Wednesday, August 13, 2014

The De-industrialization of America

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On January 6, 2004, Paul Craig Roberts and US Senator Charles Schumer published a jointly written article on the op-ed page of the New York Times titled “Second Thoughts on Free Trade. [1]” The article pointed out that the US had entered a new economic era in which American workers face “direct global competition at almost every job level–from the machinist to the software engineer to the Wall Street analyst. Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid equally skilled worker thousands of miles away. American jobs are being lost not to competition from foreign companies, but to multinational corporations that are cutting costs by shifting operations to low-wage countries.” Roberts and Schumer challenged the correctness of economists’ views that jobs off-shoring was merely the operation of mutually beneficial free trade, about which no concerns were warranted.

The challenge to what was regarded as “free trade globalism” from the unusual combination of a Reagan Assistant Treasury Secretary and a liberal Democrat New York Senator caused a sensation. The liberal think-tank in Washington, the Brookings Institution, organized a Washington conference for Roberts and Schumer to explain, or perhaps it was to defend, their heretical position. The conference was televised live by C-Span, which rebroadcast the conference on a number of occasions.

Roberts and Schumer dominated the conference, and when it dawned on the audience of Washington policymakers and economists that something might actually be wrong with the off-shoring policy, in response to a question about the consequences for the US of jobs off-shoring, Roberts said: “In 20 years the US will be a Third World country.”

It looks like Roberts was optimistic that the US economy would last another 20 years. It has only been 10 years and the US already looks more and more like a Third World country. America’s great cities, such as Detroit, Cleveland, St. Louis have lost between one-fifth and one-quarter of their populations. Real median family income has been declining for years, an indication that the ladders of upward mobility that made America the “opportunity society” have been dismantled. Last April, the National Employment Law Project reported that real median household income fell 10% between 2007 and 2012.

Republicans have a tendency to blame the victims. Before one asks, “what’s the problem? America is the richest country on earth; even the American poor have TV sets, and they can buy a used car for $2,000,” consider the recently released report [2] from the Federal Reserve that two-thirds of American households are unable to raise $400 cash without selling possessions or borrowing from family and friends.

Although you would never know it from the reports from the US financial press, the poor job prospects that Americans face now rival those of India 30 years ago. American university graduates are employed, if they are employed, not as software engineers and managers but as waitresses and bartenders. They do not make enough to have an independent existence and live at home with their parents. Half of those with student loans cannot service them. Eighteen percent are either in collection or behind in their payments. Another 34% have student loans in deferment or forbearance. Clearly, education was not the answer.

Jobs off-shoring, by lowering labor costs and increasing corporate profits, has enriched corporate executives and large shareholders, but the loss of millions of well-paying jobs has made millions of Americans downwardly mobile. In addition, jobs off-shoring has destroyed the growth in consumer demand on which the US economy depends with the result that the economy cannot create enough jobs to keep up with the growth of the labor force.

Between October 2008 and July 2014 the working age population grew by 13.4 million persons, but the US labor force grew by only 1.1 million. In other words, the unemployment rate among the increase in the working age population during the past six years is 91.8%.

Since the year 2000, the lack of jobs has caused the labor force participation rate to fall, and since quantitative easing began in 2008, the decline in the labor force participation rate has accelerated.

Clearly there is no economic recovery when participation in the labor force collapses.

Right-wing ideologues will say that the labor force participation rate is down because abundant welfare makes it possible for people not to work. This is nonsensical. During this period food stamps have twice been reduced, unemployed benefits were cut back as were a variety of social services. Being on welfare in America today is an extreme hardship. Moreover, there are no jobs going begging.

The graph shows the collapse in the labor force participation rate. The few small peaks above the 65% participation rate line show the few periods when the economy produced enough jobs to keep up with the working age population. The massive peaks below the line indicate the periods in which the dearth of jobs resulted in Americans giving up looking for non-existent jobs and thus ceased being counted in the labor force. The 6.2% US unemployment rate is misleading as it excludes discouraged workers who have given up and left the labor force because there are no jobs to be found.

Labor force part rate since Jan 2000.002

John Williams of Shadowstats.com calculates the true US unemployment rate to be 23.2%, a number consistent with the collapse of the US labor force participation rate.

In the ten years since Roberts and Schumer sounded the alarm, the US has become a country in which the norm for new jobs has become lowly paid part-time employment in domestic non-tradable services. Two-thirds of the population is living on the edge unable to raise $400 cash. The savings of the population are being drawn down to support life. Corporations are borrowing money not to invest for the future but to buy back their own stocks, thus pushing up share prices, CEO bonuses, and corporate debt. The growth in the income and wealth of the one percent comes from looting, not from productive economic activity.

This is the profile of a Third World country.

[1] Second Thoughts on Free Trade.: http://www.nytimes.com/2004/01/06/opinion/second-thoughts-on-free-trade.html
[2] recently released report: http://www.globalresearch.ca/disastrous-financial-state-of-american-households-result-of-unemployment-low-wages/5395370

$16 Trillion Federal Reserve Lie is Nothing Compared to Gold and Silver Market Manipulation

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Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry." ~ CFTC Commissioner Bart Chilton
The July 2011 audit by the Government Accountability Office of the Federal Reserve exposed one of the biggest lies the US has ever been told – that the Fed had secretly given out $16,000,000,000,000.00 to US banks, corporations and foreign financial institutions everywhere from France to Scotland, but this incredible exposed deceit is nothing compared to what is coming out now about the manipulation of gold and precious metal markets.

The prevarications of cabalistic bankers and their puppeteers are like the teeth of a viperfish. Though the creature looks pretty horrific, they only grow to about 12 inches long, and they like to stay deep in murky waters to avoid detection. Sure, those prehistoric-looking jaws are scary, but only as long as you stay ill-informed. However, if you were hoping to ride unscathed through the supposed looming Global Currency Reset or Revaluation (GCR), by purchasing gold and silver, think again.

Though the Feds called the secret $16-trillion-dollar bank bailout an ‘all-inclusive loan program’ it was nothing more than a heist. The same as the gold, silver, platinum, and other precious metal market tinkering happening right under our noses, today. These markets are manipulated in order to line the pockets of big financial institutions – who were already bailed out by Cabal money. It’s the continuation of legacy of giving ‘the entitled’ more entitlement.

This manipulation is evidenced in a number of ways. During the nearly 5,000 years in which humanity has been mining/refining gold and silver; the gold/silver price ratio has averaged roughly 15:1. Yet currently (and through all the recent decades of silver manipulation) this ratio has been depressed to 50:1 (or lower).

Christopher Pia, a hedge-fund trader with Moore Capital has just been fined $1 million in a market manipulation of precious metals settlement but his previous fines loomed larger. He paid a $25 million fine to settle separate CFTC claims of attempted manipulation and supervisory violations in April 2010 without admitting or denying the allegations. He is just a small shark in the big ocean, too. If these were just his fines settled out of court, you can imagine the total dollar value of the markets he machinated.

Additionally, China’s Chief Auditor has identified $15.2 billion in loans backed by falsified gold, according to the National Audit Office’s website.  It has been estimated that upwards of $80 Billion was advanced in gold backed loans alone, according to Goldman Sachs, as quoted in a Bloomberg article today.

Furthermore, Financial Times removed an article from its site recently that exposed gold market manipulation because it was too ‘sensitive.’ You can see a preserved copy of the article here. The article attests that gold prices were manipulated 50% of the time between 2010 and 2013.

“The findings come amid a probe by German and UK regulators into alleged manipulation of the gold price, which is set twice a day by Deutsche Bank, HSBC [a New York based corporate bank], Barclays, Bank of Nova Scotia, and Societe Generalein a process known as the London gold fixing.”

Let me back up and give just a little history about the players in the ‘investigation’ of market manipulation. The cabal is divided into smaller groups, but they all work together, until their piece of the pie is threatened. The Four Horsemen of Banking include the Bank of America, JP Morgan Chase, Citigroup and Wells Fargo who own the Four Horsemen of Oil: Exxon Mobil, Royal Dutch/Shell, BP Amoco and Chevron Texaco; in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths. But their monopoly over the global economy does not end at the edge of the oil patch.

According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.

Many mainstream publications try to minimize investor worries about gold and silver price-fixing by saying that there is no evidence that gold prices are rigged, but you’d have to be a pretty dull knife to buy that fabrication.

As the Financial Times article clearly outlined in their retracted article:

“Research found the gold price frequently climbs (or falls) once a twice-daily conference call between the five banks begins, peaks (or troughs) almost exactly as the call ends and then experiences a sharp reversal, a pattern it alleged may be evidence of “collusive behaviour”.

[This] is indicative of panel banks pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders.

The behaviour of the gold price is very suspicious in 50 per cent of cases. This is not something you would expect to see if you take into account normal market factors.”

In fact, Britain’s Barclay’s bank was recently slapped with a $44 million dollar fine for gold price fixing ( a mere slap on the hand), and as Rolling Stone writer Matt Taibi has said, “The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix.”

So whether its interest rate swaping, libor fixing, or the manipulation of gold and silver, its all fair game to the Four Horsemen. So are we to believe these goons, represented by some ‘anonymous party’ when they say that they want to change the process of how they value metals?

The proposal is for an independent chairman and third-party administrator, said the people, who asked not to be identified because the information is private. Deutsche Bank AG’s exit from the process this year as it scales back its commodities business left Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc to set the fixing price twice a day by phone.”

This, as the World Gold Council (WGC) hosted a meeting on July 7 attended by 34 delegates including producers, refiners, central banks and exchanges, and who discussed the gold benchmark. They unanimously want an independent party to administer the rate as well as improve transparency.

Good luck with that, WGC, it’s like asking for the Easter Bunny to prove that Santa Clause exists. As long as the cabal is allowed to continue its machinations, no trading is sacred.