H/t FOTM’s WildBillAlaska
As news on the Great Cyprus Bank Robbery keep getting worse, the latest being the country’s corrupt finance minister Michael Sarris saying that as much as 80% of “large” bank deposits can be confiscated, Americans should be on the alert to copycat moves by our feral government and bankers. All the more because the American Left are applauding the theft of Cypriots’ bank savings.
Tyler Durden of ZeroHedge warns us that when bankrupt insolvent governments “run out of fingers to plug the dikes,” history shows that they fall back on a very limited playbook.
Simon Black of Sovereign Man blog has enumerated 8 steps in the playbook of bankrupt governments:
1. Direct confiscation: As Cyprus showed us, bankrupt governments are quite happy to plunder people’s bank accounts, especially if it’s a wealthy minority. Aside from bank levies, though, this also includes things like seizing retirement accounts (Argentina), increases in civil asset forfeiture (United States), and gold criminalization.
2. Taxes: Just another form of confiscation, taxation plunders the hard work and talent of the citizenry. But thanks to decades of brainwashing, it’s more socially acceptable. We’ve come to regard taxes as a ‘necessary evil,’ not realizing that the country existed for decades, even centuries, without an income tax. Yet when bankrupt governments get desperate enough, they begin imposing new taxes… primarily WEALTH taxes (Argentina) or windfall profits taxes (United States in the 1970s).
3. Inflation: This is indirect confiscation– the slow, gradual plundering of people’s savings. Again, governments have been quite successful at inculcating a belief that inflation is also a necessary evil. They’re also adept at fooling people with phony inflation statistics.
4. Capital Controls: Governments can, do, and will restrict the free-flow of capital across borders. They’ll prevent you from moving your own money to a safer jurisdiction, forcing you to keep your hard earned savings at home where it can be plundered and devalued. We’re seeing this everywhere in the developed world… from withdrawal limits in Europe to cash-sniffing dogs at border checkpoints. And it certainly doesn’t help when everyone from the IMF to Nobel laureate Paul Krugman argue in favor of Capital Controls.
5. Wage and Price controls: When even the lowest common denominator in society realizes that prices are getting higher, governments step in and ‘fix’ things by imposing price controls. Occasionally this also includes wage controls… though wage increases tend to be vastly outpaced by price increases. Of course, as any basic economics textbook can illustrate, price controls never work and typically lead to shortages and massive misallocations.
6. Wage and Price controls– on STEROIDS: When the first round of price controls don’t work, the next step is to impose severe penalties for not abiding by the terms. In the days of Diocletian’s Edict on Prices in the 4th century AD, any Roman caught violating the price controls was put to death. In post-revolutionary France, shopkeepers who violated the “Law of Maximum” were fleeced of their private property… and a national spy system was put into place to enforce the measures.
7. Increased regulation: Despite being completely broke, governments will dramatically expand their ranks in a last desperate gasp to envelop the problem in sheer size. In the early 1920s, for example, the number of bureaucratic officials in the German Weimar Republic increased 242%, even though the country was flat broke from its World War I reparation payments and hyperinflation episode. The increase in both regulations and government officials criminalizes and/or controls almost every aspect of our existence… from what we can/cannot put in our bodies to how we are allowed to raise our own children.
8. War and National Emergency: When all else fails, just invade another country. Pick a fight. Keep people distracted by working them into a frenzy over men in caves… or some completely irrelevant island.
Even before the ink dried on America Conservative 2 Conservative’s sundancecracker’s “10 Guarantees,” one of the guarantees (No. 9) already is fulfilled.
Here are the Ten Guarantees, brought to us by the 59,971,178 Amerikans who voted the POS to a second term of destroying Amerika:
1. Obamacare will be 100% implemented.
2. “Card Check” will be passed by fiat.
3. Amnesty for illegal aliens will be done by executive order.
4. Two leftist Supreme Court Justices will be appointed → Gay marriage will be affirmed into law.
5. Taxes will increase ON EVERYONE who pays them, i.e., the 50.5% of Americans who actually pay federal income taxes.
6. The National Debt will increase beyond $20 Trillion.
7. The Dollar will further devalue.
8. Gold prices will skyrocket.
9. Stock Market will tumble beginning tomorrow.
10. Inflation will hit everyone directly; energy costs and food costs will massively jump.
The above 10 Guarantees are just the beginning. You and I both can think of other horrors to come.
The U.S. National Debt has now increased more during Obama’s 3 years and 2 months squatting in the White House than it did during 8 years of the George W. Bush presidency.
The Debt rose $4.899 trillion during the two terms of the Bush presidency. It has now gone up $4.939 trillion since Obama began squatting. [Source: CBS News]
Our human mind seizes up when we see stratospheric numbers of a billion, or a trillion, or worse still, 15 trillion.
We’ve seen a number of striking ways to put into perspective our morbidly obese national debt of $15+ trillion. Here’s another way, explained by Duquesne University economics professor Antony Davies.
The United States currently pays 3% interest on the federal government’s debt of $15+ trillion — an interest rate that’s the lowest since the 1960s. This means interest payments on America’s national debt is THREE TIMES the annual operating expenses of the Iraq and Afghanistan wars.
But the long-predicted rise in interest rates (and of inflation) is beginning.
If the rate rises to 8%, which is what it was 20 years ago, interest payments on the debt will be larger than the annual cost of every war the United States has ever waged combined. The more money the government is spending on interest, the less money it has available to provide other services and entitlement payments, including Social Security and Medicare.
In other words, paying interest on debt is a really really really stupid way of spending money. That’s why sensible people either don’t get in debt or if they do, try to pay off the debt as quickly as possible. (See how a middle-class family succeeds in being debt-free and accumulating $1.5 million in assets, here!)
So what should be done?
Like the finances of a family household, the federal government should take advantage of today’s low interest rate and pay off as much of the principal as possible now, before interest payments rise to unsustainable levels.
At the House Financial Services Committee hearing yesterday, Feb. 29, Ron Paul socked it to Federal Reserve Chairman Ben Bernanke.
At around the 3:50 mark, Paul asks Bernanke if he does his own shopping, if he is aware of what true inflation is, and if he knows that Americans don’t trust the government because they are being lied to about inflation. Then Paul delivers this zinger: “The Fed will self-destruct anyway when the money is gone.”
Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece. Full Article
Here is the link to professor Lang’s 4 hour talk that’s been posted to Youtube. It’s in the Chinese language.
Robert Wiedemer is an economist and bestselling author who prophetically predicted both the real estate and stock market collapse in his book, America’s Bubble Economy (2006).
He’s written a follow-up book, Aftershock, which immediately topped Amazon’s bestseller list. Dow Jones said Wiedemer’s work “is your bible, read it, get into action, and be a winner.” Standard and Poor’s says his “track record demands our attention.”
In this video, Wiedemer sounds the warning that we’re heading toward even worse times, but the pols in Washington DC are ignoring and not telling us about the true scope of the problem(s). The federal government is doing and will continue to try everything it can to stave off the collapse of the dollar, by buying back U.S. debt. (Don’t ask me to explain that because I sure don’t understand how our government can buy back its own debt.)
Here’s my summary of his main points:
1. Government will raise taxes, no matter who’s in the White House in 2013, beginning with the rich — which Obama just announced — then the middle class. But this won’t solve the debt crisis.
2. By end of 2012, we’ll see 10% inflation, which means a 10-year treasury bond would lose half its value. We could see 100% annual inflation for three consecutive years after.
3. This means many people’s savings will become drastically lower. Some life insurance plans will have big losses. Pensions will become unstable.
4. Two more bubbles will burst probably by 2013– of the dollar and of government debt.
5. By 2016, there’ll be a mass exit of foreign investments from America because of the dollar collapse.
6. The housing market will continue to be depressed. Homeowners may lose 8% of home value in 2012. Home prices can fall more than 20% in the next 5 years, once the inevitable interest rate hike comes in.
7. Retirement age will increase to 73. Many will have no choice but to keep working until dead.
8. The worst case scenario is a 90% drop in the stock market and 50% rate of unemployment. But this won’t last forever. America will recover.
1. Stay away from real estate because it hasn’t hit bottom. Sell your home and rent instead. If you stay in your home, refinance at a fixed rate mortgage, then just pay the monthly minimum, i.e., don’t pay at faster rate.
2. Save as much as you can for a rainy day.
3. Pay off your car loan.
4. Credit cards are really adjustable rate loans, so pay off your credit card loans as fast as possible.
5. Once inflation hits 10%, life insurance will be hit with big losses. Take a lump sum payoff now.
6. Safest careers will be in healthcare, education, utilities, basic food, government.
7. Stay away from long-term investments like 10-year bonds. When inflation really hits, put your money in short-term vehicles like CDs.
8. Gold will continue to be a favorite safe haven. Right now, only 10% of the world’s gold has been bought by U.S. The gold run will last at least another decade before the gold bubble bursts. Gold investments can be purchasing physical gold, gold depository, or gold mining stocks.
9. Other precious metals are also good over the long run.