Jeffrey Epstein: His Accomplices, His Victims, His Powerful and Possibly Official Entanglements

"Yet, as this report will show, all of these rings — and more — were connected to the same network that involved key figures linked to the Reagan White House and linked to Roy Cohn — revealing the true scope of the sordid sexual blackmail operations and sex rings that involved the trafficking of children within the U.S. and even in Central America for their exploitation by dangerous and powerful pedophiles in the United States.

Appalling for both the villainous abuse of children itself and the chilling implications of government by blackmail, this tangled web of unsavory alliances casts a lurid light on the political history of the United States from the Prohibition Era right up to the present day and the Age of Trump, a fact made increasingly clear as more and more information comes to light in relation to the Jeffrey Epstein case."

Whitney Webb, Too Big to Fail: Government By Blackmail


"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Regulatory Capture: The Banks and the System That They Have Corrupted

"But the impotence one feels today— an impotence we should never consider permanent— does not excuse one from remaining true to oneself, nor does it excuse capitulation to the enemy, what ever mask he may wear.  Not the one facing us across the frontier or the battle lines, which is not so much our enemy as our brothers’ enemy, but the one that calls itself our protector and makes us its slaves.  The worst betrayal will always be to subordinate ourselves to this Apparatus, and to trample underfoot, in its service, all human values in ourselves and in others."

Simone Weil


"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not.  And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions.  And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else...

If TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car... I think it's inevitable. I mean, I don't think how you can look at all the incentives that were in place going up to 2008 and see that in many ways they've only gotten worse and come to any other conclusion."

Neil Barofsky


"Written by Carmen Segarra, the petite lawyer turned bank examiner turned whistleblower turned one-woman swat team, the 340-page tome takes the reader along on her gut-wrenching workdays for an entire seven months inside one of the most powerful and corrupted watchdogs of the powerful and corrupted players on Wall Street – the Federal Reserve Bank of New York.

The days were literally gut-wrenching. Segarra reports that after months of being alternately gas-lighted and bullied at the New York Fed to whip her into the ranks of the corrupted, she had to go to a gastroenterologist and learned her stomach lining was gone.

She soldiered through her painful stomach ailments and secretly tape-recorded 46 hours of conversations between New York Fed officials and Goldman Sachs. After being fired for refusing to soften her examination opinion on Goldman Sachs, Segarra released the tapes to ProPublica and the radio program This American Life and the story went viral from there...

In a nutshell, the whoring works like this. There are huge financial incentives to go along, get along, and keep your mouth shut about fraud. The financial incentives encompass both the salary, pension and benefits at the New York Fed as well as the high-paying job waiting for you at a Wall Street bank or Wall Street law firm if you show you are a team player.

If the Democratic leadership of the House Financial Services Committee is smart, it will reopen the Senate’s aborted inquiry into the New York Fed’s labyrinthine conflicts of interest in supervising Wall Street and make removing that supervisory role a core component of the Democrat’s 2020 platform. Senator Bernie Sanders’ platform can certainly be expected to continue the accurate battle cry that 'the business model of Wall Street is fraud.'"

Pam Martens, Wall Street on Parade

This is a good example of both regulatory capture and the credibility trap that co-opts those who benefits from the system as it is, even if it is by turning a blind eye and saying nothing, going along to get along, taking the 'bullet or the bribe.'

Never assume that because a person, such as media analyst or reporter, is highly paid that they are somehow beyond the temptation to violate their trust.  Quite the contrary.   They do not believe that change can come because they have anaesthetized their integrity as a matter of convenience.  And when called upon, they will support and defend and excuse the system as it is, at first by their inaction, and then by their willing cooperation.

The corruption takes a person one seemingly innocuous decision and event at a time.  their separate their fingers, one by one, until they finally let their souls slip through and fall— and they belong to the darkness of this world.  And at the end of the day, for what?   A little more money, the patina of prestige and superiority, access to power?

Who then can stand against the world, when power and money are assumed and created out of nothing, and distributed in an unjust, interconnected system of favors and services, without duty and without honor?

And so those captured in this system excuse and accept their own part in it, for their personal benefit and professional ego and advancement, that heady feeling of sophistication and acceptance by the worldly.

It's an old story  It is so old that at times it seems as if distant, just a story from another time— a fable.   But it is real.  It is the very fundamental core of this reality.  It is the continuing struggle.

It is, in the end, the only thing that matters, the only triumph or personal tragedy.  It is the only consequence that you will dwell upon, when the husk is stripped bare, and you yourself face the only certainty in this world alone, and as your truly are.

Bill Binney Assesses the DNC Hack and the Mueller Indictments

"But the impotence one feels today— an impotence we should never consider permanent— does not excuse one from remaining true to oneself, nor does it excuse capitulation to the enemy, what ever mask he may wear.

Whether the mask is labeled fascism, democracy, or dictatorship of the proletariat, our great adversary remains The Apparatus— the bureaucracy, the police, the military. Not the one facing us across the frontier or the battle lines, which is not so much our enemy as our brothers’ enemy, but the one that calls itself our protector and makes us its slaves. No matter what the circumstances, the worst betrayal will always be to subordinate ourselves to this Apparatus, and to trample underfoot, in its service, all human values in ourselves and in others."

Simone Weil

We live in an age of hypocrisy, where the narratives flatter us, and relieve us of the problem of thinking.

Power, control and money—  the bullet or the bribe.

Remembering the 50th Anniversary of the Execution of Martin Luther King

"And some of us who have already begun to break the silence of the night have found that the calling to speak is often a vocation of agony, but we must speak.  We must speak with all the humility that is appropriate to our limited vision, but we must speak."

Martin Luther King, A Time to Break the Silence, Riverside Church, 4 April 1967


"It is a dark day in our nation when high-level authorities will seek to use every method to silence dissent.  But something is happening, and people are not going to be silenced."

Martin Luther King, 'Why I Am Opposed to the War in Vietnam',  Riverside Church, 30 April 1967


"But if not, I will not bow, and God grant that we will never bow, before the gods of evil."

Martin Luther King,  But If Not, Ebenezer Baptist Church,  5 November 1967


"We've got some difficult days ahead. But it really doesn't matter with me now, because I've been to the mountaintop.  And I don't mind.  Like anybody, I would like to live a long life — longevity has its place.

But I'm not concerned about that now.  I just want to do God's will.  And He's allowed me to go up to the mountain.  And I've looked over, and I've seen the Promised Land. I may not get there with you.  But I want you to know tonight, that we, as a people, will get to the promised land.

So I'm happy, tonight. I'm not worried about anything, I'm not fearing any man.  Mine eyes have seen the glory of the coming of the Lord."

Martin Luther King, Last Public Statement, 3 April 1968

The next day Dr. Martin Luther King, Jr. was murdered in Memphis, Tennessee, 4 April 1968, exactly one year to the day after speaking out against the Vietnam War in his sermon, A Time To Break the Silence.

This was not an isolated action—  this was a message, and one that presidential candidate Robert Kennedy refused to obey.  And it has had a transforming effect on American political consciousness.

"He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, 'Why don’t you do the things we thought you stood for?' 

Obama turned sharply and said, 'Don’t you remember what happened to Martin Luther King Jr.?' That’s a quote, and that’s a very revealing quote."

Ray McGovern, former CIA analyst for Russian affairs


"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Are we not exceptional?   Are you not entertained?

"Those who are at present so eager to be reconciled with the world at any price must take care not to be reconciled with it under this particular aspect: as the nest of The Unspeakable. This is what too few are willing to see….

Shall this be the substance of your message?  Be human in this most inhuman of ages; guard the image of man for it is the image of God.  You agree?  Good. Then go with my blessing. But I warn you, do not expect to make many friends."

Thomas Merton, Raids on the Unspeakable


"Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you... This is the way in which he conceals from you the kind of work to which he is putting you; he promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind.  He scoffs at times gone by; he scoffs at every institution which reveres them.

He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J.H.Newman, The Antichrist

I will not bow, and God grant that we will never bow, before the gods of evil.

And Now Comes the Internet Censorship

"A credibility trap is when the regulatory, political and/or informational functions of a society have been so compromised by a long term, generalcorruption that they cannot address any meaningful reform without implicating, at least incidentally, themselves.  The status quo has at least tolerated the corruption and fraud, if not profited directly from it, and most likely continues to do so.  The power brokers have become susceptible to various forms of blackmail.  And so a failed policy is sustained long after it is seen to have failed, because admitting failure is not an option for those who hold positions of advantage and power."

Jesse


"One of the primary characteristics of narcissists is their exaggerated sense of entitlement.  It's hardly surprising then that so many politicians somehow think they deserve to game the system.  After all, from their self-interested perspective, isn't that what the system is for?  In their heavily self-biased opinion, if they want something, by rights it should be their's.  So, nothing if not opportunistic, they take from public and private coffers alike whatever they think they can get away with. And given their grandiose sense of self, they're inclined to believe they can get away with most anything."

Leon F. Seltzer


"Representative institutions no longer represent voters. Instead, they have been short-circuited, steadily corrupted by an institutionalized system of bribery that renders them responsive to powerful interest groups whose constituencies are the major corporations and wealthiest Americans. The courts, in turn, when they are not increasingly handmaidens of corporate power, are consistently deferential to the claims of national security."

Sheldon Wolin, Inverted Totalitarianism


"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, The Quiet Coup


"On Wall Street he and a few others—how many?— three hundred, four hundred, five hundred?—had become precisely that—  Masters of the Universe."

Tom Wolfe, Bonfire of the Vanities

The pain of remaining human—  when the increase in wickedness unleashes the age old enemy, and makes the love of most grow cold.

How does the status quo deal with an erosion of confidence in their actions in the late stage of a cycle of looting and abuse, caught as they may be in a credibility trap?

This is the point where we seem to be, when the facade of benevolent justice starts slipping away, and the looting and self-dealing becomes all too visible, on brazen display in scandal after scandal,  special privileges and bailouts, and historic inequality.

And if there is an erosion of confidence, it surely cannot be due to anything that the best among us have done.  They are wise and benevolent, heavily burdened by the task of guiding the public.

So there must be some foreign enemy or internal dissidents, actively trying to  cause people to lose confidence in their rule.

When you run out of credible answers, one solution is to stop people from asking the questions.   An offer of the bullet or the bribe is often effective for those with significant profiles and platforms.  It is being used now more than you may know.   The pressure on the well-informed to be silent is presently palpable.  The quiet sacrifice of many people of conscience is under-appreciated.

A broader and more general use of censorship is sufficient for the rest.   Concentration of mainstream media ownership in a few powerful hands is soon followed by increased and unilateral censorship powers over the wider variety of remaining independent sources.

There is a case to be made for restricting certain types of public speech, especially that which incites the public to violent prejudice. But that case must be narrow, highly transparent, and exceptional and infrequent. Unfortunately in times of general corruption measured restraint becomes abusive, widely and secretly used to silence any form of truth-telling and dissent from the established narratives and powers.

And it should be noted that in the cases of the most extreme examples of hate speech in history, their power was not in their eloquence, or the powerful logic of their arguments, of which they had neither.  If we look at them now their language is crude and their ideas vulgar, false, and repugnant..

No, their power was that no one was able to speak out freely against them, to dissent from their obvious misstatements and errors, that were repeated endlessly without anyone who could effectively stand against them.  And the people followed those lies into the abyss.

The Intercept
First France, Now Brazil Plan to Empower the Government to Censor the Internet
By Glenn Greenwald

Yesterday afternoon, the official Twitter account of Brazil’s Federal Police (its FBI equivalent) posted an extraordinary announcement. The bureaucratically nonchalant tone it used belied its significance. The tweet, at its core, purports to vest in the federal police and the federal government that oversees it the power to regulate, control and outright censor political content on the internet that is assessed to be “false,” and to “punish” those who disseminate it. The new power would cover both social media posts and entire websites devoted to politics...

Tellingly, these police officials vow that they will proceed to implement the censorship program even if no new law is enacted. They insist that no new laws are necessary by pointing to a pre-internet censorship law enacted in 1983 – during the time Brazil was ruled by a brutal military dictatorship that severely limited free expression and routinely imprisoned dissidents...

The move to obtain new censorship authority over the internet by Brazilian police officials would be disturbing enough standing alone given Brazil’s status as the world’s fifth most populous country and second-largest in the hemisphere. But that Brazil’s announcement closely follows very similar efforts unveiled last week by French President Emmanuel Macron strongly suggests a trend in which government are now exploiting concerns over “Fake News” to justify state control over the internet...

Beyond having one’s political content forcibly suppressed by the state, disseminators of “Fake News” could face fines of many millions of dollars. Given Macron’s legislature majority, “there is little doubt about its ability to pass,” the Atlantic reports.

Both Brazil and France cited the same purported justification for obtaining censorship powers over the internet: namely, the dangers posed by alleged Russian interference in the 2016 U.S. election. But no matter how significant one views Russian involvement in the U.S. election, it is extremely difficult to see how – beyond rank fear-mongering – that could justify these types of draconian censorship powers by Brasília and Paris...

So for those who are comfortable with the current French leader overseeing a censorship program in conjunction with courts to censor “Fake News” from the internet, do you trust the Trump administration to make those determinations? Do you trust Marine Le Pen?...

Read the entire essay at The Intercept here.

Given the growth of intolerance, a surprisingly large segment of the public will not only tolerate, but may welcome censorship.  They wish to escape the pain of thinking, of being human.  They wish to smash all the mirrors that reflect their growing inhumanity.

"It seems that under the overwhelming impact of rising power, humans are deprived of their inner independence and, more or less consciously, have given up establishing an autonomous position toward the emerging circumstances.

The fact that the foolish person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with him as a person, but with slogans, catchwords, and the like that have taken possession of him.

He is under a spell, blinded, misused, and abused in his very being. Having thus become a mindless tool, the foolish person will also be capable of any evil and at the same time incapable of seeing that it is evil. This is where the danger of diabolical misuse lurks, for it is this that can once and for all destroy human beings.”

Dietrich Bonhoeffer


“A true opium of the people is a belief in nothingness after death— the huge solace of thinking that for our betrayals, greed, cowardice, and murders that we are not going to be judged.”

Czesław Miłosz

Thomas Frank Interviews 7 and 8 with Paul Jay on the Real News Network

Here is the two part continuation of the interviews on the Real News Network between Paul Jay and Thomas Frank.

Frank has the Clintons nailed, and continues to reiterate the high points of how they led the Democratic Party into an historic betrayal of their base, the working people.  For money and power.

However, he is far, far too kind, almost to the point of what can be called a willful bias, to Barack Obama.

I am sorry, but can it be more obvious that Obama was a bait-and-switch brand for the oligarch class?

He seems to come back to a more realistic assessment in the second segment.  But he just cannot bring himself to draw the conclusion that Obama was not some hapless dupe, a victim of circumstance, but knew exactly what he was doing, and early on had made his choice of what or whom to serve.

It is very hard to assess motives to a series of actions.  Was it due to the bullet or the bribe?  Was it a foregone conclusion from the very first?  But at some point the circumstantial and particular evidence can become overwhelming.

He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, 'Why don’t you do the things we thought you stood for?' Obama turned sharply and said, “Don’t you remember what happened to Martin Luther King Jr.?” That’s a quote, and that’s a very revealing quote.

Ray McGovern

The Democrats love to blame those diabolically crafty Republicans, the evil and omnipresent Russians, the weakness of virtue in the face of implacable darkness.

But for a variety of reasons, the liberal intelligentsia cannot bring themselves to accept the fact that our first 'black president,' articulate, well-educated, and charismatic, for whatever reasons, quickly became a willing tool of the moneyed interests.  Paul Jay flat out says, 'Obama is too sacred to touch.'

And the 800 pound gorilla in the room, who is incredibly never mentioned, who was a phenomenon in the presidential primaries, is Bernie Sanders.  They did manage a passing nod to Elizabeth Warren, however.  Paul Jay kept trying to bring the conversation back to Obamas ongoing role in crushing the Sanders progressive wing of the Democrats, but Frank cannot help but run away from it, back to the more comfortable areas of liberal outrage like W.

There seems to be a lot of that going around, however.  The supporters of Trump are buying into his populist mystique, even in the face of overwhelming evidence that he is a long time friend of big money, albeit a much clumsier deceiver and liar. 

Ah the wonderful ironies of the credibility trap.  

And how easy it is to see the hypocrisy and expedient rationalizations of the other guys. Which is why we must examine our own souls first before we would seek to harshly criticize another.

Don't get me wrong. I find both Thomas Frank and Paul Jay to be absolutely spellbinding, and much more intelligent and articulate than myself. It is just what, a comfort, to see that even the professionals and highly talented have the same human foibles as ourselves.

Where will all this end, this tragic overreach by the rich and the powerful?  History and human nature both suggest that the truth cannot be admitted, and then faced and overcome, until one hits bottom.

I have embedded episode 7 here.   You can click on the link below this to go to the RAI site for episode 8 and presumably an episode 9 when it appears.





Click here for episode 8.

Here is a link to the Reality Asserts Itself series on the Real News Network.

The Dark Power Behind the Frauds and Financial Asset Bubbles - Whose Fool Are You?

"While everyone enjoys an economic party the long-term costs of a bubble to the economy and society are potentially great. They include a reduction in the long-term saving rate, a seemingly random distribution of wealth, and the diversion of financial human capital into the acquisition of wealth.

As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights. Whenever we do it, it is going to be painful, however.”

Larry Lindsey, Federal Reserve Governor, September 24, 1996 FOMC Minutes


“I recognise that there is a stock market bubble problem at this point, and I agree with Governor Lindsey that this is a problem that we should keep an eye on....We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it.”

Alan Greenspan, September 24, 1996 FOMC Minutes


"Where a bubble becomes so large as to pose a threat the entire economic system, the central bank may appropriately decide to use monetary policy to counteract a bubble, notwithstanding the effects that monetary tightening might have elsewhere in the economy.

But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability."

Alan Greenspan, December 5, 1996, Speech to the American Enterprise Institute


"It was incredible. It was distressing to me how simple and outrageous it was. It wasn't so complicated that you said, "Wow, at least they're smart in the way they're doing it." It was simple. It was brazen. The evidence of it was overwhelming. It's just that it hadn't been revealed to the public, and that's why could get away with it...

Over the past decade we've wanted to deregulate, and we've said, "Let's get government out of the business of looking at these issues, and permit industry to control itself, because we can trust them." Maybe that's been a very good thing in some ways.

One of the things that is eminently clear from our investigation is that all the compliance departments, all the self-regulation is nothing. They watched it, but they did nothing. So we've got to think this through, and it's not only the financial community. There are a lot of sectors where we have said self-regulation is the answer. We've got to think about it."

Eliot Spitzer, The Wall Street Fix, March 16, 2003

This is the same Larry Lindsey who was fired by G. W. Bush as his economic advisor for stating that the Iraq War could cost as much as 200 Billion dollars when Rumsfeld estimated less than 50 billion.

And of course this is the same Alan Greenspan who, after a personal visit from Treasury Secretary Robert Rubin, decided that maybe the stock market was not so exuberant after all, and let les bon temps rouler into the dot com bubble and bust.

Who can know why these bubbles happen?  Who can see them coming?  As Upton Sinclair noted, It is difficult to get a man to understand something, when his salary depends on his not understanding it.

And as for Spitzer, he was the target of a Federal investigation into the activities of a single high priced call girl, and was exposed for having sex with her.   And so he was publicly disgraced and taken out of play, as a professional courtesy to the Banks.  And a fine example to other would be reformers he was.

Neil Barofsky puts our current dilemma quite succinctly in this 2012 interview below.

"I was trained to be a government employee and to take my oath of office very seriously. But I wasn't really interested in their reindeer games. And I felt a real obligation and sense of duty to fulfill the oath that I took in Secretary Paulson's office on December 15th, 2008 to do the job that I was sent down there to do. But I wasn't really tempted with a big job on Wall Street. And frankly, if it meant getting a judgeship, compromising the job that I needed to do and was supposed to do, it just wasn't interesting to me.

When I had my incident with the assistant secretary that my deputy, who had come down from-- who's another former federal prosecutor, who did narcotics work, said to me, Kevin Puvalowski. And he said to me, 'Neil, you were just offered the bullet or the bribe, the gold or the lead.'

And what he was referring to was a society just like that, which was Colombia, back in the day when Pablo Escobar and the drug kingpins really controlled society. And what he was referring to is that basically to corrupt society Escobar would go to a magistrate or a police officer, police chief, a politician, and say, "You have two choices. You can either take this giant pile of money and do my bidding. Or you can get the lead, a bullet in your head."

And Kevin was joking that I just received the Washington white collar equivalent of the gold or the lead. And it was funny, at the time, but that's kind of what happens in a society where the rewards and incentives are, again, nobody's getting shot in the head thank goodness. But it's a breakdown of the system.

And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not. And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else.

Neil Barofsky in a 2012 interview with Bill Moyers

And once again the public institutions of justice are under assault because they are inconvenient to the oligarchs and their courtiers. And the pundit class and the media go along for the ride, because as so many professionals they are inclined to follow the money flowing into their pockets.

And the corruption slowly infects all. But those who stand firm to the end, who hold true to their oaths, will be saved.

Sounds corny, doesn't it?   Not us, we are exceptional— different.  What a fool believes. As Brother Andrew asked, "I am a fool for Christ. Whose fool are you?"

Know whom you serve, for you will be theirs in God's economy.

M2 Money Velocity Began Dying in 1997 And What That Means For Us

It is correct to say that money velocity does not do anything.  It does not do anything in the way that the speedometer on your car does not do anything.    But it is an important measurement, a ratio of the amount of money being created and it relationship to productive, organic growth in the economy.

And it is well known that money velocity peaked in 1997, and has been in a steady decline since then.  It is now at lows never seen before in the US economy.  It, like the implications of the long term stagnation of median household income, remains largely unremarked, and if noticed, excused away as unimportant.

Why is this?

Below is a recent article from Anthony Sanders of George Mason University that makes a good case that it has to do with the 'bubble economy' which began with the expansion of the money supply to promote housing ownership.

Tony is an expert on financial aspects of housing, among other things, and as you know I follow what he writes closely.  He knows more about these things than anyone that I know.  And he says what he means and means what he says, which is a sometimes neglected principle among mainstream economists these days.

But as I have a slightly different perspective on that period of time,  I would take this a step further and draw a admittedly broader, less specialized conclusion.   The article does not account for the massive tech bubble, which at the time was covered by the fig leaf of a 'new era internet economy,' giving it the name of the dot-com bubble, with which I happened to be intimately familiar.

Who can forget Chairman Greenspan's irrational exuberance speech which shanked the stock market in December of 1996.

Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past.

But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?

Alan Greenspan, The Challenge of Central Banking in a Democratic Society, 1996-12-05

As it turned out, Chairman Greenspan was blinded by ideology, as he himself admits years afterwards, never seeing a bubble that he didn't like.  But his successors have followed the same sorry route of feeding the financiers to the detriment of the broader economy.

The problem was not the mortgage credit bubble per se, but rather the policy bias towards managing and regulating the economy itself, with an aggressive expansion of the money supply under Alan Greenspan (remember the Y2K scare) and Treasury Secretary Robert Rubin, along with bubbles in the usual suspects, in this case the financialization of housing and the tremendous bubble in the equity markets.

Do you recall the Time Magazine cover from 15 February 1999?   The Committee To Save the World?

And how can we forget the Rubin doctrine of propping up the financial markets using the SP 500 futures before the fact, which he thought was cheaper than cleaning up the mess of a market crash after the fact.  Remember The Working Group, aka The Plunge Protection Team, housed within the Exchange Stabilization Act, that came out of the scarring experience of the Crash of 1987, which itself was a precursor to the woes created by weakly regulated, artificially exotic financial instruments and mispriced risks?

A crisis is a very effective mechanism for enabling the abuse of power.

And let us not forget the overturning of Glass-Steagall in a decades long campaign richly underwritten by the Wall Street Banks, and the infamous Gramm-Leach-Bliley Financial Services Modernization Act of 1999.

In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, 'This is a day we can celebrate as an American day' and that 'the Glass-Steagall law is no longer appropriate for the economy in which we live' and 'today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority' and 'This is a very good day for the United States.'

Columbia Journalism Review, Bill Clinton on Deregulation

One might say by way of analogy that Reagan made the nest, and Clinton laid the egg.  But both Bush II and Obama have nurtured this chimera economy along.  And we can have every expectation that the political establishment will continue to do so in the next presidency.

"It comes as a surprise to many people that, despite the fiasco at Citigroup and his role in causing the subprime mess, Rubin remains inside the circle at the White House. Nearly two decades after first migrating to Washington, he apparently is still calling the shots of U.S. financial and economic policy with the full support of President Barrack Obama.

Working through his favorite marionettes, Treasury Secretary Tim Geithner and Economic Policy Czar Larry Summers, most recently Rubin managed the defense of Wall Street following the great crisis. No matter what Secretary Geithner says or when he says it in public, you can be sure that those utterances have the full knowledge and approval of his handler Larry Summers and their common political owner and sponsor, Robert Rubin.

Chris Whalen, The Institutional Risk Analyst, 29 June 2010

The causes for this are debatable and many, and I have considered it here many times as the credibility trap,

What we have now, an economy based on artificial support market resulting in a series of asset bubbles and crashes, with a growing inequality in income distribution.  This is the natural outcome when a policy body decides to manage or 'stimulate' the economy by shoving freshly minted dollars top down through a weakly regulated, increasingly corrupt financial system whose outsized and largely unproductive profits act like a private tax on the real economy.  It enriches a few, and enervates the productive working class.

This is why I have said that until there is financial and political reform, there will be no sustainable recovery.  And the longer this continues, the more that the organic productivity of the economy will decline.  And the more socially explosive the situation may become.

"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population.   Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy.   These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

Charles Ferguson, Predator Nation

I have little expectation now that reform will come from within.  The power of the status quo is too great, and too prone to rewarding those who serve it, and silencing and impeding those who oppose it by progressive reform.

"'After dinner, 'Larry [Summers] leaned back in his chair and offered me some advice,' Ms. Warren writes. 'I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want.  But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas.  People — powerful people — listen to what they have to say.  But insiders also understand one unbreakable rule: They don’t criticize other insiders.'

I had been warned."

Elizabeth Warren, A Fighting Chance

How can we have missed this element of self-serving preservation of the status quo so broadly on display in the run up to our recent presidential election?

'Stimulus' in itself is no panacea.  It must be productive and targeted towards increasing aggregate demand within a healthy economy which distributes the rewards for productive efforts broadly amongst its participants.

Whether it is affordable housing, infrastructure project such as roads, bridges, and modern power grids, the general improvement of the environment,  or the expansion and improvement of those basic elements of a culture than lend value to peoples' lives, any project which can be considered stimulative can and will be turned into an unproductive boondoggle by a corrupt financial and political system.  They contaminate everything that they touch.

And so I continue to make the observation that significant financial and political reform are the sine qua non for a genuine economic recovery.

Doing more of the same may make no sense, may even seem neurotic. And if it seems to defy common sense, that is because it does.

But it has one very special thing going for it. It has been and still is richly rewarding to a small group of very powerful people, something which we have seen repeatedly throughout the developing world, and even in the gilded, boom and bust eras of this country before.

"The crash has laid bare many unpleasant truths about the United States...

Recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, The Quiet Coup, May 2009

Confounded Interest
Dying Money Velocity Began in 1995 with Massive Mortgage Credit Expansion

M2 Money Velocity (GDP/M2 Money Stock) peaked back in Q3 of 1997. And it has mostly gone down hill from there.  As of Q2 2016, M2 Money Velocity is at the lowest point in history.

Why?

One explanation for the decline in velocity is the decline in labor force participation since early 2000 when labor force participation peaked.  Fewer people participating in the labor force (as a percentage of the population) makes it more and more difficult to maintain velocity since GDP is lower despite the expansion of money.

Why is labor force participation declining? First, our population is aging and more and more people are retiring. Second, more and more students decided to attend and/or stay in school given the lousy jobs market.  Third, some people have just given up trying to find a job and would prefer to rely on the state for food, housing, healthcare, etc.

A closer look reveals some bad AND good news. Labor force participation for ages 25-54 has been declining since 2007 (but showing some improvement in 2016). On the other hand, LFP for ages 65 and above (many of whom were pushed back into the labor force as a result of the financial crisis and housing bubble burst) has been growing steadily since 2008.

Actually, the economic world turned before labor force participation peaked in early 2000 and M2 Money Velocity peaked in 1997.  A key economic indicator, core personal consumption expenditures YoY,  was above 4% in the early 1990s only to fall to around 2% around 1995 prompting the Clinton Administration to enact policies leading to a dramatic increase in mortgage credit (creating a credit bubble) as a stimulative measure. This was the Clinton National Homeownership Strategy: Partners in the American “Dream.” nhsdream2 That turned into a nightmare for millions of American families.

1995 was the beginning of the incredible housing credit bubble that catastrophically exploded in 2008.

Core personal consumption expenditures (cPCE) YoY sagged after 1989 and hit 2% by mid 1990s and has struggled to reach 2% on a consistent basis ever since. As a result, GDP has been compromised and the massive expansion of mortgage credit helped created a massive house price bubble which burst … and things have never been the same since.

And with the fall of the House of Usher cards, mortgage equity withdrawal has fallen as well (putting a damper on personal consumption expenditures.

Remember, housing is a consumption good (to serve as shelter), not a productive asset like a factory. Trying to create economic growth through housing is a poor choice. So much so that The Federal Reserve is left blowing asset bubbles instead of stimulating actual economic growth.

What Are Sanders and Obama Going To Discuss

Apparently President Obama and Senator Sanders are going to have an 'informal one-on-one meeting with no agenda' and no press today.

This presidential election has really framed up as an attempt at a popular revolt against a Big Money political establishment. And it is fascinating to watch.

Although the mainstream media keeps feigning astonishment, the broader public is clearly seeking two non-establishment candidate who, for better or worse, they think cannot be bought off by Big Money and the revolving door.

This meeting is an informal one with no set agenda.

Perhaps Obama will share the insight he allegedly had early in his Presidency about reformers as recounted by the ex-CIA whistleblower Ray McGovern.

"He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, Why don’t you do the things we thought you stood for? Obama turned sharply and said, “Don’t you remember what happened to Martin Luther King Jr.?” That’s a quote, and that’s a very revealing quote."

Ray McGovern

I am sure Obama was being flip.   They was no need to buy him because he was a well-crafted brand backed by Big Money from the very start.  What he was voicing, if indeed he said this, was the time honored motto of political corruption, to go along to get along.  This was the great lesson to the Democratic party from the Clintons.

I have included a short but interesting video at the very bottom about how things work in Washington these days as recounted by Neil Barofsky to Bill Moyers.

And finally I include a short video describing the state of politics in the US from that wild eyed radical, former President Jimmy Carter.

Bernie Sanders Meets With Obama Today: What They Might Talk About
By Pam Martens and Russ Martens
January 27, 2016

Expensive media real estate is reporting that presidential candidate, Senator Bernie Sanders of Vermont, will meet with President Obama in the Oval Office today. Much is being made of the fact that the meeting comes less than a week before the politically important Iowa caucuses and just two days after Politico published an exclusive interview with the President in which he appeared to favor a Clinton presidency. (Memo to the President: this election is about finding an authentic non-establishment candidate, so your opinion as the quintessential establishment figure is not likely to sway folks – at least not in a good way.)

The first thing that came to mind when we heard about the meeting was that one or more kingpins on Wall Street might have asked the President to whisper in Senator Sanders’ ear to stop repeating at every campaign stop that the business model of Wall Street is fraud. Sanders is also regularly stating on the stump that one of his top priorities as President will be to break up those Wall Street banks that would require another taxpayer bailout if they should fail.

Would Wall Street actually be brazen enough to try to censor the message of a sitting U.S. Senator? Back in March of last year, Reuters reported that representatives of Citigroup, JPMorgan, Goldman Sachs and Bank of America “have met to discuss ways to urge Democrats, including [Elizabeth] Warren and Ohio Senator Sherrod Brown, to soften their party’s tone toward Wall Street.” The article noted that withholding campaign donations to Senate Democrats was one option that was on the table at the Wall Street banks...

Read the entire story at Wall Street On Parade.

Les Confessions d'un Assassin Financier - At Home and Abroad

At Home

"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not.

And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else."

Neil Barofsky

Do you see why there is no real reform now?   Do you understand the hard  choice that a person of honour and conscience is given?  Who will make such an unfashionable choice when they have so few models to follow and almost no moral encouragement to find in this vile era of selfishness and greed? 

Do you understand now why laws that are widely opposed by the people like the secret pre-approval of the Trans-Pacific Partnership can be bullied through a Congress with an approval rating in the single digits, seemingly without a care?





And abroad

“There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.”

John Adams

Do you see why suddenly a nation must be broken by fraud or by force and rebuilt, bent to the will of the powerful.  Why its people can be devastated by harsh policies that make no sense, its sovereignty replaced by a puppet regime, while its assets are privatized and sold?





And if a person follows their conscience and sacrifices greatly for the truth, do you offer any comfort and encouragement, or even a thought or a prayer for them? Are you capable of even caring? Or is it all just another opportunity to make some quick money for yourself?

Would it be any different, if instead of placing bets on the sickness and misery of women and children, you simply murdered them, and took their possessions for yourselves, and sold their clothes, even their teeth and their hair?

It is a hard world after all. And you would become truly exceptional then.

Gold Daily and Silver Weekly Charts - Sitting On Top Of the World

"They were always complaining then, as they are always complaining now, that the poor do not understand political economy. But what was the political economy that they did not understand? It was not only paradox, but a piece of mysticism, almost like the mysteries of religion.

It was the mystical dogma of Bentham and Adam Smith and the rest, that some of the worst of human passions would turn out to be all for the best. It was the mysterious doctrine that selfishness would do the work of unselfishness."

G. K. Chesterton

"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want.

But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule:  they don’t criticize other insiders."

Elizabeth Warren, A Fighting Chance

 

Gold and silver held their levels today despite some early weakness. 

 

Looking at the delivery report for gold in this active month of April, it was interesting to see a number of contracts let by customers, and for these to be stopped at $1208 by the house accounts at  HSBC and JP Morgan. 

 

Let's see how this month progresses.  It seems now that gold is more active and silver less so, a distinct change from month.

 

Speaking of things that never seem to change, tomorrow we will see the Non-Farm Payrolls report for March.  It would not be unusual to see it accompanied by the usual shenanigans, that are often a favored choice for the insiders and plutocrats. 

 

A favorite trick of perception management is to put out a good number, and revise it lower, even sharply so, in the next couple of months, thereby rolling over the material obtained to the more current month, whether it be jobs, or factory orders, or whatever is on display.  We saw an example of this today with the Factory Orders.

 

They do it so regularly that is only remarkable that the mainstream commentators seem to fall for it every time.   Thereby we obtain a rolling enthusiasm of improvement, while in the midst of a secular stagnation.

 

Yes there are certainly more jobs.  We are coming off a calamitous decline in economic activity brought on by an asset bubble founded in regulatory capture and widespread financial fraud.  

 

Unfortunately all the abundant monetary stimulus that has flowed from the Fed's Balance Sheet into the financial economy to create these 'jobs' is finding it almost impossible to reach sustainability through a revival in aggregate demand.  Instead, it is being used to prop up the balance sheets of the zombie Banks. 

 

This is shown in the unadorned GDP numbers year over year and the flagging velocity of money.  Another enormous headwind is globalization that is creating unmanageable social and financial units, and the rise of corporate monopolies that span national borders.

 

The US may already have slipped into recession.  There will most likely be no alarm raised, because the looting of the ship into the first class lifeboats continues, and it is easier if the lower decks remain unaware of the risk.

 

The rigging of the gold and silver markets is founded in this desire to manage perception.  Oh, it is based on a more 'noble' desire to inspire confidence and not make people panic. 

 

But at the same time, it has become an enduring illusion, while the disparities in economic health become increasingly pronounced.  

 

And so the looting by the nationless few continues, and justice is led down a hallway and strangled, draped in the national colors, to the sound of patriotic tunes.  Such are times of currency war. 

 

The self-serving policy errors of the Federal Reserve Bank are matched only by the horrendously destructive policy errors in political judgement by a Congress and an Executive that has been captured by the moneyed interests.

 

Who will dare even tell the truth, much less act on it, when the surrender of the truth for 'the story' is one's passport to the more favored classes, the insiders, with all that this implies in terms of comfort and security?  The only resignation is to accept a permanent exile, to be without influence, without a voice, ignored.

 

One must go along to get along, to pay one's dues, extend and pretend, and never, ever, speak ill of the insiders and their schemes.   Freedom, who needs it, when you can have security, comfort, and prestige.

So here we are, at peak illusion, just sitting on top of the world.

 

Have a pleasant evening.

 

 

 

 

 

 

What Then Is Your Point, Mr. Potter?

"The more people rationalize cheating, the more it becomes a culture of dishonesty. And that can become a vicious, downward cycle. Because suddenly, if everyone else is cheating, you feel a need to cheat, too."

Stephen Covey, The Speed of Trust

"The greatest crimes of human history are made possible by the most colorless human beings. They are the careerists. The bureaucrats. The cynics. They do the little chores that make vast, complicated systems of exploitation and death a reality... And they do not ask questions."

Chris Hedges, The Careerists

 

If, as Jamie Galbraith has put it, economics is 'a disgraced profession,' what does it matter, when almost all the professions from medicine to law to finance have also given themselves over to the darkness of this world in high places?

 

Can they be so aloof that they do not see it, see what they are becoming?  See what they serve?

Are they such bystanders that they can no longer even see themselves and where they stand?

Can such a lack of self-awareness be attributed to the blindness of egoism? Or some more profound denial of conscience that rips the very fabric of their reality and its consequences?

Have we finally approached the tipping point of corrosive indifference in our leadership and the careless few, again?

Have the wages of supreme narcissism and exceptionalism finally come to be paid with a third financial crisis, and then another?  And finally the unleashing of madness?

 

It profits a man nothing to give his soul for the whole world... but for a stipend?

 

And when the hard winds of nemesis start howling across the land, where do they think it will end, and who and what do they think will remain standing?