How Did The Crisis Happen?

We attempt to analyze and explain how and why we find ourselves in the greatest financial crisis since the Great Depression

Western Rabble-Rousers Are On The Payroll Of The KGB

By Tyler Durden Zerohedge

Up until this point Angela Merkel, and German media in general, had been staunchly on the side of the west when it comes to dealing with Russia, Putin and realpolitik in broader terms. That changed dramatically today when Gabor Steingart, the chief editor of Handelsblatt, Germany’s leading economic newspaper, came out with a stunning op-ed, in German, English and Russian, titled simply that “The West on the wrong path” in which the editor comes out very vocally against the autopilot mode German media has been on for the past several months and calls for an end to a strategy of sanctions and Russian confrontation that ultimately “harms German interests” and is a dead end.

Ukraine Protestors

The must read excerpts:

  • The politics of escalation does not have a realistic goal – and harms German interests.
  • Newspapers we thought to be all about thoughts and ideas now march in lock-step with politicians in their calls for sanctions against Russia’s President Putin. Even the headlines betray an aggressive tension as is usually characteristic of hooligans when they ‘support’ their respective teams. The Tagesspiegel: “Enough talk!“ The FAZ: “Show strength“. The Süddeutsche Zeitung: “Now or never.“ The Spiegel calls for an “End to cowardice“: “Putin’s web of lies, propaganda, and deception has been exposed. The wreckage of MH 17 is also the result of a crashed diplomacy.“
  • Our purpose is to wipe off some of the foam that has formed on the debating mouths, to steal words from the mouths of both the rabble-rousers and the roused, and put new words there instead. One word that has become disused of late is this: realism.
  • Germany has waged war against its eastern neighbor twice in the past 100 years. The German soul, which we generally claim to be on the romantic side, showed its cruel side.
  • The politics of escalation show that Europe sorely misses a realistic goal. It’s a different thing in the US. Threats and posturing are simply part of the election preparations. When Hillary Clinton compares Putin with Hitler, she does so only to appeal to the Republican vote, i.e. people who do not own a passport. For many of them, Hitler is the only foreigner they know, which is why Adolf Putin is a very welcome fictitious campaign effigy. In this respect, Clinton and Obama have a realistic goal: to appeal to the people, to win elections, to win another Democratic presidency.
  • Even the idea that economic pressure and political isolation would bring Russia to its knees was not really thought all the way through. Even if we could succeed: what good would Russia be on its knees? How can you want to live together in the European house with a humiliated people whose elected leadership is treated like a pariah and whose citizens you might have to support in the coming winter.
  • It is not too late for the duo Merkel/Steinmeier to use the concepts and ideas of this time. It does not make sense to just follow the strategically idea-less Obama. Everyone can see how he and Putin are driving like in a dream directly towards a sign which reads: Dead End.
  • Demonizing Putin is not a policy. It is an alibi for the lack thereof. He advises condensing conflicts, i.e. to make them smaller, shrink them, and then distill them into a solution. At the moment (and for a long time before that) America is doing the opposite. All conflicts are escalated. The attack of a terror group named Al Qaida is turned into a global campaign against Islam. Iraq is bombed using dubious justifications. Then the US Air Force flies on to Afghanistan and Pakistan. The relationship to the Islamic world can safely be considered damaged.
  • The American tendency to verbal and then also military escalation, the isolation, demonization, and attacking of enemies has not proven effective. The last successful major military action the US conducted was the Normandy landing. Everything else – Korea, Vietnam, Iraq, and Afghanistan – was a clear failure.

Punchline #1:

  • Collective movements start in support of the sanctioned, as is the case today in Russia. The country was hardly ever more unified behind their president than now. This could almost lead you to think that the rabble-rousers of the West are on the payroll of the Russian secret service.

And Punchline #2:

  • History does not have to repeat itself. Maybe we can find a shortcut.

Also maybe those looking for the moment in time when Germany finally rotated away from its pro-western mindset and took a long, hard look at the rising Eurasian/BRIC/counter US Dollar axis, should remember this article…

Read the Full article

The Federal Reserve and Bubbles

Many market pundits argue that the Federal Reserve is too dumb or too inept to identify asset bubbles.

By focusing on the Fed’s mental acuity (or lack thereof), these pundits are overlooking a key factor: the Fed wants asset bubbles.

Why?

Asset bubbles, at least according to the Fed’s models, will paper over the steady decline in quality of life that began in the US roughly 50 years ago.

This fact is staring everyone in the face, though few people can see past the smoke and mirrors erected by our government to identify and understand it. . Back in the 1950s, the average American family had one working parent and was able to get by just fine. Today, most families have two working parents, sometimes working more than two jobs and they’re still not able to afford a prosperous life.

A 2012 study by NYU Professor Edward Wolff found that the median net worth of American households was at a 43-YEAR LOW. The average American in the 21st century was in worse shape than his 1970s counterpart.

This process began to accelerate in the late 1990s. Looking at real media household income, one can see clearly that things have generally been downhill for nearly 20 years now.

Real Household Income

It is not coincidence that the Fed began blowing serial bubbles starting in the late 1990s. The Fed is aware on some level that quality of life in the U.S. has fallen. The Fed’s answer, rather than focus on solutions to the problems of job growth, income growth, etc. has been (and is) to blow bubbles to paper over this decline.

This is why we’ve had bubble after bubble after bubble in the last 15 years. The Fed doesn’t have a clue how to create jobs or boost incomes. Why would it? Most of the Fed’s Presidents are academics with no real world business experience.

Instead, the Fed believes in the “wealth effect” or the theory that when housing prices or stock prices increase, people feel wealthier and so go out and spend more money. This theory is baloney. People spend based on their incomes, NOT the value of their homes or portfolios.

Assets only convert into cash once the owner sells the asset. Anyone who goes out and spends more money because their home went up in value will only end up with credit card debt or home equity debt, which combined with their mortgage, puts an even greater strain on their financial resources.

The Fed wants asset bubbles because they hide the rot within the US economy. If the Fed didn’t raise stock or housing prices, people might actually start to wonder… “hey, why is my life getting more and more difficult despite the fact that I’m working all the time?”

The Fed wants bubbles. So we’re doomed to keep experiencing them and the subsequent crashes.

Originally published by Phoenix Capital Research

Feds made $100B in improper payments

From Stephen Ohlemacher of the Associated Press

  • Tax credits for families that don’t qualify.
  • Medicare payments for treatments that might not be necessary.
  • Unemployment benefits for people who are secretly working.

Federal agencies reported making $100 billion in payments last year to people who may not have been entitled to receive them.

Congressional investigators say the figure could be even higher.

“The amounts here are absolutely staggering,” said Rep. John Mica, R-Fla. “It’s over $100 billion each of the last five years. That’s a staggering half a trillion dollars in improper payments.”

Mica chairs the House Oversight government operations subcommittee, which held a hearing on improper payments Wednesday.

Each year, federal agencies are required to estimate the amount of improper payments they issue. They include overpayments, underpayments, payments to the wrong recipient and payments that were made without proper documentation.

Some improper payments are the result of fraud, while others are unintentional, caused by clerical errors or mistakes in awarding benefits without proper verification.

In 2013, federal agencies made $97 billion in overpayments, according to agency estimates. Underpayments totaled $9 billion. That adds up to $106 billion in improper payments.

The Obama administration has reduced the amount of improper payments since they peaked at $121 billion in 2010. The administration has stepped up efforts to measure improper payments, identify the cause and develop plans to reduce them, said Beth Cobert, deputy director of the White House budget office.

Federal agencies recovered more than $22 billion in overpayments last year, she said.

“We have taken an aggressive approach to attacking waste, fraud and abuse within federal agencies, and we will continue to seek out new and innovative tools to help us in this fight,” Cobert told the subcommittee.

However, a new report by the Government Accountability Office questions the accuracy of agency estimates, suggesting that the real tally could be higher. The GAO is the investigative arm of Congress.

NOT a SMIDGEN of Corruption!

  • The odds of winning the Florida lottery are 1 in 22,957,480.
  • The odds of winning the Powerball are 1 in 175,223,510.
  • The odds of winning Mega Millions are 1 in 258,890,850.
  • The odds of a disk drive failing in any given month are roughly one in 36.
  • The odds of two different drives failing in the same month are roughly one in 36 squared, or 1 in about 1,300.
  • The odds of three drives failing in the same month are 36 cubed or 1 in 46,656.
  • The odds of seven different drives failing in the same month (like what happened at the IRS when they received a letter asking about emails targeting conservative and pro-Israeli groups) is 37 to the 7th power = 1 in 78,664,164,096. (That’s over 78 Billion)

In other words, the odds are greater that you will win the Florida Lottery 342 times than having those seven IRS hard drives crashing in the same month.  Unbelievable odds of it being the truth in my opinion.

You decide if you believe the official storyline is the truth…