Daily Digest

Daily Digest - March 26

Friday, March 26, 2010, 9:55 AM
  • Eurozone Agrees On Bailout Plan For Greece
  • Treasurys Turn Lower After Weak 7-Year Auction
  • Reforming A Broken Mortgage System - George Soros
  • World Trade Protectionism "Getting Ugly", OECD Head Gurria Says
  • Whistleblower Exposes JP Morgan's Silver Manipulation Scheme
  • Contraction Tracked by the Consumer Metrics Institute Traces Unique Pattern
  • Mexico Oil Output Slips In February, Still Above Target
  • Energy Efficiency? Alone, It's Not All It's Cracked Up To Be
  • Death of Coral Reefs Could Devastate Nations 
  • Worse Than Peak Oil? We're Quickly Running Out of a Chemical Essential to Growing Food

Economy

Eurozone Agrees On Bailout Plan For Greece (mhoop)

The agreement at a Thursday meeting of European Union leaders was a clear victory for German Chancellor Angela Merkel, who demanded that a rescue for Greece only come when the country runs out of other options. She also insisted that any backstop must include the IMF.

Treasurys Turn Lower After Weak 7-Year Auction (Robert C.)

Treasury prices turned lower on Thursday, pushing 10-year yields up to the highest level since June, after the government received lackluster demand for its sale of 7-year notes, following two weak auctions earlier this week.

Reforming A Broken Mortgage System - George Soros (Christian W.)

What needs to be done is clear: The GSEs’ mortgage insurance function must be separated from mortgage financing. The former, mortgage insurance, is the legitimate function of a government agency, especially when the private sector has collapsed. A mortgage insurance entity should be run as a government agency.

But mortgage financing should revert to the private sector. This would get rid of a business model that has failed.

World Trade Protectionism "Getting Ugly", OECD Head Gurria Says (Christian W.)

Initiatives to curb imports are rising around the world, threatening “disastrous consequences,” the head of the Organization for Economic Cooperation and Development said today.

“It is getting ugly out there,” OECD Secretary-General Angel Gurria said in a speech at a Beijing forum today. “There are too many fingers ready to pull the trigger. We must avoid it at all cost. Any miscalculation can have disastrous consequences."

Whistleblower Exposes JP Morgan's Silver Manipulation Scheme (Ben Johnson)

On March 23, 2010, GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Maguire is a metals trader in London. He has been told first-hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets, and they have bragged to how they make money doing so.

Contraction Tracked by the Consumer Metrics Institute Traces Unique Pattern (Ilene)

We are not professional doom-sayers. We were incredibly upbeat one year ago — when most economic indicators were preaching doom and gloom. Since August, however, consumers have been pulling in their spending, and our numbers have slowly turned upside down. From our perspective on the demand side of the economy, a contraction is already here, having started officially in the middle of January. The only question now is whether the 2010 contraction will revisit 2006 or 2008? Our daily updates will ultimately tell the story.

Energy

Mexico Oil Output Slips In February, Still Above Target (Christian W.)

Sliding oil production has put pressure on Mexico's public finances, which depend heavily on export revenues to fund its federal budget. Pemex has struggled since 2004 to contain the rate of decline at its giant Cantarell field, which once pumped nearly two-thirds of Mexican oil output.

Energy Efficiency? Alone, It's Not All It's Cracked Up To Be (Christian W.)

In his 1865 book, “The Coal Question,” English economist Jevons pointed out a counter-intuitive truth: that making a resource-consuming process more efficient actually increases, rather than decreases, consumption of that resource. He found the proof in Britain’s coal industry, where the demand for coal skyrocketed after James Watts’ steam engine made it far easier to pull the stuff out of the ground.

Environment

Death of coral reefs could devastate nations (Christian W.)

Coral reefs are part of the foundation of the ocean food chain. Nearly half the fish the world eats make their homes around them. Hundreds of millions of people worldwide — by some estimates, 1 billion across Asia alone — depend on them for their food and their livelihoods.

If the reefs vanished, experts say, hunger, poverty and political instability could ensue.

Worse Than Peak Oil? We're Quickly Running Out of a Chemical Essential to Growing Food (Doug D.)

Unremarked and unregulated by the United Nations and other high-level assemblies, the world's supply of phosphate rock, the dominant source of phosphorus for fertilizer, is being rapidly - and wastefully - drawn down. By most estimates, the best deposits will be gone in 50 to 100 years.

Please send article submissions to: [email protected]

13 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - March 26

Greenspan Calls Treasury Yields ‘Canary in the Mine’

"March 26 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.

Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television.

“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. "..........................

“You can see the whole blossoming of finance,” Greenspan said. “As these stock prices have gone up, debt became far more valuable, and you can see this huge issuance, especially of junk bonds.”

"“We’ve never seen this magnitude or type of decisions being weighed right now,” Bilik said. “We’re talking reduced staff, reduced programs and reduced arts and sports all in one year.”

Christie, a Republican who took office Jan. 19, seeks to lower aid to schools in an amount equal to as much as 5 percent of their spending plans as he attempts to close a $10.7 billion hole in his $29.3 billion budget without raising taxes. Fifty- nine districts will lose all of their state aid under his plan. "

"March 25 (Bloomberg) -- More than half of U.S. borrowers who received loan modifications on delinquent mortgages defaulted again after nine months, according to a federal report.

The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint report today. The figure, which measures payments at least 30 days late, climbed to 57.9 percent for changes made in the prior 12 months."

"March 25 (Bloomberg) -- The Obama administration plans to announce programs to help homeowners avoid foreclosure, including subsidies for borrowers who owe more than their home is worth.

The plan, to be unveiled tomorrow, would expand Treasury Department and Federal Housing Administration programs and use funds from the $700 billion Troubled Asset Relief Program, according to two administration officials. The administration faced a week of criticism from lawmakers and watchdog groups who say the government hasn’t helped enough homeowners stave off foreclosure. "

"March 26 (Bloomberg) -- For the first time in decades, the rich showed no confidence in state and local governments during a recession. "

"March 26 (Bloomberg) -- Unemployment increased in 27 U.S. states in February, and dropped in seven.

Mississippi showed the biggest jump in joblessness, rising 0.4 percentage point to 11.4 percent, according to figures issued today by the Labor Department in Washington. Nationally, unemployment held at 9.7 percent in February for a second month and employers cut fewer jobs than anticipated, figures from the Labor Department showed on March 5.

The report indicates broad-based hiring is yet to develop following the loss of 8.4 million jobs since the recession began in December 2007. Florida, Nevada, Georgia, and North Carolina set record levels of joblessness last month. "

"March 26 (Bloomberg) -- Yields on top-rated tax-exempt municipal debt climbed to their highest level in four months as investors flocked to taxable Build America Bonds amid the biggest weekly issuance of state and local debt since Dec. 11."

"The Senate moved forward on a budget proposal, relying in part on hoped-for stimulus money, hiking tuition and privatizing prison beds."

"WASHINGTON — Social Security will pay more in benefits than it receives in payroll taxes in the current fiscal year, six years earlier than expected, the Congressional Budget Office reported yesterday."

"WASHINGTON — Pennsylvania, Michigan and Washington shed government jobs last month, a result of shrinking state tax revenue that economists fear could weaken the recovery.

State and local government jobs have traditionally provided a haven during economic downturns. But as states have struggled to close growing budget gaps, job cuts have spread.

That trend emerges from data on a dozen states that have released their employment figures in advance of a federal report Friday on state joblessness for February.

In Michigan, where the unemployment rate is 14.1 percent, the nation's highest, government jobs at all levels fell by 5,000. They accounted for one-third of the state's job losses.

Pennsylvania lost 2,200 government jobs. Minnesota lost 1,900 and Massachusetts 1,500.

Washington state shed 900 government jobs in February. And Wisconsin lost 2,100 government jobs, including 1,600 at the local level.

Economists are pointing to the states' budget problems as a potential threat to the economic recovery. In addition to job cuts, states are reducing services and raising taxes to close their deficits."

"Cobb schools chief Fred Sanderson told the seven-member board that the system’s budget shortfall will likely be $137.7 million next year because of declining revenues. A week ago the working shortfall figure for the budget year that begins July 1 was about $100 million."

"If City Manager Carlos Migoya's projections prove accurate, Miami could be on the verge of declaring a fiscal emergency -- triggering a law requiring the city to notify the governor it's in financial jeopardy, the city attorney warned Thursday.

The dire news from City Attorney Julie Bru came near the end of a lengthy discussion on the city's reeling budget and projections showing the numbers may not soon improve.

Miami commissioners voted unanimously Thursday to use $53.6 million of the city's reserves to finally balance its 2009 books. At the same time, they were told 2010 is already more than $28 million in the red, and that lawsuits against the city could raise that number.

The bottom line: A reserve that overflowed with more than $141 million earlier this decade now sits at $39 million and could nearly empty by year's end."

"Every one of Sacramento County's major school districts and many in Placer and El Dorado counties are on shaky ground financially, say state officials.

Nineteen local school districts have made the state's fiscal early warning list – up from nine last year.

In the 2006-07 school year, only 22 school districts throughout the state made the list. This year, state education officials said the list has grown to 126 districts. "

"Both Barber and Sacramento County schools chief Dave Gordon said the state's budget cuts and deferred payments have put districts in a financial bind.

Gordon said districts are taking out loans with interest to pay bills while waiting for the state to send payments. "It's really shameful," he said.

More of California's school districts will likely fall into the negative category in the near future, Gordon said. But he's confident it won't happen in the state capital.

"In Sacramento, the districts have been diligent about making their cuts," he said. "We are working really hard not to have them go into negative status or bankruptcy."

He said that for some, "if they don't get (labor) concessions, they may be in the soup," he said."

"NEW YORK (CNNMoney.com) -- You probably cost your boss a lot more than you think you do.

For Jim Garland, who owns a corporate aircraft cleaning and support services company, a $14 per hour worker has a true cost of $19.63 per hour, or about 40% more than base pay. This so-called "loaded rate" includes fixed expenses -- federal and state taxes, health insurance, workman's compensation, uniforms, and paid time off -- along with soft costs like the time spent training a new hire."

"As Congress raced to leave Washington for its Easter recess, a Republican senator blocked a stopgap bill to extend jobless benefits, saying its $9 billion cost should not be added to the national debt.

As a result, some people who have been out of work for more than six months will at least temporarily lose benefits. Newly jobless people won't be eligible to sign up for generous health insurance subsidies."

"In fact, 16 of the top 25 locales with the highest default rates are in Florida, as of December, with tiny Punta Gorda on the Gulf Coast leading at 22.7%.

The poor performance of Florida's FHA loans has helped drag the agency down to its lowest point in decades, raising concerns that taxpayers will have to bail it out. The agency is in the midst of overhauling its operations to shore up reserves, which have fallen well below the level required by Congress."

Bullard Says Fed Must Start Planning Now for Future Asset Sales

InformedCitizenNews (Video)

China facing 'boom, bubble and bust': Buiter

JPMorgan Chase May Get Billion-Dollar Tax Refund to Offset Recession Losses

House Approves Small-Business Aid Bill ($14 billion + $5.8 billion for other programs)

Greek Debt Head Says EU Deal 'Wipes Out' Default Risk

Ontario's Record Debt Level May Pressure Spreads: Canada Credit  and   With this budget, Ontario is banking on the near-impossible

Illinois overhauls pensions

Los Angeles City Council Opts for Control Over DWP's Rate Hike

Ambac Regulator Seizes Contracts to Avoid 'Scramble for Assets'  and Swaps Committee Asked If Ambac Triggered Credit Event

U.S. firms issued $58.3 billion of high-yield, high-risk bonds this year, more than a fourfold increase from the same period last year

Hospitals Chief Expects to Cut 3900 Jobs (NY)

CalPERS scrutinised in Department of Justice pension fund investigation

SJSU planning for layoffs, fee hikes and fewer students

Missouri educators prepare for funding disaster

Detroit will raze 10000 empty homes  "A city survey indicates there are 30,000 vacant properties in Detroit"

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Traders Demanding CDS Paid in GOLD

I am not sure if this was posted earlier, I certainly missed it somehow.  Thought it may be of interest.....

Are Traders Demanding US Credit Default Swaps Payable in Gold?

"If another author had said this I might not pay it so much attention. Lately some have been given over to a tabloid approach to overstatement and sensational headlines to attract attention. This is a strong temptation as the blogosphere expands, similar to the development and evolution of newspapers as a popular medium in Victorian London for example.

But as you know, I have a great deal of respect and admiration for Janet Tavakoli and her knowledge in this area. If she is seeing a new demand for Credit Default Swaps on the US payable in gold I would..."

http://jessescrossroadscafe.blogspot.com/2010/03/are-traders-demanding-us-credit-default.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

 

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Re: Daily Digest - March 26

Wow, this is such a slap in the face to anyone towing the line that if you don't take time to write and express that this is total BS, you might as well move to Russia and get it over with, because that's where we are headed.

 

"March 25 (Bloomberg) -- The Obama administration plans to announce programs to help homeowners avoid foreclosure, including subsidies for borrowers who owe more than their home is worth.

The plan, to be unveiled tomorrow, would expand Treasury Department and Federal Housing Administration programs and use funds from the $700 billion Troubled Asset Relief Program, according to two administration officials. The administration faced a week of criticism from lawmakers and watchdog groups who say the government hasn’t helped enough homeowners stave off foreclosure. "

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Re: Daily Digest - March 26
alcatwize wrote:

Wow, this is such a slap in the face to anyone towing the line that if you don't take time to write and express that this is total BS, you might as well move to Russia and get it over with, because that's where we are headed.

 

"March 25 (Bloomberg) -- The Obama administration plans to announce programs to help homeowners avoid foreclosure, including subsidies for borrowers who owe more than their home is worth.

The plan, to be unveiled tomorrow, would expand Treasury Department and Federal Housing Administration programs and use funds from the $700 billion Troubled Asset Relief Program, according to two administration officials. The administration faced a week of criticism from lawmakers and watchdog groups who say the government hasn’t helped enough homeowners stave off foreclosure. "

700 billion. Russian propaganda: 11 trillion with 13+4=17 trillion more in the pipe. 

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Re: Daily Digest - March 26

Health Care Overhaul Knocks Profits at Major US Firms

http://www.cnbc.com/id/36040002

AT&T

[ATT  26.73    0.09  (+0.34%)   ]

said Friday that it would record a $1 billion non-cash charge for the current quarter related to the bill. The operator, whose annual revenue is expected to be $124.1 billion this year, said the charge is the result of a provision in the law related to the tax treatment of Medicare subsidies.

AT&T also said it will be evaluating prospective changes to the health care benefits it offers.

Diversified manufacturer 3M

[MMM  81.00    0.07  (+0.09%)   ]

said it will take a charge of $85 to $90 million in its first quarter as a result of health reform.

These announcements followed statements from manufacturers Deere

[DE  60.56    0.36  (+0.6%)   ]

and Caterpillar

[CAT  62.44    0.30  (+0.48%)   ]

, which said on Thursday that they are expecting a combined $250 million in charges this year as a result of changes to the $2.5 trillion U.S. health care system.

They can no longer deduct from their taxes the subsidies paid by the federal government for retiree drug benefits.

Caterpillar, Deere and a handful of other big U.S. companies including Boeing

[BA  72.59    0.10  (+0.14%)   ]

, Verizon Communications

[VZ  30.37    0.06  (+0.2%)   ]

, and Xerox

[XRX  9.70    0.08  (+0.83%)   ]

had for months opposed that change.

In a filing with the U.S. Securities and Exchange Commission, Peoria, Illinois-based Caterpillar described the move as a tax hike.

Republicans—who had fought the healthcare bill that was a cornerstone of Democratic President Barack Obama's domestic policy—jumped on the company charges as evidence that the law would be damaging to the U.S. economy.

"It didn't take 48 hours before the tax increases in this health care bill started to hit manufacturers and other employers," said Representative Dave Camp, the top Republican on the tax-writing House Ways and Means Committee. "The health care bill is the single largest tax increase in American history. It is a government takeover of health care that families cannot afford and our economy cannot afford."

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Re: Does the US Gov't plan to spend the SS Trust Fund Debt?

Does the US Gov't plan to spend the SS Trust Fund Debt?

For quite sometime now I wondered if the US gov't would try to pull the wool over public eyes by spending the SS Trust fund debt in order to fund SS deficits. For those unaware,  There is no Social Security Trust Fund. The gov't spends any SS revenue surplus on the gov't general fund that used to pay anything and everything the gov't spends money on. The SS surplus revenue is tracked using special Treasury bills (also referred as Inter-gov't debt).

I've noticed a lot of chatter  in the media that since the SS in now spending more than it receives, that the gov't will have to start drawing down its trust fund earlier than planned. But in reality, there is no trust fund, just 4 Trillion in debt. However, if the gov't is able to convince the public that the 4 Trillion in SS debt is really a surplus it buys the gov't time to keep the system running for several more years. This is like running up a credit card to $40K and then spending the debt you owed to spend another $40K.

So here is Alan Greenspan quote that suggest that the US has a SS trust fund set aside :

http://www.nytimes.com/2010/03/25/business/economy/25social.html?hp

Social Security to See Payout Exceed Pay-In This Year

Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances. "When the level of the trust fund gets to zero, you have to cut benefits," Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said on Wednesday.

The Same Article also includes this quote from Stephen C. Goss, chief actuary of the Social Security Administration:

Mr. Goss, the actuary, emphasized that even the $29 billion shortfall projected for this year was small, relative to the roughly $700 billion that would flow in and out of the system. The system, he added, has a balance of about $2.5 trillion that will take decades to deplete.

So the Answer is Yes, The gov't does intend to spend its Trust Fund debt

I doubt that $2.5 Trillion will carry on for decades considering that just a few years ago, in 2007, there was there was a $190 Billon surplus. So less then three years the SS cash flow declined by more than $190 Billion Or about $60 Billion per year. Consider that we will likely see 2.7 to 2 Million new SS recipients per year that will will stop paying into the system and start withdrawing money for Social Security. Its pretty easy to see that $2.5 Trillion in alleged savings won't last very long. Especially since Medicare and Medicad expenses are soaring, and the new Healthcare bill will only excerbate the problem.

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Re: Daily Digest - March 26

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Re: Daily Digest - March 26

 

"Workers covered by these latest TAA certifications will be contacted by their respective states with instructions on how to apply for individual benefits and services. Those who apply may receive case management and re-employment services, training in new occupational skills and trade readjustment allowances that provide income support for workers enrolled in training. Some workers may also receive job search and relocation allowances, and the Health Coverage Tax Credit.

"President Obama and this entire administration are committed to a coordinated federal response that will soften the blow of the current downturn and speed the economic recovery for communities across the country affected by auto industry restructuring and other mass industrial layoffs, said Dr. Ed Montgomery, executive director of the White House Council on Automotive Communities and Workers. "Trade Adjustment Assistance is just one tool the federal government is using to help American workers during these tough times. Today's TAA certifications can provide thousands of workers and their families in auto communities nationwide with much needed income support, access to health care, job training and other assistance as they transition to new jobs in other sectors of the economy."

Workers 50 years of age and older may elect to receive Re-employment Trade Adjustment Assistance. If a worker obtains new employment at wages less than $55,000 and less than those earned in adversely affected employment, the RTAA program will pay 50 percent of the difference between the old wage and the new wage, up to $12,000 over a two-year period. RTAA participants may also be eligible for retraining and the HCTC. For more information on Trade Adjustment Assistance and the range of Department of Labor employment and training services, visit ."

"Adding a wrinkle to California Gov. Arnold Schwarzenegger's plan to furlough state workers to help shore-up the state budget deficit, a California Superior Court Judge has ordered that furlough days for certain state workers must end immediately.

In February, Judge Frank Roesch ordered the state to discontinue furloughs for state workers in special fund departments, including some union employees, because their budgets were not funded by the state's general fund. He also ordered the state to issue the workers back pay with interest for furlough days that had already been incurred."

"Paterson submitted emergency appropriations legislation Wednesday that would make only payments required by statute or contract for a few weeks if the Legislature doesn't reach a budget agreement by April 1, the start of the new fiscal year.

That means some agencies and governments will not receive state aid, Paterson said.

"You don't hear it today, because I don't think people recognize it yet," Paterson said during his weekly radio appearance on WOR-AM (710) in Manhattan, "but there will be screaming all around the state from local governments, from school districts, from different places, because they are not going to get their money.""

"Jon Karl reports on the millions spent to maintain empty government buildings."

"With prices still falling and more distressed homes hitting the market, many experts are expecting the market to get even worse before it gets better.

"There's been some increase in inventory lately, mostly from distressed sales," says Walter Malony, spokesman for the National Association of Realtors. "Buyer's are pretty much in the driver's seat."

Even the Obama administration's new plan to help troubled homeowners, while praised by some economists, won't help the market much right away.

The $14 billion program, announced Friday, will try to stem a rising tide of home foreclosures by giving lenders incentives to erase some mortgage debt and slash mortgage payments for the unemployed. But it will take months before there is any impact, experts say. "

"Four small banks across the United States were seized by regulators on Friday evening, ticking up the year bank failure tally to 41."

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Re: Daily Digest - March 26

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Re: Daily Digest - March 26

Amazing how the modern age is unfolding......just when you think you have seen it all now we have "Flash Mobs"......imagine if the SHTF for real how this will play out. 

Terrorist in Philadelphia (FLASH MOBS)

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Re: Daily Digest - March 26

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Flash Mobs

In summer of 2008, I predicted that this mess would lead to riots in the streets of at least one major U.S. city by August of 2009. As usual, I was early in my prediction and it took 6 months longer than I expected.

I think that the violence in America will prove to be the bigger story than the economic crisis, and will adversely effect far more Americans to a greater extent. Yes, the two are inter-linked and the violence is an outgrowth of the economic crisis. But the violence has a much higher risk of hitting a tipping point where it becomes completely uncontrolable.

Gerald Celente's oft-repeated words are going to become eerily true: When people loose everything and have nothing left to loose, they loose it.

I hate to say it, but I think all those detention centers Haliburton built for the gov't are going to prove insufficient to contain the problem they were designed to address.

The part that scares me the most is the form the violence is taking. Mobs of teenagers using social networking to coordinate massive campaigns of random violence. Pulling people out of their cars randomly and beating the daylights out of them is a very scary detail to me, because what it says is that the violence will not be directed. If we had angry young people trying to burn down the banks or even physically attack the executives they believe to be at fault for the crisis, that would be horrible but it would at least mean that their next moves could be predicted and countered. But when things devolve to the point that kids organize to say "Hey, the world sucks and its not our fault, so lets just go beat the crap out of people to blow off steam", it tells me that what's coming is going to be much worse than even I ever imagined.

I hope I'm wrong...

Erik

 

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Re: World Trade Protectionism "Getting Ugly"

This statement from the above article:

"Initiatives to curb imports are rising around the world, threatening “disastrous consequences,”"

is not disastrous.  It is a miracle in progress.

Globalism (i.e. shipping apples from China to New York; shipping troops to Middle East

in exchange for oil) benefits only the Finanical Elite at the expense of middle and lower "class" peoples of the Earth.

Globalism must stop. 

Globalists must be neutralized.

Relocalization is the key to our survival, our freedom, our dignitiy and our diversity: local food, local currency, local leaders, local defenders, manufacturers and merchants.

Pray for the collapse of the Global Economy.

 

 

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