Tuesday, March 19, 2013

16 Giant Corporations That Have Basically Stopped Paying Taxes -- While Also Cutting Jobs!

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US funding bill to make sequester cuts permanent

Hundreds of thousands face unpaid furloughs

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As the US government prepares to furlough hundreds of thousands of federal employees next month, Congress is moving to make permanent the $1.2 trillion in spending cuts over the next decade mandated by the sequester process that was triggered at the beginning of March.

The Democratic-controlled Senate is expected this week to approve a so-called “continuing resolution” that will fund the federal government through the end of the fiscal year on September 30. A version of the bill has already been passed by the Republican-controlled House of Representatives. Both the House and Senate versions include the $85 billion in cuts for fiscal year 2013 mandated by the sequester.

On top of these cuts, both versions of the bill include provisions to freeze federal pay through the end of this year, reversing an earlier executive order to end the current pay freeze and give federal employees a 0.5 percent raise.

With the sequester cuts secured for rest of the fiscal year, the two parties will intensify their discussions on next year’s federal budget and plans to impose unprecedented attacks on the most basic social programs—Medicare, Medicaid, and Social Security.

Congressional Democrats have made clear they have no intention of using the threat of a government shutdown, which would result from failure to pass a continuing resolution, in order to reverse the sequester cuts.

Since the exact form of the across-the-board sequester cuts are still being worked out, it is not clear precisely how many workers will face payless furloughs, but preliminary figures indicate that over one million employees could be affected. Many workers could lose more than 20 percent of their annual salary.

The spending bill passed by the House contains provisions giving the military much greater flexibility in distributing the burden of the spending cuts, meaning there will be little discernible impact on military capacity. The burden of the cuts will be born overwhelmingly by civilian employees of the military.

Admiral Jonathan Greenert, the Navy’s top uniformed officer, said earlier this month that compared to the original sequester provisions, the changes implemented in the bill are “almost night and day.” The admiral said that as a result of the bill, for instance, the Navy could proceed with the building of two new carriers whose construction it had previously threatened to halt.

“A huge portion of these cuts will come directly out of the pay of federal workers,” said Jackie Simon, the public policy director of the American Federation of Government Employees in a telephone interview Monday. “The Department of Defense has chosen to protect its contractors and make its civilian employees pay for the cuts,” she continued, adding that “the DOD spends over $200 billion per year on service contracts: none of these have been cut, and nothing is coming out of uniformed services.”

Then-Defense Secretary Leon Panetta said last month that the “vast majority” of the Defense Department’s 800,000 civilian employees would take 22 furlough days per fiscal year, resulting in pay cuts of 20 percent.

Employees affected by the defense department furloughs include workers at military hospitals and schools, employees at depots and arsenals and the sprawling defense department logistics system, as well as maintenance and repair staff.

Many thousands of non-military federal employees will also face unpaid furloughs. While most of the furlough days will be staggered throughout the year, 9,212 meat safety inspectors will all be furloughed on the same days, meaning no meat safety inspections will take place on 11 days of the year, Simon said.

The furloughs of federal employees come in addition to severe cuts in social services as a result of the sequester. The nearly 4 million long-term unemployed who receive federal unemployment benefits will see an 11 percent cut in their benefits, or about $130 per month.

The Center on Budget and Policy Priorities (CBPP) reported earlier this month that the “WIC nutrition program for low-income pregnant women, infants, and young children will have to turn away an estimated 600,000 to 775,000 women and children, including very young children, by the end of this fiscal year.”

Additionally, 100,000 low-income families will lose vouchers for housing assistance as a result of the sequester cuts, and tens of thousands of education workers will face layoffs.

Throughout the entire “debate” over the budget and federal deficit, the issues of unemployment, poverty and falling wages have gone virtually unmentioned. The joint goal of the Obama administration and congressional Republicans and Democrats is to manufacture an atmosphere of crisis, in which an immense assault on social services and workers’ living standards can be carried out.

The next crisis date will occur in August, when the federal debt ceiling will be reached. This will be utilized along prearranged lines to push through cuts and structural changes that will mark the beginning of the end of the basic social reforms enacted in the 1930s and 1960s.

Obama is resolutely pushing for cuts in Social Security benefits and hundreds of billions of further cuts in Medicare, as well as the introduction of means-testing, which will begin the transformation of the medical insurance program for seniors from a universal program to a poverty program, a major step toward its destruction.

The White House is seeking to spin this historic attack as a boon to the “middle class” and a “fair” and “balanced” approach to the deficit by linking it to token tax increases on the rich. Any such increases, however, would be more than made up for by a “reform” of the tax code that slashes corporate taxes and shifts the tax burden further from the wealthy to the working class.

JPMorgan and the criminalization of the US ruling class

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Barely a week after Attorney General Eric Holder admitted to a Senate committee that the Obama administration considered the major Wall Street banks too powerful to prosecute, i.e., that they were above the law, the Senate Permanent Subcommittee on Investigations released a 300-page report documenting rampant fraud and law-breaking by JPMorgan Chase, the largest bank in the US and the world’s biggest dealer in derivatives.

The report, issued last Thursday, documents systematic deception in connection with over $6.2 billion in losses from high-risk trades in financial derivatives in 2012.

It states: “The Subcommittee’s investigation has determined that, over the course of the first quarter of 2012, JPMorgan Chase’s Chief Investment Office used its Synthetic Credit Portfolio (SCP) to engage in high risk derivatives trading; mismarked the SCP book to hide hundreds of millions of dollars of losses; disregarded multiple internal indicators of increasing risk; manipulated models; dodged OCC [Office of the Comptroller of the Currency] oversight; and misinformed investors, regulators, and the public about the nature of its risky derivatives trading.”

The report notes that in April of last year, when CEO Jamie Dimon was telling investors that concern over credit default swap bets by the bank’s London-based Chief Investment Office was a “complete tempest in a teapot,” Dimon “was already in possession of information about the…complex and sizeable portfolio, its sustained losses for three straight months, the exponential increase in those losses during March, and the difficulty of exiting the…positions.”

This lie came during a conference call on the day JPMorgan submitted its first-quarter earnings report to the Securities and Exchange Commission (SEC). In that report, the bank utilized fraudulent accounting methods to avoid reporting what it knew at the time to be at least $1 billion in losses from bad gambling bets suffered by its Synthetic Credit Portfolio.

One month later, Dimon suddenly announced that his bank had lost some $2 billion on its so-called “London whale” derivatives trades. That loss has since ballooned to $6.2 billion. The money JPMorgan used to speculate on the credit status of various entities included the federally insured deposits of tens of thousands of customers.

Submitting false reports to federal regulators, deceiving investors and the public, and concealing losses are crimes punishable by fines and jail time. Yet there have been no indictments of the bank, Dimon or any other top JPMorgan executives, let alone convictions or punishment.

This comes as no surprise to anyone who is familiar with the incestuous relationship between the banks and their nominal federal regulators, and the record of the Obama administration in shielding the Wall Street mafia from being held accountable for its crimes.

Despite its own devastating findings, the Senate committee, headed by Michigan Democrat Carl Levin, is an integral part of the institutional collusion and cover-up that allow the financial elite to continue expanding its already obscene wealth by plundering society. Last Friday, the day after the committee issued its report, it held a hearing on the “London whale” scandal at which it took testimony from former and current JPMorgan executives and OCC officials.

Noticeably absent was Dimon, whom the committee did not call to testify—an unmistakable signal that the multimillionaire banker has nothing to fear. He has, after all, friends in high places.

Known as Obama’s “favorite banker,” he was repeatedly invited to the White House during Obama’s first term. Only days after Dimon’s May 10, 2012 announcement of previously concealed trading losses, Obama rushed to personally vouch for Dimon and his bank. He publicly declared that Dimon was “one of the smartest bankers we’ve got” and that JPMorgan was “one of the best managed banks there is.”

JPMorgan is not the exception, however, it is the rule. Two years ago, Levin’s committee issued a 630-page report documenting the illegal activities of major Wall Street banks in the run-up to the financial meltdown of September 2008. The report spelled out as well the complicity of federal regulatory agencies and the credit rating firms.

Levin said at the time that his investigation had found “a financial snake pit rife with greed, conflicts of interest and wrongdoing.” In the interim, one bank scandal has unfolded after another, from the subprime racket, to the home foreclosure fraud, to the Libor rate-rigging conspiracy, to the banks’ money laundering for the Mexican drug cartels. The same types of speculation that turned the world economy into a giant gambling casino for the financial elite continue unabated.

Yet not a single bank or top banker has been indicted, let alone tried, convicted and sent to jail. On the contrary, the financial malefactors have been rewarded with ever greater public funds to subsidize record profits, executive bonuses and stock prices. Over and above the trillions handed out to JPMorgan and the other big banks in bailout cash, cheap loans and asset guarantees—with no strings attached—the Federal Reserve is pumping $85 billion every month in virtually free money into the financial system.

This bank bonanza by itself is greater than the annual federal deficit of the United States. Meanwhile, the Obama administration and state and local governments demand ever more savage cuts in social programs, jobs, wages, health care and pensions.

The criminality on Wall Street and in Washington is not some excrescence or aberration. It is integral to the functioning of the capitalist profit system.

The types of activities exposed in the report on JPMorgan are representative of the daily operations of the major banks and hedge funds. This is the face of American capitalism in its decline and dotage, marked by the decay of industry and the productive forces, and the ever-greater role played by parasitic and socially destructive forms of financial manipulation. The political corollary of this process is the pauperization of the working class and dismantling of its democratic rights.

Decades of industrial decay and political reaction have given rise to the unbridled rule of a financial aristocracy, which, like the aristocracies of old, is a law unto itself. It controls, in part through direct bribery, both parties and the entire political system. It is not subject to the rules that bind mere mortals.

This system cannot be reformed. It must be overthrown by the collective and politically conscious action of the working class. We propose:

• The expropriation of the wealth of the financial aristocracy and the utilization of the trillions thus obtained to address pressing social needs for decent-paying jobs, education, health care, housing and pensions.

• The criminal prosecution of the bankers and financiers whose illegal activities have caused incalculable social misery and suffering.

• The taxation of all incomes over $1 million at a rate of 90 percent.

• The nationalization of the banks and major corporations, with compensation for small shareholders, and their transformation into public utilities run democratically to meet social needs, not private profit.

Senate report documents fraud and lawbreaking by JPMorgan Chase

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The Senate Permanent Subcommittee on Investigations released a 300-page report Thursday documenting systematic fraud and deception by JPMorgan Chase, the biggest US bank, in connection with over $6.2 billion in losses from high-risk speculative trades in financial derivatives in 2012.

The losses, incurred by the bank’s London-based Chief Investment Office (CIO) and a trader dubbed the “London whale” because of the size of his bets, were concealed from investors, analysts, regulators and the public by the bank’s top management, including its chairman and CEO, Jamie Dimon.

The report details from emails, phone conversations and interviews with bank officials the use of accounting gimmicks to vastly understate the scale of the losses in the first quarter of 2012, the withholding and falsification of information on the trading activities in reports made to the chief federal regulator of JPMorgan, the Office of the Comptroller of the Currency (OCC), and misrepresentations and lies from top bank officials in public statements issued beginning last April, when press reports of the massive bets being made by the CIO’s Synthetic Credit Portfolio began to emerge.

The report also documents the complicity of federal regulators, led by the OCC, in the bank’s fraudulent activities. The OCC gave its stamp of approval when JPMorgan informed it in January 2012, as the losses at its Chief Investment Office were piling up, that it was altering its calculation of risk so as to free up more funds for speculative investments. The regulator did nothing when the bank stopped providing it with profit and loss reports from its CIO division concerning its Synthetic Credit Portfolio.

At a press conference Thursday, Senator Carl Levin (Democrat of Michigan), the chairman of the Permanent Subcommittee on Investigations, said investigators “found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public.”

The report demonstrates that nothing has changed on Wall Street since the financial meltdown four-and-a-half years ago that was triggered by rampant speculation and illegality on the part of the banks. The same types of exotic bets and parasitic wheeling and dealing—in the case of JPMorgan, with depositors’ money—that brought the global financial system to the point of collapse and ushered in a world slump, continue unabated. The bets that backfired for JPMorgan in early 2012 were a form of gambling on credit default swaps.

Likewise, the role of the government and regulatory agencies as protectors of the financial criminals remains unchanged.

Two years ago, the same Senate committee released a 630-page report on the practices that led to the banking crash of September 2008, documenting the role of major banks, regulatory agencies and credit rating firms. At the time, Senator Levin said his investigation had found “a financial snake pit rife with greed, conflicts of interest and wrongdoing.” Yet not a single bank or high-ranking bank executive has been criminally charged, let alone convicted and sent to prison.

The report issued Thursday lays out a prima facie case for the criminal prosecution of the top executives of JPMorgan, including CEO Dimon. The cover-up of losses, use of accounting tricks to deceive investors, and issuance of false statements to regulators and the public are violations of federal securities statutes punishable by fines and jail terms.

But the report carefully avoids accusing the bank or any of its executives of breaking the law. The New York Times on Friday reported that the Federal Bureau of Investigation (FBI) was looking into the JPMorgan “London whale” losses and planned to interview top executives in the coming weeks, including Dimon. It added, however, that “authorities do not suspect the chief executive of wrongdoing.”

This is consistent with the policy of the Obama administration of shielding the financial elite and running interference for its socially destructive and criminal actions. Last week, Attorney General Eric Holder, testifying before the Senate Judiciary Committee, declared that it was “difficult” for the Justice Department to prosecute major banks or their top executives because of the “negative impact” it would have on the economy. This was an open acknowledgment that the Obama administration deems the major banks to be above the law.

For much of Obama’s first term in office, Dimon was known as “the president’s favorite banker.” The CEO, whose net worth is estimated at $400 million, was a frequent guest at the White House.

On April 13, 2012, JPMorgan submitted a first-quarter earnings report to the Security and Exchange Commission (SEC) that concealed losses at its Chief Investment Office of more than $1 billion over the previous three months. That in itself was a criminal act.

In an attempt to counter press reports of massive bets and potential losses, JPMorgan officials told a conference call with investors and analysts the same day that the suspicious trading activity was merely for the purpose of hedging the bank’s overall position and that the bank was keeping federal regulators fully informed. In fact, the bank in January had told the OCC that it planned to reduce the size of its Synthetic Credit Portfolio, only to triple its size over the following quarter.

In the same conference call, Dimon called the London whale matter a “complete tempest in a teapot.”

The Senate report released Thursday states that Dimon was at that time “already in possession of information about the … complex and sizeable portfolio, its sustained losses for three straight months, the exponential increase in those losses during March, and the difficulty of exiting the … positions.”

Less than a month later, on May 10, the bank was compelled to acknowledge large losses in a further filing with the SEC. On that day, Dimon suddenly announced that JPMorgan had incurred some $2 billion in losses at its London unit.

Obama personally rushed to vouch for Dimon and his bank, publicly declaring only days later that Dimon was “one of the smartest bankers we’ve got” and that JPMorgan was “one of the best managed banks there is.”

On Friday, one day after releasing its report on JPMorgan, the Permanent Subcommittee on Investigations held a hearing at which it took testimony from former and current JPMorgan executives and officials from the Office of the Comptroller of the Currency. Like all such hearings, it was an exercise in cover-up and damage control, in which the witnesses, including the former head of the bank’s Chief Investment Office, Ina Drew, palmed off responsibility and the senators of both parties avoided any suggestion that they should be prosecuted or otherwise held accountable for their actions.

Dimon was not even asked to appear before the committee. He did testify last June before the Senate Banking Committee and used the occasion to denounce bank regulations. The bowing and scraping by Democrats and Republicans alike was so profuse and shameless, the Washington Post ’s Dana Milbank felt obliged to write that they “acted as though they were wholly owned subsidiaries of JPMorgan.”

In fact, all but six of the committee members were recipients of JPMorgan campaign cash, the bank being the biggest campaign contributor to the committee chairman, Democrat Tim Johnson.

This Is Housing Bubble 2.0

Many have named a U.S. housing recovery as a bright spot in a so-called broader domestic economic recovery.
And data seems to support this analysis, despite a slowdown in sales momentum at the end of the year. Existing home sales in December were up 12.8% from the same time in 2011, with the total number of sales in 2012 rising to the highest level in five years, according to the National Association of Realtors. Meanwhile, the annual price for existing homes also jumped to the highest level since 2005, with the median price of a home up 11.5% in December from the same period in 2011.

But David Stockman, former director of the Office of Management and Budget in the Reagan Administration sees little to get excited about.
He tells The Daily Ticker, “I would say we have a housing bubble...again.”
Stockman argues a combination of artificially low interest rates and speculation are to blame, not unlike the last boom and bust cycle in real estate.
“We don’t have a real organic sustainable recovery because in a world of medicated money by the central bank, things aren’t what they appear to be,” Stockman argues.
And according to Stockman, it’s this medicated, cheap money being put to work by investors that’s driving the apparent healing in some of the hardest hit real estate markets in the country.
“It’s happening in the most speculative sub-prime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade,” he contends. “And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came.”
By 'fast money', Stockman is referring to professional investors like hedge funds and private equity firms. To his point, global investment firm Blackstone (BX) has spent more that $2.5 billion on 16,000 homes to manage as rentals, according to Bloomberg. It’s now the country’s largest investor in single-family homes to manage as rentals, with properties in nine markets. And Blackstone is joined by others like Colony Capital LLC and Two Harbors Investment Corp. (SBY) in trying to turn this market into a new institutional asset class, Bloomberg reports.
Stockman argues the problem in housing is the two forces needed for a recovery, first-time buyers and trade-up buyers, are missing. With the combination of 7.9% unemployment and staggering student loan debt, he doesn’t see a young generation of new home buyers coming into the market. And with baby boomers heading for retirement with less than adequate savings, he thinks they’ll be trading down with their homes, not up.
Stockman sees a rise in interest rates as the trigger for any kind of bust. He says you can’t have zero rates forever, referring to the Fed’s ZIRP and quantitative easing policies of the last several years.
“As soon as the Fed has to normalize interest rates, housing prices will stop appreciating and they’ll probably head down,” he explains. “The fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it’s appeared. I don’t know how many times we’re going to do this, and the only people who benefit are the top one percent - the hedge funds, the LBO funds, the fast money people who come in for a trade, make a quick buck, and move along to the next bubble.”
Mortgage rates, for their part, rose from an average 3.42 percent to 3.53 percent on Thursday, the sharpest increase in 10 months, according to the weekly survey of 30-year mortgages by Freddie Mac, the government-backed mortgage company. Even still, mortgage rates are hovering around their lowest levels in more than 30 years.
As for the "American Dream" of home ownership, Stockman argues the past model where the government was trying to get to 69% home ownership was a huge policy mistake that led to no-downpayment loans, liars loans, and a degradation of lending standards. He says the government should have no dog in the hunt when it comes to ownership versus renting.
“Let the market decide,” Stockman says.

17 Signs That A Full-Blown Economic Depression Is Raging In Southern Europe – Is The U.S. Next?

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When you get into too much debt, eventually really bad things start to happen.  This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well.  It simply is not possible to live way beyond your means forever.  You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you.  And when it catches up with you, the results can be absolutely devastating.  Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies.  In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining.  And you know what?  None of those countries has even gotten close to a balanced budget yet.  They are all still going into even more debt.  Just imagine what would happen if they actually tried to only spend the money that they brought in?

I have always said that the next wave of the economic collapse would start in Europe and that is exactly what is happening.  So keep watching Europe.  What is happening to them will eventually happen to us.

The following are 17 signs that a full-blown economic depression is raging in southern Europe...

#1 The Italian economy is in the midst of a horrifying "credit crunch" that is causing thousands of companies to go bankrupt...

Confindustria, the business federation, said 29pc of Italian firms cannot meet "operational expenses" and are starved of liquidity. A "third phase of the credit crunch" is underway that matches the shocks in 2008-2009 and again in 2011.

In a research report the group said the economy was caught in a "vicious circle" where banks are too frightened to lend, driving more companies over the edge. A thousand are going bankrupt every day.
#2 During the 4th quarter of 2012, the unemployment rate in Greece was 26.4 percent.  That was 2.6 percent higher than the third quarter of 2012, and it was 5.7 percent higher than the fourth quarter of 2011.

#3 During the 4th quarter of 2012, the youth unemployment rate in Greece was 57.8 percent.

#4 The unemployment rate in Spain has reached 26 percent.

#5 In Spain there are 107 unemployed workers for every available job.

#6 The unemployment rate in Italy is now 11.7 percent.  That is the highest that it has been since Italy joined the euro.

#7 The youth unemployment rate in Italy has risen to a new all-time record high of 38.7 percent.

#8 Unemployment in the eurozone as a whole has reached a new all-time high of 11.9 percent.

#9 Italy's economy is starting to shrink at a frightening pace...

Data from Italy's national statistics institute ISTAT showed that the country's economy shrank by 0.9pc in the fourth quarter of last year and gross domestic product was down a revised 2.8pc year-on-year.
#10 The Greek economy is contracting even faster than the Italian economy is...

Greece also sank further into recession during the fourth quarter of 2012, with figures on Monday showing the economy contracted by 5.7pc year-on-year.
#11 Overall, the Greek economy has contracted by more than 20 percent since 2008.

#12 Manufacturing activity is declining just about everywhere in Europe except for Germany...

Research group Markit said its index of activity in UK manufacturing – where 50 is the cut off between growth and decline – sank from 50.5 in January to 47.9 in February. It left Britain on the brink of a third recession in five years after the economy shrank by 0.3 per cent in the final quarter of 2012.

Chris Williamson, chief economist at Markit, said: ‘This represents a major setback to hopes that the UK economy can return to growth in the first quarter and avoid a triple-dip recession.’

The eurozone manufacturing index also read 47.9. Germany scored 50.3 but Spain hit 46.8, Italy 45.8 and France 43.9.
#13 The percentage of bad loans in Italian banks has risen to 12.2 percent.  Back in 2007, that number was sitting at just 4.5 percent.

#14 Bank deposits experienced significant declines all over Europe during the month of January.

#15 Private bond default rates are soaring all over southern Europe...

S&P said the default rate for Italian non-investment grade bonds jumped to 9.5pc last year from 5.7pc in 2012 as local banks shut off funding. It was even worse in Spain, doubling to 14.3pc.

The default rate in France rocketed from 0.8pc to 8.7pc, the latest in a blizzard of bad news from the country as the delayed effects of tax rises, fiscal tightening, and the strong euro do their worst.
#16 Lars Feld, a key economic adviser to German Chancellor Angela Merkel, recently said the following...

"The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance."
#17 Things have gotten so bad in Greece that the Greek government plans to sell off 28 state-owned buildings - including the main police headquarters in Athens.

One of the few politicians in Europe that actually understands what is happening in Europe is Nigel Farage.  A video of one of his recent rants is posted below.  Farage believes that "the Eurozone has been a complete economic disaster" and that the worst is yet to come...

Most people believe that the eurozone has been "saved", but that is not even close to the truth.

In fact, it becomes more likely that we will see the eurozone break up with each passing day.

So who would leave first?

Well, recently there have been rumblings among some German politicians that Greece should be the first to leave.  The following is from a recent Reuters article...

Greece remains the biggest risk for the euro zone despite a calming of its economic and political crisis and may still have to leave the common currency, a senior conservative ally of German Chancellor Angela Merkel said.
But there is also a chance that Germany could eventually be the first nation that decides to leave the euro.  In fact, a new political party is forming in Germany that is committed to getting Germany out of the euro.  The following is a brief excerpt from a recent article by Ambrose Evans-Pritchard...

A new party led by economists, jurists, and Christian Democrat rebels will kick off this week, calling for the break-up of monetary union before it can do any more damage.

"An end to this euro," is the first line on the webpage of Alternative für Deutschland (AfD). "The introduction of the euro has proved to be a fatal mistake, that threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit their mistakes."

They propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes.
However this all plays out, the reality is that things are about to get much more interesting in Europe.

No debt bubble lasts forever.  The Europeans are finding that out right now, and the U.S. won't be too far behind.

But for the moment, most Americans assume that everything is going to be okay because the Dow keeps setting new all-time record highs.

Well, enjoy this little bubble of debt-fueled false prosperity while you can, because it won't last for long.

A massive wake up call is coming, and it will be exceedingly painful for those that are not ready for it.

US sequester cuts target jobs, vital social services

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Two weeks into the “sequester” triggered on March 1, the effects of the $85 billion in federal cuts mandated this year are already being felt across the country. The failure of the Obama administration and the Republicans to come to an agreement on “deficit reduction” has set into motion spending cuts that will impact jobs, unemployment benefits and vital social programs and services depended upon by millions of Americans.

Having initiated the sequester, the two big business parties unveiled their budget proposals this week. Both proposals—the Republicans’ plan to cut $4.8 trillion and the Democrats’ for $1.8 trillion—see the sequester cuts as the starting point for even deeper cutbacks. The two parties have already moved on to the next order of business, coordinating an attack on the core federal health care and retirement programs that largely escape the sequester budget ax—Medicare, Medicaid and Social Security.

The sequester reduces federal spending by $85 billion in the fiscal year that ends September 30, and by a total of $1.2 trillion over the next 10 years. The cuts this year include $42.7 billion in discretionary defense spending (7.9 percent), $28.7 billion in non-defense discretionary spending (5.3 percent), $9.9 billion from Medicare (2 percent), and $4 billion in other mandatory cuts (5.9 percent).

While Medicaid, Social Security, welfare and food stamps are exempt from the sequester, cuts to other vital social programs benefiting working people and the poor will be devastating. Federal agencies and programs supported by them will be forced to lay off and furlough workers and cut back on the services they provide.

The White House has estimated that 750,000 workers will lose their jobs as a result of the sequester, although other projections range anywhere from 250,000 jobs lost, up to as many as 2 million. Economic forecasters predict that it will shave 0.6 percentage points from gross domestic product for the year, contributing not only to job cuts, but also to reduced consumption and a slowdown in job creation.

Hundreds of thousands of employees in the Defense Department, the Treasury, the Transportation Safety Administration and other federal agencies are likely to experience unpaid furloughs over the course of the next weeks and months. A ripple effect could result in mass layoffs of government workers at the state and local level.

Marty Kusler, government relations director at the National Education Association, told MSNBC, “We anticipate that over 50,000 educators across the country could be losing their jobs through all of this.” This comes under conditions in which more than 300,000 public school teachers have already lost their jobs since 2009 under the impact of state and local government austerity. Kusler said the cuts would hit poorer districts the hardest. “Lots of urban centers, a lot of urban poverty,” she said.

Federal employees are already working into the third year of a pay rate freeze, which was imposed for two years beginning in January 2011. The freeze has been extended through the end of March, and with the sequester in motion and the budget talks underway, it is likely to be extended for at least the remainder of the year.

For those workers who had already lost their jobs before sequestration, cuts to the Emergency Unemployment Compensation program will hit hard. Created in mid-2008, the federal program provides benefits to the long-term unemployed who have exhausted their state jobless benefits. Assuming the sequester runs for the entire year, an estimated 3.8 million workers could be affected.

The Obama administration estimates that sequestration will require an 11 percent cut in federal jobless benefits, or about $140 a month on average for those affected. Seven states have already reduced the maximum number of weeks of unemployment benefits, down from the traditional 26 weeks: Michigan (20 weeks), Missouri (20), South Carolina (20), Arkansas (25), Illinois (25), Florida (12-23 weeks, depending on the jobless rate).

Because the maximum duration of federal benefits is proportional to the length of state benefits, those states providing a lower number of weeks of benefits receive less federal benefits. In Michigan, about 75,000 long-term jobless workers will see their weekly benefits fall from about $285 to $254 beginning April 1.

The National Park Service (NPS) expects to hire 1,000 fewer seasonal workers this summer, down from 10,000 last year, and plans to open roads later, close visitor centers and furlough park police. NPS Director Jonathan Jarvis said the sequester cuts will also worsen the service’s $12 billion park maintenance backlog.

The nearly 300 million people projected to visit the historical and natural sites maintained and operated by the NPS this year can expect to find many cutbacks. The National Capital Region, overseeing Civil War battlefields in the Washington, DC area, is considering limiting the hours of, or closing altogether, the visitor center at Antietam National Battlefield in Maryland. The region plans to hire only half of its usual 400-450 seasonal workers.

The Superintendent at the Cape Cod National Seashore in Massachusetts is contemplating closing the Province Lands Visitor Center, which had 260,000 visitors last summer. Grand Teton National Park in Wyoming, Yellowstone National Park, and other parks are considering closing visitor centers, reducing snow plowing and cutting rangers’ and seasonal workers’ jobs.

Low-income families will see deep cuts to programs that provide nutrition, housing and other needs. As many as 775,000 women, infants and children could be cut off from WIC, the supplemental nutrition program that provides food and baby formula for at-risk families.

The Meals On Wheels Association of America, an umbrella group of about 5,000 local organizations that distributes about a million hot meals a day, estimates that the mandated cuts will result in 19 million fewer meals being delivered. For many housebound individuals, the majority of them elderly, Meals On Wheels provides their major source of nutrition as well as one of their only points of contact with others in the community.

The Health Resources and Service Administration (HRSA) disbursed $7 billion to the states in 2011 to pay for maternal and children’s health programs. HRSA’s budget will see a $365 million reduction due to sequestration, cutting funds for screening newborns for genetic conditions, immunizing children, tobacco cessation programs for pregnant women, and other services.

Mental Health Block Grants distributed by the federal government through the Substance Abuse and Mental Health Services Administration will lose $168 million. Joel Miller of the National Association of State Mental Health Program Directors told Pew Charitable Trusts that “373 adults with serious mental health issues and children with serious behavioral and emotional illnesses” could lose critical services.

The Centers for Disease Control and Prevention (CDC) will see a $303 million reduction in funding. CDC funds comprise about 40 percent of state public health budgets. The cutbacks will hamper efforts to detect and fight new infectious diseases, while reducing the ability to screen for diseases such as HIV/AIDS.

A $1.5 billion cut to the National Institute of Health’s budget will contribute to slowing or shutting down research centers across the country, as well as cutting jobs at these institutions.

Funding to the Indian Health Service will be reduced by $198 million due to the automatic cuts, leading to a potential decrease of 3,000 in-patient admissions and 804,000 outpatient visits at tribal hospitals and clinics.

U.S. to let spy agencies scour Americans' finances

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The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters.

The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.

Financial institutions that operate in the United States are required by law to file reports of "suspicious customer activity," such as large money transfers or unusually structured bank accounts, to Treasury's Financial Crimes Enforcement Network (FinCEN).

The Federal Bureau of Investigation already has full access to the database. However, intelligence agencies, such as the Central Intelligence Agency and the National Security Agency, currently have to make case-by-case requests for information to FinCEN.

The Treasury plan would give spy agencies the ability to analyze more raw financial data than they have ever had before, helping them look for patterns that could reveal attack plots or criminal schemes.

The planning document, dated March 4, shows that the proposal is still in its early stages of development, and it is not known when implementation might begin.

Financial institutions file more than 15 million "suspicious activity reports" every year, according to Treasury. Banks, for instance, are required to report all personal cash transactions exceeding $10,000, as well as suspected incidents of money laundering, loan fraud, computer hacking or counterfeiting.

"For these reports to be of value in detecting money laundering, they must be accessible to law enforcement, counter-terrorism agencies, financial regulators, and the intelligence community," said the Treasury planning document.

A Treasury spokesperson said U.S. law permits FinCEN to share information with intelligence agencies to help detect and thwart threats to national security, provided they adhere to safeguards outlined in the Bank Secrecy Act. "Law enforcement and intelligence community members with access to this information are bound by these safeguards," the spokesperson said in a statement.

Some privacy watchdogs expressed concern about the plan when Reuters outlined it to them.

A move like the FinCEN proposal "raises concerns as to whether people could find their information in a file as a potential terrorist suspect without having the appropriate predicate for that and find themselves potentially falsely accused," said Sharon Bradford Franklin, senior counsel for the Rule of Law Program at the Constitution Project, a non-profit watchdog group.

Despite these concerns, legal experts emphasize that this sharing of data is permissible under U.S. law. Specifically, banks' suspicious activity reporting requirements are dictated by a combination of the Bank Secrecy Act and the USA PATRIOT Act, which offer some privacy safeguards.

National security experts also maintain that a robust system for sharing criminal, financial and intelligence data among agencies will improve their ability to identify those who plan attacks on the United States.

"It's a war on money, war on corruption, on politically exposed persons, anti-money laundering, organized crime," said Amit Kumar, who advised the United Nations on Taliban sanctions and is a fellow at the Democratic think tank Center for National Policy.


The Treasury document outlines a proposal to link the FinCEN database with a computer network used by U.S. defense and law enforcement agencies to share classified information called the Joint Worldwide Intelligence Communications System.

The plan calls for the Office of the Director of National Intelligence - set up after 9/11 to foster greater collaboration among intelligence agencies - to work with Treasury. The Director of National Intelligence declined to comment.

More than 25,000 financial firms - including banks, securities dealers, casinos, and money and wire transfer agencies - routinely file "suspicious activity reports" to FinCEN. The requirements for filing are so strict that banks often over-report, so they cannot be accused of failing to disclose activity that later proves questionable. This over-reporting raises the possibility that the financial details of ordinary citizens could wind up in the hands of spy agencies.

Stephen Vladeck, a professor at American University's Washington College of Law, said privacy advocates have already been pushing back against the increased data-sharing activities between government agencies that followed the Sept. 11 attacks.

"One of the real pushes from the civil liberties community has been to move away from collection restrictions on the front end and put more limits on what the government can do once it has the information," he said.