THE PUPPET MASTERS PULL THE STRINGS

Watch Europe, and in particular Greece. The European Union is structured, in many ways, just like the good ol' USA. It is comprised of a group of sovereign states organized under a central governmental authority. And just like the US, many of these sovereign states are broke.

Before becoming part of the EU these states had more options in time of emergency because they had their own currency and their own printing presses. Now, just as here in America, they are controlled by a central bank that issues a common currency. Their options are limited to selling bonds, raising taxes, cutting services and asking for handouts.

Since raising taxes or cutting services runs the very real risk of social disorder the real options are reduced to bonds and handouts. As their economies become weaker they are forced to offer higher yields on their bonds to attract buyers which only increases the risk of collapse because they won't be able to pay back the bonds without tax increases or cuts in services.

So, here in America, just as in Europe, the states are going to run to the central government (bankers) and demand to be bailed out. The central governments are in no better shape than the sovereign states but they do have printing presses. So they'll print more money, creating more debt. And in the end they'll give that money to the states, for a price. The price will be the sovereignty of the states.

Never let a good emergency go to waste.

Because the citizens have become so enslaved to the government they can't make the hard decisions necessary to retain their freedom. Slashing government programs will allow the states to avoid bondage to the central governments. All of the "safety nets" that have been put in place are going to cause the ultimate collapse of our society. Families and communities are where charity starts and where it should stay.

To defend our state sovereignty and our personal freedom we must do the hard things. We must become responsible for ourselves and our communities. We can no longer redistribute wealth from those that have to those that need unless it is done through free will acts of charity. Government long ago exceeded it's rightful authority in creating a socialist welfare state and it must be returned to it's true function. If we don't make these hard choices we will collapse.

We'll collapse into the welcoming arms of an all caring and all powerful central government. It will pull the strings and we'll do the dance. We will return to what has been the natural state of government for all of human history, up until the last 240 years of the American experiment. And if we fall back, we will never climb out of the hole again.

"With unemployment still at a severe high, a majority of states have drained their jobless benefit funds, forcing them to borrow billions from the federal government to help out-of-work Americans.

A total of 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net, according to a report released Thursday by the National Employment Law Project. Four others are at the brink of insolvency."
CNN

"Give people their money. It's the rallying cry of lawmakers around the country pushing back against states that are delaying tax refunds to shore up their budgets.

Holding on to the refunds allows states to use the money for other purposes, earn interest on it or simply wait until there's enough cash to cover the checks. But the cost can be an unhappy public.

"It's not the state's money, it's the people's money," said Missouri Rep. Jason Smith, R-Salem. "It's money they've overpaid to the state, and they deserve to get their money back in a prompt time."
MSNBC

"The aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to the boiling point", said the Swiss-based bank for central bankers -- the oldest and most venerable of the world's financial watchdogs. Drastic austerity measures will be needed to head off a compound interest spiral, if it is not already too late for some.

..."The question is when markets will start putting pressure on governments, not if. When will investors start demanding a much higher compensation for holding increasingly large amounts of public debt? In some countries, unstable debt dynamics -- in which higher debt levels lead to higher interest rates, which then lead to even higher debt levels -- are already clearly on the horizon."
Telegraph

"California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink -- budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

...Some economists fear the states have a potentially bigger problem than their recession-induced budget woes. If investors become reluctant to buy the states' debt, the result could be a credit squeeze, not entirely different from the financial strains in Europe, where markets were reluctant to refinance billions in Greek debt.


"If we ran into a situation where one state got into trouble, they'd be bailed out six ways from Tuesday," said Kenneth S. Rogoff, an economics professor at Harvard and a former research director of the International Monetary Fund. "But if we have a situation where there's slow growth, and a bunch of cities and states are on the edge, like in Europe, we will have trouble."
Yahoo Finance

ANOTHER SIGN ON THE ROAD TO COLLAPSE

"The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.

Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market."
Bloomberg

This means that interest rates are going to start heading up. Couple this with all the money we've been printing and todays post from Swarm USA showing that every dollar of new debt (printing money) is taking forty five cents off the GDP, and it is becoming increasingly clear that our time before we collapse has grown short.

You see, as Karl Denninger at Market ticker explains, we are in a death spiral. As interest rates on our bonds go up we will have to print more money to service the debt. The more money we print the greater the impact on our GDP, which of course will have a negative impact on our creditworthiness, forcing interest rates higher.

The only way out is to reset the system, a task that our government does not have the stomach for because it would cost the wealthy players in the system too much money and damage the politicians. Not to mention just generally suck for the rest of us. But, if we do it in a controlled manner we can come out of it, maybe. We may be past the point of no return.

However, to do nothing, as we are doing now, will certainly result in the greatest depression and civil unrest; along with the potential destruction of our system of government.

Whichever way it goes, life as we have known it is in it's last days. Get ready, the time is short!

LOOK TO THE EAST- CHINA AND THE FUTURE WAR

We are in a depression. It was caused by the bursting of bubbles and the creation of new bubbles to offset the effects of the last bubble's burst. Each bubble in succession has burst ratcheting our debt to unsustainable levels. We cannot pay down our debt so we have to make a choice; inflate our way out or collapse. To this point we have increased the money supply to affect Keynesian economic policies in the hopes that we could stimulate the economy back to life. It hasn't worked and will have the effect of causing massive inflation, ratcheting up the cost of goods as the deflationary pressures of a depression drive wages down.

A war would be just the thing to take our minds off the problem, wouldn't it? It would also be a dandy way to wash the excess capital out of the system while creating high paying manufacturing jobs. The only thing holding us back is that we are a Christian nation and the immorality of war started for economic reasons (most are anyway) still rubs us the wrong way.

I wonder if China would have the same qualms?

"While communist China’s growing hostility toward the free world (as represented by the United States) is becoming more and more difficult to conceal, the trade and financial ties between the two countries are nevertheless stronger than ever.

Some wonder why China, as resentful as it is toward the U.S., has spent so much on purchasing U.S. treasury bonds.

The question remains whether and when China will dump American bonds as an extreme financial weapon. Chinese military officers once threatened to do so in the aftermath of earlier threats to fire 200 nuclear bombs at the U.S.

Beijing’s think-tank and pro-communist overseas media believe that dumping a small portion of the $800 billion in American bonds would cause economic turmoil in the U.S.—a blow almost as great as a nuclear bomb. Should that happen, they have speculated that the U.S. would be brought to its knees."
Epoch Times

"China retained its spot as the biggest foreign holder of U.S. Treasury debt in January even as it trimmed its holdings for a third straight month. The string of declines underscored worries that the U.S. government could face much higher interest rates to finance soaring budget deficits."
AP News

"China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand."
Telegraph

"Nervousness is growing in the financial markets about China, which might seem odd when there are so many other places to worry about.

There’s still Greece, for example, which is likely to be the focus of this week’s meetings of European finance ministers. There’s Germany, and its trade surplus. And there’s the U.S., the U.K. and all the other places with triple-A-rated debt that may not be rated triple-A for much longer.

So why the focus on China, where shares closed Monday at their lowest in five weeks, with the benchmark Shanghai Composite ending below 3000 at its weakest since Feb. 9? Well, as one bank put it on Monday: “Are we facing a ‘growth miracle’ or will China be the next bubble to burst?”

So far, it’s been widely assumed that the strength of the Chinese economy is a plus for the global economy as a whole. But fears of over-heating are growing and, after China’s failure to raise interest rates over the weekend, there’s inevitable concern that it might wait too long before tightening the screws.

What’s more, the rhetoric from China seems increasingly confrontational. Premier Wen Jiabao warned other countries not to pressure China over its exchange-rate policy during his news conference at the end of the country’s annual legislative session Sunday."
Wall Street Journal

"In China's zeal to keep their economy going, the government injected about 4 trillion yuan since 2008 (14 percent of GDP) as fiscal stimulus. It expects to have deficit spending equal to 1.5 trillion yuan this year. Since they believe in Keynesian stimulus, and since they still have a quasi-centrally planned economy (the ultimate Keynesian technocrats), they will keep doing this until the crisis passes. You see, there is one thing the Central Politburo fears: their own people. If the economy collapsed, you would see massive unrest, and I believe they fear for their lives."
Zerohedge