Neithercorp Press: July 2010

Monday, July 26, 2010

The New American: A Rebirth Of The Old Guard

By Giordano Bruno

Neithercorp Press - 07/26/2010

People no longer believe in the existence of heroes. By heroes, I do not mean synthetic pop culture icons and sports stars, or mass media generated two faced chimera politicians. I do not mean those fraudulent public figures and false idols which are thrust into the establishment limelight and into our collective faces everyday. By heroes, I mean those ordinary men and women throughout the ages who stood firm against extraordinary corruption and overwhelming social evil. I mean those who had the will to risk everything for truth and an honorable tomorrow, often receiving no recognition for their sacrifice. Today, such heroes are considered a distant memory, a mythology from days long since drowned in the tides of history. How we yearn for those tides to turn…

In our modern era, the shadow of elitism appears to have cast across the whole of the world and permeated every facet of this culture. Many Americans have become so overwhelmed in the face of such unrelenting and widespread government and corporate criminality that they have collapsed in on themselves, hiding behind cynicism, narcissism, and nihilism. They see the horrors of modern life as some disturbed comedy designed for their entertainment. They escape into fantasy worlds and chemical dependency in order to numb the shame they feel, the crushing inadequacy of being unable or unwilling to determine their own destiny. They feel like ghosts, hovering through life as insignificant wisps of vapor. Deep down, they know they have failed themselves, but still, they blame everyone else.

However, for every negative force that exists in nature, in physics, and in the psychology of the human mind, there always arises a positive and opposing strength. It is an undeniable law of the universe. I believe it has taken so long for men to rally against the evils of elitism because the elites have taken special care in making sure they could not be easily defined. They have hidden behind organizations, political parties, and money, for decades if not centuries. Good people cannot fight back against an enemy they cannot clearly see, and heroes cannot rise to occasion against an opponent that has no face and no name. Thanks to the efforts of the Liberty Movement, though, the obscurity of elitists and globalists has come to an end, and we now know who the true enemy is.

The next step requires the reformation of the defenders of old. The reinstitution of legitimate American stewardship, founded by the Constitutionalists and free thinkers at the birth of this country. Though there is much to fear in the path our society has recently taken, even now I see a return to clarity and principle. Even now, I can see the rebirth of the Old American Guard.

In this article, we will examine just some of the qualities that distinguish these men and women…

Fighting For Truth In An Age Of Lies

When men first hear the truth of a thing, the unfiltered unfettered truth, their most common and predictable reaction is invariably one of disbelief. A wise man, or even a moderately intelligent one, would expect that new truths will arise from the ashes of dead notions. They would expect that there are vast reaches of knowledge in this world we have yet to tap, and that every once in a while, our previous assumptions on life will be dashed against the rocky shores of reality. However, most people in today’s culture of mental and philosophical “leisure” are not intuitively wise, and in some cases their ability to rationally observe any situation is highly questionable. The truth, for them, is less like an inspirational moment of empowerment, and more like a blood curdling shark attack. For those with a narrow and manipulated world view, the truth is a terrifying threat.

Often, human beings tend to classify truth through “repetition”, instead of through objective observation and evidence. What this means is, we tend to assume that the viewpoint we hear the most everyday must be the correct view, regardless of whether or not it is supported by tangible fact. When new information, correct information based on solid data, breaks into the light of day, those who base their entire world view on repetition will be left in the dust, wondering how everything could change right under their noses. Sometimes, these people cling to their once widely accepted presumptions for the rest of their lives. For them, the Earth is flat forever.

What we have seen in the past decade or so, though, is a great movement towards embracing the truth despite the wailing of the now dying mainstream. Millions of Americans are turning off their televisions and actively seeking out information for themselves through alternative sources outside the influence of corporate globalists. In the “New America” (which is really just the return of the old America), the proliferation of disinformation is UNACCEPTABLE, and will no longer be tolerated. Guardians today are those people who have chosen to stand against our cultural misconceptions and propaganda, facing ridicule, censorship, and even physical harm. They tear into the great lie like attack dogs locking their jaws and never letting go, they are shaken about and beaten and yet they still hold on, until finally, the lie exhausts itself, and fades away. The New American has rediscovered the perseverance of his forebears, and the will to endure.

If this is to continue, the ideal of transparency in government must be instituted as strict social policy, and the pursuit of the truth must be ingrained into our national consciousness. A respect for self awareness, individuality, and personal honesty, must become the foundation of our civilization. The current system, which makes paths for the dishonest, cradles the vicious, coddles the weak spirited, and rewards those who lack conscience, must be cut away. It is up to the New American to do this.

True Patriots vs Fake Nationalists

Patriotism is a highly abused and misappropriated term. The exploitation of the methodology is evident in the propaganda of the Neo-Conservative movement (an elitist construct), especially during George W. Bush’s two terms in office. Interestingly, it has been real conservatives, as opposed to neo-cons, which have now sought to rebalance and reintroduce the concept of patriotism once again. The internal conflict of the Republican Party at this time, between the rising Liberty Movement and the falling Neo-Cons, illustrates the true nature of patriotism well.

In the past, we have been wrongly instructed to treat patriotism as a political weapon, a tool for shaming those who question the status quo. We have been taught that to be patriotic, one must become blindly nationalistic. This is not what the founders intended. A country is nothing without principles. A government that does not represent the root standards and principles of the country they are meant to lead is not a government that we the people are meant to follow. A nationalist ignorantly places government on a pedestal as the symbol of a people; a patriot places the solid founding principles of his nation above all else and dismantles any government that does not. A patriot demands that government adhere to the will of the people. A nationalist demands that people adhere to the will of government.

The New Americans, taking the torch from the old guard, are putting the manipulation of patriotism to an end. We are no longer allowing the establishment to define our beliefs for us, and are forcing them to either adopt the Constitutionalist methods which originated this country, or to relinquish their power. No longer will we be fooled into associating the twisted philosophies of a corrupt government with our own national identity.

No Fear, No Regrets

The New American answers to no one but his own conscience. All other directives are secondary. Because of this way of life, he rarely has any reason to regret any decision he has ever made.

He does not pander at his workplace. He is never a yes-man or a leech. Nowhere is he a servant. He is a person that demands to be treated with the same respect he gives, and openly gives respect where it is deserved. In his daily life, he absolutely refuses to follow the herd. The cesspool of groupthink is abhorrent to him, and fake people hiding behind two dimensional personas make him physically ill. Bullies and people with an outrageous sense of entitlement need a good punch in the mouth, not a turn of the cheek, and the New American looks forward to the day when it is once again socially acceptable to hand thugs and weasels their own derriere in a paper sack.

The New American has abandoned the false left / right paradigm in U.S. politics. He understands that the leadership of both major parties, Democrat and Republican, have the exact same goals and support nearly identical legislation. Their purpose is to give us the illusion of choice, and to consolidate and centralize power and dissolve the sovereignty of the U.S. Their openly stated objective is to force Americans to accept a global economy and global governance, virtually erasing our Constitutional freedoms and any ability we may have left to participate in the political process. The New American has set out to overtake and reclaim the Republican Party from globalists, and to use it as a tool in support of limited government and individual liberty once again.

For the New American, authority is derived from experience and earned respect. Petty authority derived from corruption is to be either laughed at or scorned. For instance, a policeman or politician that does not follow or understand Constitutional Law is a liability to society, not an authority, and as such, does not deserve respect. The New American is not impressed by uniforms, titles, expensive Ivy League degrees, old money, celebrities, or pop culture fluff. To him, the people who ARE impressed with these things are rather repulsive. To get his attention, you need to have an honorable reputation, legitimate intelligence, and, for heaven’s sake, a backbone.

Gullibility in others is only endured to a point. Knowledge, self knowledge and an understanding of ones surroundings, is paramount. The New American has seen too many catastrophes transpire because of the complicity of morons. The ignorant have a tendency to threaten not just themselves but also those around them. Their stupidity makes them malleable and easily influenced by those who seek power. They become unwitting accomplices in tyranny. The willfully uneducated are the second most dangerous people on Earth.

The primary threat, not just to the New American but to every living person, is Elitism. There is nothing more vile than an elitist: they demand fealty from the masses even though they hate and despise the common man. They are fully aware of their conscience, but see it as a hindrance to their pursuit of dominance and so ignore it. They fancy themselves as “godlike” and imagine themselves to be intellectually superior to the rest of us, even though they have proven on numerous occasions to be rather foolish. Their ego-mania is so immense that they are virtually incapable of recognizing the fallibility of their philosophies. And, they are willing to sacrifice anything and anyone accept themselves to get what they want, meaning they are the worst kind of cowards exacting the worst kind of oppression.

As horrifying as elites are, the New American is unphased. He knows that an uncompromising sense of despotism can only be met with an uncompromising sense of liberty. He knows that because he is confident in his values and refuses to negotiate them away, elitists fear him. They recognize that men who are defending their home, who are wise, who hold the moral high ground, and who are unafraid, are difficult if nearly impossible to defeat. More than anything else, the elites quake at the thought of the New American Guard.

The Return Of Freedom’s Protectors

It is in the worst of times that the best of men make their presence known. Some of them have felt for most of their lives that they were meant to make a difference, to sway the flow of events towards a greater purpose, a better future. Some have yet to realize their latent potential. Many of these men play unassuming roles in their normal lives. Carpenters and clerks, factory workers and investors, farmers and soldiers, it is always the seemingly inconspicuous that surprise us when the nightmare falls. The counterfeit champions, those the public once invested all of their faith in, quickly turn and run, while the true defenders stand unyielding against the coming tempest. They are the old men of the mountain, weathered by the storm, but unshakable in their resolve. Not simply warriors, but also scholars and social healers. They are modern-day Paladins in the most brutal of epochs.

There are two kinds of people in this world; history makers, and spectators. Spectators allow the throes of events to propel them wherever they may. They wait for the crosswinds of fate to determine their final home, their final occupation, their final resting place. During great upheaval, these are the people who fall by the wayside of time, whose children despair in the wake of their parent’s failure. These are the people upon which the elite feed.

History makers are defined by a beautifully simple decision; the decision to participate in the making of their own providence. The decision to actually live, instead of playing at life. True history makers are often not chronicled in books. Their tales are often not told for posterity. But none of this matters. What matters, is the contribution they make to the good in all of us, the tremors they send through the underlying foundations of humanity. Their presence is felt, even if their names are not known. By this measure, the New Americans will definitely make history.

The responsibility that lay ahead of us is daunting. While a global awakening is certainly taking place, the epicenter is right here in our own backyard. All eyes will be watching us and waiting. The world is relying on us to make a stand, to prove that the fight is far from over. If we do not, then everything is lost, not just for ourselves, but for every generation after we are gone. No matter what obstacles the elites unleash, be it nuclear disaster, economic collapse, or yet another war, we must not falter. The world is waiting. They are waiting for heroes. They are waiting for the old guard to return.

Special Note To Neithercorp.us Readers: For the past four weeks or more, our website neithercorp.us has come under heavy attack by hackers or agencies employing hackers. Due to the sophistication of these attacks, we are unable to properly secure the site at this time. In order to protect you, our readers, I will be posting my articles to this page until the problem can be resolved. I hope you will continue to follow our efforts here at blogspot while neithercorp.us is on hiatus. Thank you for your continued patronage. It will take more than web attacks to shut me up...

Sunday, July 18, 2010

Economic Meltdown: The Final Phase

By Giordano Bruno

Neithercorp Press - 07/18/2010

In the financial life of every culture built upon faulty monetary policy, there are points at which the thin thread of economic faith; the thread that ties the entire failing system together, the thread made tangible by the hopes (and sometimes ignorance) of the general populace, finally snaps. From Ancient Rome, to Weimar Germany, to Argentina, to modern day America, no society fueled by unsustainable debt and fiat inflation can duck the ‘Fiscal Reaper’ for very long. The U.S. alone has survived since the early 1970’s (after Nixon removed the last vestiges of the gold standard) on nothing but questionable credit practices and baseless optimism, but there is a limit to the power of fantasy. This is a fact that most mainstream financial analysts and some in the American public refuse to grasp. Mere belief in the enduring nature of the marketplace is not enough; the fundamentals must also support that belief.

Today, we face an atmosphere in which the fundamentals are fiercely opposed to the publicly promoted perception of the economy, and it is moments in history like this that present a clear primer for total collapse. Financial disaster is bad enough when it is at least partially anticipated. When the masses are caught completely unaware and unprepared in the midst of misguided conviction, this leads to the worst kind of tragedy: the ironic and Shakespearian kind. To avoid this brand of tragedy is one of the primary reasons why we in the Liberty Movement do what we do. We may not be able to stop the current crisis from developing, but we can create awareness, and through this we can lessen the cultural shock, and thereby lessen the impact.

Mainstream economists crowed about the “invincible” rise of globalism and the unstoppable U.S. financial juggernaut for years while more level headed and intelligent men tried to warn the public of danger. The initial derivatives collapse in 2007 / 2008 should have put all of these pathetic establishment cheerleaders to shame, not to mention out of work. Yet three years later, amazingly, we are asked, even expected, to continue to look to such sad and useless people for predictions on market stability that always turn out absolutely inaccurate, and advice on savings and investment that they are not equipped to give.

I suppose we should not be surprised by the continued lifespan of MSM parrots and puppets. They may not be helpful to the average American, but they are very helpful to international banks and the globalist companies that pay their salaries. They distract and confuse us. They comfort when they should caution, and contradict when they should pay heed. Our financial house is burning from the bottom floor up, and they assure us that the warm orange glow is just the dawning of a new and beautiful day. We are told to “look to the future”, a return to normalcy is “just around the corner”. Never would they dare to weigh the cold hard factors of the present, or the ruse would be up. Whether they are aware of it or not the lies media pundits perpetuate set the stage for even greater upheaval, to the detriment of most, and the benefit of only a handful.

In this article, as we have in so many others, we will examine those lies, as well as the truths they are meant to hide. The most important truth of all being, that not only are we not in the middle of a recovery, but that the final phase of the economic meltdown is about to commence…

Distractions, Half-Truths, And Outright Lies

“We will not have any more crashes in our time.”
- John Maynard Keynes in 1927

“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
- Herbert Hoover, President of the United States, May 1, 1930

Most of us were not alive to witness the throws of the Great Depression, but for many, the quotes above sound strangely familiar. Pundits and government officials of our fateful era have taken to spewing the same kind of nonsense on a daily basis, and one begins to wonder if they are TRYING to top the ridiculous statements of their forebears in an attempt of ultimate mockery. Today, not only are we told that “green shoots” abound, but that if those green shoots fail, it will only be because we did not “believe” hard enough in their existence!

http://www.telegraph.co.uk/finance/comment/jeremy-warner/7864373/Will-the-world-suffer-a-double-dip-recession-Only-if-we-talk-ourselves-into-it.html

It is this kind of idiocy that led us to the state of affairs we are in now, and it is the same idiocy that will leave millions of Americans in extended financial ruin in the near future. The absurd idea that prosperity is driven merely by blind optimism must be put to rest if we are ever to rebuild. Transparency, the pure and unadulterated truth, must be present in every aspect of government and finance without question for a culture to succeed. No longer can we operate in a system built upon the premise that the American people must be kept in the dark “for their own good”.

The essence of the recovery argument lay in unsubstantiated rhetoric, skewed statistics, and the over-promotion of news items that in reality are very minor economic indicators. Wall street reform has been heralded as a fix-all, yet the language of the legislation does little to nothing in reigning in the toxic derivatives trading practices that fomented the housing bubble, nor does it take any measures against the root cause of the mortgage crisis; the private Federal Reserve Bank, which artificially lowered interest rates and lending standards during the 1990’s knowing full well that this would amass pockets of poisonous debt securities throughout the economy. International banks have not been truly punished for their practices of market rigging and faulty accounting, nor will they be. The recent and laughable lawsuit settlements of AIG and Goldman Sachs prove that no bankers will be held accountable, only penalized with fines that amount to little more than pocket change to these monstrous global corporations:

http://www.sec.gov/news/press/2010/2010-123.htm

http://www.cbsnews.com/stories/2010/07/16/ap/business/main6685538.shtml

This means that the conditions which triggered the initial collapse have not been mended in any way. Absolutely nothing has changed since 2007. Americans have only been temporarily shielded from the effects and the particulars of continuing financial corruption. For instance, it has been revealed that the SEC itself has known since at least April that Citigroup has been hiding assets and debts on its books by counting Repurchase Agreements as actual sales. For those of you not familiar with such slight-of-hand, this is the same kind of accounting trick that led to the fall of Lehman Brothers:

http://www.reuters.com/article/idUSTRE66F0NV20100716

Citigroup claims, of course, that these Repurchase Agreements are only a small part of their operation and will not affect their ability to function. The problem is that like Lehman Brothers and Citigroup, it is probable that most global banks have used false accounting procedures to hide the true measure of their leveraged capital. It certainly is not in their best interest to reveal the whole truth, so why would they? Due to the continuing dilemma of hidden and unreported bank debts, it is only a matter of time before we witness yet another credit implosion, followed by even more taxpayer funded bailouts, and even greater stress on the stability of the U.S. Dollar.

While empty promises of reform and the hidden accounting practices of banks have kept markets malleable for the moment, it is really the exaggeration of consumer spending and retail gains, along with rigged unemployment reports from the Labor Department, that have kept the false recovery wheel spinning for over a year. Any profit or production increase by almost any company has been held up as a rallying cry for a bull market, even though in most cases these companies increased profits by cutting their labor force, and increased production by forcing their remaining employees to work harder for the same amount of money. They did not expand profits because the U.S. consumer is spending once again with wild abandon as has been suggested every time new quarterly profit reports are released. After a year of this misrepresentation of the facts, finally, the truth is starting to come out.

Retail stocks are beginning to shed value as they take hits from decreasing sales and profits, meaning, the cost cutting strategy has run its course and retailers are still losing money:

http://www.bloomberg.com/news/2010-07-14/sales-at-u-s-retailers-fell-for-a-second-month-in-june.html

http://finance.yahoo.com/news/Dim-retail-sales-hurt-economy-apf-3335262562.html?x=0&sec=topStories&pos=9&asset=&ccode=

Service sector employment has remained stagnant. The excitable talk that started at the beginning of this year of a hiring resurgence has now faded:

http://www.reuters.com/article/idUSTRE65M2WK20100706

The bottom line; the TRUE unemployment rate of around 20% has become perpetual, and some economists are even suggesting that we accept it as a standard. The American public is now coming to realize that healthy job creation is a very distant goal, one that the government alone has no ability to achieve, bailout or no bailout:

http://www.bloomberg.com/news/2010-07-13/americans-in-70-majority-see-frozen-unemployment-as-budget-deficit-widens.html

On the international scene, news from Europe has gone abruptly quiet. After months of blaring reports on the Greek sovereign debt crisis, and the imploding Euro, suddenly, we are told that the situation is stabilized? But how? What measures were taken and how did they affect a balancing of the EU economy? The fact is, no measures have been taken. No effective adjustments have been made. The MSM has only muted the reports, and for many Americans, out-of-sight truly is out-of-mind.

Greece is still right where it was six months ago, and the debt to GDP ratios of EU member countries continue to rise.

The mere mention that Spain’s Aaa credit rating was coming under review for a possible downgrade jolted stocks at the beginning of July. The review is not set to conclude for three months, but the market reaction shows that some of the larger investment firms are keenly aware of the weakness in Spain, and the chance that it will become the next in a long line of Greek style implosions:

http://www.businessweek.com/news/2010-06-30/spain-s-aaa-on-downgrade-review-at-moody-s-as-note-sale-nears.html

Portugal’s credit rating was downgraded by Fitch in March, and now it has been downgraded by Moody’s as well:

http://www.huffingtonpost.com/2010/07/13/portugals-credit-rating-d_n_644093.html

And, the IMF and the EU have suspended a review of Hungary’s funding program while the country is in the midst of meltdown. This means Hungary will no longer have access to the $25.1 billion loan package made available by the IMF to see them through the crisis. Frankly, I think all countries are much better off not taking money from the demon spawn over at the IMF, but many of the citizens of Hungary may not see it that way. The suspension of the loan package almost ensures a national default:

http://www.reuters.com/article/idUSTRE66G0RT20100717

Most European countries are in the same predicament as Greece to varying degrees, Greece just happened to be the first to fall. The combined weight of sovereign debts in all EU countries is now threatening the very framework of the European Central Bank itself. The ECB is now facing higher interest rates, which means increased funding costs that they cannot afford without inflating the Euro:

http://www.bloomberg.com/news/2010-07-07/trichet-faces-threat-of-higher-market-rates-as-debt-crisis-hurts-economy.html

What is this leading to? A situation we have been warning about for years; either the default of numerous EU member nations, or the inflationary collapse of the Euro. In each case, the EU will eventually be forced to turn towards the only avenue left available to them; the IMF and full austerity measures. This, of course, was the plan all along….

We have just covered the broader problems in the world economy that have been obscured by the establishment media in order to perpetuate a false sense of security in the masses. However, these are simply ongoing problems that some may dismiss as “par for the course”, troubles that could go on for years without causing immediate damage to America itself. Other recent events, though, now show that the likelihood of a final phase meltdown of the U.S. economy may begin before the end of this year.

The Signs Of Final Phase Collapse

It is difficult to write about economic indicators of collapse for many reasons, but the primary issue is one of relativity. Most Americans alive today have never suffered through an extended depression and few if any have ever witnessed a full fledged meltdown of a country’s finance and infrastructure. Therefore, many people in this country have no point of reference with which to compare and contrast the events of the new millennium. The unfortunate reality is, when a society enjoys an extended period of affluence, they often become conditioned to take prosperity for granted. They become unable or unwilling to interpret warning signs of a collapse until the event is already near its end, and they have lost everything.

The signals listed below I believe are truly the last straw, the final alarm before the global financial system spirals completely out of control. It is impossible to say exactly when this larger secondary breakdown will occur, however, when one studies the economic disasters of the past, these same primers tend to appear preceding very fast moving financial decay.

Secondary Real Estate Bubble: If you think you’ve seen a catastrophe in the real estate market so far, just wait another six months. Now that the government home buyer tax credit has ended, we are starting to see how much the real estate market really was being propped up by taxpayer dollars. Mortgage bond yields have plummeted to their lowest level on record while bond sales have slumped, all in anticipation of another massive round of mortgage defaults:

http://www.bloomberg.com/news/2010-07-13/mortgage-bond-yield-spreads-that-guide-home-loan-rates-approach-record-low.html

http://www.bloomberg.com/news/2010-07-05/property-bonds-slump-most-since-march-09-on-default-risk-credit-markets.html

Sales of new U.S. homes have plunged to the lowest level on record:

http://www.bloomberg.com/news/2010-06-23/sales-of-u-s-new-houses-plunge-to-lowest-level-on-record.html

And, nearly 1 in 3 homes sales in the first quarter of 2010 were foreclosures at rock bottom prices:

http://news.yahoo.com/s/nm/20100630/us_nm/us_usa_housing_foreclosures

Home foreclosures are on track to reach 1 Million or more by the end of 2010, and home seizures have risen 38% as banks process a backlog of mortgage defaults. This is despite efforts by banks to reduce foreclosure numbers by modifying loans and attempting short sales of properties:

http://news.yahoo.com/s/ap/20100715/ap_on_bi_ge/us_foreclosure_rates

http://www.bloomberg.com/news/2010-07-15/u-s-home-seizures-rise-38-to-record-as-banks-process-forclosure-backlog.html

This is nothing compared to the nightmare that is brewing in the commercial real estate market. Commercial real estate transactions have collapsed by 90% as many people are aware:

http://www.mybudget360.com/commerical-real-estate-collapse-90-percent-from-peak-next-taxpayer-bailout-4-times-size-of-credit-card-market/

However, most analysts tend to overlook retail land occupancy rates. Commercial property vacancies have hit a ten year high:

http://www.reuters.com/article/idUSN0610302020100707

In the past, owners of commercial real estate have enjoyed extra credit and loan extensions from banks because financiers hope that by supporting the commercial market through the downturn they might retrieve profits once the economic uncertainty has ended and businesses start making money again. But what happens when the downturn does not end? Banks are only going to extend loans for so long before they pull the plug, even on commercial borrowers. It would seem that the time has come for the commercial real estate bubble to finally burst.

Why are these recent problems in the real estate market an indicator of a final phase collapse in the near term? The issue is one of prolonged instability. The recession / depression that we face today should have transpired sometime in the early 1990’s, but the engineered low interest rates supplied by the private Federal Reserve during that decade created the property value boom. Any American could buy a home regardless of whether or not they could actually afford it, and anyone with a home could then use it as collateral for enormous credit lines. This new artificial debt bubble prolonged the collapse for around fifteen years. As of the second quarter of 2010, though, this credit source has been exhausted completely. There is officially nothing left to support the general economy (except, of course, fiat inflation). The effects of this lack of national capital should become very visible by the end of this year.

Unemployment Visibility: It did not come as a surprise to this researcher that the jobs market began to crumble once again in June and July, but it did come as a surprise to some. We’ve talked on numerous occasions about how the Labor Department hides the true level of unemployment from the public, and I won’t beat that poor dead horse any further. Suffice to say, real unemployment counting the U6 measurement is around 20%. The length of the average American’s unemployment has reached incredible levels. Many millions have remained jobless for 6 to 12 months. In response, the Federal Government has extended unemployment benefits several times over the past year. While this has been painted as a necessary action to save the livelihood of jobless citizens, it is less about “compassion” from the government and more about obscuring the effects of unemployment until they are ready to let the cradle fall. That time has come.

Congress has not renewed extensions of benefits as of this month, and it looks as though they do not plan to do so again. Barack Obama (or his handlers) have tried to turn this issue into another false left / right paradigm argument, claiming that it is the Republicans that are to blame for the loss of unemployment benefits. This is a distraction from the real matter at hand. The truth is, the ENTIRE government is responsible for the disruption of benefits due to the unchecked and insane deficit spending BOTH parties have enacted over the years. Extending benefits again would add billions if not trillions to the already unsustainable U.S. debt and cannot be continued indefinitely.

Unemployment benefits hide the visible scars of national job loss. Now that millions of Americans have run out, expect to see those scars in all their terrible glory. Expect homeless numbers to skyrocket. Expect crime to skyrocket. Expect suicides to skyrocket. Expect all the problems that were once muted and hidden to now parade across the street where you live. Expect things to deteriorate from the comparably nice, polite, and civil situation we have currently. Expect things to get ugly.

Municipal Debt Implosion: As we have been warning about for the past couple years, municipal bonds are in dire straights. Cities and some states are ready to implode and they are ready to implode now. Look for city defaults to rise to record levels in the next year.

California and Illinois are broke, make no mistake. When Arnold calls for state employee pay to be reduced to minimum wage and Illinois lets $5 Billion in bills go unpaid, there is no turning back:

http://www.bloomberg.com/news/2010-07-14/california-may-cut-pay-illinois-holds-bills-to-bar-downgrades.html

Municipal Bond Defaults now continue at triple the typical rate:

http://www.bloomberg.com/news/2010-07-16/municipal-bond-defaults-continue-at-triple-the-typical-rate-lehmann-says.html

This not only sets the stage for statewide bankruptcies, it also threatens to bring down large holders of municipal securities, such as Citigroup and U.S. Bancorp:

http://www.bloomberg.com/news/2010-07-06/u-s-banks-risk-untold-problem-as-muni-holdings-climb-to-25-year-high.html

Usually, muni-bonds are used by investors as a tax haven and hedge to weather credit storms like that which we are seeing now, yet, investors in the past few months have begun dumping their municipals like a bad date. I believe we will begin hearing about state defaults before the end of the year.

The Dollar? Stick A Fork In It, It’s Done: As we recently predicted, the dollar has broken its traditional relationship with the stock market. Usually, when investors pull their money out of stocks, they then place it in dollar based securities as a safe haven. This causes the dollar to increase in value. In the past few weeks, though, the dollar has plummeted at the same time as stocks! This means investors no longer trust the dollar as a safe haven investment during a market crisis. As we have said for years, when this signal happens, the dollar is ripe for meltdown.

Central banks across the world are beginning to abandon the U.S. dollar:

http://wallstreet.blogs.fortune.cnn.com/2010/07/09/central-banks-start-to-abandon-the-u-s-dollar/

Despite the uncertainty in Europe, the dollar has still sunk against the Euro faster than it has in the past year:

http://www.bloomberg.com/news/2010-07-17/dollar-weakens-most-in-14-months-versus-euro-on-signs-of-economic-slowdown.html

In 2008, I predicted that China would radically re-engineer its economy, changing it from an export based hub to a self sustaining consumer hub. I predicted that they would depeg the Yuan from the Dollar after this move was done, and following that, they would dump their vast holdings of U.S. treasuries, causing the dollar to lose its world reserve status, destroying its value, and creating hyperinflation in prices here in the U.S. So far, the first two events have already occurred. China has depegged its currency from the dollar and is allowing it to begin appreciating. They have also almost finished converting their economy into a consumer system while continuing exports through the ASEAN trading bloc:

http://www.nytimes.com/2010/06/25/world/asia/25china.html?_r=1&ref=global-home

The Yuan is now being globalized by the Chinese in an effort to strengthen its base and make it viable as a reserve currency:

http://www.reuters.com/article/idUSTRE66427920100705

Some analysts have suggested that the globalization of the Yuan could take years, however, this is not necessarily so. If the U.S. dollar were to collapse, or the Euro, or both, the Yuan suddenly would look extremely viable as a reserve currency. I believe this is exactly what will happen, and, I believe China will begin depleting its U.S. Treasury holdings in the next 6 months.

Interestingly, some in China have gone out of their way to deny that such plans are in the wings, and the MSM has helped to facilitate this fallacy:

http://www.reuters.com/article/idUSTRE6660VC20100707

Set aside the fact that others in China are calling for the government to dump U.S. Treasuries:

http://www.reuters.com/article/idUSTRE66I05U20100719

Now would be the perfect time considering the dollar’s recent rise due to the problems in the EU. A bond dump at this time would mean China could reap maximum profits before a final monetary breakdown. China is reverting to a consumer hub and is no longer relying on exports to the U.S., so the idea that they have any reason whatsoever to continue holding onto U.S. Treasuries is absurd.

The final key to the coming Chinese treasury dump, I feel, is in the relationship between China and Germany. Germany is really the primary pillar of the EU, without it, the EU could not exist. A barely publicized visit by German Chancellor Angela Merkel on July 15^thmay be the final piece of a long escalating financial relationship between China and the stronger countries of the EU:

http://news.xinhuanet.com/english2010/china/2010-07/14/c_111953600.htm

A Chinese / German financial alliance could create a core economic “shell” which might withstand an anticipated disintegration in the U.S. and some of the more indebted European nations. I do not expect the dollar as we know it to survive past 2011.

The Line Has Been Crossed

I have never seen so many indicators of total meltdown, when compared to past economic collapses throughout history, as I see today. Not to sound melodramatic, but I’m really not certain if I will be writing these financial analysis articles for much longer. I suspect that before the year is out there will be no more need, being that every facet I have laid out over the years will become glaringly obvious to everyone.

As I have stated so many times, we may not be able to stop these events from unfolding, but we can determine their final outcome. Prepare for the worst, because I have no doubt you are liable to see it before the next few years are done. Stand by your principles. Never compromise your conscience. And above all else, survive. No ending culminates without the graces of a new life, one full of possibility. It is up to you, the staunch and independent American individual, to see that that possibility is realized regardless of any obstacle or enemy. A fiscal catastrophe will not stop us, it will not break our spirits, it will not enslave us. It will only strengthen our resolve to remain forever defiant, and forever free.