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Sunday, March 31, 2013

Economic Stories of Relevance in Today's World -- March 31, 2013

State-Wrecked: The Corruption of Capitalism in America - New York Times - David Stockman - March 30, 2013 - ... So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.                     When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.                            THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.                     As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.                     The culprits are bipartisan, though you’d never guess that from the blather that passes for political discourse these days. The state-wreck originated in 1933, when Franklin D. Roosevelt opted for fiat money (currency not fundamentally backed by gold), economic nationalism and capitalist cartels in agriculture and industry.

Thanks, World Reserve Currency, But No Thanks: Australia And China To Enable Direct Currency Convertibility - Zero Hedge - Tyler Durden -  March 31, 2013 - ...Australia appears to have come to the same conclusion, with the Australian reporting that the land down under is set to say goodbye to the world's "reserve currency" in its trade dealings with the world's biggest marginal economic power, China, and will enable the direct convertibility of the Australian dollar into Chinese yuan, without US Dollar intermediation, in the process "slashing costs for thousands of business" and also confirming speculation that China is fully intent on, little by little, chipping away at the dollar's reserve currency status until one day it no longer is.                   That said, this latest development in global currency relations should come as no surprise to those who have followed our series on China's slow but certain  internationalization of its currency over the past two years. To wit: "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says", "India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees", and "The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap."                     And while previously the focus was on Chinese currency swap arrangements, the uniqueness of this weekend's news is that it promotes outright convertibility of the Yuan: something China has long said would happen but many were skeptical it ever would. That is no longer the case, and with Australia setting the precedent, expect many more Asian countries (at first) to follow in Australia's footsteps, because while the developed world is far more engaged in diluting its currency as a means to spur "growth", Asian and developing world nations are still engage in real, actual trade, where China is rapidly and aggressively becoming the world's hub.

Video: An American Recovery: Police Restrain Hundreds of People Begging For Food As Officials Opt To Throw It In the Trash Rather Than Help - - Mac Slavo - March 28th, 2013 - When SunTrust Bank bank foreclosed on the Laney Supermarket grocery store, managers were left with thousands of pounds of food and nowhere to put it. So, they decided to move non-perishable items to the parking lot for those who might need it. As news of the give-away spread throughout the neighborhood, a crowd numbering in the hundreds quickly swooped in.                          But the goods never made it into the hands of people who desperately needed, as local police barricaded the stockpile of food. They called in a disposal company and tossed every bit of it into the trash, angering many of those who had hoped they could take some of the food home.                  Nearly 100 million Americans are living on the edge of poverty and 47 million Americans have nowhere to turn but Uncle Sam to help put food on their tables through nutritional food assistance programs.                        When a grocery store is giving away food that has no official owner what do benevolent government officials tasked to serve and protect do?                  They look starving Americans in the face and throw the food in the trash.                         Still think the government will help you should our financial, economic and political systems collapse? Still think they care about you or your children?                   Think again.                    Not a single official had the wherewithal to do what’s right and feed the hungry.                  They were all just following orders.

The Most Important Thing to Remember About America's Food Stamp Boom - The reason a record number of Americans are on food assistance is that a record number are in poverty. - Jordan Weissmann - March 28, 2013 - he Wall Street Journal is out with a long article today exploring why the number of Americans on food stamps isn't falling along with the unemployment rate. As of December there were 47.8 million people enrolled in the Supplemental Nutrition Assistance Program, up more than a million over the year. So what's going on?                      It's a complicated answer, and the WSJ does a good job teasing out the story's different threads. But I want to focus on the simple part of the issue for a moment, because in the big picture, it's also by far the most important part. So repeat after me: There are record numbers of Americans on food stamps today because there are record numbers of Americans in poverty (records begin in 1959.)                     As of 2011, there were 46.2 million men, women, and children living below the U.S. poverty line. There isn't much reason to believe that the last year of mediocre job growth has dented that number. And until it plunges, the food stamp rolls are going to stay full -- plain and simple.

New NC legislature targets ‘arrogant’ cities - Raleigh News and Observer - Jim Morrill - March 30, 2013 - Even in a state that has grown increasingly urban, North Carolina cities are on the defensive, fighting to keep prized assets and local control against a legislature that appears intent on taking them.                         Three cities – Charlotte, Asheville and Raleigh – face the loss of signature assets. Small towns, like bigger cities, fear significant revenue drains.                                 It’s not just municipalities that have felt the sting. Senate bills would redraw school board districts in Wake and Guilford counties and change the way members in each are elected.               “It has been an amazing array of bills that add up to more restrictions on cities and on urban counties to govern themselves,” says Ferrel Guillory, a political analyst at UNC Chapel Hill.                          
• Lawmakers would transfer control of Charlotte Douglas International Airport – the world’s sixth busiest based on takeoffs and landings – from the city to an independent, regional authority.
Sen. Bob Rucho, a Matthew Republican, says city officials want control “for their personal agenda rather than what is best for the economic future of airport, the city and the region.”
• The Senate negated a lease of the former Dorothea Dix hospital property to the city of Raleigh, which plans a park. The bill would require the state to get fair market value. The lease had been approved in December under former Democratic Gov. Bev Perdue.
The measure, now in the House, sparked tense debate. At a hearing, Capitol Broadcasting president and CEO Jim Goodmon said nobody would trust doing business with the state if it breaks the lease.
• A long-anticipated bill filed last week would put Asheville’s water system under control of a Metropolitan Sewerage District, without compensating the city.                    Dozens of other bills would affect cities.                      House Bill 150, for example, would limit their ability to make homebuilders adhere to design standards. House Bill 79 calls for a constitutional amendment eliminating extraterritorial jurisdiction, a tool that helps cities control development on their borders.
Tax reform bills would end revenue sources such as the franchise and business privilege license taxes. That would cost cities $320 million, according to the N.C. League of Municipalities, though bill supporters say it would be balanced by broadening the sales tax base.                      House Bill 252 would prevent Asheville from using part of its water utility revenues for street repairs that result from installing underground water lines.                  All these follow last year’s major changes in North Carolina’s annexation laws that made it harder for cities to grow through annexation.                   “The legislature has created a threatening environment for cities, forcing cities to legitimize and justify their role in North Carolina and its economy,” says Esther Manheimer, vice mayor of Asheville and a former legislative attorney.               “Past legislatures have understood the role of cities in the overall health of the state, and that was never questioned.”...

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Read more here:

Eustace Mullins - Secrets of The Federal Reserve (FULL)


wandaarnold1716 said...

Thanks for posting this Thom. Although the information is dated, it's still accurate. The conclusion should vindicate what you are trying to do with your blog. When the international elite can no longer keep the people in the dark, the jig is up. We need to protect the Internet at all cost, keep it free and available to everyone.

James Thomas Shell said...

Thank You Wanda. I appreciate your comment and am glad you comment. There are many people who are afraid to post comments, because they are afraid Big Brother might figure out who they are and what they think.

That is like Thought Crimes in 1984. Your brain has an organic free will and the authoritarians fear free will. If more people expressed themselves, then we wouldn't be careening down the disastrous path we are on.

wandaarnold1716 said...

I wish more people would comment just to inform the rest of us. Eustace Mullins seems to be passing along a lot of disinformation along in his talk. Some additional research gave me a better feel for the man and his ideas, much of which I would disagree with. But he was present when much of this history was made and his ideas make you question what you know.

I regret that people can't disagree any more and still respect each other. The "you're either with me or against me" has no place in a democracy; but most people really feel this way. I found that out during the recent referendum.

James Thomas Shell said...

I agree Wanda, even if it is just you and I let's have a dialogue.