"Ecstasy of Empire" Depression Started? Fannie and Freddie's Slimy Foreclosure Barons, Food Stamp Usage & "Richistan" Soars & Google-Verizon Sell Out

Are we just in the "Early Stages of a Depression?" I do not agree with any of these right-wing prescriptions that say we should cut back all spending on the lower classes and let the time spent in a deep, deep recession (Depression 2) work out the "system kinks." Right. Richie Riches can just bail out in their Gulfstreams for the duration and spend it on some nice beaches with an acquiescent slave population to bring the apertifs (while the rest of the population riot and starve - and blame each other for sinful behavior). Not me, and just take a look at his prescriptions (I particularly enjoy the mixing up of Friedmanism and the call for "reindustrialization" arising from the prior utilizing of Friedmanism). I've been calling this con game for a decade now and am not surprised in the least that it includes revoking Social Security and abolishing the rest of the skimpy safety net we have left after the Bush-Whacked Years in order to "cure" the economic mess that they made (emphasis marks added - Ed.).

In August 2006, Peter Schiff, president of Euro Pacific Capital, offered what many considered to be an outlier prognosis for the economy: The exuberance would end, real estate prices would crash back down to earth, and consumers would revert to saving from spending. In short, a deep recession was in the works.

As outlandish as he may have sounded at the time, he was right. Four years and the worst recession since the Great Depression later, Schiff stands alone again with a bleaker diagnosis for the economy: an inflationary depression. In an interview, Schiff, president and chief global strategist of Euro Pacific Capital, a candidate for U.S. Senate in Connecticut, and author of the new book How an Economy Grows and Why It Crashes, said he thinks the government's policies - massive fiscal stimulus and a zero interest-rate policy -- have put the U.S. on a track for a collision course.

As such, to protect one's wealth, Schiff recommends divesting U.S. assets and dollar-denominated debt in favor of emerging markets. He likes natural resources economies like Australia, Norway, and Canada. Companies like Rio Tinto (NYSE: RTP) or BHP Billiton (NYSE: BHP) are examples of companies that offer exposure to natural resources economies.

. . . Here is an edited transcript of our conversation.

Jennifer Schonberger: What's your take on the state of the economy now?

Peter Schiff: We're in the early stages of a depression now. It's going to be a horrific experience for average Americans who are going to watch their standard of living plunge. The cost of living is going to escalate dramatically. We are going to see soaring prices for the basic necessities of life, like energy, clothing, and other things. Education and health-care costs are going to continue to spiral out of control. Millions of more Americans are going to lose their jobs, and all of us are going to lose our freedoms and our rights. As the government gets bigger, it tries to end the crisis; but its policies are creating, perpetuating, and making it worse.

The sad fact is these policies are going to wipe out the middle class. They're going to wipe out the poor; they're going to wipe out retirees. Accumulated savings is going to be blown. There is no economic recovery. All we did is spend more borrowed money. We dug ourselves into a deeper hole, and now we're in even more trouble than before Obama ascended to the presidency.

Schonberger: You've got the new book out on how an economy grows and why it crashes, and as you noted, you feel that this recovery is "fake." Certainly, it's slowing down as the stimulus is beginning to fade. How do we revive the economy for real growth and create jobs?

Schiff: We have to stop stimulating. We have to shrink the government and cut government spending dramatically. The reason the economy is so screwed up is because government regulations and subsidies have created a slowing economy. They have prevented market forces from operating the way they need to be. They have prevented an efficient allocation of resources. We need to rebuild our manufacturing base. We need to reindustrialize. We can't do that without the resources, without the savings, without the investment. They've created a nation of spenders, speculators, and consumers, and they've destroyed the savers, producers, and the investing class that built this country. We're moving from a market-based economy to essentially a planned economy. We're abandoning capitalism and embracing socialism. That's a recipe for disaster.

What? And now you understand how the Limpboys and Becktd-ups of that world confuse a fear of future socialism with the present real fear of capitalism gone wild (and destroying the economic universe). They've been programmed for years just awaiting the opportunity to drop these "gems" from above.

Paul Craig Roberts as usual rides in on his white horse to tell us more about his dislike of the Empire that America has become following many of his own earlier Raygun Era prescriptions about enriching the rich, letting the wastes trickle down, and abolishing the safety net as being too "socialistic" for the Land of the Free (also explaining the "mystery of the Federal Reserve"). Too bad that he turned against his own words and has had to make enemies among his former cohorts. Many people question his sincerity, but I don't. He is absolutely clear in his mind that he was right all along, and bear with reading him a little while. You'll start to see the light as well. (!) Of course, Paul Krugman, Joe Stiglitz and Dean Baker tell a different story - but never mind them. (Emphasis marks (as usual) are added - Ed.)

The Ecstasy of Empire: How Close Is America’s Demise? Without a revolution, Americans are history. The United States is running out of time to get its budget and trade deficits under control. Despite the urgency of the situation, 2010 has been wasted in hype about a non-existent recovery. As recently as August 2 Treasury Secretary Timothy F. Geithner penned a New York Times column, “Welcome to the Recovery.”

As John Williams (shadowstats.com) has made clear on many occasions, an appearance of recovery was created by over-counting employment and undercounting inflation. Warnings by Williams, Gerald Celente, and myself have gone unheeded, but our warnings recently had echos from Boston University professor Laurence Kotlikoff and from David Stockman, who excoriated the Republican Party for becoming big spending Democrats.

It is encouraging to see a bit of realization that, this time, Washington cannot spend the economy out of recession. The deficits are already too large for the dollar to survive as reserve currency, and deficit spending cannot put Americans back to work in jobs that have been moved offshore. However, the solutions offered by those who are beginning to recognize that there is a problem are discouraging. Kotlikoff thinks the solution is massive Social Security and Medicare cuts or massive tax increases or hyperinflation to destroy the massive debts.

Perhaps economists lack imagination, or perhaps they don’t want to be cut off from Wall Street and corporate subsidies, but Social Security and Medicare are insufficient at their present levels, especially considering the erosion of private pensions by the dot com, derivative and real estate bubbles. Cuts in Social Security and Medicare, for which people have paid 15% of their earnings all their life, would result in starvation and deaths from curable diseases.

Tax increases make even less sense. It is widely acknowledged that the majority of households cannot survive on one job. Both husband and wife work and often one of the partners has two jobs in order to make ends meet. Raising taxes makes it harder to make ends meet--thus more foreclosures, more food stamps, more homelessness. What kind of economist or humane person thinks this is a solution?

Duh, teh tax increases on those above $250,000: homelessness?

Ah, but we will tax the rich. The usual idiocy. The rich have enough money. They will simply stop earning. Let’s get real. Here is what the government is likely to do. Once the Washington idiots realize that the dollar is at risk and that they can no longer finance their wars by borrowing abroad, the government will either levy a tax on private pensions on the grounds that the pensions have accumulated tax-deferred, or the government will require pension fund managers to purchase Treasury debt with our pensions. This will buy the government a bit more time while pension accounts are loaded up with worthless paper.

Our pensions? He must be talking about those still-solvent government pensions of which he has a big bite? Now, he's really afraid.

The last Bush budget deficit (2008) was in the $400-500 billion range, about the size of the Chinese, Japanese, and OPEC trade surpluses with the US. Traditionally, these trade surpluses have been recycled to the US and finance the federal budget deficit. In 2009 and 2010 the federal deficit jumped to $1,400 billion, a back-to-back trillion-dollar increase. There are not sufficient trade surpluses to finance a deficit this large. From where comes the money?

Just now he's starting to get really worried?

The answer is from individuals fleeing the stock market into “safe” Treasury bonds and from the bankster bailout, not so much the TARP money as the Federal Reserve’s exchange of bank reserves for questionable financial paper such as subprime derivatives. The banks used their excess reserves to purchase Treasury debt. These financing maneuvers are one-time tricks. Once people have fled stocks, that movement into Treasuries is over. The opposition to the bankster bailout likely precludes another. So where does the money come from the next time?

The Treasury was able to unload a lot of debt thanks to “the Greek crisis,” which the New York banksters and hedge funds multiplied into “the euro crisis.” The financial press served as a financing arm for the US Treasury by creating panic about European debt and the euro. Central banks and individuals who had taken refuge from the dollar in euros were panicked out of their euros, and they rushed into dollars by purchasing US Treasury debt.

This movement from euros to dollars weakened the alternative reserve currency to the dollar, halted the dollar’s decline, and financed the massive US budget deficit a while longer. Possibly the game can be replayed with Spanish debt, Irish debt, and whatever unlucky country swept in by the thoughtless expansion of the European Union. But when no countries remain that can be destabilized by Wall Street investment banksters and hedge funds, what then finances the US budget deficit?

The only remaining financier is the Federal Reserve. When Treasury bonds brought to auction do not sell, the Federal Reserve must purchase them. The Federal Reserve purchases the bonds by creating new demand deposits, or checking accounts, for the Treasury. As the Treasury spends the proceeds of the new debt sales, the US money supply expands by the amount of the Federal Reserve’s purchase of Treasury debt.

Do goods and services expand by the same amount? Imports will increase as US jobs have been offshored and given to foreigners, thus worsening the trade deficit. When the Federal Reserve purchases the Treasury’s new debt issues, the money supply will increase by more than the supply of domestically produced goods and services. Prices are likely to rise.

How high will they rise? The longer money is created in order that government can pay its bills, the more likely hyperinflation will be the result.

The economy has not recovered. By the end of this year it will be obvious that the collapsing economy means a larger than $1.4 trillion budget deficit to finance. Will it be $2 trillion? Higher?

Whatever the size, the rest of the world will see that the dollar is being printed in such quantities that it cannot serve as reserve currency. At that point wholesale dumping of dollars will result as foreign central banks try to unload a worthless currency.

The collapse of the dollar will drive up the prices of imports and offshored goods on which Americans are dependent. Wal-Mart shoppers will think they have mistakenly gone into Neiman Marcus.

Domestic prices will also explode as a growing money supply chases the supply of goods and services still made in America by Americans.

The dollar as reserve currency cannot survive the conflagration. When the dollar goes the US cannot finance its trade deficit. Therefore, imports will fall sharply, thus adding to domestic inflation and, as the US is energy import-dependent, there will be transportation disruptions that will disrupt work and grocery store deliveries. Panic will be the order of the day.

Will farms will be raided? Will those trapped in cities resort to riots and looting? Is this the likely future that “our” government and “our patriotic” corporations have created for us?

To borrow from Lenin, “What can be done?”

Gotcha!!!! (Who'da thunk he'd be quoting Lenin?) Lenin probably.

Here is what can be done. The wars, which benefit no one but the military-security complex and Israel’s territorial expansion, can be immediately ended. This would reduce the US budget deficit by hundreds of billions of dollars per year. More hundreds of billions of dollars could be saved by cutting the rest of the military budget, which in its present size, exceeds the budgets of all the serious military powers on earth combined.

US military spending reflects the unaffordable and unattainable crazed neoconservative goal of US Empire and world hegemony. What fool in Washington thinks that China is going to finance US hegemony over China?

The only way that the US will again have an economy is by bringing back the offshored jobs. The loss of these jobs impoverished Americans while producing over-sized gains for Wall Street, shareholders, and corporate executives. These jobs can be brought home where they belong by taxing corporations according to where value is added to their product. If value is added to their goods and services in China, corporations would have a high tax rate. If value is added to their goods and services in the US, corporations would have a low tax rate.

This change in corporate taxation would offset the cheap foreign labor that has sucked jobs out of America, and it would rebuild the ladders of upward mobility that made America an opportunity society.

Fat chance of this, huh? Nice patsy suggestion though. Sounds great! (Calling Lee Harvey Oswald . . . .)

If the wars are not immediately stopped and the jobs brought back to America, the US is relegated to the trash bin of history. Obviously, the corporations and Wall Street would use their financial power and campaign contributions to block any legislation that would reduce short-term earnings and bonuses by bringing jobs back to Americans. Americans have no greater enemies than Wall Street and the corporations and their prostitutes in Congress and the White House.

So Obama is shit. Right. Because he still employs and is following orders from: The NeoCons! Is this getting clearer yet cause it will soon?

The neocons allied with Israel, who control both parties and much of the media, are strung out on the ecstasy of Empire. The United States and the welfare of its 300 million people cannot be restored unless the neocons, Wall Street, the corporations, and their servile slaves in Congress and the White House can be defeated. Without a revolution, Americans are history.

And I'm guessing that Petraeus (or McCain again) are not allied with the NeoCons, and thus are the perfect candidates to succeed Obama's Screwups! But that 's just a guess. Scared yet? You should be. Just don't panic yet. There's plenty of time - several weeks at least! And the vote counting will leave you breathless on Election Night. I know I'll be working at the polls. On another front, do you know what the housing market is like now? Do you care about its future? Okay, not if you're already homeless, but some are not. Yet. And be glad you don't live in Florida (or any of the other "fleecing" states). (Emphasis marks added - Ed.)

Fannie and Freddie's Foreclosure Barons

How the federal housing agencies and bailed-out banks are helping shady lawyers make millions by pushing families out of their homes.

From Mother Jones:

LATE ONE NIGHT IN February 2009, Ariane Ice sat poring over records on the website of Florida's Palm Beach County. She'd been at it for weeks, forsaking sleep to sift through thousands of legal documents. She and her husband, Tom, an attorney, ran a boutique foreclosure defense firm called Ice Legal [1]. (Slogan: "Your home is your castle. Defend it.") Now they were up against one of Florida's biggest foreclosure law firms [2]: Founded by multimillionaire attorney David J. Stern, it controlled one-fifth of the state's booming market in foreclosure-related services.

Ice had a strong hunch that Stern's operation was up to something, and that night she found her smoking gun. It involved something called an "assignment of mortgage," the document that certifies who owns the property and is thus entitled to foreclose on it. Especially these days, the assignment [3] is key evidence in a foreclosure case: With so many loans having been bought, sold, securitized [4], and traded, establishing who owns the mortgage is hardly a trivial matter. It frequently requires months of sleuthing in order to untangle the web of banks, brokers, and investors, among others. By law, a firm must execute (complete, sign, and notarize) an assignment before attempting to seize somebody's home.

A Florida notary's stamp is valid for four years, and its expiration date is visible on the imprint. But here in front of Ice were dozens of assignments notarized with stamps that hadn't even existed until months - in some cases nearly a year — after the foreclosures were filed. Which meant Stern's people were foreclosing first and doing their legal paperwork later. In effect, it also meant they were lying to the court — an act that could get a lawyer disbarred or even prosecuted. "There's no question that it's pervasive," says Tom Ice of the backdated documents — nearly two dozen of which were verified by Mother Jones. "We've found tons of them."

This all might seem like a legal technicality, but it's not. The faster a foreclosure moves, the more difficult it is for a homeowner to fight it — even if the case was filed in error. In March, upon discovering that Stern's firm had fudged an assignment of mortgage in another case, a judge in central Florida's Pasco County dismissed the case with prejudice [5] — an unusually harsh ruling that means it can never again be refiled. "The execution date and notarial date," she wrote in a blunt ruling, "were fraudulently backdated, in a purposeful, intentional effort to mislead the defendant and this court."

Stern has made a fortune foreclosing on homeowners. He owns a $15 million mansion, four Ferraris, and a 130-foot yacht. More often than not in uncontested cases, missing or problematic documents simply go overlooked. In Florida, where foreclosure cases must go before a judge (some states handle them as a bureaucratic matter), dwindling budgets and soaring caseloads have overwhelmed [6] local courts. Last year, the foreclosure dockets of Lee County in southwest Florida became so clogged that the court initiated rapid-fire hearings lasting less than 20 seconds per case — "the rocket docket [7]," attorneys called it. In Broward County, the epicenter of America’s housing bust [8], the courthouse recently began holding foreclosure hearings in a hallway, a scene that local attorneys call the "new Broward Zoo." "The judges are so swamped with this stuff that they just don't pay attention," says Margery Golant [9], a veteran Florida foreclosure defense lawyer. "They just rubber-stamp them."

But the Ices had uncovered what looked like a pattern, so Tom booked a deposition with Stern's top deputy, Cheryl Samons, and confronted her with the backdated documents — including two from cases her firm had filed against Ice Legal's clients. Samons, whose counsel was present, insisted that the filings were just a mistake. She refused to elaborate, so the Ices moved to depose the notaries and other Stern employees whose names were on the evidence. On the eve of those depositions, however, the firm dropped foreclosure proceedings against the Ices' clients.

It was a bittersweet victory: The Ices had won their cases, but Stern's practices remained under wraps. "This was done to cover up fraud," Tom fumes. "It was done precisely so they could try to hit a reset button and keep us from getting the real goods." Backdated documents, according to a chorus of foreclosure experts, are typical of the sort of shenanigans practiced by a breed of law firms known as "foreclosure mills." While far less scrutinized than subprime lenders or Wall Street banks, these firms undermine efforts by government and the mortgage industry to put struggling homeowners back on track at a time of record foreclosures. (There were 2.8 million foreclosures [10] in 2009, and 3.8 million [11] are projected for this year.)

The mills think "they can just change things and make it up to get to the end result they want, because there's no one holding them accountable," says Prentiss Cox, a foreclosure expert at the University of Minnesota Law School. "We've got these people with incentives to go ahead with foreclosures and flood the real estate market."

And, of course, I'm sure you already know that Food Stamp Use Hit Record 40.8m in May.

Bloomberg News

August 5, 2010

WASHINGTON — The number of Americans who are receiving food stamps rose to a record 40.8 million in May as the jobless rate hovered near a 27-year high, the government reported yesterday.Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases jumped 19 percent from a year earlier and increased 0.9 percent from April, the US Department of Agriculture said in a statement on its website.Participation has set records for 18 straight months.Unemployment in July may have reached 9.6 percent, according to a Bloomberg News survey of analysts in advance of the Aug. 6 release of last month’s rate. Unemployment was 9.5 percent in June, near levels last seen in 1983.An average of 40.5 million people, more than an eighth of the population, will get food stamps each month in the year that began Oct. 1, according to White House estimates.The figure is projected to rise to 43.3 million in 2011.

And then there's always that final question (from that stellar source - The Wall Street Journal (WSJ)!). (Emphasis marks added - Ed.)

Do the Rich Need the Rest of America?

By Robert Frank As stocks boomed, the wealthy bounced back. And while the Main Street economy was wracked by high unemployment and the real-estate crash, the wealthy – whose financial fates were more tied to capital markets than jobs and houses – picked themselves up, brushed themselves off and started buying luxury goods again.

Who knows what the next few months and years will bring. But one thing seems clear: the economic fate of Richistan seems increasingly separate from the fate of the U.S.

Some argue that the decoupling has gone even further. Michael Lind, a policy director for the Economic Growth Program at the New American Foundation, argues in Salon that the American rich no longer need the rest of America.

He says the wealthy increasingly earn their fortunes with overseas labor, selling to overseas consumers and managing financial transactions that have little to do with the rest of the U.S. “A member of the elite can make money from factories in China that sell to consumers in India, while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”

Shades of the Nixons (and the Reagans and the Bushes and the . . . ).

He adds: If the American rich increasingly do not depend for their wealth on American workers and American consumers or for their safety on American soldiers or police officers, then it is hardly surprising that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people. The rich don’t need the rest anymore.

Or have I said this too many times already?

Some would argue this is a vast overstatement. The U.S. remains the largest consumer market in the world and still matters to Bill Gates, Warren Buffett and Lloyd Blankfein alike. The American wealthy benefit greatly from the country’s legal system and business transparency, not to mention its armed forces. Yet the increasingly global elite do seem to be forming something of their own financial culture, unattached to any single nation or set of rules, and increasingly free to move their money and resources (and tax dollars) wherever they are treated best.

Rather than having a second home in Richistan, an increasing number of rich people seem to be moving their money there full time.

Do you think the rest of America matters anymore to the rich?

And Eric Prince just moved to Abu Dhabi - following Halliburton's to Dubai? No good reasons there, kids. Pay no attention to the shadowy men behind the curtain. Not to mention the ultimate plans of Google and many others (emphasis marks added - Ed.).

Google-Verizon Pact: It Gets Worse

So Google and Verizon went public today with their "policy framework" -- better known as the pact to end the Internet as we know it.

News of this deal broke this week, sparking a public outcry that's seen hundreds of thousands of Internet users calling on Google to live up to its "Don't Be Evil" pledge.

But cut through the platitudes the two companies (Googizon, anyone?) offered on today's press call, and you'll find this deal is even worse than advertised.

The proposal is one massive loophole that sets the stage for the corporate takeover of the Internet. Real Net Neutrality means that Internet service providers can't discriminate between different kinds of online content and applications. It guarantees a level playing field for all Web sites and Internet technologies. It's what makes sure the next Google, out there in a garage somewhere, has just as good a chance as any giant corporate behemoth to find its audience and thrive online.

What Google and Verizon are proposing is fake Net Neutrality. You can read their framework for yourself here or go here to see Google twisting itself in knots about this suddenly "thorny issue."

I think one commenter had it about right:

So that's how the slimeballs circumvent the First Amendment . . . "The First Amendment (Amendment I) to the United States Constitution is part of the Bill of Rights. The amendment prohibits the making of any law "respecting an establishment of religion", impeding the free exercise of religion, infringing on the freedom of speech, infringing on the freedom of the press, interfering with the right to peaceably assemble or prohibiting the petitioning for a governmental redress of grievances."

Begging the question - has the day come to break our contracts with Verizon in protest? Yikes! Are we ready to take it to the streets yet?

Just asking . . . . Suzan _______________