Friday, May 17, 2013

How Billionaires Took Over American Democracy

Billionaires with an axe to grind, now is your time. Not since the days before a bumbling crew of would-be break-in artists  set into motion the fabled Watergate scandal,  leading to the first far-reaching restrictions on money in American politics, have you been so free to meddle. There is no limit to the amount of money you can give to elect your friends and allies to political office, to defeat those with whom you disagree, to shape or stunt or kill policy, and above all to influence the tone and content of political discussion in this country.
Today, politics is a rich man’s game. Look no further than the 2012 elections and that season’s biggest donor, 79-year-old casino mogul  Sheldon Adelson. He and his wife, Miriam, shocked the political class by first  giving $16.5 million in an effort to make Newt Gingrich the Republican presidential nominee. Once Gingrich exited the race, the Adelsons invested  more than $30 million in electing Mitt Romney. They donated millions more to support GOP candidates running for the House and Senate, to  block a pro-union measure in Michigan, and to  bankroll the U.S. Chamber of Commerce and other conservative stalwarts (which waged their own campaigns mostly to helpRepublican candidates for Congress). All told, the Adelsons donated $94 million during the 2012 cycle — nearly four times  the previous record set by liberal financier George Soros. And that’s only the money we know about. When you add in  so-called dark money, one estimate puts their total giving at closer to $150 million.
It was not one of Adelson’s better bets. Romney went down in flames; the Republicans failed to retake the Senate and conceded seats in the House; and the majority of candidates backed by Adelson-funded groups lost, too. But Adelson, who oozes chutzpah as only a gambling tycoon  worth $26.5 billion could, is undeterred. Politics, he  told the Wall Street Journal in his first post-election interview, is like poker: “I don’t cry when I lose. There’s always a new hand coming up.” He said he could double his 2012 giving in future elections. “I’ll spend that much and more,” he said. “Let’s cut any ambiguity.”
But simply tallying Adelson’s wins and losses — or the Koch brothers’, or George Soros’s, or any other mega-donors’ — misses the bigger point. What matters is that these wealthy funders were able to give so much money in the first place.
With the advent of super PACs and a growing reliance on secretly funded nonprofits, the very wealthy can pour their money into the political system with an ease that didn’t exist as recently as this moment in Barack Obama’s first term in office. For now at least, Sheldon Adelson is an extreme example, but he portends a future in which 1-percenters can flood the system with money in ways beyond the dreams of ordinary Americans. In the meantime, the traditional political parties, barred from taking all that limitless cash,  seem to be sliding toward irrelevance. They are losing their grip on the political process, political observers say, leaving motivated millionaires and billionaires to handpick the candidates and the issues. ”It’ll be wealthy people getting together and picking horses and riding those horses through a primary process and maybe upending the consensus of the party,” a Democratic strategist recently told me. “We’re in a whole new world.”
The Rise of the Super PAC
She needed something sexy, memorable. In all fairness, anything was an improvement on “independent expenditure-only political action committee.” Eliza Newlin Carney, one of D.C.’s trustiest scribes on the campaign money beat, didn’t want to type out that clunker day after day. She knew this was big news — the name mattered. Then it  came to her:
This article originally appeared on : AlterNet

The Trick to Suppressing Revolution: Keeping Debt/Tax Serfdom Bearable

by Charles Hugh-Smith

The 30 million whose labor funds the parasitic status quo don’t have to rebel; they simply have to stop going to work, stop starting enterprises, stop being productive.
Parasites must balance their drive to maximize what they extract from their host with the risk of losing everything by killing their host. This is the dilemma of the parasitic partnership of the central state and financial Elites everywhere: to extract the maximum possible in debt payments and taxes without sparking rebellion and revolution.
I have often commented on the current class structure, which paradoxically unites the interests of the top 1/5% of 1% and their political-class toadies and the bottom 50% who are drawing transfer payments/benefits from the state: both support the status quo because both receive direct benefits from it.
The 20% who pay most of the tax and service much of the debt are in the middle, a political minority of debt/tax serfs who finance the status quo, i.e. cartel-crony capitalism owned and operated by the financial and political Elites:
The Three-and-a-Half Class Society (October 22, 2012)
Entitlements, Taxes, Inequality and Three-Way Class Warfare (September 20, 2010)
Tyranny of the Majority, Corporate Welfare and Complicity (April 9, 2010)
Two Americas: The Gap Between the Top 5% and the Bottom 95% Widens (August 18, 2010)
The numbers of Americans drawing benefits from the state are astounding:almost 11 million people drawing lifetime disability from Social Security (The Number Of US Citizens On Disability Is Now Larger Than The Population Of Greece); Social Security (SSA) has 61 million beneficiaries as of March 2012; Medicare had 49.4 million beneficiaries in 2012, and Medicaid has over 50 million beneficiaries (another source puts the current number at 58 million, but the Kaiser Family Foundation says roughly 7 million “dual-eligibles” receive both Medicaid and Medicare, so let’s use the data point of 50 million Medicaid-only recipients.)
This aligns fairly well with the 48 million drawing SNAP (food stamp) benefits: Foodstamp Recipients Hit Record (Zero Hedge). Those qualifying for one program likely qualify for the other.
This means roughly 110 million people are drawing significant direct benefits from the Federal government (central state) while the number of full-time workers is 116 million–about a 1-to-1 worker-beneficiary ratio.
The problem is two-fold: the entitlement programs are running massive deficits even though the Baby Boom has barely started to enter the programs, and the number of workers earning enough to pay significant income taxes is remarkably limited.
As I detailed in The Fraud at the Heart of Social Security (January 17, 2011), the program paid out $707 billion in 2010 and collected $631 billion in taxes, a $76 billion shortfall for 2010. The current program (2012) cost is $817 billion, a leap of $100 billion in a few short years as Baby Boomers flood into the program.
Of the roughly 142 million workers in the U.S., 38 million earn less than $10,000 per year, 50 million earn less that $15,000 a year and 61 million earn less than $20,000 annually. All these numbers are drawn directly from Social Security Administration payroll data.
100 million wage earners, or 2/3 the entire workforce, earn less than $40,000 per year.
Most of the heavy-lifting in terms of paying income taxes falls to about 30 million people, the top 20% of wage earners.
As for debt-serfdom, the status quo has widely distributed huge debt loads via home mortgages and student loans. A trillion here and a trillion there and pretty soon you’re talking real money:


The banks have written off some defaults but the debt load on the serfs hasn’t declined much:

Meanwhile, real wages have been declining, meaning there is less money left to service debt:

This presents the partnership of the financial kleptocracy and the state with an insoluble problem: their parasitic skimming of rentier debt payments and taxes has reduced the income of 95% of the workers, leaving them less able to service more debt and pay more taxes.
The parasitic financial class is not about to accept lower wealth accumulation, so the state must protect the cartel-rentier arrangements of the Elites at all costs. But the state must also buy the complicity of 110 million (going on 150 million as the Baby Boom retires) potentially restive citizens, an open-ended spending commitment that is only sustainable if the economy and those employed full-time expand smartly.
Alas, financialization (debt-serfdom) and higher taxes (the transformation of the middle class into tax donkeys) have gutted the real economy, driving real income lower for 95% of the workforce that still has earned income.
Hmm, what’s a parasitic kleptocracy to do? The ever-resourceful Elites have hit on a solution: 1) print money via central banks and 2) borrow trillions of dollars, euros, yen, yuan, etc. to fund the status quo.
These adaptations have enabled the parasites of the financial Elites and the state to maintain their exploitation of their primary host, i.e. the dwindling middle-class of tax donkeys and debt-serfs. But is this rentier arrangement sustainable in the long term?
In Nature, parasites weaken the resiliency of the host; when crisis strikes, the weakened host, though superficially stable and strong, suddenly collapses in a heap. The financial parasitism of the state and financial Elites is weakening the real economy everywhere: Japan, China, the European Union and the U.S. Massive money creation and state borrowing are keeping the host-parasite relationship stable for the time being, but the fragility of the host is increasing.
The financial-political Elites are confident that they have found a way to maintain their parasitic rentier arrangements–print money, keep all the phantom assets on the books, and keep interest rates low enough that the debt-serfs can still service their debts.
But the financial-political Elites’ calculus cannot calculate the breaking point of the dwindling minority propping up the entire status quo: When Belief in the System Fades(March 12, 2008):
In a way, a belief in the value, transparency, trust and reciprocity of the System is like a religious belief. The converts, the true believers, are the ones who work like crazy for the company or the service. And when the veil of illusion is tugged from their eyes, then the Believer does a reversal, and becomes a devout non-believer in the System. He or she drops out, moves to a lower position, or “retires” to some lower level of employment.
At what point do people choose to opt out of debt/tax-serfdom? What triggers their decision to renounce debt, go off the financial grid, and escape serfdom by fashioning a low-cost lifestyle in the cash economy? At what point do productive people tire of supporting parasitic financial and political Elites and millions of people who aren’t working themselves to the bone to pay taxes and service debt?
The more the state pays in benefits and the higher it pushes taxes, the more appealing opting out becomes. The more The Reverse Robin Hoods of the Federal Reserve, Ben Bernanke and his Merry Band of Thieves prints money to fund the parasitic financiers, the more they weaken the real economy and fuel a recognition that the Federal Reserve is the enemy of free enterprise and democracy. Bernanke’s Neofeudal Rentier Economy(May 7, 2013).
The 30 million whose labor funds the parasitic status quo don’t have to rebel;they simply have to stop going to work, stop starting enterprises, stop being productive. They just have to tire of being the host, tire of being debt-serfs, tire of being tax donkeys. And when they lay down their burden, there won’t be anyone to pick it up: the parasitic financial and political Elites are incapable of being productive, and the working poor don’t generate enough surplus to fund open-ended benefits for 110 million non-workers.
The trick to suppressing revolution is to keep debt-tax serfdom bearable. The parasitic Elites are keeping the host going, but at a high cost in resiliency. Let’s see how long the host lasts once a crisis hits.

Hashimoto says comfort women system necessary for wartime troops

Outspoken Osaka Mayor Toru Hashimoto on Monday said that comfort women—a euphemism for sex slaves—used by the Japanese imperial army before and during World War II were necessary for the wellbeing of troops.

Speaking at a news conference, Hashimoto said that the women were needed to provide “the brave frontline troops with rest and relaxation,” TBS reported. He said the system was also important for maintaining discipline and that other countries used similar systems during wartime.

Monday’s comments were not the first time that Hashimoto, who co-heads the Nippon Ishin No Kai (Japan Restoration Party), has made controversial remarks on the issue.

Historians say about 200,000 “comfort women” from Korea, China, the Philippines and elsewhere were drafted into Japanese army brothels.

The issue, along with other wartime atrocities perpetrated during the Japanese occupation, has long remained a source of contention between Tokyo and its neighbors, notably South Korea.

In the 1993 statement, Japan offered “sincere apologies” for the “immeasurable pain and suffering” inflicted on comfort women. Two years later, Japan issued a broader apology expressing “deep remorse” for war suffering.

That apology remains passionately opposed by some Japanese conservatives who contend that the country did not directly coerce the women.

Goldman Sachs 'sweetheart' tax deal with HMRC will stand as UK Uncut fails in court challenge

  • Judge told it was allowed to proceed to avoid embarrassing Chancellor
  • UK Uncut asked him to declare that HMRC decision was legally flawed
  • Deal in 2010 was worth up to £20m - but judge rules it wasn't unlawful

  • Campaign group UK Uncut Legal Action today lost its High Court challenge over the legality of the ‘sweetheart’ tax deal between HM Revenue and Customs and Goldman Sachs.
    A judge was told the 2010 deal, worth up to £20million, was allowed to proceed to avoid ‘major embarrassment’ to Chancellor George Osborne and the tax authorities after the bank became ‘aggressive’ and allegedly made threats.
    UK Uncut asked Mr Justice Nicol, sitting in London, to declare that HMRC's decision to let the deal go through was legally flawed and involved a breach of statutory duty.
    Defeat: Campaign group UK Uncut Legal Action today lost its High Court (pictured) challenge over the legality of the 'sweetheart' tax deal between HM Revenue and Customs and Goldman Sachs
    Defeat: Campaign group UK Uncut Legal Action today lost its High Court (pictured) challenge over the legality of the 'sweetheart' tax deal between HM Revenue and Customs and Goldman Sachs
    The judge ruled the deal was ‘not a glorious episode in the history of the Revenue’ but it was not unlawful.
    Tax authority lawyers defended the settlement, saying it was among five big business deals declared ‘reasonable’ by a 2012 report of the National Audit Office (NAO).
     
    UK Uncut says it is wrong to allow rich companies to avoid paying millions in tax while the Government imposes tough austerity measures on the poor and ordinary taxpayers are pursued for every penny.
    Murray Worthy, a director of UK Uncut Legal Action, said after today's hearing that he was disappointed with the ruling.
    Evidence: A judge was told the 2010 deal, worth up to £20million, was allowed to proceed to avoid 'major embarrassment' to Chancellor George Osborne (pictured yesterday) and the tax authorities
    Evidence: A judge was told the 2010 deal, worth up to £20million, was allowed to proceed to avoid 'major embarrassment' to Chancellor George Osborne (pictured yesterday) and the tax authorities
    But he added: ‘This case has shown that the Government's tough talk on tax is just that - talk not substance.’
    Defeat: Murray Worthy, the director of UK Uncut, outside the High Court in London today
    Defeat: Murray Worthy, the director of UK Uncut, outside the High Court in London today
    Dave Hartnett, then permanent secretary for tax, initially shook hands on the Goldman Sachs deal on November 19 2010 following a long-running dispute over National Insurance contribution payments dating back to the 1990s.
    Lawyers for UK Uncut put before the High Court in London an email and a witness statement they submitted showed that Mr Hartnett overruled legal advice, the HMRC's own guidelines and its internal review board to ensure the deal went ahead.
    Just over a week after the handshake, the Revenue's high-risk corporate management board attempted to block the deal, just as the Chancellor announced that the top 15 banks in the country had signed up to a new code of conduct related to tax.
    An email from Mr Hartnett on December 7 2010 described how Goldman Sachs allegedly ‘went off the deep end’ after the board decision and threatened to withdraw from the Government's bank code of practice, first published in December 2009.
    The email warned: ‘The risks here are major embarrassment to the ChX (Chancellor of the Exchequer), HMRC, the LBS (the large business service of the HMRC), you and me, not least if GS withdraw from the code.’
    The witness statement from Mr Hartnett, who retired as head of tax last summer following strong criticism of the Goldman Sachs deal from the public accounts committee, said the bank withdrawing from the code ‘would have embarrassed the Chancellor’.
    Base: James Eadie QC, appearing for HMRC (whose London headquarters are pictured), accused UK Uncut of taking legal action 'to pursue politics by other means'
    Base: James Eadie QC, appearing for HMRC (whose London headquarters are pictured), accused UK Uncut of taking legal action 'to pursue politics by other means'
    Ingrid Simler QC, appearing for UK Uncut, argued that the deal breached HMRC's statutory duties, and an ‘aggressive’ bank had been ‘rewarded’ for several years of failing to pay tax it owed, causing ‘real disquiet among the taxpaying public’.

    'THIS WASN'T A GLORIOUS EPISODE IN HMRC'S HISTORY': JUDGEMENT

    In his judgment, the judge, Mr Justice Nicol, said Dave Hartnetthad taken into account ‘the potential embarrassment to the Chancellor of the Exchequer if Goldman Sachs were to withdraw from the tax code’ when he decided to approve the Goldman Sachs settlement.
    The judge said: ‘HMRC accepts that was an irrelevant consideration and should not have featured in his decision-making process.’
    But ‘maladministration and illegality’ were separate issues, said the judge, and the settlement itself was not unlawful.
    The judge listed other mistakes made by the Revenue as he observed: ‘The settlement with Goldman Sachs was not a glorious episode in the history of the Revenue.
    ‘The HMRC officials who negotiated it had not been briefed by the lawyers who were litigating against Goldman Sachs.
    ‘They relied on their belief or recollection that there was a barrier to the recovery of interest on the unpaid National Insurance contributions (NICs). That was erroneous.
    ‘HMRC accepts now that there was no such barrier. The officials who negotiated the agreement overlooked the need for approval from the Programme Board in relation to an agreement over £100 million.
    ‘HMRC now accepts that they should have appreciated this. Because the officials did not have this requirement to mind, they said nothing about it to Goldman Sachs and created the impression that the agreement was a done deal by the end of the meeting on 19th November.
    ‘HMRC accepts that was an error. Furthermore, HMRC did not appear to have taken a contemporaneous note as to the agreement which was reached on 19th November.
    ‘That allowed a degree of uncertainty to prevail for a time as to what precisely had been agreed.
    ‘In the end that has been resolved but in the course of the hearing, HMRC accepted that it would have been a good idea for a contemporaneous record to have been kept.’
    She said the exact amount lost to the Revenue was not known but was at least £5million to £10million, and the Commons Public Accounts Committee had received evidence that it could be up to £20 million.
    James Eadie QC, appearing for HMRC, accused UK Uncut of taking legal action ‘to pursue politics by other means’.
    HMRC said in a press statement: ‘Large business tax settlements are a vital part of how HMRC secures tax revenues for the country and without them Britain's public finances would be seriously damaged.’
    Anna Walker, campaigns director of UK Uncut Legal Action, said: ‘Obviously, while we are deeply disappointed that this deal has not been declared unlawful, the judge's ruling that top HMRC officials played politics with major tax deals to protect (Mr) Osborne's reputation is a major victory in exposing the truth behind these secret deals.
    ‘Despite not having won the case today, we still feel that this judgment has demonstrated that the Government is making a political choice to cut legal aid, public services and the welfare system, rather than take action to make corporate giants... pay their fair share of tax.
    ‘This case has exposed the lengths the Government will go to to look tough on tax avoidance and has been vital in holding the Government to account for its shameful actions.’
    Solicitor Rosa Curling, of law firm Leigh Day, which represented UK Uncut Legal Action, said: ‘This is a disappointing decision but it has been an extremely important case to fight. It has forced HMRC to reveal the process by which it reached a deal with Goldman Sachs, a settlement which let the bank off an estimated £20 million tax owed.
    ‘Without this legal action HMRC would have succeeded in keeping secret the fact that the settlement was in part motivated by saving the blushes of the Chancellor rather than collecting the tax due to the public purse.
    ‘We hope through this litigation that HMRC has learnt from its mistakes in the past and will ensure that such sweetheart deals, like that reached with Goldman Sachs, do not happen in the future.’
    Jim Harra, HMRC's director-general for business tax, welcomed the ruling.
    ‘The High Court's comprehensive dismissal of UK Uncut's claim puts to rest the fallacy that HMRC is soft on large businesses,’ he said.
    ‘HMRC has an exemplary record in relentlessly challenging those who avoid tax. We have recovered £34 billion in additional revenues from large businesses in the last seven years.
    Bank: Dave Hartnett, then permanent secretary for tax, initially shook hands on the Goldman Sachs deal on November 19 2010 following a long-running dispute over National Insurance contribution payments
    Bank: Dave Hartnett, then permanent secretary for tax, initially shook hands on the Goldman Sachs deal on November 19 2010 following a long-running dispute over National Insurance contribution payments
    ‘The High Court's judgment confirms what HMRC has always said: that while we made errors in settling the Goldman Sachs dispute, we made the right settlement in the circumstances, and that our decision was both proper and lawful.
    'The High Court's comprehensive dismissal of UK Uncut's claim puts to rest the fallacy that HMRC is soft on large businesses'
    Jim Harra, HMRC director-general for business tax
    ‘This issue has been rigorously and repeatedly scrutinised - by the Public Accounts Committee, by a retired High Court judge on behalf of the National Audit Office and now by the High Court itself.
    ‘The public can have confidence in our governance processes, which we have strengthened, providing greater levels of scrutiny, transparency and role separation.
    ‘In its definitive judgment, the High Court has now drawn a line under the Goldman Sachs issue.
    ‘HMRC can now get on with the critical job of working to ensure that all individuals and companies, big and small, pay the tax they owe to fund the UK's essential public services.’

    We Just Got A Bunch Of Crappy Data!!! Tragic Trifecta: Initial Claims Soar, Housing Starts Plunge, CPI Below Expectations, Philly Fed Misses, Key Indicators Negative Across The Board!!!

    DEFLATION: CONSUMER PRICES FALL 0.4% (Est. -0.3%)
    http://www.businessinsider.com/consumer-price-index-april-2013-5
    BIG MISS: HOUSING STARTS FALL TO 853k (Est. 970k)
    http://www.businessinsider.com/april-housing-starts-2013-5
    MISS: INITIAL JOBLESS CLAIMS JUMP TO 360k (Est. 330k)
    http://www.businessinsider.com/initial-jobless-claims-may-11-2013-5

    zerohedge‏@zerohedge1 min
    Economic data is so bad today we may get S&P 1700
    zerohedge‏@zerohedge2 min
    Housing Starts 853K, Exp. 970K
    zerohedge‏@zerohedge3 min
    Claims 360K, Exp.330K. Random()
    zerohedge‏@zerohedge9 min
    S&P Downgrades Berkshire From AA+ To AA, Outlook Negative
    Obviously with Buffett a major shareholder of Moody’s, the only place where a downgrade of Berkshire could come from was S&P. Moments ago, the rating agency that dared to downgrade the US for which it is being targeted by Eric Holder’s Department of “Justice”, did just that.
    On New Criteria, Berkshire Hathaway Inc. Downgraded To ‘AA’, Core Ins. Subs Affirmed At ‘AA+’, Senior Debt Rated ‘AA’
    Overview
    • Under our revised group methodology criteria, we are lowering our counterparty credit rating on BRK to ‘AA’ from ‘AA+’. At the same time, we are affirming our ‘AA+’ counterparty credit and financial strength ratings on BRK’s core operating insurance companies.
    • The ratings reflect our view of the group’s excellent business risk profile and very strong financial risk profile based on an extremely strong competitive position and very strong capital and earnings.
    • The negative outlook reflects the U.S. sovereign ratings cap and our view that the group’s capital adequacy per our capital adequacy model could deteriorate relative to its risk profile.
    http://www.zerohedge.com/news/2013-05-16/sp-downgrades-berkshire-aa-aa-outlook-negative

    We Just Got A Bunch Of Crappy Data
    Welp!
    It still remains an open question whether the economy is hitting escape velocity, or whether the sequester and everything else are dragging it back down.
    Today we get more evidence that growth is sputtering.
    Initial jobless claims jumped from 328,000 to 360,000, a number that was far worse than the 330,000 that economists were expecting.
    Housing starts missed big, in part thanks to a huge drop in multi-family. The total sequential drop was 16.5%.
    Read more: http://www.businessinsider.com/bad-data-roundup-may-16-2013-5#ixzz2TTOLdqAZ

    Gregor Peter‏@L0gg0l2 min
    Bonds getting a HUGE bid after the US data miss
    Gregor Peter‏@L0gg0l21 min
    RT @XHNews: Gold demand in China jumped 20% in Q1 as global demand slid 13%.
    http://news.xinhuanet.com/english/business/2013-05/16/c_132387632.htm
    zerohedge‏@zerohedge3 min
    Tragic Trifecta: Initial Claims Soar, Housing Starts Plunge, CPI Below Expectations



    http://www.zerohedge.com/news/2013-05-16/tragic-trifecta-initial-claims-soar-housing-starts-plunge-cpi-below-expectations
    zerohedge‏@zerohedge1 min
    Census revises all housing data from January 2011
    rohedge‏@zerohedge6 min 
    IMF SAYS QE BENEFITS TO BECOME AMBIGUOUS IF GROWTH STAYS WEAK
    zerohedge‏@zerohedge1 h
    FED’S FISHER: I’M NOT THE ONLY ONE READY TO WIND DOWN BUYING OF MORTGAGE BONDS – DJ
    Philly Fed Misses, Key Indicators Negative Across The Board: Employment Index Lowest Since September 2009
    It’s just getting plain stupid out there. Just as stocks were exploding into the green (perhaps on expectations of an epic Philly Fed miss), the Philly Fed did not disappoint, printing at -5.2, down from 1.3, and crushing expectations of an increase to +2.0 (comingbelow the lowest forecast), the biggest miss since February and confirming that the Empire Fed index plunge was not a fluke. Virtually every components in the Philly Fed was red except for Inventories (up to 4.1 from -22.2 in March) and Prices Paid (up to 6.9 from 3.1 in March). Among the plungers, the key New Orders tumbled from -1.0 to -7.9, Shipments crashed from 9.1 to -8.5, Average Workweek slide from -2.1 to -12.4, and the Number of Employees imploded from -6.8 to -8.7, the lowest print since September 2009. And if all of this doesn’t send the Stalingrad & Poor 500 to new historic highs, we don’t know what will. All one can do now is just laugh at this “market.”
    http://www.zerohedge.com/news/2013-05-16/philly-fed-misses-key-indicators-negative-across-board-employment-index-lowest-septe
    zerohedge‏@zerohedge1 h
    Philly Fed employment lowest since September 2009

    zerohedge‏@zerohedge1 h
    Philly Fed -5.2, Exp. +2. LOL
    zerohedge‏@zerohedge1 h
    Philly Fed will have to be a huge miss for 1700 in the S&P

    “Taper Off?” – US Treasuries Are Having Their Best Day In Almost 3 Months
    http://www.zerohedge.com/news/2013-05-16/taper-us-treasuries-are-having-their-best-day-almost-3-months

    Luisport

    NO BANK DEPOSITS WILL BE SPARED FROM CONFISCATION

    I challenge anyone to prove me wrong that confiscation of bank deposits is legalized daylight robbery
    Bank depositors in the UK and USA may think that their bank deposits would not be confiscated as they are insured and no government would dare embark on such a drastic action to bail out insolvent banks.
    Before I explain why confiscation of bank deposits in the UK and US is a certainty and absolutely legal, I need all readers of this article to do the following:
    Ask your local police, sheriffs, lawyers, judges the following questions:
    1) If I place my money with a lawyer as a stake-holder and he uses the money without my consent, has the lawyer committed a crime?
    2) If I store a bushel of wheat or cotton in a warehouse and the owner of the warehouse sold my wheat/cotton without my consent or authority, has the warehouse owner committed a crime?
    3) If I place monies with my broker (stock or commodity) and the broker uses my monies for other purposes and or contrary to my instructions, has the broker committed a crime?
    I am confident that the answer to the above questions is a Yes!
    However, for the purposes of this article, I would like to first highlight the situation of the deposit / storage of wheat with a warehouse owner in relation to the deposit of money / storage with a banker.
    First, you will notice that all wheat is the same i.e. the wheat in one bushel is no different from the wheat in another bushel. Likewise with cotton, it is indistinguishable. The deposit of a bushel of wheat with the warehouse owner in law constitutes a bailment. Ownership of the bushel of wheat remains with you and there is no transfer of ownership at all to the warehouse owner.
    And as stated above, if the owner sells the bushel of wheat without your consent or authority, he has committed a crime as well as having committed a civil wrong (a tort) of conversion – converting your property to his own use and he can be sued.
    Let me use another analogy. If a cashier in a supermarket removes $100 from the till on Friday to have a frolic on Saturday, he has committed theft, even though he may replace the $100 on Monday without the knowledge of the owner / manager of the supermarket. The $100 the cashier stole on Friday is also indistinguishable from the $100 he put back in the till on Monday. In both situations – the wheat in the warehouse and the $100 dollar bill in the till, which have been unlawfully misappropriated would constitute a crime.
    Keep this principle and issue at the back of your mind.
    Now we shall proceed with the money that you have deposited with your banker.
    I am sure that most of you have little or no knowledge about banking, specifically fractional reserve banking.
    Since you were a little kid, your parents have encouraged you to save some money to instil in you the good habit of money management.
    And when you grew up and got married, you in turn instilled the same discipline in your children. Your faith in the integrity of the bank is almost absolute. Your money in the bank would earn an interest income.
    And when you want your money back, all you needed to do is to withdraw the money together with the accumulated interest. Never for a moment did you think that you had transferred ownership of your money to the bank. Your belief was grounded in like manner as the owner of the bushel of wheat stored in the warehouse.
    However, this belief is and has always been a lie. You were led to believe this lie because of savvy advertisements by the banks and government assurances that your money is safe and is protected by deposit insurance.
    But, the insurance does not cover all the monies that you have deposited in the bank, but to a limited amount e.g. $250,000 in the US by the Federal Deposit Insurance Corporation (FDIC), Germany €100,000, UK £85,000 etc.
    But, unlike the owner of the bushel of wheat who has deposited the wheat with the warehouse owner, your ownership of the monies that you have deposited with the bank is transferred to the bank and all you have is the right to demand its repayment. And, if the bank fails to repay your monies (e.g. $100), your only remedy is to sue the bank and if the bank is insolvent you get nothing.
    You may recover some of your money if your deposit is covered by an insurance scheme as referred to earlier but in a fixed amount. But, there is a catch here. Most insurance schemes whether backed by the government or not do not have sufficient monies to cover all the deposits in the banking system.
    So, in the worst case scenario – a systemic collapse, there is no way for you to get your money back.
    In fact, and as illustrated in the Cyprus banking fiasco, the authorities went to the extent of confiscating your deposits to pay the banks’ creditors. When that happened, ordinary citizens and financial analysts cried out that such confiscation was daylight robbery. But, is it?
    Surprise, surprise!
    It will come as a shock to all of you to know that such daylight robbery is perfectly legal and this has been so for hundreds of years.
    Let me explain.
    The reason is that unlike the owner of the bushel of wheat whose ownership of the wheat WAS NEVER TRANSFERRED to the warehouse owner when the same was deposited, the moment you deposited your money with the bank, the ownership is transferred to the bank.
    Your status is that of A CREDITOR TO THE BANK and the BANK IS IN LAW A DEBTOR to you. You are deemed to have “lent” your money to the bank for the bank to apply to its banking business (even to gamble in the biggest casino in the world – the global derivatives casino).
    You have become a creditor, AN UNSECURED CREDITOR. Therefore, by law, in the insolvency of a bank, you as an unsecured creditor stand last in the queue of creditors to be paid out of any funds and or assets which the bank has to pay its creditors. The secured creditors are always first in line to be paid. It is only after secured creditors have been paid and there are still some funds left (usually, not much, more often zilch!) that unsecured creditors are paid and the sums pro-rated among all the unsecured creditors.
    This is the truth, the whole truth and nothing but the truth.
    The law has been in existence for hundreds of years and was established in England by the House of Lords in the case Foley v Hill in 1848.
    When a customer deposits money with his banker, the relationship that arises is one of creditor and debtor, with the banker liable to repay the money deposited when demanded by the customer. Once money has been paid to the banker, it belongs to the banker and he is free to use the money for his own purpose.
    I will now quote the relevant portion of the judgment of #3b4d81;”>the House of Lords handed down by Lord Cottenham, the Lord Chancellor. He stated thus:
    Money when paid into a bank, ceases altogether to be the money of the principal… it is then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it.
    The money paid into the banker’s, is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains himself,…
    The money placed in the custody of the banker is, to all intent and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable TO THE PRINCIPAL IF HE PUTS IT INTO JEOPARDY, IF HE ENGAGES IN A HAZARDOUS SPECULATION; he is not bound to keep it or deal with it as the property of the principal, but he is of course answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.” (quoted in UK Law Essays,  #3b4d81;”>Relationship Between A Banker And Customer,That Of A Creditor/Debtor, emphasis added,)
    Holding that the relationship between a banker and his customer was one of debtor and creditor and not one of trusteeship, #3b4d81;”>Lord Brougham said:
    “This trade of a banker is to receive money, and use it as if it were his own, he becoming debtor to the person who has lent or deposited with him the money to use as his own, and for which money he is accountable as a debtor. I cannot at all confound the situation of a banker with that of a trustee, and conclude that the banker is a debtor with a fiduciary character.”
    In plain simple English – bankers cannot be prosecuted for breach of trust, because it owes no fiduciary duty to the depositor / customer, as he is deemed to be using his own money to speculate etc. There is absolutely no criminal liability.
    The trillion dollar question is, Why has no one in the Justice Department or other government agencies mentioned this legal principle?
    The reason why no one dare speak this legal truth is because there would be a run on the banks when all the Joe Six-Packs wise up to the fact that their deposits with the bankers CONSTITUTE IN LAW A LOAN TO THE BANK and the bank can do whatever it likes even to indulge in hazardous speculation such as gambling in the global derivative casino.
    The Joe Six-Packs always consider the bank the creditor even when he deposits money in the bank. No depositor ever considers himself as the creditor!
    Yes, Eric Holder, the US Attorney-General is right when he said that bankers cannot be prosecuted for the losses suffered by the bank. This is because a banker cannot be prosecuted for losing his “own money” as stated by the House of Lords. This is because when money is deposited with the bank, that money belongs to the banker.
    The reason that if a banker is prosecuted it would collapse the entire banking system is a big lie.
    The US Attorney-General could not and would not state the legal principle because it would cause a run on the banks when people discover that their monies are not safe with bankers as they can in law use the monies deposited as their own even to speculate.
    What is worrisome is that your right to be repaid arises only when you demand payment.
    Obviously, when you demand payment, the bank must pay you. But, if you demand payment after the bank has collapsed and is insolvent, it is too late. Your entitlement to be repaid is that of a lonely unsecured creditor and only if there are funds left after liquidation to be paid out to all the unsecured creditors and the remaining funds to be pro-rated. You would be lucky to get ten cents on the dollar.
    So, when the Bank of England, the FED and the BIS issued the guidelines which became the template for the Cyprus “bail-in” (which was endorsed by the G-20 Cannes Summit in 2011), it was merely a circuitous way of stating the legal position without arousing the wrath of the people, as they well knew that if the truth was out, there would be a revolution and blood on the streets. It is therefore not surprising that the global central bankers came out with this nonsensical advisory:
    “The objective of an effective resolution regime is to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to losses, while protecting vital economic functions through mechanisms which make it possible for shareholders and unsecured and uninsured creditors to absorb losses in a manner that respects the hierarchy of claims in liquidation.”(quoted in #3b4d81;”> #3b4d81;”>FSB Consultative Document: Effective Resolution of Systemically …)
    This is the kind of complex technical jargon used by bankers to confuse the people, especially depositors and to cover up what I have stated in plain and simple English in the foregoing paragraphs.
    The key words of the BIS guideline are:
    “without severe systemic disruptions” (i.e. bank runs),
    “while protecting vital economic functions” (i.e. protecting vested interests – bankers),
    “unsecured creditors” (i.e. your monies, you are the dummy),
    “respects the hierarchy of claims in liquidation” (i.e. you are last in the queue to be paid, after all secured creditors have been paid).
    This means all depositors are losers!
    Please read this article carefully and spread it far and wide.
    You will be doing a favour to all your fellow country men and women and more importantly, your family and relatives.

    Israel has highest poverty rate in OECD

    Country also plagued by wide income inequality gulf between rich and poor, new data shows, underlining imperative ‘to protect the most vulnerable’

    A man searches the trash in a garbage container in the center of Jerusalem. (illustrative photo by Nati Shohat/Flash90)
    A man searches the trash in a garbage container in the center of Jerusalem. (illustrative photo by Nati Shohat/Flash90)
    Israel has a poverty rate of 21 percent, the highest among all OECD countries, a report by the economic development organization revealed Wednesday.
    The report, aimed at investigating the impact of the global financial crisis on developing countries, also found that the gap between the rich and the poor was very high in Israel, with only Chile, Turkey, Mexico and the United States exhibiting a higher gap.


    Iceland, Slovenia, Norway and Denmark were found to have the lowest rate of income inequality among the 34 OECD member countries. Israel joined the OECD in 2010.
    “These worrying findings underline the need to protect the most vulnerable in society, especially as governments pursue the necessary task of bringing public spending under control,” said OECD Secretary-General Angel Gurría in response to the findings.
    “Policies to boost jobs and growth must be designed to ensure fairness, efficiency and inclusiveness. Among these policies, reforming tax systems is essential to ensure that everyone pays their fair share and also benefits and receives the support they need.”
    However, Israel was found to have had a low increase in child poverty since 2007 compared to other OECD states, such as Turkey, Spain, Belgium, Slovenia and Hungary.

     

    Traditional dance performed at Nikko temple

    A traditional dance was performed on Friday at an ancient temple in Nikko City, northeast of Tokyo.

    Rin-noji temple is designated as a UNESCO World Heritage Site. The event to pray for long life and peace has been held there every May for more than 1,000 years. The dance took place in the main building which is currently being restored.

    2 monks appeared on the stage carrying short swords and began dancing slowly to the chanting of sutras.
    They wore white cloths shaped like samurai helmets on their heads.

    A Rin-noji official says this type of event used to be held at major temples all over Japan.

    But he adds that it is now only performed at Rin-noji and Moutsu temple in Iwate Prefecture, northern Japan, due to a shortage of dancers who are trained in this style.

    Japan PM warns of possible military response to Chinese subs


    Source: Defense Talk
    Hawkish Prime Minister Shinzo Abe said Tuesday Tokyo could mount a military response if foreign submarines enter its territorial waters while underwater, as Japan and China continue to squabble over islands.
    Abe’s comment came after Japan’s Defence Ministry said a submerged vessel was spotted in the contiguous waters — a 12 nautical mile strip outside territorial waters — near one of Japan’s Okinawa islands, from late Sunday to early Monday.
    The government would not confirm media reports it was a Chinese sub.
    “These are serious acts. If (submarines) enter our territorial waters while underwater, we would have to implement maritime security action,” Abe told parliament Tuesday.
    He did not clarify further, but the form of words he used may indicate that the Defence Minister could order action by Japan’s Self Defense Forces.
    In the incident on Monday, the submarine was tracked close to territorial waters off Kume, although it did not violate any laws.
    Under international rules, vessels can pass freely through the outer ring of waters, provided their intent is peaceable. Submarines must surface and display their flag if they navigate into territorial waters.
    The submarine incident came as three Chinese government ships spent half a day in waters off the Tokyo-controlled Senkaku islands that Beijing claims as the Diaoyus.
    It was the latest episode in a fraught few months which have seen repeated stand-offs between official ships from both sides as they jostle over ownership of the strategically-important and resource-rich islands.
    China is believed to be boosting its naval capability in the Pacific and has been criticised by neighbours for what is seen as an increasingly aggressive stance in the region, particularly in its multiple territorial disputes.

    David Stockman: “The American Empire And The End Of Sound Money”

    In Chapter 12 of David Stockman’s new book The Great Deformation, the outspoken truth-sayer discusses the realities of the end of the gold standard – from the the Bank of England’s ‘default’ in 1931 to the 1960 London Gold panic (a shot across the Keynesian bow) and on to Nixon and Bretton Woods, Stockman explains how we are constantly deferring the day of reckoning…
    Richard Nixon soon found that meeting the nation’s obligation to pay its debts in gold and to uphold the Bretton Woods system were distinctly inconvenient to his own reason of state: reelection in 1972.
    Moreover, he had found a polyglot of economic advisors who persuaded him to discard the essence of the old-time Republican financial doctrine.. and embrace the prosperity management model, turning fiscal policy into a hapless stepchild of the jobs count and the GDP measurements, and giving a public policy rationalization to endless raids on the Treasury by special interest groups and crony capitalists….
    Worse still, severing the link to gold paved the way for the T-bill standard and a vast multi-decade spree of central bank debt monetization and money printing. Since a régime of floating-rate paper money had never been tried before on a global basis, the Keynesian professors and their Friedmanite collaborators can perhaps be excused for not foreseeing its destructive consequence.
    The record of the next several decades, however, eliminated all doubt.
    The combination of free markets and freely printed money gave rise to a toxic financial deformation; namely, the vast financialization of the world economy and the rise of endless carry trades, massive arrangements of speculative hedging, and monumental daisy chains of debts, owned by debts, owned by still more debts.”
    Stockman Ch12

    The New Pay-As-You-Go Landscape of American ‘Democracy’

    This piece first appeared at TomDispatch. Read Tom Engelhardt’s introduction here.
    Billionaires with an axe to grind, now is your time. Not since the days before a bumbling crew of would-be break-in artists set into motion the fabled Watergate scandal, leading to the first far-reaching restrictions on money in American politics, have you been so free to meddle. There is no limit to the amount of money you can give to elect your friends and allies to political office, to defeat those with whom you disagree, to shape or stunt or kill policy,  and above all to influence the tone and content of political discussion in this country.
    Today, politics is a rich man’s game. Look no further than the 2012 elections and that season’s biggest donor, 79-year-old casino mogul Sheldon Adelson. He and his wife, Miriam, shocked the political class by first giving $16.5 million in an effort to make Newt Gingrich the Republican presidential nominee. Once Gingrich exited the race, the Adelsons invested more than $30 million in electing Mitt Romney. They donated millions more to support GOP candidates running for the House and Senate, to block a pro-union measure in Michigan, and to bankroll the U.S. Chamber of Commerce and other conservative stalwarts (which waged their own campaigns mostly to help Republican candidates for Congress). All told, the Adelsons donated $94 million during the 2012 cycle—nearly four times the previous record set by liberal financier George Soros. And that’s only the money we know about. When you add in so-called dark money, one estimate puts their total giving at closer to $150 million.
    It was not one of Adelson’s better bets. Romney went down in flames;  the Republicans failed to retake the Senate and conceded seats in the House; and the majority of candidates backed by Adelson-funded groups lost, too. But Adelson, who oozes chutzpah as only a gambling tycoon worth $26.5 billion could, is undeterred. Politics, he told the Wall Street Journal in his first post-election interview, is like poker: “I don’t cry when I lose. There’s always a new hand coming up.” He said he could double his 2012 giving in future elections. “I’ll spend that much and more,” he said. “Let’s cut any ambiguity.”
    But simply tallying Adelson’s wins and losses—or the Koch brothers’, or George Soros’s, or any other mega-donors’—misses the bigger point. What matters is that these wealthy funders were able to give so much money in the first place.
    With the advent of super PACs and a growing reliance on secretly funded nonprofits, the very wealthy can pour their money into the political system with an ease that didn’t exist as recently as this moment in Barack Obama’s first term in office. For now at least, Sheldon Adelson is an extreme example, but he portends a future in which 1-percenters can flood the system with money in ways beyond the dreams of ordinary Americans. In the meantime, the traditional political parties, barred from taking all that limitless cash, seem to be sliding toward irrelevance. They are losing their grip on the political process, political observers say, leaving motivated millionaires and billionaires to handpick the candidates and the issues. “It’ll be wealthy people getting together and picking horses and riding those horses through a primary process and maybe upending the consensus of the party,” a Democratic strategist recently told me. “We’re in a whole new world.”
    The Rise of the Super PAC
    She needed something sexy, memorable. In all fairness, anything was an improvement on “independent expenditure-only political action committee.” Eliza Newlin Carney, one of D.C.‘s trustiest scribes on the campaign money beat, didn’t want to type out that clunker day after day. She knew this was big news—the name mattered. Then it came to her:
    Super PAC.
    The Supreme Court’s 2010 Citizens United decision is often blamed—or hailed—for creating super PACs. In fact, it was a lesser-known case, SpeechNow.org vs. Federal Election Commission, decided by the D.C. Circuit Court of Appeals two months later, that did the trick. At the heart of SpeechNow was the central tension in all campaign money fights: the balance between stopping corruption or the appearance of corruption, and protecting the right to free speech. In this instance, the D.C. appeals court, influenced by the Citizens United decision, landed on the side of free speech, ruling that limits to giving and spending when it came to any group—and here’s the kicker—acting independently of candidates and campaigns violated the First Amendment.
    Wonky as that may sound, SpeechNow reconfigured the political landscape and unchained big donors after decades of restrictions. The lawyers who argued the case, the academics and legal eagles whose expertise is campaign finance, and the beat reporters like Carney Newlin soon grasped what SpeechNow had wrought: a new, turbocharged political outfit that had no precedent in American politics.
    Super PACs can raise unlimited amounts of money from pretty much anyone—individuals, corporations, labor unions—and there is no limit on how much they can spend. Every so often, they must reveal their donors and show how they spent their money. And they can’t directly coordinate with candidates or their campaigns. For instance, Restore Our Future, the super PAC that spent $142 million to elect Mitt Romney, couldn’t tell his campaign when or where it was running TV ads, couldn’t share scripts, couldn’t trade messaging ideas. Nor could Restore Our Future—yes, even its founders wince at the name—sit down with Romney and tape an interview for a TV ad.
    It’s far easier, in other words, for a super PAC to attack the other guy, which helps explain all the hostility on the airwaves in 2012. Sixty-four percent of all ads aired during the presidential race were negative, up from 51% in 2008, 44% in 2004, and 29% in 2000. Much of that negativity can be blamed on super PACs and their arsenal of attack ads, according to a recent analysis by Wesleyan University’s Erika Franklin Fowler and Washington State University’s Travis Ridout. They found that a staggering 85% of all ads aired by “outside groups” were negative, while only 5% were positive.
    And it will only get worse. “It’s going to be the case that the more super PACs invest in elections, the more negative those elections will be,” Michael Franz, a co-director of the Wesleyan Media Project, told me. “They’re the ones doing the dirty work.” Think of them as the attack dogs of a candidate’s campaign—and the growling packs of super PACs are growing fast.
    The savviest political operatives quickly realized how potentially powerful such outfits could be when it came to setting agendas and influencing the political system. In March 2010, Karl Rove, George W. Bush’s erstwhile political guru, launched American Crossroads, a super PAC aimed at influencing the 2010 midterms. As consultants like Rove and the wealthy donors they courted saw the advantages of having their own super PACs—no legal headaches, no giving or spending limits—the groups grew in popularity.
    By November 2010, 83 of them had spent $63 million on the midterm elections. Nearly $6 of every $10 they put out supported conservative candidates, and it showed: buoyed by the Tea Party, Republicans ran roughshod over the Democrats, retaking control of the House and winnowing their majority in the Senate. It was a “shellacking,” as President Obama put it, powered by rich donors and the new organizations that went with them.
    In 2012, no one, it seemed, could afford to sit on the sidelines. Having decried super PACs as “a threat to democracy,” Obama and his advisers flip-flopped and blessed the creation of one devoted specifically to reelecting the president. Soon, they were everywhere, at the local, state, and federal levels. A mom started one to back her daughter’s congressional campaign in Washington State. Aunts and uncles bankrolled their nephew’s super PAC in North Carolina. Super PACs spent big on abortion, same-sex marriage, and other major issues.
    In all, the number of super PACs shot up to 1,310 during the 2012 campaign, a 15-fold increase from two years earlier. Fundraising and spending similarly exploded: these outfits raised $828 million and spent $609 million.
    But what’s most striking about these groups is who funds them. An analysis by the liberal think tank Demos found that out of every $10 raised by super PACs in 2012, $9 came from just 3,318 people giving $10,000 or more. That small club of donors is equivalent to 0.0011% of the U.S. population.
    Into the Shadows
    In late April, roughly 100 donors gathered at a resort in Laguna Beach, California. They were all members of the Democracy Alliance, a private group of wealthy liberals that includes George Soros and Facebook co-founder Chris Hughes. Over five days, they swapped ideas on how best to promote a progressive agenda and took in pitches from leaders of the most powerful liberal and left-leaning groups in America, including Organizing for Action, the rebooted version of Obama’s 2012 presidential campaign. Since the Democracy Alliance’s founding in 2005, its members have given $500 million to various causes and organizations. At the Laguna Beach event alone, its members pledged a reported $50 million.
    At the same time, about 100 miles to the east, a similar scene was playing out. A few hundred conservative and libertarian donors descended on the Renaissance Esmeralda Resort and Spa in Palm Springs for the latest donor conference convened by billionaire Charles Koch, one-half of the mighty “Koch brothers.” Over two days, donors mingled with politicians, heard presentations by leading activists, and pledged serious money to bankroll groups promoting the free-market agenda in Washington and around the country.
    The philosophies of these two groups couldn’t be more different. But they have this in common: the money raised by the Democracy Alliance and the Kochs’ political network is secret. The public will never know its true source. Call it “dark money.”
    So what is dark money? How does it wind up in our elections? Say you’re a billionaire and you want to give $1 million to anonymously influence an election. You’re in luck: you can give that money, as many donors have, to a nonprofit organized under the 501(c)(4) section of the tax code. That nonprofit, in turn, can spend your money on election-related TV ads or mailers or online videos. But there’s a catch: unlike super PACs, the majority of a 501(c)(4) nonprofit’s work can’t be political. Note, though, that where the IRS draws the line on how much politicking is too much, and even what the taxman defines as political, is very murky. And until Congress and the IRS straighten all of that out, donors wanting to influence elections have a mostly scrutiny-free way to unload their money.
    This type of nonprofit has a long history in U.S. politics. The Sierra Club, for instance, has a 501(c)(4) affiliate, as does the National Rifle Association. But in recent years, political operatives and wealthy donors have seized on this breed of nonprofit as a new way to shovel secret money into campaigns. Between 2010 and 2012, the number of applications for 501(c)(4) status spiked from 1,500 to 3,400, according to IRS official Lois Lerner.
    During the 2010 campaign, politically active nonprofits—“super secret spooky PACs,” as Stephen Colbert calls them—outspent super PACs by a three to two margin, according to a Center for Public Integrity analysis. Take the American Action Network (AAN), run by former Senator Norm Coleman of Minnesota. The group purports to be an “issue-based” nonprofit that only dabbles in politics, but its tax records suggest otherwise. From July 2009 through June 2011, as Citizens for Ethics and Responsibility in Washington noted, 60% of AAN’s money went toward politics. (An AAN spokesman called the complaint “baseless.”)
    Because they’re so lacking in transparency, some nonprofits have been emboldened to bend—if not break—the tax law. One of the more egregious examples was benignly named the Commission on Hope, Growth, and Opportunity (CHGO). Created in the summer of 2010, it informed the IRS that it wouldn’t spend a penny on politics. During the 2010 elections, however, it put $2.3 million into ads attacking 11 Democratic congressional candidates. Then, sometime in 2011, CHGO simply closed up shop and disappeared—a classic case of political hit-and-run. And it wouldn’t have happened without a secretive wealthy bankroller: of the $4.8 million raised by CHGO, tax records show that $4 million came from a single donor (though we don’t know his or her name).
    Transparency advocates and reformers supporting more limits on spending have pushed back against the new wave of dark money. They have filed numerous complaints with the IRS and the Federal Election Commission alleging that politically active nonprofits are flouting the law and demanding a crackdown. Marcus Owens, the former head of the IRS’s exempt organizations division, which oversees politically active nonprofits, agrees that the agency needs to take action. “The government’s going to have to investigate them and prosecute them,” Owens, who is now in private practice, told me in January. “In order to maintain the integrity of the process, they’re going to be forced to take action.”
    Don’t hold your breath for that. This week, a report by a Treasury Department inspector general revealed that IRS staffers singled out tea partiers and other conservative groups which had applied for tax-exempt status for special scrutiny. Now, Republicans and Democrats are howling with outrage and demanding that heads roll. One result of this debacle, ex-IRS director Marcus Owens told me, is that the IRS will certainly shy away from cracking down on those nonprofits that do abuse the tax code.
    At least one politician is upset enough by the steady flow of dark money into our politics to do something about it. Senator Carl Levin of Michigan, who is retiring in 2014, has made the issue of dark money one of the priorities of his time left in office. He plans to “look into the failure of the IRS to enforce our tax laws and stem the flood of hundreds of millions of secret dollars flowing into our elections, eroding public confidence in our democracy.”
    Do millionaires and billionaires dominate the donor rolls of nonprofits, too? Without disclosure, it’s near impossible to know who funds what. But not surprisingly, the limited data we have suggest that, as with super PACs, rich people keep politically active nonprofits flush with cash. The American Action Network, for instance, raised $27.5 million from July 2010 to June 2011; of that haul, 90% of the money came from eight donors, with one giving $7 million. The story is the same with Karl Rove’s Crossroads GPS. It raised $77 million from June 2010 to December 2011, and nearly 90% of that came from donors giving at least $1 million. And while Priorities USA, the pro-Obama nonprofit, raised a comparatively tiny $2.3 million in 2011, 80% of it came from a single, anonymous donor.
    Big Money Civil War
    A few days after the 2012 elections, a handful of Republican politicians including Governor John Kasich of Ohio and Governor Bobby Jindal of Louisiana met privately with Sheldon Adelson. They were officially in Las Vegas for a gathering of the Republican Governors Association, but it was never too early to court the man who, with a stroke of his pen, could underwrite a presidential hopeful’s bid for his or her party’s nomination.
    Democratic candidates are no different. House and Senate hopefuls are flocking to Hollywood studio boss Jeffrey Katzenberg, one of their party’s biggest donors and fundraisers. And why wouldn’t they? Barack Obama might not be where he is today without Katzenberg. Days after Obama launched his presidential campaign in 2007, the DreamWorks Animation mogul gave the junior senator his imprimatur and prodded Hollywood into raising $1.3 million for him. Years later, Katzenberg provided $2 million in seed money for the pro-Obama super PAC that played a pivotal role in his reelection.
    As 2016 nears, don’t be surprised to see the next set of Democrats clambering over each other to win Katzenberg’s endorsement and money. Paul Begala, the Democratic consultant and TV pundit, is already predicting what he calls the “Katzenberg primary.”
    More than ever, a serious Senate or White House bid is dependent not on climbing the party ranks, but on winning the support of a few wealthy bankrollers. In fact, it’s no longer an exaggeration to say that while the political parties still officially pick the candidates for office, the power increasingly lies with the elites of the political donor class.
    Super PACs, just three years old, are now a fixture, not a novelty. They’ve become de rigueur for candidates running at the federal, state, and even local level. Want to scare off potential primary challengers? A super PAC with millions in the bank will help. Need to blast away at your opponent with negative ads without tarnishing your own reputation? Let a super PAC do the dirty work. Any candidate running for office begins with a to-do list, and with each month, getting a super PAC and making friends in the dark money universe rises higher on those lists.
    Super PACs and their wealthy donors are also stoking civil wars within the parties. At the moment, they have been springing up to offer cover to politicians who vote a certain way, or stake out traditionally unpopular positions. For instance, Republicans for Immigration Reform, a relatively new super PAC, says it will spend millions to defend GOP politicos who take a moderate stance on immigration reform. And another super PAC, bankrolled by hedge fund investor Paul Singer, intends to spend big money to push more Republicans toward the middle on same-sex marriage. But there are also vigorous tea-party-style super PACs pushing their politicians toward the fringes. Each faction of the GOP is getting its own set of super PACs, and that means an already contentious fight for the future of the party could get far bloodier.
    Democrats could find themselves in a money-fueled internal struggle, too. Tom Steyer, a former hedge fund investor worth $1.3 billion, says he’s sick of seeing climate change neglected in campaigns. He now plans to use his vast wealth to elevate it into a banner issue. In a recent primary in Massachusetts, he spent hundreds of thousands of dollars attacking Democratic Congressman Stephen Lynch for supporting the controversial Keystone XL pipeline. Lynch’s opponent, Congressman Ed Markey, a leading House environmentalist, went on to win the primary, but Steyer’s intervention raised plenty of eyebrows about possible Democrat-on-Democrat combat in 2014.
    Meanwhile, as the recent Democracy Alliance and Koch retreats show, millionaires and billionaires are revving up to take ever-greater control of the political process via secretive nonprofits. In April, Facebook co-founder Mark Zuckerberg unveiled FWD.us, a quasi-dark-money outfit created to give Silicon Valley a greater political presence in Washington. It has already raised $25 million.
    Right now, the best avenues for fired-up billionaires exist outside the traditional political parties. The Supreme Court could change that. In a case called McCutcheon vs. Federal Election Commission, the court is considering whether to demolish the overall aggregate limit on how much a donor can give to candidates and parties. If the court rules in favor of Republican donor Shaun McCutcheon, and perhaps goes on to eliminate contribution limits to candidates and parties altogether, super PACs could go out of style faster than Crocs. Donors won’t need them. They’ll give their millions straight to the Democrats or the Republicans and that will be that.
    There is an important backdrop to all of these changes, and that’s the increase in income inequality in this country. Just as the incredibly wealthy are given the freedom to flood the political system with money, they’ve got more and more money to spend. Our lopsided economic recovery affords a glimpse of that growing inequality gap: from 2009 to 2011, the average wealth of the richest 7% of American households climbed by almost 30%, while the wealth of the remaining 93% of households actually declined by 4%. (So much for that “recovery.”)
    Can there be any question that this democracy of ours is nearing dangerous territory, if we’re not already there? Picture the 2016 or 2020 election campaigns and, barring a new wave of campaign reforms, it’s not hard to see a tiny minority of people exerting a massive influence on our politics simply by virtue of bank accounts. There is nothing small-d democratic about that. It flies in the face of one of the central premises of this country of ours, equality, including political equality—the concept that all citizens stand on an equal footing with one another when it comes to having their say on who represents them and how government should work.
    Increasingly, it looks like before the rest of us even have our say, before you enter the voting booth, issues, politics, and the politicians will have been winnowed, vetted, and predetermined by the wealthiest Americans. Think of it as a new definition of politics: the democracy of the wealthy, who can fight it out with each other inside and outside the political parties with little reference to you.
    In the meantime, the more those of modest means feel drowned out by the money of a tiny minority, the less connected they will feel to the work of government, and the less they will trust elected officials and government as an institution. It’s a formula for tuning out, staying home, and starving whatever’s left of our democracy.
    I caught a glimpse of this last November, when I spoke to a class of students at Radford University in Virginia, a state blanketed with super PAC attack ads and dark money in 2012. Over and over, students told me how disgusted they were by all the vitriol they heard when they turned on the TV or the radio. Most said that they ended up ignoring the campaigns; a few were so put off they didn’t bother to vote. “They’re all bought and sold anyway,” one student told me in front of the entire class. “Why would my vote make any difference?”
    Andy Kroll covers money in politics for Mother Jones magazine, and is an associate editor at TomDispatch, which he writes for regularly. He lives in Washington, D.C., the only place in America where people freely discuss campaign financing at happy hour.
    Follow TomDispatch on Twitter and join us on Facebook or Tumblr. Check out the newest Dispatch book, Nick Turse’s The Changing Face of Empire: Special Ops, Drones, Proxy Fighters, Secret Bases, and Cyberwarfare.
    Copyright 2013 Andy Kroll

    conorwithonen (CC BY 2.0)
    This article originally appeared on : TruthDig

    Why Can’t Students Borrow at the Same Rates as Banks?

    How serious of an issue is student loan debt? In the United States alone, student debt is poised to hit the $1 trillion mark soon. Stafford loan interest rates will double to 6.8% in a couple of months if Congress doesn’t act. Many expect that student loan debt will be responsible for an upcoming economic crisis.
    American’s young adults are crippled by this debt. Having been told that going to college is the responsible choice, they accept tens of thousands of dollars in loans that haunt them for years if not decades to come. Lower interest rates would certainly alleviate some of this financial burden, but you’ve got to charge significant interest to make lending money worthwhile.
    Well, unless you’re one of the countries largest banks. The government is happy to loan to their toxic BFFs at the low rate of just 0.75%. It seems fair to give the wealthy the nicest financial breaks while saddling America’s youth with massive debt, right?
    Enter freshman Senator Elizabeth Warren, who has already made a name for herself by standing up to the corrupt banks and calling a spade a spade. As TPM reports, Warren has proposed legislation that would allow students to borrow money at the same rate that the large financial institutions are offered.
    “The federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks – the same banks that destroyed millions of jobs and nearly broke this economy,” Warren said, adding, “That isn’t right.”


    The government typically justifies its loan deals to the banks by citing that giving these institutions money is an investment in the country’s economy and future. But using that logic, shouldn't students fall into the same category? Why is educating our up-and-coming generations and providing them with a ticket to financial stability not considered an equal investment in the country’s economy and future?
    Warren is taking a novel approach to her legislation, as well. Rather than first seeking her party or the President’s approval like most high-ranking politicians do, she’s floating the idea to the public first, in the hopes of gaining widespread support. It’s probably a smart decision on Warren’s part. The average American is bound to see the common sense in this proposal, whereas the powers-that-be are bound to find an excuse to shut it down.
    As it stands, the American government profits greatly from student loan debt. The Congressional Budget Office determined that the government makes 36 cents in profit for each dollar it loans to college students. Additionally, the banks – those same corporations that are gifted minuscule loan rates – have also exploited higher education for profit. For example, Goldman Sachs found that by pressuring high school graduates to enroll in schools they cannot afford, it could profit for decades to come off of their student loan payments.
    Though still in early stages, Warren hopes her proposal can be adopted before the current student loan plan expires in July. While she acknowledges it is a temporary fix for a much larger problem, it is a step toward ensuring that young people seeking an education aren’t sidelined with a lifetime of debt.

    Surge in Retail Gold Demand “Outweighed by ETF Selling” as Far East Premiums Hit New Highs

    London Gold Market Report
    from Adrian Ash, BullionVault
    Thurs 16 May, 08:10 EST

    Surge in Retail Gold Demand “Outweighed by ETF Selling” as Far East Premiums Hit New Highs

    GLOBAL GOLD prices fell further at the start of London trade on Thursday, hitting new 1-month lows beneath $1370 per ounce but leaving gold bars traded in East Asia at record-high premiums.

    “[Western] investors appear to be tired of gold as a safe haven,” says Mitsubishi analyst Jonathan Butler, quoted by Reuters, because “they anticipate the end of loose monetary policies, possibly by the end of this year or maybe early next year.”

    With US consumer price inflation data due just before today’s Wall Street opening, five members of the US Federal Reserve were scheduled to make separate speeches at various events later on Thursday.

    Four of them are voting members on the Fed’s policy-setting committee.

    “There also seems to be a return of risk appetite” amongst Western money managers, says Mitsubishi’s Butler.

    European stock markets today held flat after rising 12% in the last month.

    The gold price in US Dollars extended Wednesday’s drop to fall briefly beneath a one-month low of $1370 per ounce – a level first hit in October 2010.

    Gold priced in Sterling fell closer to £900 per ounce, a level seen on only 4 trading days since May 2011.

    “New highs in the US equity markets and plummeting bond yields,” says Edward Meir at INTL FC Stone, “particularly in Europe, spurred the exodus away from gold and into financial assets on Wednesday.

    The silver price, “which has been looking particularly poorly on the charts lately,” says Meir, “is now within striking distance of its mid-April lows of $22 an ounce” – the lowest level since Oct. 2010.

    “Rampant equity markets continue to attract investor funds away from gold,” agrees a note from Japanese trading house Mitsui’s New York team.

    “The yellow metal looks to be heading for another look towards last month’s lows beneath $1350.”

    In contrast to Western money managers, Chinese investors “[have been] discouraged by the weak domestic stock market,” says the latest Gold Demand Trends from market-development group the World Gold Council, “[and so] increasingly relied on gold to fulfil their investment needs.”

    Analyzing global data from the first 3 months of this year (which included the Chinese Lunar New Year holidays), the World Gold Council says China’s total gold demand again outpaced demand from India – still the world’s #1 in 2012 – by rising 20% from the same period in 2012 to a new quarterly record of 294 tonnes.

    Indian demand rose 27% to 256 tonnes. So-called “retail” demand worldwide – meaning jewelry, small gold bars and coin – rose 11.5% by weight compared to Jan-Mar. 2012, with US gold jewelry sales rising 6%.

    That was the first rise in US gold jewelry demand year-on-year since autumn 2005.

    Opposing the rise in retail gold demand, says the World Gold Council, “[was] a well-documented decline in gold E.T.F. holdings…which outweighed the [global] growth in bar and coin demand.”

    In total, exchange-traded gold trust funds shed more than 175 tonnes during the first quarter.
    The giant New York-listed SPDR Gold Trust (ticker: GLD) has shed a further 175 tonnes in the 6 weeks since, losing metal again on Wednesday to reach its smallest holdings since March 2009.

    New regulatory filings for March 31st yesterday showed speculator George Soros’s flagship hedge fund cut its position in the GLD by a further 12% during the first quarter.

    Paulson & Co., the largest single investor in the GLD, maintained its position in the trust, which now holds 1047 tonnes of large gold bars in HSBC’s specialist bank vault in East London.

    Meantime in Asia, “Japan is clearly back from stagnation,” reckons Citigroup economist Naoki Iizuka in Tokyo, commenting to Bloomberg today on new data showing a surprise 3.5% annualized rise in GDP during the first quarter.

    The Japanese stock market took a pause Thursday from hitting new 5-year highs.

    Premiums for 1 kilogram gold bars in Hong Kong and Singapore meantime rose to newly unprecedented levels above the bullion market’s benchmark London price, according to private reports.

    The excess demanded above 400-ounce London wholesale prices for kilobars (31 ounces) of 0.9999 fineness today reached $5 per ounce, up from last week’s strong $3 level as demand held firm.

    Adrian Ash