Video: The EU Banking Crisis Contagion is Spreading

Cyprus, Not Cyprus Hill Negro

One of the biggest news stories thus far this year was the lead for the top German, Brazilian, Japanese and Canadian Television outlets yesterday. But it wasn’t even mentioned in the coverage offered by CNN, MSNBC, ABC, NBC, or CBS via broadcast transcripts - Thank God for PBS and the News Hour. Not to mention it wasn’t even a consideration for coverage by African American political bloggers or news sites the likes of The Root, Politics 365, The Grio or any other supposedly political news site that is run by African Americans. And no it was not Obama in Israel, or even Keisha Cole and Beyoncé, rather the run on banks and the EU central bank actions toward Cyprus. Yes to get a bailout from the EU central banks, banks are now allowed to take money from all bank depositors – all account holders.

Now I know many will ask, “What does that have to do with me?” A lot and I will attempt to explain, albeit I know it may be difficult for many of us African Americans because we never heard of Cyprus, care or know anything of substance of the Eurozone sovereign debt crisis, but such should be no excuse. See what happened over the weekend was that a group of EZ leaders, the IMF and newly elected President of the small tiny island nation with a GDP the size of Vermont and a population the size of Philly agreed to force all with a bank account to pay for the government’s debt. Banking will never be the same if folk can’t truth the banks and since they saw the could not trust the EZ, IMF, government or the banks they started to pull all of their loot out.

The EU central bank has decided it is ok for big banks to take money out of the accounts of private citizens to pay for the debt of the nation they live in. Yes that right, all under the guise of it being a new tax. Strange since taxes are the result of political legislation and don’t go back in time. But that is what the large global banks are doing and if they can do it there, they can do it here, especially given Obama’s lack of gonads to even prosecute and arrest bankers. Even funnier is the fact that the banks are taking citizen’s money for loans they did not ask for and which the banks knew were bad when they first made them to the government of Cyprus.

Some will naively assert that this is America and it could or would never happen here. Surprise, it already did, last year from on one of Obama’s boys – John Corzine of MF Global. What Corzine did is what we see happening in Cyprus right now – bank account seizure (tax) without due process. Thus if it can be done in Cyprus, it can and will be done in Italy, Ireland, Spain and even the US, since bankers who caused all this nonsense with the assistance of inept politicians will seek to get all their money from the governments they loaned them too to cover for the losses of the zillions of different complex papers they created that were then and still today basically worthless. But yawl don’t hear me though.

What I can say factually that the present Administration, as the last four are for the fat cat bankers and Corporations. Just from IRS statistics we know that Americans who made over $10 million in 2010 paid on average just under 24 percent of their incomes in federal income tax, less than a third what they paid in 1950. The end result of such practices is a nation in which corporate profits are setting records while typical workers continue to make less than they earned a dozen years ago.

You know there was a time in America when corporations paid taxes, no lie. Not anymore even when corporate profits have been growing per annum at a 20 percent rate. In fact, to find a year when corporations were grabbing as great a share of America’s income as they’re grabbing now, you have to go back to 1950. In the 1950s, the average corporation paid about 40 percent in annual taxes. Now, major U.S. corporations actually pay about 12 percent in taxes. Why is this a problem, well in 2011, the Institute for Policy Studies, reported that 25 major U.S. corporations paid their CEOs more than they paid in corporate income taxes.  Then we can take alook at NYC where the number of  residents receiving food stamps has  more than doubled over the past decade under Mayor Bloomberg, according to data released yesterday. Now, 1.8 million receive food stamps, a jump from 800,000 in 2002, and the Independent Budget Office data show. But 99 percent of African Americans believe their President even against fact that the economy is growing. But it is not and if I accept this premise, then for whom is it growing?

First, the cost of the federally funded food-stamp program in places like NYC had increased dramatically to $3.4 billion from $1.28 billion over the past decade. True, naysayers and other average minded individuals reinforced on reciting lessor proofs proffered my weaker minds will say look at the stock market. I in return will say, yes, look at it. But reality notes that the stock market is not a good indicator for overall wealth of Americans since the average American’s wealth, if the happen to own a home is in home equity - real estate values are still down about $5.5 trillion from their peak. So thinking about, one has to ask if the economy is doing so well and growing as Obama describes it, why then are there over 47 million people in the US living on food assistance to survive. It is clear they are not obtaining any of this wealth.

The Administration is a top down machine just like it was when Ronald Reagan started the practice. The US financial system is buttressed upon trillions of dollars of bailouts and loan that result in risky speculation that cause incessantly financial bubble after bubble. Right now, America has a record debt of $16.7 trillion. Maybe this is why as quiet as it is kept, the Obama administration has announced policy that would allow the federal government to control private citizens 401k’s.

Plainly stated, it is the cost of borrowing money itself that has bankrupted Cyprus, Ireland, Spain and Italy. As it stands, the same shackles of debt are on the hands and feet of the US government and if history is any indication from a policy purview, the people will be the ones to pay for it. But this won’t happen, Obama and Bernanke are so stuck on “quantitative easing” even when they know and data points out that it is just making money out of thin air via a few zeroes added via a computer monitor. The problem with today’s QE is that it has put money into the pockets of the big fat Wall Street bankers but not into the pockets of consumers. What we need is to obviate all public debt and let the corporations and banks keep theirs and let them deal with the problems they created as a fiat. I mean default on the public debt has worked in Iceland, Argentina, Ecuador, and Russia, among other countries.

 But this all makes too much sense and we African Americans don’t care if it hasn’t anything to do with a singer, rapper or anything on television. I know, I asked all of my classes if they were aware of what had occurred in Cyprus: one asked, “you mean Cyprus Hill?” I responded “naw Negro, Cyprus not Cyprus Hill.” Cyprus may be just the start. As of now banks are closed until Thursday. We will have to see if a run starts again and if it spreads to other European nations, if so, it could be the end of the Eurozone and the start of the demise of the US economy. Two years ago we exported 40 percent of our goods and services, this year its down to 21 percent.

Americas Biggest Threat is EU Sovereign Debt Crisis not AQAP

Okay, let’s get this straight. The injudicious assertions promulgated by political charlatans on both side of the aisle from Obama to Congressman Pete King that America’s biggest threat is Al-Qaeda in the Arabian Peninsula (AQAP) is feculent and even dangerous. In fact it is one of the more laughable jactitations proffered in recent years and ranks up there with the suggestion that America is post racial or even that Wall Street and bankers can police themselves.
In all honesty as things stand, our truest and greatest threat is the European sovereign debt crisis and not AQAP. For if the chickens come home to roost, with the chickens in this sense being the massive preponderance of complex financial papers and derivatives which remain without a true valuation and inundate the global markets, and then we have seen nothing yet in terms of an economic disaster. I means, what is on the horizon given what is occurring in Europe will eventually demonstrate that what we just observed with regards to JP Morgan-Chase and Jamie Dimon will be just a drop in the bucket.

But instead of giving these events the attention they require and other signals, we ignore them and continue with the small thinking myopia that would advance a HR 1838 (SWAP Bailout prevention act) on behalf of Republicans or an HR 3784 (Gas Price Spike Act of 2012) on behalf of democrats. The later under whom oil companies would be taxed at 50 to 100 percent of profits considered to be “higher than reasonable.” Notwithstanding other distractions whether they concern Mayor Cory Booker’s honest remarks on private equity or the President’s personal opinion on Gay marriage, we never seem to be able to be proactive and address real issues that will impact us more than any of the aforementioned in aggregate. Fact is gay marriage has nothing to do with the US economy.

Bush, followed by the Obama administration implemented massive stimulus that were supposed to grow the economy. Unfortunately, such has not manifested as promised by the Keynesian heavy Obama administration (Bernanke, Krugman and Geithner). By their logic the stimulus was supposed to produce fifty cents of GDP growth for each stimulus dollar spent. But instead of increasing demand, what they did was discourage consumption and investment by the private sector who based on all this talk, rightly expect tax hikes to finance the stimulus somewhere in the near future. Meaning that the stimulus actually squashed the private sector spending it desired to stimulate.

This may be why the CBO recently reported the strong chance of another US recession soon. They predict that the US Gross National Product (GNP) will go negative for at least two quarters, given the eventually ending of the Bush-era tax cuts, the extended unemployment benefits and the reinstating of the payroll tax rates back up to 6.2 percent from the current 4.2 percent. Not to mention that currently as a nation, we spend $454 billion a year just on servicing the interest on the national debt alone. Then there is the $642 billion spent on the Afghan war (this includes this year’s spending). And let us not forget the 11 million homeowners in the US with in excess of $800 billion in negative home equity and you can see we have a big mess on our hands without the problems in Europe.

Starting with the UK, Britain's economy contracted by 0.3% in the first three months of the year, faster than previously thought and pushing the country back into another recession and equal to the contraction in the final quarter of 2011. There has been no growth in manufacturing after last year the sector exhibited a decline of 0.7% at the end of last year. The banking sector also contracted, by 0.3%.

Then there is Spain. Spanish banks’ total loan losses could range between 218 billion and 260 billion Euros, more than currently expected according to estimates by the Institute of International Finance. Spain’s economy is in critical condition with 23 percent unemployment of which 50% percent of those under 24 are unemployed (the highest in the Euro zone) and they are in their second recession in three years. Spain like all the European countries that, are uncompetitive, have high debt levels, and suffer from low savings rates that have been forced down in over the past years - one reason why 16 Spanish banks were downgraded last week.

The picture is no different in Italy which saw Moody‘s Investors Service downgraded 26 Italian banks, where investors are needing higher risk premiums for Italian government bonds on fears that Greece may exit from the euro zone and Italy's double-dip recession . Italy is estimated to have around a debt burden of €1.9 trillion (about 120% the size of its gross domestic product), or about $2.6 trillion).

The reality is all the talking and meeting the G-8 just did wasn’t anything and empty, especially without Russia, China and India in attendance. The realty remains that a Greek euro exit is very likely and soon. If it happens, it will lead to runs on Spanish and Italian banks, resulting in the need for the ECB to give out more credit to keep the banks from collapsing. Although the problem isn’t Greece, but rather that Greek banks are undercapitalized. Greece cannot crash the euro zone alone. But what it may lead to can. If they are allowed to leave, the same will be true for other nations.

Ben Bernanke and the politicians in Washington DC speak of recovery while the facts do not support their contention. Not to forget that it was in the 1970s when Nixon enabled bankers and politicians to print and spend at liberty without a gold standard and a Central Bank owned by Wall Street, has resulted in a country where the cost of things we need to live have risen at twice the rate of our income. The truth is that real inflation has been running 5% higher than government is telling us in spite of what is being told to us by Paul Krugman (that there are very few Americans living on a fixed income being impacted by Bernanke’s zero interest rate policy). Maybe this is why Krugman is so bent on another $4 trillion of debt and a debt to GDP ratio of 130% to get our economy back on track.

Yes we cannot see the big picture. The real US deficit is over $5 trillion. Our policy appears to ignore Greece, which after several years of austerity are in the midst of a full-blown economic depression and they still do not have a balanced budget. The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent, is already experiencing a depression that will only get worse. If or when they leave, investor confidence in the euro zone will be damaged forever. Already as a nation America has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

Europe is our largest trading partner, especially as it pertains to exports. Yet our efforts are all over the place. Paul Ryan supposed spending cuts really only slow spending to 3 percent annually while Obama increases spending 4.5 percent a year in his budget. No to mention that like the EU zone banks who are undercapitalized and heavily burden with the uncertainty of how much banks actually hold in bad assets, and the potential need for the government to bail them out at the expense of a bigger debt burden, the same is true for US banks.

Economic growth is stalled both in Europe and in America plus there seems to be a lack of concern here and little if any coordination between the EU and US. None of the nations including the US are recalibrating either fiscal or monetary policy which is a must. Reform not stimulus is the answer if we look at the real world examples here and abroad. Both the ECB and Federal Reserve seem to focus on the nations and not the banks and the Obama administration has only tackled the issue from a short term perspective. So what there is a newly revealed Al Qaeda video that calls on followers to launch cyber attacks on Western targets that has Sens. Susan Collins and Joe Lieberman, chairman of the Senate Homeland Security Committee, scared, it aint got nothing on what’s going on across the pond and is nowhere as big a threat to America as the European sovereign debt crisis. Take note you heard it here first.

America for Dummies

One thing you can say about us Negroes is that most of us care and know more about the 2-pac sex tape, the Michael Jackson voluntary manslaughter trial and the BET hip hop awards than events that actually have an impact on our present and future lives such as the European sovereign debt crisis.

Not to be sarcastic, but the economic crisis in Europe is tenfold more important and impactful on the lives of African Americans because it directly impact how much money we have in our pockets, more so even than the supposed jobs plan proposed by the president. Like our economy, the major participants in the European Union, mainly Germany, have implemented another temporary fix to stop the hemorrhaging via a new bailout package. We tried a bailout here under Bush and Obama, the second of which resulted in a loss of 2.5 million more jobs and more paper money added to the economy albeit liquidity was never at issue.

In theory, the goal is to calm markets and to isolate the problems of Greece from the rest of the EU and subsequently the rest of the world, most importantly the US. But this can never happen when you add Ireland, Spain, Portugal, Italy and even France into the mix. The simple truth is no matter how much money stronger European nations throw onto the already massive debt, it will not help and result in more debt, like any pyramid scheme does.

Seeing the unrest in Greece, the demand for additional collateral from Finland and backroom deals that want bankers to take a large reduction of the value of their Greek bond holdings to reduce their national debt, what we may see in the next coming weeks may be more problems for global markets. It hard for at least me to see why hasn’t dumping all of this bailout money on the problem has not resulted in a drop in the credit rating for countries like France and Italy, especially when countries like Venezuela, who have 60 billion or more in surplus, have lower ratings than the aforementioned.

It is apparent that Greece will eventually default and Germany will be put in a position to protect its banks first and for the record, we do not know or at least I cannot discern how much loot French, Spanish and Italian banks have on hand to do the same let alone how much US exposure exist with our big insurance corporations and all. If this does happen, it would not be unreasonable for one to speculate bank failures in Europe leading to a global sovereign debt and banking crisis simply due to not knowing the value of all the varied derivatives and complex papers banks around the world hold.

And back to Germany, if rumors hold true and they reinstate the Mark, debt will continue to accrue because without the existence of a single EU bond, there is no mathematical way to support the massive debt in the EU’s struggling markets. We may see some evidence of such now for just this week we saw France and Belgium guarantee the financing of the troubled cross-border bank Dexia, as its shares plunged just on reports that it will be broken up.

I could go one for days but in simple terms several things are true. The people of the bailout giving nations from Germany to Finland do not want to bail out Greece and other struggling national economies in the union. Second, all that is being done is to the benefit of creditors and foreign investors and not to address the structural impediments at the root of the current crisis. Last, if a bank like Dexia cannot survive, which is the leading provider of local government financing in France, the it will be only a matter of time before other French banks, who currently buffer the crisis nations from the rest of the EU will become insolvent. Why, because the worsening of the European sovereign debt crisis and the tensions on the interbank market means that all of the world will have a clear picture of how troubled non-strategic assets weigh on EU banks as a whole regardless of what country they are located in.

I admit I am no economist, just a reader and a free thinker. Math is my tool and although I cannot say who is the rapper of the year, or who is brought out in the Jackson trial, I don’t need too because it does not and will not impact my life more than what I see occurring in Europe. Maybe someone should write a book for me and call it “America for Dummies” to help me out. Or better yet, I should write that book, for only a nation of dummies would pay more attention and be more knowledgeable of pop culture garbage that doesn’t have a real significance on their survival than event that do.

The One World Corporation

As I listen to the inside the beltway bickering of sound bites from “taxes on private jets” to “cut, cap and balance,” I cannot grasp that no one has simplified this discussion regarding debt and deficits. The way it is presented, many act as if debt and deficit are the same things when they are not, while just forgetting to explain that the real issue is our sovereign debt crisis as a nation and not liquidity. This means that the US economic woes are a function of structural problems we have while operating in a global economy.

For example, around the globe, the real problem is not the governments (albeit they play a major role) but rather the banks and the possibility they may run out of money. In Ireland for example, it is more likely that banks will run out of loot before the government. Here at home, Bank of America recently made a bond issuance of $2.5 billion in new bonds. Why, because they are short on loot, running out of money and because the bank's stock just fell to fresh multi-year lows.

Both banks and governments are responding to the global debt crisis by adding more debt on top of debt. Adding debt to more debt is a pyramid scheme, a Ponzi scheme for to keep the pyramid intact, more loot is needed to keep those on top and under them making money. All kidding aside, looking a Greece for example, the fact is that Greece will never be able to pay back the debt it owes bond holders and the global markets.

It is not hard to see, but when you have a basically dumb-downed and ignorant electorate, the obvious gets lost in this age where talk and opinion takes the place of news and information. Or else it would be front and center that in the last year, the US dollar has fallen 12% in value which has led to making China the top seller of US treasury bonds worldwide. This means that the US government is an insolvent nation financially. We have accumulated a trillion dollar deficit three years in a row and a double dip in the housing market. Add to this the rising cost of oil and gas due to manipulation by speculators, mainly by the Goldman Sachs Commodity Index, and then it is easy to see what the outcome will be – a global economy run by a single corporate institution in the form of one world bank.

Ireland, which total debt is 100 percent of GDP, is insolvent. Greece, Italy, Spain, France and the US are all approaching the same boat. Why because the IMF, World Bank, Federal Reserve, Bank for International Settlements in Basle, Switzerland (a private bank owned and controlled by the worlds' central banks which were themselves private corporations) and similar agencies only work to see banks get paid, not that governments or democracy survive and prosper. If the US is to survive, it must function on a national credit system, which would lead to a sovereign nation state based on a system of our currency – the dollar. This would result in a non-inflationary credit system run by the state. But banks don’t want that, as Andrew Jackson and Lincoln found out centuries earlier.

If this does not occur, then we will continue, as a nation to involve ourselves in wars, for that will be the only way to make money. We will be in Pakistan, which will put us in conflict with China (which may involve India and Russia) and even in our own hemisphere in South America.
What is saddening is that most Americans do not have a clue, especially African Americans who often cannot see the trees for the forest through our own doing. History shows us that when the US economy goes awry, we feel it first and hardest. For we have limited if any knowledge of the collateralized debt obligations, complex financial papers/instruments, or the sophisticated computerized risk models that got us as a nation in this predicament. But we can spend, and buy and not save although property depreciations due to the foreclosure crisis will wipe out a significant amount of our wealth as a community and may cost us alone upwards of $190 billion dollars. After all everybody know we are the most vulnerable, especially loan companies, except for us.

Folk, America is broke. We the people are broke. The only thing I see on the horizon is debt on top of debt. But like all pyramid schemes, ours will fall or be found out too and our republic as we know it will be no longer and instead, a part of a new entity – the one world corporation.

The World Economic Collapse explained in 3 minutes

What’s it made off

As many of you know I do not like to write about entertainment, but today I will digress and do such. So please bear with me on my new endeavor. Down in this camp, the ATL, there a social event that will go on tonight called “Hot on the Runway.” It is a fashion show and concert that will be held it this joint called the Compound, which was founded by the Black Mafia Family (BMF). Performances are slated to be made by Atlanta’s own Blood Raw of CTE, Mario, Ray-J and Ashanti among others.

Now there is nothing wrong with fashion, or fashion shows. I even went to a fashion show once (my daughters mother was in it and said i never came to see her model) and although I cannot recall of the designers, and didn’t attempt to get any of the models phone numbers, what I recant most was that it was outside and that the had a barb-q pit and he was serving pork – and I simply loved that.

However, at this show, they have a promotional contest in which the will be giving away a $5000 red Dolce & Gabbana Crocodile Purse. Now correct me if I am wrong, but what can a purse be made of that make it worth $5000? Sure I know the obvious, but when I lived in Nigeria you could get them for $50 US dollars. I tried to find a picture of the purse but could’t because didn’t know WTF I was looking for, so one of my favorite beverages has to suffice for this post.

Now the way I see it, which may be foul, I could get 68.7 shares of National Oilwell Varco (NOV) or 40.7 shares of PBR (Petroleo Brasileiro), although it could by me a lot of Pabst Blue Ribbon also. But that is just me. But on the real, with the recession, and the high cost of education, and folks losing teir houses, why not give away a scholarship, or a down payment on a home, or even offer to pay $5000 on someone’s mortgage?

I just don’t get, I really don’t. To me, such action play into sterotypes tha are already debilitating. Such as buying cars over homes, spinners(Sprewell’s) over stock, and last but not least the ubiquitous flossin’ and frontin’ – which by definition means pretending like you got loot when you do not. As a people, we command a GDP of $688 billion. That’s way more than the highest GDP for an African nation (Egypt), which has an estimated annual GDP of $290 billion. Our estimated GDP is in the ranks with countries the likes of Spain and Mexico.

So what gives folk, when we gone stop and look at the big picture. 5 stacks could get me central air and heat for my home, and at least a years worth of gas. I just want to leave you with this think, cause if I spent 5 stacks, and it wasn’t on stocks, it better be some aluminum siding or stucco on my crib.