quo was not restored. Instead, a vast giveaway to the financial elites occurred, setting the rest of the economy on a road to debt peonage.

It would have been encouraging if Sheila Bair had used the Lehman 10th Anniversary to lay out the procedures that the FDIC had put in place ready to take over insolvent banks in the future. It would have been encouraging to hear from Hank Paulson and Barney Frank that it is necessary to write down bad mortgages whose carrying charges are far above the debtor’s ability to pay and the going rental value for similar properties. It would have been encouraging to hear Obama apologize for representing the interest of his campaign donors instead of his voters. Perhaps also an expression of guilt from Tim Geithner and Eric Holder for the high-paying jobs they got for rescuing the banks from their bad loans.

What is needed now is the perception that today’s financially dysfunctional economy cannot be saved without a bank crash that rolls back the enormous gains that the FIRE sector has made at the expense of the “real” economy. Banks have ceased to be an “engine of growth.” They are not making loans to create new means of production. They are lending to asset strippers, not asset creators. It is not hard to show this statistically.

At stake is whether the U.S. and Western European economies are going to end up looking like those of Greece, Latvia and Argentina – or imperial Rome for that matter. Neoliberals applaud finance capitalism as the “end of history.” The end of history will be different from what they think as debt deflation brings back the austerity of the Dark Age.

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ZeroHedge: Leveraged Loan Demand Is Off The Charts As Dangers Mount

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

Ten years after the crisis, demands for leveraged loan offerings is once again off the charts. Portfolio managers who are seeking rising yields as the Federal Reserve hikes rates have shown unprecedented demand for recent deals, despite repeated warnings that they may be buying “at the wrong time.”

Leveraged loans are a type of debt that is offered to an entity that may already have significant amounts of leverage or a poor credit history. As rates move higher, the loans – whose interest rates reference such floating instruments as Libor or Prime – pay out more. As a result, as the Fed tightens the money supply, defaults tend to increase as the interest expenses rise and as the overall cost of capital increases.

Gershon Distenfeld, co-head of fixed income at AllianceBernstein LP and a longtime “skeptic of bank loans” told Bloomberg that a good way to gauge the risk in the loan market is to look at returns when loans price too high. Currently, the average outstanding loan is priced at about 98.5 cents on the dollar. According to Distenfeld’s research of market prices between 1992 and 2018, when priced at this level, annual returns are about 2.8% for the following two years – lagging both behind 5 year treasuries and high yield bonds. And yet investors are piling in, hoping for even more generous payments, and oblivious of whether the underlying credit will be viable in a higher interest rate environment.

Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC kept it simpler: “It’s not a good time to be buying bank loans,” he stated. He also noted something we have demonstrated on numerous prior occasions: lender protections are worse than usual and there’s a smaller pool of creditors to absorb losses, and as covenant protection has never been weaker.

But that hasn’t fazed money managers who have been hungry for these leverage loans. For instance, this week, Blackstone Group tapped the loan market to borrow $9. (more…)

via zerohedge