Fed To The Sharks, Part 2: Housing And The Death Of The Middle Class

The Fed sacrificed the foundation of middle class wealth–stable housing values–to boost bank profits.

Lest you think the phrase “death of the middle class” is hyperbole, please examine these two charts, keeping in mind the middle class by definition must be in the middle of income/wealth distribution–conventionally, between 40% and 80%, i.e. the 40% between the bottom 40% and the top 20%.

See that little red wedge? That’s the bottom 80%–the entire middle class and everyone below the middle class.

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Here’s another look at the wealth distribution: the middle class’s share of wealth is modest, unless you define the top slice of households just below the top 1% as “middle class.” But since the top 19% cannot be in the “middle,” attempting to boost the wealth of the middle class by including the wealthy is truly Orwellian.

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Why has the middle class eroded? We can start by looking at income. As noted yesterday in Fed to the Sharks, Part 1, household income for the bottom 90% has stagnated for 40 years.

The next chart shows how financialization boosted asset valuations in waves of boom and bust. Some of the first two waves of financialization leaked into wages, but the Fed’s bubble-blowing since 2009 has failed miserably to increase incomes: disposable income fell off a cliff in 2009 and has continued falling, despite the Fed’s blowing new bubbles in bonds, stocks and housing.

The Rest Of The Story Here

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We Are On A Sinking Ship On The Brink Of Destruction – Are you Prepared?

The commentary from Charlie McGrath, shown in the video below, is heartfelt, emotional and 100 percent accurate. It is also too hard-hitting for those that continue to bury their heads in the sand. He speaks of preparing his son for what is coming, how America itself is a sinking ship and that we are on the brink of destruction.

An economy that produces more “paper” than anything else where leaders continue to try to push us towards a one world governance under the guise of “economic prosperity,” something we started losing decades ago and he declares that it is not coming back!

Manufacturing is gone, retail stores are closing by the masses which he names a number of but a Full List Can Be Found Here the dollar is weakening day by day and people need to be prepared because those unprepared, those refusing to see what is happening in front of there very eyes, will be left devastated and destitute.

While he admits there is no predictive “date” as to when the fall will occur, it is coming because there is no conceivable way we can come back from the damage that has been done.

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Fed to the Sharks, Part 1: The Fed Takes Our Money, Gives It to Banks Who Loan It Back to Us at 16%

We’re being Fed to the sharks, every day, one morsel at a time. What a way to go….

What can we say about the Federal Reserve’s policies that hasn’t been said a million times? How about simplifying the two primary purposes of Fed policies? I will cover one today and the second one tomorrow. Both involve feeding the 99.5% to the financier/ Wall Street/bank sharks.

Longtime readers are familiar with Harun I.’s incisive analysis. Two of his recent commentaries can be found in Resolution #1: Let’s Call Things What They Really Are in 2014 (January 15, 2014) and Doomed If We Do, Doomed If We Don’t (February 12, 2014)

In the above entries, Harun explained how the Fed’s money creation has leveraged a global bubble in assets. At 72-to-1 leverage, the Fed’s $3.3 trillion money expansion has generated inflation as well as asset bubbles, though the Fed and its cronies deny both asset bubbles and inflation.
Chart

Inflation is the Fed’s explicit, stated goal. The Fed wants prices to go up because that raises GDP (gross domestic product) and makes debt cheaper to service every year.

But alas, real income isn’t keeping pace–it’s declining. Median household income is down 7% since 2000, but if we strip out the top 1% households, the decline for the bottom 99% would be more than 7%. And if we strip out the top 10% households, the decline of the bottom 90% of households is much more than 7%.

The Rest Of The Story Here

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16 major retail chains closing stores across America

Hussein
Daniel Jennings writes for Wealthy Debates, April 4, 2014, that despite all the talk from the Obama administration and the MSM about a “recovering” economy, a retail tsunami shows the U.S. economy to be in trouble.
Recent news stories show that American retail is in dire straits. Here are 16 big retail companies that have closed or will close stores soon:
Office supply company Staples has announced plans to close 225 stores by 2015, which is about 15% of its chain. Staples already closed 40 stores last year.
Office Depot, Staples’ main competitor which bought Office Max last year, isn’t in good shape either. Industry analysts expect Office Depot to announce its own round of store closings soon.
Radio Shack has announced plans to close 20% of its stores or as many as 1,100 stores this year. The company, which operates around 4,000 stores, reported that its sales fell by 19% last year.
Albertsons supermarket closed 26 stores in January and February this year. Analysts expect many more Albertsons to be closed down because Albertsons’ owner hedge fund Cerberus Capital Management just bought Safeway Inc. Some Safeway stores could soon shut down as well.
Clothing retailer Abercrombie & Fitch is planning to close 220 stores by the end of 2015. The company is also planning to shut down the Gilly Hicks chain, which has 20 stores.
Barnes & Nobles is planning to shut down one third of its stores or about 218 stores in the next year. The chain has already closed its iconic flagship store in New York City.
J.C. Penney is closing about 33 stores and laying off about 2,000 employees.
Toys R Us has plans to close 100 stores.
The Sweetbay Supermarket chain will close all 17 of the stores it operates in the Tampa Bay area. Many of the stores might open as Winn-Dixie Stores. Sweetbay closed 33 stores in Florida last year.
The entire Loehmann’s chain of discount clothing stores in the New York City area shut down. Loehmann’s once operated 39 stores and was considered an institution by generations of New Yorkers.
Sears Holdings, which owns both Sears and Kmart, is expected to close another 500 stores this year. Sears has already shut down its flagship store in Chicago.
Quiznos has filed for bankruptcy and could close many of its 2,100 stores.
Sbarro, which operates pizza and Italian restaurants in malls, is planning to close 155 locations (or 20% of its restaurants) in North America (U.S. and Canada). The chain operates around 800 outlets.
Ruby Tuesday announced plans to close 30 restaurants in January after its sales fell by 7.8%. The chain currently operates around 775 steakhouses across the US.
An unknown number of Red Lobster stores will be sold. The chain is in such bad shape that the parent company, Darden Restaurants Inc., had to issue a press release stating that the chain would not close. Instead Darden is planning to spin Red Lobster off into another company and sell some of its stores.
Ralph’s, a subsidiary of Kroger, has announced plans to close 15 supermarkets in Southern California within 60 days.
Safeway closed 72 Dominick’s grocery stores in the Chicago area last year.

All those store closures mean more Americans will be unemployed, which translates into less tax revenue and more dependency on government welfare.
H/t FOTM’s swampygirl
~Eowyn

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2014 Real Estate Market Ready To EXPLODE

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RIGGED: The Truth About the Federal Reserve

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Martin Armstrong Warns This Is The Age Of Civil Unrest

Submitted by Martin Armstrong via ArmstrongEconomics,

All governments had better open their eyes for we are on the brink of a major convergence between both the Cycle of Civil Unrest, Civil War & Revolution and International War. Both of these models converge and as I pointed out at the Cycles of War Conference, this is the first time we have seen this convergence since the 1700s.

This is no plain modern event with civil unrest erupting because of an interconnected world. These are grassroots uprisings cross-fertilized perhaps from a world contagion yet they often have similarities – corrupt governments. Turkey, Ukraine, Thailand, Venezuela and Bosnia-Herzegovina are all middle-income democracies with elected leaders besieged by people angry at misgovernment, corruption and economic sclerosis. These days it is no longer just dictators who have something to fear from the crowd. This is the promise of Marxism that centralized planning and false promises are coming home and governments are too corrupt and incompetent to deliver what they have claimed for decades.

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USIntAs%Total

Communism is dead. The socialistic agendas that have lined the pockets of government and filled the coffers of banks is over. The national debts are on average composed of 70% interest payments not programs to help the poor as marketed. The debts that keep growing with no intent upon paying anyone back are draining the national productivity and turning the people into economic slaves. The standard of living has declined and it now takes two incomes to survive where one use to be just fine. Women won the right to work and lost the right to stay home.

Manipulating Interest Rates

IntRate-Manipulate

The promises that you save for the future have collapsed into dust as interest rates have been driven lower making savings utterly worthless. There is no such thing as saving and living off your fixed income. The elderly are being driven back into the work force and the whole ideas that a generation believed in are vanishing before their eyes.

So it is no longer communists and dictators that are the targets. All governments are now the targets and when the economy turns down after 2015.75, the threat of civilization will be pulled apart by the self-interest of politicians clinging to power to the detriment of the people.

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Winding Down Fannie and Freddie the Economic Scam of the Century

Mar 27, 2014 – 10:44 AM GMT
By: Mike_Whitney

Politics
The leaders of the U.S. Senate Banking Committee, Sen. Tim Johnson (D., S.D.) and Sen. Mike Crapo (R., Idaho), released a draft bill on Sunday that would provide explicit government guarantees on mortgage-backed securities (MBS) generated by privately-owned banks and financial institutions. The gigantic giveaway to Wall Street would put US taxpayers on the hook for 90 percent of the losses on toxic MBS the likes of which crashed the financial system in 2008 plunging the economy into the deepest slump since the Great Depression. Proponents of the bill say that new rules by the Consumer Financial Protection Bureau (CFPB) –which set standards for a “qualified mortgage” (QM)– assure that borrowers will be able to repay their loans thus reducing the chances of a similar meltdown in the future. However, those QE rules were largely shaped by lobbyists and attorneys from the banking industry who eviscerated strict underwriting requirements– like high FICO scores and 20 percent down payments– in order to lend freely to borrowers who may be less able to repay their loans. Additionally, a particularly lethal clause has been inserted into the bill that would provide blanket coverage for all MBS (whether they met the CFPB’s QE standard or not) in the event of another financial crisis. Here’s the paragraph:

“Sec.305. Authority to protect taxpayers in unusual and exigent market conditions….

If the Corporation, the Chairman of the Federal Reserve Board of Governors and the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, determine that unusual and exigent circumstances threaten mortgage credit availability within the U.S. housing market, FMIC may provide insurance on covered securities that do not meet the requirements under section 302 including those for first loss position of private market holders.” (“Freddie And Fannie Reform – The Monster Has Arrived”, Zero Hedge)

In other words, if the bill passes, US taxpayers will be responsible for any and all bailouts deemed necessary by the regulators mentioned above. And, since all of those regulators are in Wall Street’s hip-pocket, there’s no question what they’ll do when the time comes. They’ll bailout they’re fatcat buddies and dump the losses on John Q. Public.

If you can’t believe what you are reading or if you think that the system is so thoroughly corrupt it can’t be fixed; you’re not alone. This latest outrage just confirms that the Congress, the executive and all the chief regulators are mere marionettes performing whatever task is asked of them by their Wall Street paymasters.

The Rest Of The Story Here

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The World Holds Suicidal America Hostage

Tuesday, 25 March 2014 08:02 JC Collins

This article was written by JC Collins and originally published at PhilosophyOfMetrics.com

With March quickly coming to an end it appears there will be no passage of supporting legislation in Congress for the IMF 2010 Quota and Governance Reforms.

On Friday, the House of Representatives introduced a new aid bill for Ukraine which did not include the reforms. An earlier version of the bill did in fact include the reforms.

We are entering into a situation where the G20 countries have told the United States that they have until the Finance Ministers and Central Bank Governors meeting on April 10th and 11th to enact the required supporting legislation for the IMF Reforms.

This meeting is being held in Washington and it will certainly be a few days to remember.

Let’s recall that the G20 countries have stated that they will take aggressive measures to by-pass the United States and its veto power over the IMF Executive Board by the April meeting.

Let’s recall that Russia has threatened to dump its US Treasury Bonds and begin settling trade in other currencies other than the US dollar. As many have predicted, this will be the death of the petrodollar and reserve currency status of the American dollar.

America has but a few weeks to enter into multilateral agreements with the rest of the world and show its willingness to become part of a more balanced and centralized financial system. The financial power of the rest of the world has created a situation for the US where it is collapse or consolidation.

While not paying attention to the obvious sovereign debt crisis the US will have the moment the dollars status is removed, television pundits and government officials will talk America into a corner by saying that they will not be financially held hostage to the whims and desires of corrupt financial institutions which are now controlled by a consortium of special interests.

Like Nixon taking the dollar off its 30% gold peg in 1971, the American people will never be told the truth of why and how international economics has given them a post WW2 life style with the reserve status of the dollar, and how that same lifestyle and image will now be reduced as the reserve currency status is shifted to the centralized SDR system.

America is playing a dangerous game where it thinks that the level of Treasury debt being held in the foreign account reserves of other countries will protect it from a debt default. The consensus is that if the US dollar collapses so will the foreign assets of other countries. As such, its in the best interest of all countries to keep the dollar alive.

One can’t help but wonder if the simplicity of this argument is injected into the social collective to enforce the forthcoming deniability of American administration officials. There is way too much focus put on this component of the US debt and bond issue. How easy would it be for the rest of the world, represented by a disgruntled G20 and International Monetary Fund to aggressively restructure the US debt into the SDR bond allocation and composition system, while using the Bank for International Settlements as the clearing house for all transactions?

One can only think of such historical paradigm shifts as the Versailles Treaty and the end of the Ottoman Empire.

The US dollar will be removed from its current status as primary reserve currency and the world will move towards a centralized SDR system. Of this there is little doubt. When even China and Russia are calling for the implementation of this very same system, and resource rich countries like Canada and Australia also supporting the IMF restructuring, not to mention currency swap agreements with China and the establishment of renminbi trading hubs, the transition becomes imminent.

America will cry victim. It has become the hostage to a world which it held hostage since 1944. It’s karma has come full circle.

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US Now Spending 26% Of Available Tax Revenue Just To Pay Interest

By Simon Black Sovereign Man

March 25, 2014
Sovereign Valley Farm, Chile

By the 19th century, the Ottoman Empire had become a has-been power whose glory days as the world’s superpower were well behind them.

They had been supplanted by the French, the British, and the Russian empires in all matters of economic, military, and diplomatic strength. Much of this was due to the Ottoman Empire’s massive debt burden.

In 1868, the Ottoman government spent 17% of its entire tax revenue just to pay interest on the debt.

And they were well past the point of no return where they had to borrow money just to pay interest on the money they had already borrowed.

The increased debt meant the interest payments also increased. And three years later in 1871, the government was spending 32% of its tax revenue just to pay interest.

By 1877, the Ottoman government was spending 52% of its tax revenue just to pay interest. And at that point they were finished. They defaulted that year.

This is a common story throughout history.

The French government saw a meteoric rise in their debt throughout the late 1700s. By 1788, on the eve of the French Revolution, they spent 62% of their tax revenue to pay interest on the debt.

Charles I of Spain had so much debt that by 1559, interest payments exceeded ordinary revenue of the Habsburg monarchy. Spain defaulted four times on its debt before the end of the century.

It doesn’t take a rocket scientist to figure out that an unsustainable debt burden soundly tolls the death knell of a nation’s economy, and its government.

Unfortunately, it can sometimes take a rocket scientist to figure out what the real numbers are; governments have a vested interest in not being transparent about their debts and interest payments.

In the Land of the Free, for example, the government routinely doesn’t count interest payments that they make to the Social Security Trust Fund.

They’ve managed to convince people that those debts don’t matter ‘because we owe it to ourselves.’

Apparently in their minds, solemn promises made to retirees simply don’t count.

It’s like a person who is in debt up to his eyeballs with both credit card companies and family members has no compunction about stiffing Grandpa.

Obligations are obligations, no matter who they’re owed to.

Taking this into account, total US interest payments in Fiscal Year 2013 were a whopping $415 billion, roughly 17% of total tax revenue. Just like the Ottoman Empire was at in 1868.

Here’s the thing, though– it’s inappropriate to look at total tax revenue when we’re talking about making interest payments.

The IRS collected $2.49 trillion in taxes last year (net of refunds). But of this amount, $891 billion was from payroll tax.

According to FICA and the Social Security Act of 1935, however, this amount is tied directly to funding Social Security and Medicare. It is not to be used for interest payments.

Based on this data, the amount of tax revenue that the US government had available to pay for its operations was $1.599 trillion in FY2013.

This means they actually spent approximately 26% of their available tax revenue just to pay interest last year… a much higher number than 17%.

This is an unbelievable figure. The only thing more unbelievable is how masterfully they understate reality… and the level of deception they employ to conceal the truth.

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