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Does the Fed Favor Any Group in Particular? Mark Spitznagel vs. Paul Krugman

Does the Fed Favor Any Group in Particular? Mark Spitznagel vs. Paul Krugman.

Kicking off this Economic Farce Royale… we have Mark Spitznagel explaining why the Fed is the root of all evil… or at least the source of the so-call “wealth gap”. We’ve sprinkled our own comments throughout to keep it lively and (God help us) not too serious.

OK. Round one, *ding, ding*…


Mark Spitznagel

Amajor issue is the growing disparity between rich and poor, the 1% versus the 99%. While the president’s solutions differ from Republicans, they both ignore a principal source of this growing disparity.

The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price. (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm… dun, dun, dun… the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power.

[Go figure…]

David Hume, the 18th-century Scottish philosopher, pointed out that when money is inserted into the economy (from a government printing press or, as in Hume’s time, the importation of gold and silver), it is not distributed evenly but “confined to the coffers of a few persons, who immediately seek to employ it to advantage.”

[Well, yeah…]

In the 20th century, the economists of the Austrian school built upon this fact as their central monetary tenet. Ludwig von Mises and his students showed that an increase in money supply is beneficial to those who get it first and is detrimental to those who get it last. Monetary inflation is a process, not a static effect. To think of it only in terms of aggregate price levels (I’m looking at you Ben Bernanke) is to ignore this pernicious process and the imbalance and economic dislocation that it creates.

As Mises protégé Murray Rothbard explained, monetary inflation is akin to counterfeiting, which necessitates that some benefit and others don’t. After all, if everyone counterfeited in proportion to their wealth, there would be no real economic benefit to anyone. Similarly, the expansion of credit is uneven in the economy, which results in wealth redistribution. To borrow a visual from another Mises student, Friedrich von Hayek, the Fed’s money creation does not flow evenly like water into a tank, but rather oozes like honey into a saucer, dolloping one area first and only then very slowly dribbling to the rest.

The Fed doesn’t expand the money supply by uniformly dropping cash from helicopters over the hapless masses. Rather, it directs capital transfers to the largest banks (whether by overpaying them for their financial assets or by lending to them on the cheap), minimizes their borrowing costs, and lowers their reserve requirements. All of these actions result in immediate handouts to the financial elite first, with the hope that they will subsequently unleash this fresh capital onto the unsuspecting markets, raising demand and prices wherever they do.

The Fed, having gone on an unprecedented credit expansion spree, has benefited the recipients who were first in line at the trough: banks (imagine borrowing for free and then buying up assets that you know the Fed is aggressively buying with you) and those favored entities and individuals deemed most creditworthy. Flush with capital, these recipients have proceeded to bid up the prices of assets and resources, while everyone else has watched their purchasing power decline.

At some point, of course, the honey flow stops—but not before much malinvestment. Such malinvestment is precisely what we saw in the historic 1990s equity and subsequent real-estate bubbles (and what we’re likely seeing again today in overheated credit and equity markets), culminating in painful liquidation.

The Fed is transferring immense wealth from the middle class to the most affluent, from the least privileged to the most privileged. This coercive redistribution has been a far more egregious source of disparity than the president’s presumption of tax unfairness (if there is anything unfair about approximately half of a population paying zero income taxes) or deregulation.

Pitting economic classes against each other is a divisive tactic that benefits no one. Yet if there is any upside, it is perhaps a closer examination of the true causes of the problem. Before we start down the path of arguing about the merits of redistributing wealth to benefit the many, why not first stop redistributing it to the most privileged?

Ooh… Them fightin’ words. OK, we turn to *ahem* America’s leading economist, nobel laureate and pointy head, Paul Krugman. He’ll now take himself too seriously and give us his academic rebuttal. We took a few editorial liberties so you wouldn’t fall asleep…

Round two, *ding, ding*…


Paul KrugmanI’ll be the first to admit that these past few years have been lean times in many respects — but they’ve been boom years for agonizingly dumb, pound-your-head-on-the-table economic fallacies. The latest fad — illustrated by what Mark Spitznagel just wrote above [ouch] — is that expansionary monetary policy is a giveaway to banks and plutocrats generally.

Indeed, his screed actually claims that the whole 1 versus 99 thing should really be about reining in or maybe abolishing the Fed. (Hah… Could you imagine that!) Unfortunately, and I’m sorry for this backhanded compliment, some pretty smart people have bought into at least some version of this dumb story.

What’s wrong with the idea that running the printing presses is a giveaway to plutocrats? Let me count the ways!

First, the situation is utterly the reverse of what Spitznagel claimed. Quantitative easing isn’t being imposed on an unwitting populace by financiers and rentiers; it’s being undertaken, to the extent that it is, over howls of protest from the financial industry. I mean, c’mon! Where are the editorials demanding that the Fed raise its inflation target, right?!

[Crickets…]

Uhh… Beyond that, let’s talk about the economics.

The deliberately misleading… er I mean, naive, version of Fed policy Spitznagel made is that Ben Bernanke is “giving money” to the banks. What it actually does, of course, is buy stuff from the banks, usually short-term government debt but nowadays sometimes other stuff with money that didn’t exist before. But, seriously, it’s not a gift.

To claim that it’s a gift you have to claim that the prices the Fed is paying are artificially high, or equivalently that interest rates are being pushed artificially low. And you do in fact see assertions to that effect all the time. But if you think about it for even a minute, that claim is truly bizarre.

I mean, what is the un-artificial, or if you prefer, “natural” rate of interest? As it turns out, there is actually a standard definition of the natural rate of interest and it’s basically defined on a PPE basis (that’s for proof of the pudding is in the eating). Roughly, the natural rate of interest is something, kind of like the rate that would lead to stable inflation at more or less full employment.

[Uh-huh…]

And we have low inflation with high unemployment, strongly suggesting that the natural rate of interest is below current levels, and that the key problem is the zero lower bound which keeps us from getting there. Under these circumstances, expansionary Fed policy isn’t some kind of giveway to the banks, it’s just a giveaway to the banks that the economy needs.

Furthermore, Fed efforts to do this probably tend on average to hurt, not help, bankers. Yes, I just wrote that with a straight face. Banks are largely in the business of borrowing short and lending long; anything that compresses the spread between short rates and long rates is likely to be bad for their profits. And the things the Fed is trying to do are in fact largely about compressing that spread, either by persuading investors that it will keep short rates at zero for a longer time or by going out and buying long-term assets. These are actions you would expect to make bankers angry, not happy — and that’s what has actually happened.

How, exactly, does expansionary monetary policy hurt the 99 percent? Think of all the people living on fixed incomes, we’re told. But who are these people? I know the picture: retirees living on the interest on their bank account and their fixed pension check — and there are no doubt some people fitting that description. But there aren’t many of them, which makes it ok.

No, the real victims of expansionary monetary policies are the very people who the current mythology says are pushing these policies. And that, I guess, explains why we’re hearing the opposite.

The typical retired American these days relies largely on Social Security — which is indexed against inflation. He or she may get some interest income from bank deposits, but not much: ordinary Americans have fewer financial assets than the elite can easily imagine. And as for pensions: yes, some people have defined-benefit pension plans that aren’t indexed for inflation. But that’s a dwindling minority — which again means it’s perfectly ok — and I assume the effect of, say, 1 or 2 percent higher inflation isn’t going to be enormous even for this minority.

What’s the takeaway? That unless you’re going to go stumping for policy on capitol hill (in which case, there’s no hope for you) you should focus on actionable steps you can take to increase your wealth… instead of engaging in groupthink. As for the policy debate…well, it’s always good for a laugh.

Regards,

The Daily Reckoning

Ed. Note: Whether you’re on a fixed income or not, there are ways you can safeguard and even grow your wealth, regardless of where you stand on the issue debated above. Today’s Daily Reckoning email edition gave readers a chance to get in on a one-time live event that will help them do just that. Didn’t see that offer? Not to worry… The Daily Reckoning will be back tomorrow with another opportunity for you to take advantage of. Be sure you don’t miss that one too. Sign up for the FREE Daily Reckoning email edition, right here.

 

An open letter from Carl Bernstein to Guardian editor Alan Rusbridger | Media | theguardian.com

An open letter from Carl Bernstein to Guardian editor Alan Rusbridger | Media | theguardian.com.

Carl Bernstein

Carl Bernstein, Watergate journalist and author, who has written a letter to the Guardian editor, Alan Rusbridger, who is to be questioned by MPs over the NSA revelations. Photograph: Teri Pengilley

Dear Alan,

 

There is plenty of time – and there are abundant venues – to debate relevant questions about Mr Snowden’s historical role, his legal fate, the morality of his actions, and the meaning of the information he has chosen to disclose.

 

But your appearance before the Commons today strikes me as something quite different in purpose and dangerously pernicious: an attempt by the highest UK authorities to shift the issue from government policies and excessive government secrecy in the United States and Great Britain to the conduct of the press – which has been quite admirable and responsible in the case of the Guardian, particularly, and the way it has handled information initially provided by Mr Snowden.

 

Indeed, generally speaking, the record of journalists, in Britain and the United States in handling genuine national security information since World War II, without causing harm to our democracies or giving up genuine secrets to real enemies, is far more responsible than the over-classification, disingenuousness, and (sometimes) outright lying by a series of governments, prime ministers and presidents when it comes to information that rightly ought to be known and debated in a free society. Especially in recent years.

 

You are being called to testify at a moment when governments in Washington and London seem intent on erecting the most serious (and self-serving) barriers against legitimate news reporting – especially of excessive government secrecy – we have seen in decades.

 

The stories published by The Guardian, the Washington Post and the New York Times based on Mr Snowden’s information to date hardly seem to represent reckless disclosure of specific national security secrets of value to terrorists or enemy governments or in such a manner as to make possible the identification of undercover agents or operatives whose lives or livelihoods would be endangered by such disclosure. Such information has been carefully redacted by the Guardian and other publications and withheld from stories based on information from Mr Snowden. Certainly terrorists are already aware that they are under extensive surveillance, and did not need Mr Snowden or the Guardian to tell them that.

 

Rather, the stories published by the Guardian – like those in the Washington Post and the New York Times – describe the scale and scope of electronic information-gathering our governments have been engaged in – most of it hardly surprising in the aggregate, given the state of today’s technology, and a good deal of it previously known and reported and indeed often discussed “on background” with reporters by high government officials from the White House to Downing Street confident that their identities will not be disclosed.

 

Moreover, the Guardian—like the Times and the Post in the US – has gone to great lengths to consult with Downing Street, the White House and intelligence agencies before publishing certain information, giving time for concerns to be raised, discussed sensibly, and considered.

 

What is new and most significant about the information originating with Mr Snowden and some of its specificity is how government surveillance has been conducted by intelligence agencies without the proper oversight – especially in the United States – by the legislative and judicial branches of government charged with such oversight, especially as the capabilities of information-gathering have become so pervasive and enveloping and with the potential to undermine the rights of all citizens if not carefully supervised. The “co-operation” of internet and telecommunications companies in some of these activities ought to be of particular concern to legislative bodies like the Commons and the US Congress.

 

As we have learned following the recent disclosures initiated by Mr Snowden, intelligence agencies – especially the NSA in the United States – have assiduously tried to avoid and get around such oversight, been deliberately unforthcoming and oftentimes disingenuous with even the highest government authorities that are supposed to supervise their activities and prevent abuse.

 

That is the subject of the rightful and necessary public debate that is now taking place in the US, the UK and elsewhere.

 

Rather than hauling in journalists for questioning and trying to intimidate them, the Commons would do well to encourage and join that debate over how the vast electronic intelligence-gathering capabilities of the modern security-state can be employed in a manner that gives up little or nothing to real terrorists and real enemies and skilfully uses all our technological capabilities to protect us, while at the same time taking every possible measure to insure that these capabilities are not abused in a way that would abrogate the rights and privacy of law-abiding citizens.

 

There have always been tensions between such objectives in our democracies, especially in regard to the role of the press. But as we learned in the United States during our experience with the Pentagon Papers and Watergate, it is essential that no prior governmental restraints or intimidation be imposed on a truly free press; otherwise, in such darkness, we encourage the risk of our democracies falling prey to despotism and demagoguery and even criminality by our elected leaders and government officials.

 

With warmest regards and admiration,

 

Carl Bernstein

 

Leaked IPCC Report Must Be Catalyst for a Reassessment of Global Food System – Our World

Leaked IPCC Report Must Be Catalyst for a Reassessment of Global Food System – Our World.

In case it wasn’t already clear, there is now consensus that climate change will have a significant impact on the world’sfood systems. A leaked draft of the newest report from the United Nations Intergovernmental Panel on Climate Change (IPCC) underscored the serious threat climate change poses for meeting demand for food in the coming decades. The contents of the report — though not a revelation — should be a catalyst for a complete reassessment of the global food system.

Increasingly, it is not a question of if or when a changing climate will impact our food, but rather how farms and agricultural systems will choose to adapt.

In a warming world there will be bursts of heavy rain and prolonged drought that will, as the UN puts it, exacerbate water shortages and shift growing seasons. Some of the biggest impacts from climate change will be felt on farms, with the UN estimating that yields of staple crops such as corn, wheat and rice could be depressed by as much as 2 percent each decade for the rest of the century.

What all of this will actually mean for the world’s hungry though, and what we can do about it is another story entirely. As awareness about the impacts of climate change increases, the debate about how to achieve climate resiliency and feed the world intensifies.

Food sector emissions are largely the result of industrial livestock operations, fertiliser and chemical use, carbon loss from soils on industrial farms, and significantly, deforestation driven by a handful of corporate controlled commodities.

We believe we cannot have these conversations without first acknowledging the role the food system itself currently plays in the crisis. Today, almost every aspect of our modern food system generates greenhouse gas emissions; responsible for one third of the world’s total greenhouse gas emissions every year. Food sector emissions are largely the result of industrial livestock operations, fertiliser and chemical use, carbon loss from soils on industrial farms, and significantly, deforestation driven by a handful of corporate controlled commodities.

Indonesia is now the third largest greenhouse gas emitter in the world, just behind China and the US. This is partially as a result of clearing rainforests and peatlands to make way for industrial palm oil plantations — an ingredient now found in much of the packaged foods lining our supermarket shelves.

The climate solutions from agribusiness players — such as commodity and chemical giants Cargill, Wilmar and Monsanto — are worth questioning in light of the impact these corporations have on our climate. In their PR spin, these corporations suggest that we face key tradeoffs: either accept chemicals, engineered seeds, and synthetic fertilisers as well as expansion of cropland into forests — or face more hunger. Echoing this talking point in 2008, the chair of the board of agrochemical giant Syngenta said: “The world has to choose between technology, deforestation and hunger. I can’t see another way out.”

But this is a false tradeoff. Executives from the companies profiting from industrial agriculture may see little reason to stray from their current path, but in an increasingly resource-constrained and climate-unstable world we cannot support life unless we shift away from input-intensive agriculture that is degrading ecosystems, marginalising small farmers, and failing to eliminate hunger.

So what can we do? We can move quickly and confidently toward climate-friendly farming. Protecting forests, working with smallholder farmers and promoting climate-smart agriculture can address the roots of hunger and the climate crisis.

A global assessment by the UN special rapporteur on the right to food concludes: “… agroecology, if sufficiently supported, can double food production in entire regions within 10 years while mitigating climate change and alleviating rural poverty.”

Research has shown that by using agro-ecological methods, such as organic fertilisers, crop rotations, cover crops and ecological pest management, and focusing on improving the productivity of smallholder farmer communities that already feed one third of the world, we can maintain the health of farmlands. We can also promote increased resilience to climate change impacts and meet our food needs. A global assessment by the UN special rapporteur on the right to food concludes: “… agroecology, if sufficiently supported, can double food production in entire regions within 10 years while mitigating climate change and alleviating rural poverty.”

We need to start incentivising — through corporate agreements, consumer demand, and policy — an agricultural system that’s climate smart and pro-farmer, and at the same time reduce emissions from the industrial food sector as fast as we can.

That means protecting pristine forests from soy or palm oil plantations; reducing dependency on synthetic fertiliser and petroleum-based agrochemicals; working with smallholders to improve the productivity of traditional farming systems; and addressing the rampant waste along the food chain.

Today, an estimated one third of all food that could be eaten is wasted. In some countries such as the US as much as half is wasted. Just focusing on food waste reduction could feed three billion people and still leave enough surplus for countries to provide 130 percent of the nutritional requirements for their entire populations, according to food waste expert, Tristram Stuart.

As a warming climate increasingly affects the world’s farmers, agribusiness will continue to prey on fears of “not enough” to preserve their way of doing business. It’s time to pursue a different path.

 

European Fascism Is Different This Time, Says the New York Times :: The Circle Bastiat

European Fascism Is Different This Time, Says the New York Times :: The Circle Bastiat.

Tuesday, November 12th, 2013

A recent New York Times article bemoans the rise of populist parties in European countries, which are stridently nativist and nationalist. In Denmark, some polls show that the Danish People’s Party is now more popular than the incumbent Social Democrats.  Likewise, a recent poll indicates that the National Front, founded by the notorious Jean-Marie Le Pen and now led by his daughter Marine Le Pen,  is the most popular party in France.  According to the article such “disruptive upstart groups” are also making inroads in Austria, Britain, Bulgaria, the Czech Republic, Finland and the Netherlands.

The article hastens to assure readers, however, that, aside from Greece and maybe Hungary,  ”The trend in Europe does not signal the return of fascist demons from the 1930s.”  Why no cause for concern?  You see  ”Europe’s populists want to strengthen, not shrink, government and see the welfare state as an integral part of their national identities.”   These parties tap into  ”a curious mix of right-wing identity politics and left-wing anxieties about the future of the welfare state.”  In making such an argument the author of the article, Andrew Higgins, demonstrates his complete innocence of any historical or doctrinal knowledge of the phenomenon of fascism.

A strong government and a welfare state was precisely what the the European fascists of the 1930s promoted in their propaganda and instituted once they achieved power.  For example, the 25-point program of Hitler’s National Socialist party, promulgated in 1920, called for an extensive  welfare state enforced by a strong central government.  Point 7 demanded “that the State shall make it its primary duty to provide a livelihood for its citizens.”  Point 11 sought “The abolition of all incomes unearned by work” and “The breaking of the slavery of interest.”  Points 13-16 demanded, respectively:  the nationalization of all  trusts; profit-sharing in all large industrial enterprises; the “extensive development” of old age insurance; and the communalizing of large department stores and the subsidization and preferential treatment of “small traders” by the State.  Point 20 demanded that the State reconstruct education “with the aim of opening up to every able and hard-working German the possibility of higher education and of thus obtaining advancement.”  It also demanded “the education of gifted children of poor parents, whatever their class or occupation, at the expense of the State.”  Point 21 would require that the State “ensure that the nation’s health standards are raised by protecting mothers and infants, by prohibiting child labor, by promoting physical strength through legislation providing for compulsory gymnastics and sports, and by the extensive support of clubs engaged in the physical training of youth.”   Last but not least, Point 25 addressed the means for putting the whole program into effect and  demanded  ”the creation of a strong central state power for the Reich; the unconditional authority of the political central Parliament over the entire Reich and its organizations.”

Nor was the National Socialist  program for a welfare state mere empty rhetoric.  In his book, Hitler’s Beneficiaries: Plunder, Racial War, and the Nazi Welfare StateGotz Aly argues that Hitler created “a racist-totalitarian welfare state” that showered munificent benefits on the lower and middle classes and on farmers.  Living standards for these groups remained elevated almost until the end of World War 2.  The Hitlerian welfare-warfare state was paid for by punitive capital gains taxes on corporations, a 50 percent surcharge on all wages (50% of which was paid by 4% of the highest wage earners), and, during the war, by the plunder of Jewish property and conquered countries.

 

What You Should Be Doing NOW to Protect Yourself from Radiation | Zero Hedge

What You Should Be Doing NOW to Protect Yourself from Radiation | Zero Hedge.

It is well-known that potassium iodide works to protect against damage from radioactive iodine by saturating our body (the thyroid gland, specifically) with harmless iodine, so that our bodies are unable to absorb radioactive iodine from nuclear accidents.

For example, the World Health Organization notes:

The thyroid gland is at particular risk from irradiation from radioactive iodine because the thyroid uses iodine to produce hormones that regulate the body’s metabolism.  The thyroid gland does not differentiate between non-radioactive and radioactive iodine.

***

When taken at the appropriate dosage and within the correct time interval around exposure to radioactive iodine, KI [i.e. potassium iodide] saturates the thyroid gland with stable (non-radioactive) iodine. As a result, radioactive iodine will not be taken up and stored by the thyroid gland.

However, KI only protects against one particular radioactive element, radioactive iodine, which has a half life of only 8.02 days.* That means that the iodine loses half of its radioactivity within 8 days.  For example, after the initial Fukushima melt-down, radioactive iodine was found in California kelp.

But the longer-term threat lies elsewhere.  As the New York Times noted – in addition to iodine-131 – the big danger is cesium:

Over the long term, the big threat to human health is cesium-137, which has a half-life of 30 years.

At that rate of disintegration, John Emsley wrote in “Nature’s Building Blocks” (Oxford, 2001), “it takes over 200 years to reduce it to 1 percent of its former level.”

It is cesium-137 that still contaminates much of the land in Ukraine around the Chernobyl reactor.

***

Cesium-137 mixes easily with water and is chemically similar to potassium. It thus mimics how potassium gets metabolized in the body and can enter through many foods, including milk.

***

The Environmental Protection Agency says that … once dispersed in the environment … cesium-137 “is impossible to avoid.”

Cesium-137 is light enough to be carried by the wind a substantial distance. And it is being carried by ocean currents towards the West Coast of North America.

Fortunately – while little-known in the medical community – other harmless minerals can help “saturate” our bodies so as to minimize the uptake of other harmful types of radiation.

The U.S. Department of Defense’s Army Medical Department Center and School explained in its book Medical Consequences of Radiological and Nuclear Weapons (Chapter 4):

One of the keys to a successful treatment outcome is to reduce or eliminate the uptake of internalized radionuclides before they can reach the critical organ.

***

The terms “blocking” or “diluting” agent can, in most cases, be used interchangeably. These compounds reduce the uptake of a radionuclide by saturating binding sites with a stable, nonradioactive element, thereby diluting the deleterious effect of the radioisotope. For example, potassium iodide is the FDA-recommended treatment to prevent radioactive iodine from being sequestered in the thyroid…. Nonradioactive strontium compounds may also be used to block the uptake of radioactive strontium. In addition, elements with chemical properties similar to the internalized radio-nuclide are often used as blocking agents. For example, calcium, and to a lesser extent phosphorus, can be used to block uptake of radioactive strontium.

The American Association of Physicists In Medicine agrees:

As does the book published in 2006 by the American Academy of Orthopaedic Surgeons, called Weapons of Mass Casualties and Terrorism Response:

After the U.S. military conducted above-ground nuclear tests on Bikini Island, scientists found that adding potassium to the soil reduced the uptake of radioactive cesium by the plants:

The first of a series of long-term field experiments was established on Bikini Island during the late 1980s to evaluate potential remediation techniques to reduce the uptake of cesium-137 into plants (Robison and Stone, 1998). Based on these experiments, the most effective and practical method for reducing the uptake of cesium-137 into food crop products was to treat agricultural areas with potassium fertilizer (KCl).

John Harte – Professor at the University of California at Berkeley in Energy and Resources and Ecosystem Sciences, a PhD physicist who previously taught physics at Yale, a recipient of the Pew Scholars Prize, Guggenheim Fellowship,  the Leo Szilard prize from the American Physical Society, and who has served on six National Academy of Sciences Committees and has authored over 170 scientific publications, including six books – notes:

Marine fish are usually about 100 times lower in cesium-137 than are freshwater fish because potassium, which is more abundant in seawater, blocks uptake of cesium by marine organisms.

The same is true in mammals.  The U.S. Department of Health and Human Services’ Agency for Toxic Substances and Disease Registry notes:

Cesium is a close chemical analogue of potassium. Cesium has been shown to compete with potassium for transport through potassium channels and can also substitute for potassium in activation of the sodium pump and subsequent transport into the cell.

***

Elimination rates of cesium may be altered by potassium intake.  Following the intraperitoneal injection of 137 Cs in rats, a basal diet supplemented with 8–11% potassium resulted in cesium clearance of 60 days compared to about 120 days for rats receiving the unsupplemented basal diet that contained 1% potassium

(Richmond and Furchner 1961). After 20 days on the diets, rats receiving supplemental potassium had body burdens of 137 Cs that were one-half those of the rats not receiving supplemental potassium. This finding shows that  supplemental potassium reduces the uptake and increases the elimination of ingested 137 Cs.

Dr. Ingrid Kohlstadt – a medical doctor with a master’s of public health, on the Faculty at the Johns Hopkins Bloomberg School of Public Health, editor of the best-seller Food and Nutrients in Disease Management – says that the same is true for humans:

Plutonium is treated like iron by our bodies. So getting enough iron will help reduce absorption of plutonium. And see this. (Plutonium is a very heavy element, and so normally cannot travel too far. Therefore, adequate iron intake is primarily important for those living in Japan.)

Here are the recommended daily allowances (RDA) for various minerals (data from the U.S. Department of Agriculture):

You can buy calciumpotassiumiron supplements. You can also buy non-radioactive strontium supplements.  Or incorporate foods high in calciumpotassium, and iron.

(Selenium also helps protect our bodies from radiation. See  thisthis and this.)

In addition to these minerals, getting enough of certain vitamins is helpful.

A number of scientific articles conclude that Vitamin A helps to protect us from radiation. See thisthis and this.

Numerous studies show that Vitamin C helps to protect the body against radiation.

Vitamin D can help repair damage to DNA, and may help protect against low-level radiation.   As Science Daily reports:

Radiological health expert Daniel Hayes, Ph.D., of the New York City Department of Health and Mental Hygiene suggests that a form of vitamin D could be one of our body’s main protections against damage from low levels of radiation. Writing in the International Journal of Low Radiation, Hayes explains that calcitriol, the active form of vitamin D, may protect us from background radiation and could be used as a safe protective agent before or after a low-level nuclear incident.

***

“Vitamin D by its preventive/ameliorating actions should be given serious consideration as a protective agent against sublethal radiation injury, and in particular that induced by low-level radiation,” concludes Hayes.

It takes a couple of weeks or months to build up our body’s levels of Vitamin D.  You cannot just pop a bunch of pills and raise your Vitamin D level.   You should never take more than the recommended dose, and  – even if you did – it wouldn’t raise your vitamin D level all at once.  As such, we should start now …

Vitamin E has also shown promise in protecting from low-level radiation, at least in animal studies. Here and here.

Here are the RDAs for vitamins (data from the U.S. Department of Agriculture):

You can buy vitamin supplements, or eat foods rich in vitamins ACD and E.

Antioxidant-rich foods also help protect you against low-level radiation. See this for the science behind antioxidant protection from radiation, tips on inexpensive, anti-oxidant rich foods … and other valuable tips on how to protect yourself from radiation.

The bottom line: starting to saturate your body now with the right types of healthy vitamins, minerals and antioxidants can help protect you against radiation if it hits in the future.

Postscript: We only advocate taking the RDA for various nutrients, which is healthy for you anyway. We are not talking about mega-doses.

We have spent hours looking through medical journal articles for other foods which help protect against radiation.  Here are the results.

For a more complete discussion of commonly-accepted scientific consensus on different prevention and treatment options, please review the Army’s Medical Consequences of Radiological and Nuclear Weapons and the The American Association of Physicists In Medicine’s Medical Management of Radionuclide Internal Contamination.

*  You should not take potassium iodide supplements unless you are exposed to high doses of radioactive iodine, because it can damage some people’s health.  These supplements are only for short-term, high-dose ratiation protection, not for years-long low-dose exposure. For long-term exposures, a daily, baseline level of iodine is healthier.

Potassium iodide is found in most common table salt.  However, if exposed to air, the iodine content can largely evaporate within a month or so.  So store your salt in as air-tight a condition as possible.  Also, it is important not to ingest too much potassium iodide, and most of us already get a lot of salt in our diets from processed foods.  (The RDA for “sodium” – i.e. salt – is listed in the table above on the RDAs for various minerals)

Here is RDA for iodine:

And here are some iodine-rich foods.

Click here for a discussion by two medical doctors about preventative iodine doses.

Disclaimer: We are not doctors or health professionals, and this should not be taken as medical advice. Nothing contained herein is intended to diagnose or treat any condition.

 

You’ve Been Warned: Why You Need to Be Ready for Total Grid Failure |

You’ve Been Warned: Why You Need to Be Ready for Total Grid Failure |.

Are you ready for total grid failure

If you haven’t been in a bubble cut off from all forms of media lately, it would be impossible to have missed all of the warnings being issued about the impending loss of our electrical grid.

This isn’t just coming from so-called “gloom and doom” sites or from alternative media.  Major mainstream media sources such as ABC News, the Washington Post, the New York Times, and CBS News have all issued the alerts. Unfortunately, the hordes seem to be brushing these warnings off as something that cannot happen, because the reality is too unpleasant to even contemplate.  Many seem to think that they are far better to stick their heads in the sand and be assured it can never happen than to prepare ahead of time.

Who Is Ringing the Warning Bell?

In case you’ve missed it, here are some of the warnings over the past few months that most people are ignoring.

When Janet Napolitano stepped down from her role as head of the DHS she released an open letter to her successor.  One chilling tidbit she passed on was this.

The outgoing Homeland Security Secretary has a warning for her successor: A massive and “serious” cyber attack on the U.S. homeland is coming, and a natural disaster — the likes of which the nation has never seen — is also likely on its way. (source)

Read more on Napolitano’s warning HERE.

But there’s more.  Big Sis isn’t the only one warning us about the possibility of a grid-down scenario.

Former North Dakota Senator Byron Dorgan has co-authored a book about the topic with David Hagberg – his novel Gridlock is a fictional account of a very real threat.

“Our power system is very vulnerable. You could see a shutdown by hackers in cyber terror. You could see it shutdown for days, weeks or months, crippling this country and causing enormous havoc.” (source)

Rep. Ed Markey (D-Mass.) also actively agrees with the threat assessment.  He released a report last May that said our power infrastructure was “highly vulnerable to attacks from Iran and North Korea” and as well as to natural threats such as geomagnetic storms from solar activity.

“With one well-placed keystroke, Americans could be plunged into darkness and chaos through the damage to our electric grid. Foreign enemies are employing Web warriors to attack our way of life, and it’s time that our actions respond to the potential threat.” (source)

Other people in the know have attempted to make the public aware of the potential for apocalyptic disaster, but few seem to be taking them seriously.

We are only one act of madness away from a social cataclysm unlike anything our country has ever known.
-Congressman Trent Franks (R-AZ), Senior Member House Armed Service Committee

EMP is one of the small number of threats that could hold at risk the continued existence of U.S. civil society.
-Dr. Robert Hermann, Commissioner US Congress EMP Commission

Just one violent active region on the sun can cause continent-wide, perhaps even planetary-scale impacts to our critical infrastructure.
-John Kappenman, Principal Investigator US Congress EMP Commission

The Likelihood of a severe geo-magnetic event capable of crippling our electric grid is 100%.
-Congresswoman Yvette Clarke (D-NY), Senior Member House Homeland Security Committee

(source)

Former Congressman Roscoe Bartlett has been preaching the dangers of EMP, whether deliberate or natural, for many years:

We could have events in the future where the power grid will go down and it’s not, in any reasonable time, coming back up. For instance, if when the power grid went down some of our large transformers were destroyed, damaged beyond use, we don’t make any of those in this country. They’re made overseas and you order one and 18 months to two years later they will deliver it. Our power grid is very vulnerable. It’s very much on edge. Our military knows that.

There are a number of events that could create a situation in the cities where civil unrest would be a very high probability.

I think that those who can, and those who understand, need to take advantage of the opportunity when these winds of strife are not blowing to move their families out of the city. (source)

Don’t forget the veiled warnings implicit in predictive programming entertainment.  One of last year’s biggest television hits was the show “Revolution“, which portrayed life 15 years after a deliberate takedown of the power grid.

GridEx Drill in November

And finally, if all of these warnings aren’t enough to alert your Spidey senses, here is one that is undeniable.

The United States, Mexico, and Canada intend to participate in a drill in November that will simulate the takedown of the grid.

An electrical grid joint drill simulation is being planned in the United States, Canada and Mexico. Thousands of utility workers, FBI agents, anti-terrorism experts, governmental agencies, and more than 150 private businesses are involved in the November power grid drill.

The downed power grid simulation will reportedly focus on both physical and cyber attacks. The antiquated electrical system in the United States has been one of the most neglected pieces of integral infrastructure.

The disaster drill is being described as a crisis practice unlike anything the real power grid has ever experienced. The GridEX II drill Nov. 13-14 will focus primarily on how governments will react if the electrical grid fails and, for instance, the food supply chain collapses.

American utility companies are responsible for running approximately 5,800 power plants and about 450,000 high-voltage transmission lines, controlled by various devices which have been put into place over the past decades. Some of the utility companies which oversee the power grid reportedly use “antique computer protocols” which are “probably” safe from cyber hackers,” The New York Times reported.

“If an adversary lands a knockout blow, [experts] fear, it could black out vast areas of the continent for weeks; interrupt supplies of water, gasoline, diesel fuel and fresh food; shut down communications; and create disruptions of a scale that was only hinted at by Hurricane Sandy and the attacks of Sept. 11,” The Times said.

If the power grid fails, a lack of electricity and food delivery are only the first wave of troubles facing the American people. Police could face major problems with civil unrest. Of course, there also would not be any electric heating or cooling, which easily could lead to many deaths depending on the season. (source)

The most alarming thing about this drill is the trend of suspected false flag events in America that have corresponded with “drills”.  Whether or not this will coincide in a real take-down of the grid remains to be seen, but one only needs to think back to events such as the Boston Marathon Bombing, the 9/11 attacks, and the Oklahoma City Bombing to see that there is a possibility that when “drills” occur, often the players are simply being moved into place right under the nose of the public.

What Can You Do to Be Ready?

It doesn’t honestly matter HOW the grid goes down. Whether it is an enemy attack, as in the novel One Second After, a government false flag in order to institute martial law, or a natural act that is the result of a solar flare, a long-term grid collapse will result in an extremely high death toll.

If you are already of the preparedness mindset, you’ll fare better than the average North American.  However, many people have never contemplated the following questions:

  • How will you get food if the grocery stores are closed?
  • How will you cook food if you are able to acquire it?
  • What will happen to the perishable food in your refrigerator and freezer?
  • How will you heat and cool your home if you are in an area subject to extreme temperatures?
  • What will you use for light once the scented candle that sits on your coffee table is gone?
  • How will you transport yourself if a) your vehicle doesn’t run because the computers are fried or b) it runs but you can’t get gas because the pumps at the station run on electricity?
  • What will you drink and wash with if the municipal water facilities are no longer providing water or if the pump on your well runs on electricity?

Find as many solutions as possible for the issues you would face if going for weeks (or longer) without power.  You must stay warm, eat, and drink.  Everything else is a bonus. You can live without the television, the video game console, the microwave in the kitchen, and the laptop.

Some people like to give arguments as to why they can’t resolve these issues.  They live in an apartment, they rent, they have a limited budget….the list is as long as indefinite detention.  The fact is, by realizing these things are necessary and refusing to face them and find solutions for your particular situation, you are setting your family up to suffer, and possibly even die, when it could be avoided.

A recent article encouraged readers who were new to prepping to start out by getting ready for a two week power outage.  Apply the following  information to create your own preparedness plan for the grid failure that is sure to come. Modify the suggestions to adapt them to your particular home, family, and climate.

Water

Everyone knows that clean drinking water is something you can’t live without. In the event of a disaster, the water may not run from the taps, and if it does, it might not be safe to drink, depending on the situation.  If there is a boil order in place, remember that if the power is out, boiling your water may not be as easy as turning on your stove.

Each family should store a two week supply of water. The rule of thumb for drinking water is 1 gallon per day, per person.  Don’t forget to stock water for your pets, also.

You can create your water supply very inexpensively.  Many people use clean 2 liter soda pop bottles to store tap water.  Others purchase the large 5 gallon jugs of filtered water from the grocery store.  Consider a gravity fed water filtration device and water purification tablets as well.

Food and a Way to Prepare It

There are two schools of thought regarding food during a power outage.  One: you need a cooking method that does not require the grid to be functioning.  Two: you can store food that doesn’t require cooking.

If you opt for a secondary cooking method, be sure that you have enough fuel for two weeks.  Store foods that do not require long cooking times – for example, dried beans would use a great deal of fuel, but canned beans could be warmed up, or even eaten cold.

Click HERE for a short term food storage list

Click HERE to find a list of foods that require no cooking.

Heat (Depending on Your Climate)

If your power outage takes place in the winter and you live in a colder climate, heat is another necessity.  During the first 24 hours after a power outage, you can stay fairly warm if you block off one room of the house for everyone to group together in.  Keep the door closed and keep a towel or blanket folded along the bottom of the door to conserve warmth.  You can safely burn a couple of candles also, and in the enclosed space, your body heat will keep it relatively warm.  As well, dress in layers and keep everything covered – wear a hat, gloves (fingerless ones allow you to still function), and a scarf.

Click HERE to learn how to stay warm with less heat.

However, after about 48 hours, that’s not going to be enough in very cold weather. You will require back-up heat at this point in certain climates.  If you are lucky enough to have a source of heat like a fireplace or woodstove, you’ll be just fine as long as you have a supply of wood.

Consider a portable propane heater (and propane) or an oil heater.  You have to be very careful what type of backup heat you plan on using, as many of them can cause carbon monoxide poisoning if used in a poorly ventilated area.

Learn more about off-grid heat options HERE.

Sanitation Needs

A common cause of illness, and even death, during a down-grid situation is lack of sanitation.  We’ve discussed the importance of clean drinking water, but you won’t want to use your drinking water to keep things clean or to flush the toilet.

For cleaning, reduce your need to wash things. Stock up on paper plates, paper towels, and disposable cups and flatware.  Keep some disinfecting cleaning wipes and sprays (I don’t recommend using antibacterial products on a regular basis, however in the event of an emergency they can help to keep you healthy.)  Use hand sanitizer after using the bathroom and before handing food or beverages – there may be a lot more germs afoot in a disaster.

Look at your options for sanitation.  Does your toilet still flush when the electricity is out?  Many people discovered the hard way that the toilets didn’t work  when the sewage backed up in the highrises in New York City in the aftermath of Hurricane Sandy.  At our cabin, the toilet won’t flush without power because the pump is electric.

If you are on a septic system, with no risk of the toilet backing up into the house, simply store some water for flushing in the bathroom.  (At the first sign of a storm, we always fill the bathtub for this purpose.)  Add the water to the tank so that you can flush.

If this is not an option, another solution is to stock up on extremely heavy duty garbage bags (like the kind that contractors use at construction sites) and kitty litter.  Place a bag either in your drained toilet or in a bucket.  Sprinkle some kitty litter in the bottom of the bag.  Each time someone uses the bathroom, add another handful of litter. Be very careful that the bag doesn’t get too heavy for you to handle it.  Tie it up very securely and store it outside until services are restored.

Light

Lighting is absolutely vital, especially if there are children in the house.  Nothing is more frightening than being completely in the dark during a stressful situation. Fortunately, it’s one of the easiest things to plan for, as well as one of the least expensive.

Some lighting solutions are:

  • Garden stake solar lights
  • Candles
  • Kerosene lamps
  • Flashlights (don’t forget batteries)
  • Hand crank camping lantern
  • Don’t forget matches or lighters

Tools and Supplies

Some basic items will make your life much easier during an emergency. Here are some things that are essential in the event of a power outage:

  • Lighter/waterproof matches
  • Batteries in various sizes
  • Manual can opener
  • Basic tools: Pliers, screwdriver, wrench, hammer
  • Duct tape
  • Crazy glue
  • Sewing supplies
  • Bungee cords

If you’d like to expand on the basic supplies, a more detailed list of tools and hardware can be found HERE.

First Aid Kit

It’s important to have a basic first aid kit on hand at all times, but particularly in the event of an emergency.  Your kit should include basic wound care items like bandages, antibiotic ointments, and sprays.  As well, if you use them, keep on hand a supply of basic over-the-counter medications, like pain relief capsules, cold medicine, cough syrup, anti-nausea pills, and allergy medication. Particularly important if sanitation is a problem are anti-diarheal medications.

If you want to put together a more advanced medical kit, you can find a list HERE.

Special Needs

This is something that will be unique to every family. Consider the things that are needed on a daily basis in your household. It might be prescription medications, diapers, or special foods.  If you have pets, you’ll need supplies for them too.  The best way to figure out what you need is to jot things down as you use them over the course of a week or so.

Get Started Today

You can start right now – this very minute – all you have to do is grab a pad of paper and a pen.

  1. Begin by personalizing the suggestions above to fit your family’s needs and make a list of your requirements.
  2. Next, do a quick inventory – as I mentioned above, you may be surprised to see that you already have quite a few of the supplies that are recommended.
  3. Make a shopping list and acquire the rest of the items you need.  If you can’t afford everything right now, prioritize the most important things first.
  4. Organize your supplies so that they are easily accessible when you need them. It’s hard to find seldom-used items in the dark.

When the lights go out, don’t be left to the not-so-tender mercies of those who would place themselves in charge.  Maintain your independence by strengthening the position of your family.  Take steps towards preparedness and self-sufficiency so  that you won’t need the government’s assistance to weather the storm.

If you must comply to survive, your freedom is just an illusion. You’ve been warned – what you do with the information is up to you.

About the author:

Please feel free to share any information from this site in part or in full, giving credit to the author and including a link to this website and the following bio.

Daisy Luther is a freelance writer and editor.  Her website, The Organic Prepper, offers information on healthy prepping, including premium nutritional choices, general wellness and non-tech solutions. You can follow Daisy on Facebook and Twitter, and you can email her at daisy@theorganicprepper.ca

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Chris Hedges: The Detention of Greenwald’s Partner on Terrorism Charges Amounts to the “Criminalization of Journalism”.

Chris Hedges: The Detention of Greenwald’s Partner on Terrorism Charges Amounts to the “Criminalization of Journalism”..

Last Friday it was reported that British officials detained David Miranda, the partner of journalist Glenn Greenwald, earlier this year at London’s Heathrow Airport for his alleged, quote, espionage and, quote, terrorism for transporting documents provided by former NSA whistleblower Edward Snowden.

Now joining us to discuss this and other recent revelations about the NSA is Chris Hedges. Chris is a Pulitzer Prize-winning journalist, former Middle East bureau chief for The New York Times. He’s a columnist for Truthdig, author of many books, including the best-selling Days of Destruction, Days of Revolt.

Thank you so much for joining us, Chris.

CHRIS HEDGES, JOURNALIST, SENIOR FELLOW AT THE NATION INSTITUTE: Thank you.

NOOR: So, Chris, let’s start off by getting your response to the British government accusing David Miranda, the partner of journalist Glenn Greenwald, who often collaborates with Greenwald, of, quote, espionage and terrorism and saying those were some of the reasons why they held him for hours on end at Heathrow without letting him speak to his lawyer or anyone else.

HEDGES: Well, they didn’t just told him. They seized all of his electronic equipment–his computer, his phone–because they were looking for some of the files that Greenwald has been using to publish his stories that were leaked by Edward Snowden. And this is just part of the criminalization of journalism which has taken place not only within the United States but within countries like Great Britain as well.

NOOR: Britain doesn’t have the same safeguards for journalists as places like the U.S. do. It was also reported earlier this year that the British authorities threatened to seize The Guardian‘s hard drives containing a lot of this material. What are the bigger–what’s the bigger ramifications for journalism not only in Britain but the rest of the world?

HEDGES: Well, there aren’t any safeguards left within the United States as well. I mean, remember that the security and surveillance state seized all of the AP phone records. And let’s not forget that the security and surveillance state has the phone–all of the electronic communications of every journalist in this country. They’ve used the Espionage Act aggressively seven times, the last time being against Snowden, to make sure nobody does talk to the press to expose the inner workings of power.

So we once had, at least legally, more protection as journalists than were provided to journalists in Great Britain. But all of it’s gone up in smoke, both here and there. There is no protection left. Jim Risen at The New York Times is fighting back against government efforts to make him reveal his sources in the story on more or less wiretapping, and he said that he would be willing to go to jail rather than give up those sources. So this is kind of a global assault where we’re not at this point any more protected here than we are anywhere else. And what this really, I think, points to is the fact that the security and surveillance state is global and it serves, essentially, global power, which is corporate.

NOOR: Now, the NSA and its defenders, they cite 54 terrorist plots they have been able to supposedly thwart due to this massive spying. But a recent report by ProPublica found that the NSA was only able to provide evidence in four of those cases. Why do you think the NSA is not providing additional evidence for those remaining 50 cases?

HEDGES: Well, because they’re lying. And, you know, government officials like Clapper have been lying throughout this entire process. Barack Obama has lied. And that’s just part of, you know, the spin that they’re throwing out.

What’s interesting is that a lot of times when they lie, they get caught because of courageous whistleblowers like Snowden who expose their lives. And I was a victim of this in the–I was part of one of the plaintiffs in the Amnesty International v. Clapper lawsuit that went to the Supreme Court. And the Supreme Court threw out the case because they said I and the other plaintiffs did not have standing. And they made that judgment on the fact that the government said that if any of us were being watched or had government surveillance, we would be informed.

Well, we now know that the government lied, and we know the government lied because of the leaks by Snowden. So this is a government that, like most governments, has a very callous regard for the truth. And, you know, if you believe that they stopped 54 terrorism plots, then, you know, come see me. I’ll sell you land in Florida, the Brooklyn Bridge.

NOOR: Ed Snowden has continued to provide outlets like The New York Times, which released a front-page story Sunday about ongoing new information about NSA programs, yet backers and supporters of the NSA continue to push back. Some of the arguments include saying, if you have nothing to hide, there is nothing to worry about; this NSA spying shouldn’t concern you. Is there any historical precedent for citizens to be concerned about government surveillance? And how do you respond to arguments such as those?

HEDGES: Well, you don’t want to give this kind of power to the state, because–and I speak as a journalist–because it makes it absolutely impossible to carry out any serious investigation of power. No source is going to reach out to you, because they know full well that the government has all of the electronic footprints that you make in trying to contact a journalist. And I think one of the reasons that Snowden went public almost immediately is that he knew that the government had all of Greenwald’s communications and it he would very quickly trace it back to him. That’s the problem.

It’s not a matter of nothing to hide. That’s an inverted question. The government has a lot to hide. And this kind of mechanism is a kind of a failsafe device by which whatever the government wants to do, however criminal, however corrupt, however fraudulent, however anticonstitutional, it never gets found out. That’s the real issue.

NOOR: And in light of Snowden’s revelations about how the U.S. government is spying on the German government, including tapping Angela Merkel’s cell phone, over 50 public figures in Germany have called for the German government to grant Snowden asylum. What’s your response to this growing–both the growing backlash against what Snowden has revealed and growing support in places like Germany that he be protected?

HEDGES: Well, I hope he does get granted asylum. He’s only got a kind of temporary one-year asylum in Russia. And I hope some government steps in to give him the kind of safeguards that he should have within this country but is probably never going to get. You know.

I mean, the tapping of Merkel’s phone is a kind of window into how this pervasive intrusion of privacy and surveillance has nothing to do with terrorism. It has to do with iron control, even among people who are purported to be our allies. And it isn’t just Merkel–I mean, the millions of records that they swept up in Spain and France. And it is a absolutely staggering intrusion into the lives not only of Americans but of foreign citizens. And it has nothing to do with protecting those citizens, and it has everything to do with protecting a state, security and surveillance state, corporate state that has less and less legitimacy as these kind of revelations become more public. You know, it’s clear that we have undergone a kind of corporate coup d’état in slow motion, and it’s global.

NOOR: Chris Hedges, thank you so much for joining us.

HEDGES: Thank you.

NOOR: You can follow The Real News @TheRealNews on Twitter, and you can follow me @JaisalNoor. Feel free to Tweet me questions, comments, or story suggestions.

Thank you so much for joining us.

End

John Taylor Explains Why Economic Failure Causes Political Polarization | Zero Hedge

John Taylor Explains Why Economic Failure Causes Political Polarization | Zero Hedge. (source)

Authored by John Taylor, originally posted at WSJ.com,

It is a common view that the shutdown, the debt-limit debacle and the repeated failure to enact entitlement and pro-growth tax reform reflect increased political polarization. I believe this gets the causality backward. Today’s governance failures are closely connected to economic policy changes, particularly those growing out of the 2008 financial crisis.

The crisis did not reflect some inherent defect of the market system that needed to be corrected, as many Americans have been led to believe. Rather it grew out of faulty government policies.

In the years leading up to the panic, mainly 2003-05, the Federal Reserve held interest rates excessively low compared with the monetary policy strategy of the 1980s and ’90s—a monetary strategy that had kept recessions mild. The Fed’s interest-rate policies exacerbated the housing boom and thus the ensuing bust. More generally, extremely low interest rates led individual and institutional investors to search for yield and to engage in excessive risk taking, as Geert Bekaert of Columbia University and his colleagues showed in a study published by the European Central Bank in July.

Meanwhile, regulators who were supposed to supervise large financial institutions, including Fannie Mae and Freddie Mac, allowed large deviations from existing safety and soundness rules. In particular,regulators permitted high leverage ratios and investments in risky, mortgage-backed securities that also fed the housing boom.

After the housing bubble burst the value of mortgage-backed securities plummeted, putting the solvency of the many banks and other financial institutions at risk. The government stepped in, but its ad hoc bailout policy was on balance destabilizing.

Whether or not it was appropriate for the Federal Reserve to bail out the creditors of Bear Stearns in March 2008, it was a mistake not to lay out a framework for future interventions. Instead, investors assumed that the creditors of Lehman Brothers also would be bailed out—and when they weren’t and Lehman declared bankruptcy in September, it was a big surprise, raising grave uncertainty about government policy going forward.

The government then passed the Troubled Asset Relief Program which was supposed to prop up banks by purchasing some of their problematic assets. The purchase plan was viewed as unworkable and financial markets continued to plummet—the Dow fell by 2,399 points in the first eight trading days of October—until the plan was radically changed into a capital injection program. Former Treasury Secretary Hank Paulson, appearing last month on CNBC on the fifth anniversary of the Lehman bankruptcy, argued that TARP saved us. Former Wells Fargo CEO Dick Kovacevich, appearing later on the same show, argued that TARP significantly worsened the crisis by creating even more uncertainty.

In any case, the crisis ended, but rather than simply winding down its short-term liquidity facilities the Fed continued to intervene through massive asset purchases—commonly called quantitative easing. Many outside and inside the Fed are unconvinced quantitative easing is meeting its objective of spurring economic growth. Yet there is a growing worry about the Fed’s ability to reduce its asset purchases without market disruption. Bond and mortgage markets were roiled earlier this year by Chairman Ben Bernanke’s mere hint that the Fed might unwind.

The crisis ushered in the 2009 fiscal stimulus package and other interventions such as cash for clunkers and subsidies for first-time home buyers, which have not led to a sustained recovery. Crucially, the actions taken during the immediate crisis set a precedent for giving the federal government more power to intervene and regulate, which has added to uncertainty.

The Dodd-Frank Act, meant to promote financial stability, has called for hundreds of new rules and regulations, many still unwritten. The law was supposed to protect taxpayers from bailouts. Three years later it remains unclear how large complex financial institutions operating in many different countries will be “resolved” in a crisis. Any fear in the markets about whether a troubled big bank can be handled through Dodd-Frank’s orderly resolution authority can easily drive the U.S. Treasury to resort to another large-scale bailout.

Regulations and interventions also increased in other industries, most significantly in health care. The mandates at the core of the Affordable Care Act represent an unprecedented degree of control by the federal government of the activities of businesses and individuals, adversely affecting incentives to hire and work and eventually worsening the federal-budget outlook.

Federal debt held by the public has increased to 73% of GDP this year from 41% in 2008—and according to the Congressional Budget Office, it will rise to more than 250% without a change in policy. This raises uncertainty about how the debt can be brought under control.

Despite a massive onslaught of legislation and regulation designed to foster prosperity, economic growth remains low and unemployment remains high. Rhetoric aside, many both inside and outside the government quite reasonably seek to return to the kinds of policies that worked well in the not-so-distant past. Claiming that one political party has been hijacked by extremists misses this key point, and prevents a serious discussion of the fundamental changes in economic policies in recent years, and their effects.

 

 

Guest Post: Puerto Rico’s Debt Crisis – Another Domino Keels Over | Zero Hedge

Guest Post: Puerto Rico’s Debt Crisis – Another Domino Keels Over | Zero Hedge. (FULL ARTICLE)

If one looks at various sovereign states, it seemingly doesn’t matter that their public debts continue to rise at a hefty clip. The largest ones are considered to have economies that are big and resilient enough to be able to support the growing debt load. Part of the calculus is no doubt the notion that they contain enough accumulated wealth to allow their governments to confiscate even more of their citizens property and income in order to make good on their debts.

Then there are the small and mid-sized states in the EU that are getting bailed out by their larger brethren, or rather, the tax payers of their larger brethren. However, things are different when the territories or municipalities concerned are considered too small and have no such back-up. Detroit was a recent case in point, and it seems that the US territory of Puerto Rico is the next domino to fall. Here is a recent price chart of the Puerto Rico 20 year bond maturing in 2033, which currently yields 10.6% and trades at 46 cents below par:…

 

Media Blasts Obama: Most Closed, Control Freak Administration | Judicial Watch

Media Blasts Obama: Most Closed, Control Freak Administration | Judicial Watch. (FULL ARTICLE)

You know things are really bad when the mainstream press corps trashes the Obama administration—on the record!—for its secrecy, aggressive efforts to control information and hostility towards the media when it exposes information viewed as unfavorable to the president.

This includes an unprecedented number of prosecutions of government sources, seizures of journalists’ records and even criminal investigations of reporters. As a result government sources are afraid to speak to journalists, even if it doesn’t involve sensitive national security issues but rather routine stories that help keep elected officials and government accountable. “There’s no question that sources are looking over their shoulders,” said a senior managing editor at the Associated Press, who added that “sources are more jittery and more standoffish.”

A veteran chief Washington correspondent for the New York Times, David E. Sanger says “this is the most closed, control freak administration I’ve ever covered.” Consider the source; a journalist at a powerful mainstream newspaper well known for its favorable coverage of everything Obama. The surprising lashing by the mainstream media comes this week via a special report on the Obama administration and the press from the Committee to Protect Journalists….

 

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