In an economy based on borrowing, i.e. credit a.k.a. debt, loan defaults and deleveraging (reducing leverage and debt loads) matter. Consider this chart of total credit in the U.S. Note that the relatively tiny decline in total credit in 2008 caused by subprime mortgage defaults (a.k.a. deleveraging) very nearly collapsed not just the U.S. financial system but the entire global financial system.
Every credit boom is followed by a credit bust, as uncreditworthy borrowers and highly leveraged speculators inevitably default. Homeowners with 3% down payment mortgages default when one wage earner loses their job, companies that are sliding into bankruptcy default on their bonds, and so on. This is the normal healthy credit cycle.
Bad debt is like dead wood piling up in the forest. Eventually it starts choking off new growth, and Nature’s solution is a conflagration–a raging forest fire that turns all the dead wood into ash. The fire of defaults and deleveraging is the only way to open up new areas for future growth.
Unfortunately, central banks have attempted to outlaw the healthy credit cycle.In effect, central banks have piled up dead wood (debt that will never be paid back) to the tops of the trees, and this is one fundamental reason why global growth is stagnant. ⇒ Keep Reading
Parliamentary Report Confirms What the Alternative Media Has Been Saying for Years
The UK Parliament just confirmed what the alternative media has been saying for years.
Specifically, a new report from the bipartisan House of Commons Foreign Affairs Committee – based on interviews with all of the key British decision-makers, review of documents, and on-the-ground investigations in Africa – found that the Libyan war was based on lies, that it destroyed the country, and that it spread terrorism far and wide.
The War Based On Bogus Intelligence … Like the Iraq War
Initially, the report finds that the threat to civilians from Libyan government forces was dramatically overstated:
Former French Foreign Minister Alain Juppé, who introduced Resolution 1973 [imposing a no-fly zone over Libya, and laying the groundwork for overthrowing the government], asserted in his speech to the Security Council that “the situation on the ground is more alarming than ever, marked by the violent re-conquest of cities”. He stressed the urgency of the situation, arguing that “We have very little time left—perhaps only a matter of hours.” Subsequent analysis suggested that the immediate threat to civilians was being publicly overstated and that the reconquest of cities had not resulted in mass civilian casualties.
The proposition that Muammar Gaddafi would have ordered the massacre of civilians in Benghazi [which was the basis for the West’s war to overthrow Gaddafi] was not supported by the available evidence. The Gaddafi regime had retaken towns from the rebels without attacking civilians in early February 2011 …. Gaddafi regime forces targeted male combatants in a civil war and did not indiscriminately attack civilians. More widely, Muammar Gaddafi’s 40-year record of appalling human rights abuses did not include large-scale attacks on Libyan civilians. ⇒ Keep Reading
The American airstrikes on Syrian forces in Deir al-Zour on Saturday have produced a chain reaction throughout the diplomatic world with Russia calling an emergency meeting of the U.N. Security Council regarding the attacks and causing a war of words between Russian and American ambassadors.
After Russia responded to the U.S. bombing by calling for an urgent meeting of the UNSC, the U.S. Ambassador to the U.N. and notorious humanitarian bomber Samantha Power ranted and raved about the “embarrassment” that Russia was bringing on itself by daring to question the U.S. prerogative to bomb any and everywhere it wants.
“Why are we having this meeting tonight? It is a diversion from what is happening on the ground. If you don’t like what is happening on the ground then you distract. It is a magician’s trick… we encourage the Russian Federation to have emergency meetings with the Assad regime and deliver them to this deal,” Power said.
“What Russia is alleging tonight is that somehow the United States is undermining the fighting against ISIL. The Russian spokesperson even said that the United States might be complicit in this attack… This is not a game,” she exclaimed.
“The Syrian regime that bills itself as the fighter against ISIL let the group grow and grow. ISIL took root and prospered right next to the Assad regime,” Power said. “”The best way to fight ISIL and al-Nusra Front is to stop bombing civilians and deliver the Assad regime. Assad’s tactics have been a gift to terrorists. There is a better way forward, but Russia really needs to stop the cheap point scoring and grandstanding and focus on what matters. The implementation of something that we have negotiated in good faith with them.” ⇒ Keep Reading
Do you remember the old Saturday Night Live sketches in which comedian Chris Farley portrayed a motivational speaker that lived in a van down by the river? Unfortunately, this is becoming a reality for way too many Americans. As the middle class has shrunk and the cost of living has increased, a lot of people have decided to quite literally “live on the road”. Whether it is a car, a truck, a van, a bus or an RV, an increasing number of Americans are using their vehicles as their homes. Just recently, someone that I know took a trip down the west coast of the United States and stayed at a number of campgrounds along the way. What she discovered was that a lot of people were actually living at these campgrounds. Of course there are some that actually prefer that lifestyle, but many others are doing it out of necessity.
Earlier this week, Circa.com posted a story about “the van life”. One of the individuals that they featured was a recent graduate of the University of Southern California named Stephen Hutchins. Without much of an income at the moment, he decided that the best way to cut expenses was to live in his van…
If George Bush Senior thought Reaganomics was “voodoo economics,” he’d think the Trump tax plan was its kachina doll, and if GB Minor had been smoking weed while popping magic mushrooms when he made his eponymous tax cuts, the Bush Tax Cuts might have come out looking like the Wall-Street tax Fantasia that Trump’s peeps have brewed up — a plan that will make Donald Trump and the guests in his gold-plated penthouse much wealthier if enacted.
The Kudlow-Moore Trump Tax Plan
What else would you expect when, as I pointed out in my last article, the Donald’s select team of economic advisors looks like a a Who’s Who of the Republican establishment? If you’re looking for an anti-establishment president, as I am, you might ask why Donald Trump is surrounding himself with establishment leaders and mouthpieces. Stephen Moore is a senior fellow of the Heritage Foundation and served as its chief economist. He’s been a constant champion of trickle-down economics (supply-side economics). Larry Kudlow is CNBC’s talking head, formerly paired as the conservative match with Mad Money’s Jim Cramer. He’s a career-spanning champion of the Republican establishment, particularly of trickle-down economics. Both are now shilling for the plan they created.
While their bonafide establishment credentials make them questionable anti-establishment advisors in the extreme (like a team of snakes being asked to design a better hen house), let’s not judge them by their associations but by their own words and actions:
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