21st Century Wire
For the past two weeks we’ve seen the Obama administration embroiled in controversy, as three separate scandals continue to grow and attach themselves to the White House.
While this is major news, and does have the power to topple this U.S. President, there are other far-reaching actions unfolding under his watch…
In a bizarre move, President Obama, held two joint press conferences last week, one with U.K. Prime Minister David Cameron and another with Turkish Prime Minister Recep Tayyip Erdogan. Perhaps the dual Presidential podiums were a subliminal touch to what seemed to blur the line between world leaders, in a sense, becoming rule by global council. This strange observation may well be significant to understanding the kind of dark partnerships that are developing world-wide.
Rightly, most of the media will focus on the obvious take down of an empire, as they try to uncover the truth about Benghazi, IRS, and the DOJ. However, on the global chess board of finance and war, more stark revelations have come to light involving the U.S. President. During the press conference with Prime Minister Cameron, President Obama, made vague sweeping statements about a Transatlantic Partnership with the E.U. A partnership that many fear will lead to a Transatlantic Union which will impose more globalized standards and regulations, potentially derailing individual free trade.
This was made clear by The New American earlier this year:
“The “Transatlantic Partnership,” of course, is just one of the major sovereignty-threatening international schemes being pursued by the Obama administration simultaneously — closer North American Integration and the so-called “Trans-Pacific Partnership” are two of the most prominent efforts. The latest plot, though, has far-reaching, global implications that critics argue represent a serious threat to America and freedom. If the U.S.-EU deal ends up becoming reality, the regulatory regime governing the new bloc, which accounts for about half of global GDP, would become the de-facto standard-setting entity for the entire planet.”
Obama had this to say during the Cameron press conference:
“With respect to the relationship between the U.K. and the EU, we have a special relationship with the United Kingdom. And we believe that our capacity to partner with a United Kingdom that is active, robust, outward-looking and engaged with the world is hugely important to our own interests as well as the world. And I think the U.K.’s participation in the EU is an expression of its influence and its role in the world, as well as obviously a very important economic partnership”.
Obama echoed the same rhetoric at the Erdogan press conference adding: “Today, we focused on three areas that I want to highlight. First, we agreed to keep expanding trade and investment. Over the past four years, our trade has surged and U.S. exports to Turkey have more than doubled. As the United States pursues a new trade and investment partnership with the EU, I want to make sure that we also keep deepening our economic ties with Turkey. So we’re creating a new high-level committee that will focus on increasing trade and investment between our two countries and will help fuel Turkish innovation. And the progress that Turkey’s economy has made over the last several years I think has been remarkable and the Prime Minister deserves much credit for some of the reforms that are already taking place.”
It seems that more and more we’re faced with a manufactured reality, one in which international institutions will have dictatorial power over trade and the economy world-wide. Breaking away from sovereign entities controlling their own destiny.
Is the transatlantic partnership a sleeping giant for the global economy? What other partnerships are being harbored in regards to U.S., Britain and Turkey? How does this tie into the situation in Syria?
Writer Patrick Henningsen delves further into this in a recent op-ed for Russia Today news: “On Wednesday Kentucky Sen. Rand Paul(R) weighed in on the Benghazi debacle, in a direct challenge to the President and Hillary Clinton, inferring that the Sept. 11, 2012 attack unfolded as a result of a secret arms trade, and rubbishing the previous government line put forward by Susan Rice and the US Intelligence community that the attack was a result of a YouTube film, “The Innocence of Muslims”. During a recent CNN interview Paul explains:
“I’ve actually always suspected that, although I have no evidence, that maybe we were facilitating arms leaving Libya going through Turkey into Syria,” he said. “Were they trying to obscure that there was an arms operation going on at the CIA annex?”
One can only conclude that those in the world who are making economic reforms aligned to a socialist “pay your fair share” tax scheme, can also control the narrative on world events. Creating a new kind of “strategy of tension” by forcing countries to be complicit in illegal activities, via their trade partnerships. Is the new growing economic partnership, a partnership in conflict and consolidation?
Daily Business Report
The most ardent optimist has to confront the consequences of low interest rates. The macro analysis of ivory tower academics seldom reflects the struggle of ordinary consumers or retirees. One such pinhead is Ben Bernanke.
Back on October 1, 2012 at the Economic Club of Indiana, the Federal Reserve Chairman employs sophistry of a major order. Such confused and twisted logic defies common sense and real world finance. Robert Romano writes in the article, More monetary alchemy from Bernanke: Low interest rates help savers.
“Many savers are also homeowners,” said Bernanke, adding, “indeed, a family’s home may be its most important financial asset. Many savers are working, or would like to be. Some savers own businesses, and — through pension funds and 401(k) accounts — they often own stocks and other assets.”
Bernanke explained, “Only a strong economy can create higher asset values and sustainably good returns for savers… [and] [t]he way for the Fed to support a return to a strong economy is by maintaining monetary accommodation, which requires low interest rates for a time.”
He said home values would collapse without Fed support, unemployment would rise, and asset values would plummet and “[s]uch outcomes would ultimately not be good for savers or anyone else.”
So, admittedly, the Fed’s easy money policies do not in actuality directly help savers. But they will increase home values, asset prices, and create jobs for savers, Bernanke claimed. Okay, but is that even true?”
Such deceptive dishonesty that the Fed fosters beneficial monetary measures, which encourage job growth and a vigorous housing market, defies evidence. The saver watches the evaporation of their money, while prices jump at rates far in excess of the official CPI. This is a fact. This construct is the legacy of the intentional 2007 Wall Street meltdown.
The inability of distinguishing between illiquid assets and the need to pay for cost of living expenses must be a trait that only financially – cash flow secure – magicians master. The perception that the masses benefit from central banking driving down and suppressing interest rates to negative levels is patently absurd. Negative Interest Rates and the Impoverishing of America by Michael R. Winther sums up the self-evident.
“Don’t forget that consumers pay income tax on interest earned regardless of whether real interest rates are positive or negative. The result is that many Americans are paying income tax on a negative real interest rate! This discourages savings and investment, but even worse, it steals from our citizens.
Negative real interest rates hurt all savers, but these rates are especially damaging to the elderly and those on fixed incomes. It is no longer possible for senior citizens to live on the interest of their savings and investments. In fact, our negative interest rates result in a situation in which our seniors must rely on the depletion of their principle for all of their living expenses.”
The net effects of an inflationary depression require that privately saved capital must be used to pay for the continued increases in basic costs. It is not just the retired person that is shafted from zeroing out the money market. Anyone who attempts to devise a budget that sets aside a portion of cash flow understands that there is no return on banking funds.
How long will people accept this thief? The options to parking cash in hand with a FDIC insured institution seems worth an examination. However, few alternatives for working class savers exist. Surely, this occurrence is intentional because the real objective of the “New Normal” is to bankrupt Middle America. What other conclusion makes sense?
Designed lowering of our standard of living is visible at every turn. The money-centered banks recapitalized their balance sheets at the expense of the passbook accounts customers.
The recent implementation of approving an extra fee to credit card purchases is outrageous. The NY Daily News reports the example of allowing “MasterCard and Visa credit card users might see a surcharge of up to 4 percent on their receipts. Merchants are allowed to add an extra fee to credit card purchases starting Jan. 27.“
The besieged consumer gets another whammy from a banking system that thrives on charging usurious fees, while paying you near zero on your saving accounts. With the execution of the Bernanke rescue strategy, the prospects of personal or consumer loans are virtually non-existent. In Helicopter Ben speak; “maintaining monetary accommodation” just does not filter down to the common- man.While the concept of interest often confuses some Christians, Gary North offers a scriptural analysis in Usury, Interest, and Loans: A Brief Summary of Biblical Teaching, which asks:
“If charging interest were not legitimate, why would Jesus have used the example of money-lending as a legitimate way to increase capital? Why would He have attributed to God such words of condemnation for not having lent at interest?”
The tangible injustice is that the saver is especially screwed by the moneychanger system.
When you strip away the banking veil of trickery, what remains is a stash of greed, built on a hoard of distrust and deception. Few financial policies have been more destructive for the depositor than low interest rates. Siphoning off purchasing power is a perfect method to impart a fiscal squeeze, hard to rebound for any depositor. Everyday your cash lingers in money interest limbo is another diminution in your net wealth.
How can a society encourage saving under these circumstances? Apparently, the plan for depleting the economic assets of workers or investors is well underway. The notion that investing is feasible in this environment borders on delusional.
The submissive banking customer needs to take a hard look on continuing their depositing relationship with the commercial saving establishment. The endless gimmicks and get rich schemes that proliferate might seem attractive to desperate people. Yet, when you operate on parallel tracts, separated by a wide gulf of moneymaking returns, the definitive result is that treasure ends up in the accounts of the banksters and favored insiders.
“There’s now a 9/11 cartoon movie courtesy of Mike Huckabee, co-founder of Learn Our History, a for-profit company whose mission is to get kids excited and educated about history. The first initiative, an animated DVD series, has flicks on subjects like the American Revolution, and, perhaps more tellingly, “The Reagan Revolution.” The September 11th cartoon really explains, according to the literature, “How the ongoing War on Terror protects Americans at home and American ideals abroad.”
Food shortages- even famine, therefore has a short fuze today. As the initially joyful Flash Mob youth rebellion in some countries (Tunisia is in fact the only one) are followed by increasingly bloody and lengthening struggles we can easily fear these will degenerate into, and generate, long civil wars. Prolonged breakdown of civil society is a sure and certain threat. During civil wars, all through history, famine is the common fellow rider able to further intensify the loss of life and trigger further, more bloody struggles and massive flows of refugees. It is likely- but not certain, that this parameter is understood by leaders of the developed world, somewhat rocked and shocked by the rapidity and intensity of events in the Arab world since this new start of 2011. The non-ideological dimension is also troubling – so troubling that conspiracy theories are flocking to fill the void: obviously Iran is behind the Bahraini uprising, to inflict collateral damage on Saudi Arabia and deprive the west (and China, India and more than 100 other importer countries) of Saudi oil. Egypt’s uprising, when it is not the fruit of CIA and US Joint Chiefs of Staff plotting, is surely the result of Hamas infiltrating Egyptian youths’ minds using Facebook. Tunisia’s revolution was almost certainly remote-controlled by neighboring ex-Algerian islamic terrorists, when it was not the product of French socialist intellectuals and trade unionists. And so Western conventional wisdom goes. Gaddafi’s very welcome downfall poses problems for cobbling rosy conspiracy theories, but with time these will flourish. We might suggest his downfall could or might be linked to Wikileaks, like any other unexplained geopolitical event, inch’allah. But in all cases of revolt in the Arab world no conspiracy theory can claim the objective is to deprive the world of food supply. Taking simply Egypt, Algeria, Saudi Arabia and Morocco, these 4 countries import more than 45 percent of world total wheat export supply. As traders in their exuberant excesses of panic and euphoria reasoned, in their own way through February 21-23, any prolonged civil strife in the Arab food importer countries could crater demand, and therefore a rigorous sell-off was needed. To be sure, the long-only bets will be back in a few days. Much more important and more grave, the world is in a long-term process of depriving itself with food. Rebellion, revolt and revolution inside countries totally dependent on food imports is a dangerous signal not only for their citizens but for the world. The list of urgent measures in these countries – and in the huge number of countries outside the Arab world but like them heavily dependent on food imports – starts with the development of farming and food production. To date, this basic need is almost inaudible, along with other economic realities. THE FOOD AND JOB CRISIS One sure cause or intensifier and accelerator of today’s Arab revolt is the twin – in fact interrelated – crises of not enough food and not enough jobs. To be sure, citizens listening to the high-flown delirium of a megalomaniac like Gaddafi, or a despot like Mubarak or Ahmedinejad of Iran will be less than thrilled by the ranting rhetoric, when they do not have enough to eat and their job outlook is close to zero. We can suggest that rising strains, and coming fractures in the world food production and supply system will initially be good for democracy but the best-before date on the packaging will be short. The massive rate of urban growth in the Arab world, both due to and causing rural and agricultural under-development, low productivity and poor paid jobs outside cities, is only an extreme version of the same general process in all developing and emerging countries. Inside the fast-growing cities of the entire world outside the OECD countries, which count for 15 percent of world population, the growing capital intensity of low paid manufacturing jobs, to play a humble export platform role in the global economy, also chokes off job growth. Solving both these crises is the challenge for the world that arises from the ashes of the fossil regimes of the Arab world, in Africa and elsewhere, set in a moment of time that disappeared decades ago. Returning again to their time, in the 1960s and 1970s, we can take a swift look at Mao’s failed but deadly rural development and regeneration revolution, and the extreme war crimes of the Khmer Rouge forced return to village living in Cambodia. Both these acts of criminal folly were failures. Their total body count was perhaps as high as 40 million – the same as the total death toll from World War 2. What is important and usually missed out in analyzing these sombre events is that both were either directly, or in major part driven by an attempt to solve chronic or acute food shortage – and create jobs. We are currently offered a bizarre, even eccentric mix-and-match of supposed Green Growth, and intensified consumer society growth economy, by institutions and agencies such as World Bank, IMF, the UN development and economic agencies and some major private corporations. We might ironically think that the dreamers producing these concepts for the economic way ahead are working on a basis that if one fails the other could work, if God wills. The gravest problem is that neither can or will work due to these models being totally antinomic or exclusive. Case in point: at this moment in time, when the post-uprising civil societies of countries experiencing the Flash Mob youth revolt need support, advice, help and direction, the policy void in the OECD developed countries is a grave threat to recovery and sustained change in the world. SOME CONCLUSIONS The rate of change since the start of January 2011 is high and may be growing, not weakening. The Arab revolt now means what it says: anti-regime movements now span almost the whole Arab world, from Morocco to Yemen, and can likely soon spill over and spread to African countries, Iran, Armenia, the Central Asian republics, and perhaps China. All the autocratic and unelected governments unable or unwilling to solve the basic issues of food and jobs will now suffer rising popular opposition and the risk of overthrow by mass uprising. By contagion, this movement could spread to the elected governments in many countries which are unwilling or unable to solve exactly the same challenges and can lose what remains of their own popular credibility and support. Unlike the student revolts of 40 years ago, and totally unlike the rock-solid economic growth of the time, during les Trente Glorieuse, today’s weakened and fragile global economy is exposed to a host of challenges always bringing the economic issues closer to the surface. These as we said, start with the basic issues of failure to feed large chunks of humanity, or employ the youth of nearly all countries, whether rich or poor. Given the resource pinch, geopolitical climate change concerns, rising threats of major ecosystem collapse and heightened awareness of these economic constraints the way forward is both complex and difficult. This however does not mean we can avoid grasping the nettle: on the geopolitical front, endlessly avoiding the basic humanitarian need to eliminate toy-sized Hitlers (many of whom serve at the pleasure of Western powers) like Gaddafi- is returning home to roost. The coming storm of refugee, economic, security and energy problems for the whole Europe-North Africa region, and beyond, is a clear proof of this. Exactly the same applies to meeting the nested challenges of feeding humanity and creating sustained employment within resource and ecological limits, that is within a set of sometimes clear – and often growing – constraints and limits. Time is short, and the heavy weight of avoided and ignored problems over several decades, the ultimate in laisser faire, shows that finally action is the only choice. COPYRIGHT ANDREW MCKILLOP 2011 – Andrew McKillop is guest writer for 21st Century Wire. He has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO. -