Saturday, April 19, 2014

Bank and insurers sending customers policy documents with more words than Macbeth, survey finds

  • Nearly 75 per cent of customers admit not reading policy documents
  • Consumer group has launched campaign against length of T&Cs
  • HSBC was worst offending bank with more than 34,000 words
  • Shakespeare's play Macbeth is 19,000 words long in comparison


Insurers and banks have come under attack for sending customers reams of unnecessary policy documents that are even longer than Macbeth.
Nearly three quarters of consumers admitted to not reading all of their policy documents or T&Cs because they were too long.
While only 17 per cent of people who did read it in full said they understood it, according to the survey of more than 2,000 people.
Consumer group Fairer Finance, who commissioned the survey, has launched a campaign against the book-length policy documents that are riddled with legalese and jargon.
Several terms and conditions sent out to customers were found to be nearly twice the length of Shakespeare’s Macbeth - which is 19,000 words long.
Analysis by Fairer Finance found HSBC topped the table for the longest bank account T&Cs at just over 34,000 words long - almost 5,000 words longer than John Steinbeck’s Of Mice and Men.
The shortest in the sector was Nationwide’s, though it still weighed in at a hefty 11,000 words.
In car insurance, Endsleigh has the dubious honour of longest motor policy with more than 37,000 words - just a few hundred words shy of Joseph Conrad’s Heart of Darkness.
While Sheila’s Wheels, Esure and M&S Bank all had policy documents of over 30,000 words - longer than George Orwell’s Animal Farm. The shortest in the sector was LV with just under 7,000 words.

James Daley, founder and managing director of Fairer Finance, said all banks and insurers should make documents more accessible and do away with small print that is riddled with legalese and jargon.
He said: ‘If next to no one is reading terms and conditions, and even those who do are struggling to understand them, then what exactly is the point of these documents?
‘Of course it’s important that customers know what’s covered and what isn’t in their insurance policy, but if one company can do the job in less than 7,000 words, there’s no excuse for insurers who are producing documents that are five times as long.

HSBC terms and conditions were among the longest
HSBC's terms and conditions are among the longest
HSBC's terms and conditions were among the longest, the survey found, totalling 34,000 words


Italy PM Renzi cuts taxes for 10 million low earners


Italian Prime Minister Matteo Renzi gestures during a meeting in Turin, April 12, 2014. REUTERS/Giorgio Perottino

(Reuters) - Italian Prime Minister Matteo Renzi on Friday cut taxes for 10 million low earners to try to boost household spending after a two-year recession, making good on a promise he made after taking office two months ago.
Renzi's cabinet passed a decree to reduce taxes for those earning between 8,000 and 26,000 euros a year by about 80 euros per month, starting next month.
The 6.9 billion euros in tax cuts will be funded by a mix of spending reductions, one-off windfalls and a "review" of spending on Lockheed Martin's F-35 fighter jet, Renzi told reporters.
"We kept our word. Today is the beginning of a general reorganization of spending and of the relationship between the state and its citizens," Renzi said before outlining the cuts with tweets that were published on the government's Twitter account as he spoke.
Italy is still struggling to recover from a recession that drove youth unemployment to over 40 percent. Real per capita income in Italy, the euro zone's third-biggest economy, is at nearly the same level it was in 1997.
In February, Renzi seized power within the Democratic Party from rival Enrico Letta, whom he accused of acting too slowly to make reforms and lift growth.
Since then the 39-year-old former mayor of Florence has pushed to cut taxes, eliminate political privileges and overhaul institutions, with an eye to the May European Parliament election.
He needs his Democratic Party to make a strong showing to shore up his grip on his right-left coalition.
The decree "for competitiveness and social justice", which goes into effect immediately but must be confirmed by parliament within 60 days, means almost 7 billion euros in tax cuts this year and 10 billion in the following years.
SPENDING CUTS
To plug the hole in lost revenue, Italy will reduce its spending on goods and services by 2.1 billion euros this year and cap salaries in the public administration for 600 million euros. It will also include 900 million euros in other savings.
One-off measures include a tax windfall from private banks that hold revalued shares of the central bank, which should bring in 1.8 billion euros.
Other areas he mentioned were reducing the number of municipal companies paid for by the state, fighting tax evasion and cutting 150 million euros of spending that had been earmarked for the F-35 fighter.
Renzi did not give details on the "review" of spending for the jets. Italy now has committed to ordering 90 of the planes for about 12 billion euros, but some in his party have said the order should be halved.
Renzi also confirmed that the decree lowers the regional business tax (IRAP) by 10 percent, a reduction to be funded by an increase of taxation on capital gains from financial instruments, except for government bonds, to 26 percent from 20 percent.
In 2015, the government foresees spending cuts of 14 billion euros, 4 billion more than the cost of the tax reductions, Economy Minister Pier Carlo Padoan said.
The reforms, when taken as a whole, will boost growth potential and the fragile recovery will become more "robust" this year, Padoan said.
Padoan has estimated the tax cuts can raise Italy's economic growth this year by around 0.3 percentage points. It is not clear if this boost is already incorporated in the government's official forecast of 0.8 percent growth, which it reduced from 1.1 percent last week.
Renzi is under pressure from Brussels to keep a lid on Italy's strained public finances, and he is pushing to be allowed to lower Italy's deficit more slowly than a strict application of EU guidelines while not breaching the rules.
"Matteo Renzi only delivered a bunch of confusion," said Renato Brunetta, head of Silvio Berlusconi's opposition Forza Italia party in the lower house.
In a statement, the anti-establishment 5-Star Movement, which has called on Italy to consider scrapping the euro, said that the funding for the tax cuts is "nothing but hot air".
(Editing by Robin Pomeroy)

Vaccines KILLED Thousands! Big Pharma Profits.


Mother claims healthy son, 19, was killed by flu-shot after he fell into a coma just 24-hours after having vaccineIndia: Paralysis cases soar after oral polio vaccine introducedGermans Unhappy with Alternative Swine Flu Vaccine for PoliticiansIs your doctor on a drug maker’s payroll? 

Bailout Blowout – Deal Would Give Detroit $100 Million Of Federal Funds – Stuart Varney – F&F


South Korea: Arrest Warrants Issued Against Captain Of Sunken Ship


Dollar dying; multi-polar world in offing




Washington’s decision to go for the military coup in Ukraine was intended to rupture the emerging cooperation between key Eurasian nations that ultimately would have isolated the power of US hegemony and opened the door for a genuine multi-polar world where peaceful cooperation replaced military threats and sole Superpower domination.
The very rich and powerful families who control the US military industry complex reacted by trying to revert to their tried strategy of re-activating a new Cold War that paints Russia as evil and tries to cripple or severely weaken her. Ultimately it was a stupid decision being implemented by very stupid people, who believe they are very smart. 
One of the unintended consequences of their stupidity is the fact that because of the foolish US decision to impose economic sanctions on Russia over Crimea’s annexation, Washington has forced Moscow to react by selling Gazprom bonds not in the dollar market but rather in the fast-emerging Chinese Yuan. The US has just shot itself in the foot.
OAO Gazprom, the world’s biggest natural-gas producer, plans to issue Chinese Yuan-denominated debt in the coming days. Because of Obama Administration sanction threats, the interest rate for Gazprom debt in dollars is rising dramatically while that of Yuan debt is falling, making it attractive to issue the Yuan debt.  But this is a decision that makes more than business sense. It accelerates a trend by Russia, China, Iran and other countries to abandon the US dollar as world central bank and trade reserve currency.
Wars with other countries’ money
The role of the US dollar as the world’s leading reserve currency is more than a status symbol. Since the creation of the Bretton Woods monetary order in 1944, the role of the dollar as reserve currency has been at the center of American power. After August 1971, when Nixon ended the convertibility of foreign-held dollars for US Federal Reserve gold stocks, the dollar has been a fiat currency whose relative value has fluctuated up and down.
Today, despite the worst economic depression in the USA since the 1930’s and despite three decades of US trade deficit, combined with a soaring Government debt that is now over 103% of GDP, the US Government is able to finance wars in Syria, Libya, Afghanistan and elsewhere because of the reserve currency role. Other trading nations like China or Russia who buy or sell dollar-priced
goods must have dollars for trade, so their central banks invest their trade surpluses into “safe” US Treasury bonds.
Ironically, that has in effect meant that the US has been able until recently to finance its foreign wars and trillion dollar military budget using Chinese, Russian and other nations’ dollars.
When the Euro threatened the reserve currency status of the dollar in 2010 as Washington ran annual trillion dollar+ budget deficits, the Chinese and others began buying bonds denominated in Euros instead to diversify their risk of a possible US default.
To prevent the emergence of the Euro, Washington launched a financial warfare operation using key Wall Street banks like Goldman Sachs and JP MorganChase together with the US-based credit rating agencies Standard & Poors and Moodys and the US Federal Reserve to prevent the shift to the Euro. It was called the “Greek Crisis.” The Euro fell and the dollar was suddenly “safe haven...”, for a while.
But other national central banks took notice that the dollar was losing its value, as Washington continued to print money without limit, in order to rescue the bankrupt Wall Street banks with what the Federal Reserve calls Quantitative Easing.
China, Russia and other major trading nations have quietly begun to develop alternatives to using the US dollar for their bilateral trade.
Dramatic shift in dollar role
A new report by the International Monetary Fund reveals a dramatic shift in the role of the US dollar as reserve currency. Some 23 countries today report holding Chinese Yuan as official reserves. That, despite the fact the Yen, much like the French Franc after World War II, is not yet fully convertible into other currencies. The Chinese are moving to convertibility in very carefully measured steps. 
Not only do 23 other central banks hold Yuan officially, twelve more have invested in Yuan without officially declaring so.
The most dramatic point in the IMF report is the fact that the relative role of the US dollar in central bank reserves is rapidly declining. Yes, the dollar is still the largest reserve currency. But whereas in 2000 some 55% of all reserves worldwide were in US dollars, today it has declined to 33%. And the trend is accelerating. The IMF does not list the Yuan as an official reserve currency as it is not yet convertible. In its statistics the Yuan falls under the category “other currencies.” The Other Currency share according to the IMF has doubled since the US invasion of Iraq in 2003. 
In recent years the central bank of China has been buying gold in huge amounts to prepare for Yuan becoming a fully convertible currency. Now, with Russian companies increasingly looking east to China and Asia generally, the shift away from the dollar could accelerate dramatically, forcing US interest rates sharply higher and significantly increasing the pressures on Washington’s government spending.
The foolish Obama sanctions threats against Moscow are simply accelerating the refocus of giant Russian companies like Gazprom and Norlisk Nickel to the huge Asian market. Russian mining companies, including OAO GMK Norilsk Nickel, the world’s largest producer of nickel, are stepping up activities in Asian markets in the last month. 
A China-Iran-Russia Triangle
The NATO-led Ukraine coup and ensuing crisis have dramatically accelerated the trend not only by Russian companies to look east. Other nations realize they could someday be target of Washington sanctions and are looking to lessen their dollar exposure. Iran and Russia recently announced a huge barter deal that allows the two to skirt US-imposed economic sanctions.
On April 2, the two countries agreed a barter deal that would reportedly be worth up to $20 billion, enabling Tehran to boost vital energy exports in defiance of Western sanctions. Reportedly Moscow would buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods. Russian technical assistance in building two new nuclear plants in Iran are reported part of the deal, as well as purchases of various metals and perhaps Russian missiles.  The dollar, of course, would play no role. Washington was furious, but why should Russia or Teheran obey US-dictated measures of economic warfare when both now are being attacked by them?
And in May, Russian President Putin is scheduled to fly to Beijing where he is expected to sign a mammoth 30-year deal to supply China’s energy-hungry economy with Russian gas. State-owned Gazprom plans to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world's largest producer of conventional gas to the largest consumer. Signing this deal after almost a decade of tough negotiations would mark another major step away from the dollar in international trade as both countries seek to free themselves from dollar wars or threats of same.
When Rosneft’s Igor Sechin was in Tokyo in late March discussing energy deals there, he told the press that US sanctions on Russia over Crimea could have negative consequences for the West. He declared that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.
The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If the USA and EU try to isolate Russia, Moscow will look East for new business. That will include major new energy deals, military contracts and political alliances. China surpassed Germany as Russia's biggest buyer of crude oil this year when Sechin’s Rosneft secured deals to boost eastward oil supplies via the East Siberia-Pacific Ocean pipeline and another crossing Kazakhstan.
What is emerging is a tectonic shift in monetary relations with the largest nations of Eurasia to conduct bilateral trade denominated in either Rubles or Renminbi, or gold. If we add Iran, possibly Iraq and India, and now, with Turkey’s Recep Erdogan looking away from NATO for new allies, amid his life-or-death battle with the CIA-run Fetullah Gülen, Turkey could well join such an emerging Eurasian economic alliance.
Unintended consequences
The Ukraine NATO coup and Washington’s disastrous attempt to topple Syria’s Assad have accelerated the creation of what they ultimately most want to avoid. It’s what Zbigniew Brzezinski warned of in his 1997 The Grand Chessboard when he wrote, “It is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus of also challenging America.” The former Obama adviser went on to state,
"In that context, how America 'manages' Eurasia is critical. A power that dominates Eurasia would control two of the world's three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa's subordination, rendering the Western Hemisphere and Oceania (Australia) geopolitically peripheral to the world's central continent. About 75 per cent of the world's people live in Eurasia, and most of the world's physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about three-fourths of the world's known energy resources."
Brzezinski then spoke of what he called a “Zone of Percolating Violence.” The heat on the percolator, of course, would be regulated by Washington and NATO.

The people in Washington or Brussels, like Brzezinski or the pathetic Victoria Nuland at the State Department—the former Dick Cheney aide who was given responsibility for the logistics of the Ukraine NATO coup—are essentially stupid people. They are stupid in a very specific way. Not that they are not well-educated, some from the finest “elite” universities, with years of political experience.
Their stupidity lies in their inability to think-through or foresee the global consequences of their actions.

FWE/SL

It’s Time to Ditch the Consumer Price Index (CPI)

So why does the government maintain such a transparently inaccurate and misleading metric? For three reasons.
That the official rate of inflation doesn’t reflect reality is obvious to anyone paying college tuition and healthcare out of pocket. The debate over the accuracy of the official consumer price index (CPI) and personal consumption expenditures (PCE–the so-called core rate of inflation) has raged for years, with no resolution in sight.
The CPI calculates inflation based on the prices of a basket of goods and services that are adjusted by hedonics, i.e. improvements that are not reflected in the price of the goods. Housing costs are largely calculated on equivalent rent, i.e. what homeowners reckon they would pay if they were renting their house.
The CPI attempts to measure the relative weight of each component:
Many argue that these weightings skew the CPI lower, as do hedonic adjustments. The motivation for this skew is transparent: since the government increases Social Security benefits and Federal employees’ pay annually to keep up with inflation (the cost of living allowance or COLA), a low rate of inflation keeps these increases modest.
Over time, an artificially low CPI/COLA lowers government expenditures (and deficits, provided tax revenues rise at rates above official inflation).
Those claiming the weighting is accurate face a blizzard of legitimate questions. For example, if healthcare is 18% of the U.S. GDP, i.e. 18 cents of every dollar goes to healthcare, then how can a mere 7% wedge of the CPI devoted to healthcare be remotely accurate?
In my analysis, the debate over inflation is intrinsically flawed. What really matters is not the overall rate of inflation, which can be endlessly debated, but the purchasing power of earned income, i.e. wages and the exposure to real-world costs.
In other words, those households with zero exposure to college tuition and the full costs of daycare, medical care and healthcare insurance may well experience low inflation, while the household paying the full costs of daycare, college tuition and healthcare insurance will experience soaring inflation.
Here’s one example of how CPI fails to capture real-world inflation/loss of purchasing power. Let’s say an employee works for a company or agency that pays his/her healthcare insurance. The monthly cost has risen from $1,000/month to $1,500/month. The employee’s wage has remained stagnant but the total compensation costs paid by the employer have gone up by $500/month.
Now the employer shifts that $500/month to the employee as their share of the healthcare insurance cost. Since the average full-time worker earns around $40,000 a year, and pays around 18% in taxes, their take-home pay is around $33,000 annually.
The employee’s co-pay of $6,000 a year ($500/month) represents 18% of their take-home wage. This is an 18% reduction in earnings, or the equivalent of 18% inflation (i.e. a reduction in purchasing power).
This shifting of the skyrocketing burden of healthcare costs acts the same as 20% inflation, yet it doesn’t even register in the current CPI.
The geography of inflation doesn’t register, either. Soaring rents in Brooklyn, NY and the San Francisco Bay Area have a profound effect on those exposed to these rapidly rising costs, yet these impacts are massaged to zero by national CPI calculations.
So once again we have a bifurcated society: those protected by the state from rising costs and those exposed to real-world reductions in purchasing power. Households that receive government subsidies and direct payments have little exposure to real-world healthcare costs, since they are covered by Medicaid, and modest exposure to housing if they receive Section 8 benefits (Section 8 recipients pay 30% of their income for rent, regardless of the market price of the rental). Retirees on Medicare also have limited exposure to the real-world costs of their care paid by the government.
If we analyze inflation by these two metrics, we find the middle class is increasingly exposed to skyrocketing real-world prices. Pundits in the top 5% have the luxury of pontificating on the accuracy of the CPI while those protected by government subsidies and coverage have the luxury of wondering what all the fuss is about. Only those 100% exposed to the real costs experience the full fury of actual inflation.
So why does the government maintain such a transparently inaccurate and misleading metric? For three reasons: 1) it is useful propaganda; 2) it suppresses the state’s cost-of-living increases and 3) it lowers the government’s cost of borrowing.The benefits of reducing COLA adjustments are self-evident, as is the benefit of borrowing money at low rates of interest, but the propaganda benefits are more subtle.
The key to enabling the endless printing of money that enriches the banks and the top .1% is low inflation. Asset bubbles can be inflated, ballooning the wealth of the owners of the assets, as long as inflation is near-zero.
Indeed, the Federal Reserve claims it must print money to counter low inflation.
Meanwhile, in the real economy, those exposed to the real costs of college tuition, healthcare, childcare, etc. are seeing their purchasing power evaporate like a puddle of water in Death Valley. The Fed needs low inflation to justify its continuing enrichment of the financial elite, and the Federal government needs low inflation to keep its COLAs and borrowing costs low.
There are two ways to mask real-world reductions of purchasing power: 1) skew the CPI by distorting the component percentages, hedonics and how costs are measured, and 2) protect enough of the populace from real-world increases so they no longer care. Seniors, who famously vote in droves, have no idea what their Medicare benefits actually cost. As a result, they have no experience of healthcare inflation /reduction of purchasing power.
This works in all sorts of industries. As I have often mentioned here, the F-35 Lightning fighter aircraft costs in excess of $200 million each, roughly four times the cost of the F-18F it replaces. This extraordinary inflation is not experienced directly by the taxpayer who is paying for the boondoggle, as the Federal government borrows trillions of dollars to pay for such boondoggles, effectively passing the inflated costs on to future generations.
These costs are hidden by the low cost of borrowing trillions to pay for boondoggles.If real-world inflation is (say) 5%, then interest rates would typically adjust to a few points above that rate, to compensate capital for the erosion of purchasing power. If the Treasury had to pay 7% to borrow money, the interest cost would soon cripple Federal spending. People would be forced to focus on how all those trillions of dollars are being spent, and to whose benefit.
But with borrowing costs so low, nobody cares.
The solution? One, abolish the Fed and let the market discover interest rates, and two, abandon the simplistic notion that one number of inflation has any meaning in a complex economy with numerous subsets of exposure to market costs and the loss or gain of purchasing power.
Will we muster the will to look past failed models and metrics? Sadly, the answer is no. Why?
As I noted yesterday in What’s the Difference Between Fascism, Communism and Crony-Capitalism? Nothinga system set up to enrich political and financial elites is incapable of reform. the only way the CPI will ever be replaced is when the Status Quo collapses in a heap of lies and insolvency. Until then, propaganda and gaming the system to protect vested interests will rule.

Anwar: Karpal defended me pro bono

BUTTERWORTH, April 18 ― The late Karpal Singh had refused to accept payment from Datuk Seri Anwar Ibrahim when he took on the latter’s sodomy case back in 1998.
The federal opposition leader told a rally here last night that his family had tried to pay Karpal repeatedly for his legal services but Karpal had refused.
“At that time, I was in jail, but my family tried to pay him and he refused to accept and they tried to pay him a few more times until he came to tell me to tell my family not to ‘disturb’ him anymore,” he said.
“He told me I was fighting for the nation so I should let him fight for my freedom and he won't accept payment for that,” he added.
Anwar’s last conversation that Anwar had with Karpal  was on Wednesday evening before Karpal was killed in a car crash a few hours later.
Karpal, who was widely known as the Tiger of Jelutong, was killed on the spot when the vehicle he was travelling in collided with a lorry at the North-South Highway near Gua Tempurung at about 1.10am yesterday.
The 73-year-old was heading towards Penang from Kuala Lumpur to attend a court hearing here.
Anwar said he believed that Karpal’s mind may have been dwelling on the submissions for his sodomy case ahead of the lawyer’s  death.
“He told me that he has 10 days to prepare and submit the submissions for my appeal and that he will work on it for the next two days,” Anwar said.
In March, Malaysia’s Court of Appeal overturned a lower court’s decision to acquit Anwar on charges of sodomy and sentenced him to five years in jail. Anwar, has always maintained that the charges were trumped up to hurt his political career is looking to appeal the decision.
The Permatang Pauh MP told a crowd of about 1,000 people at the PKR Reformasi 2.0 rally here that Karpal had told him to carry on with his fight and leave the court case in his (Karpal’s) hands.
“He told me ‘You carry on. I will do my best to fight your case in court,’ when I called him back on Wednesday evening after seeing four missed calls from him,” the PKR leader said.
He also said when he paid his last respects to Karpal at his house yesterday, Karpal's widow, Gurmit Kaur, also told him that Karpal was worried about his sodomy appeal case.
Anwar said he had lost not only a lawyer but a great friend who was like a family member to him.
He expressed  uncertainty over the outcome of his upcoming appeal against the five year jail sentence handed to him last month.
“This may even be my last chance to speak to all of you before I'm sent back to prison,” he said.
He added that he does not fear being put back into prison but that he wants his constituents to continue to support PKR no matter what happens.
“We must always remember, the fight will always go on and we must not let Barisan Nasional wrest this seat away from Pakatan Rakyat if I was sent back to prison,” he said.
Earlier, a moment of silence was held in remembrance of Karpal.
Some of the speakers expressed their sadness over the passing of a great leader before continuing with the talking points about Anwar's sodomy trial.
“He was the lawyer of lawyers and he was the only MP who dared to tell the Dewan Rakyat Speaker to get out. In normal cases, it was the Speaker who tells MPs to get out but with Karpal, it was the other way around,” PAS deputy president Mohamed Sabu said.
He spoke of Karpal’s courage in speaking up against injustice no matter where or when and reminded the crowd that Karpal had taken on many cases all for the sake of seeking justice for the people.
Karpal’s funeral will be held on Sunday.

Housing Bubble 2.0 Veers Elegantly Toward Housing Bust 2.0

They’re not even trying to blame the weather this time. “Housing affordability is really taking a bite out of the market,” is how Leslie Appleton-Young, chief economist for the California Association of Realtors explained the March home sales fiasco. “We haven’t seen this issue since 2007.”
In Southern California, the median price soared to a six-year high of $400,000, up 15.8% from a year ago, as San Diego-based DataQuick reported. It was the 24th month in a row of price increases, 20 of them in the double digits, maxing out at 28.3%. Ironically, prices per square foot are increasing fasted at the bottom third of the market (up 21%), versus the middle third (up 15.9%) and the top third (up 14.3%).
Ironically, because at the bottom 65%, sales have collapsed.
People, wheezing under the weight of their student loans and struggling in a tough economy where real wages have declined for years, hit a wall. Private equity firms and REITs, prime beneficiaries of the Fed’s nearly free money, gobbled up vacant homes sight unseen in order to convert them into rental housing, and in the process pushed up prices – exactly what the Fed wanted. But now high prices torpedoed their business model, and they’re backing off. So sales of homes priced below $500,000 plunged 26.4%, and sales of homes below $200,000 collapsed by 45.7%.
These aren’t poor people who stopped buying them but two-income middle-class families who’ve been priced out of the market. Thanks to the Fed’s glorious wealth effect, however, sales of homes ranging from $500,000 to $800,000, increased by 2.9% from a year ago, and sales of homes above $800,000 increased by 5.4%. In total, 35% of the homes sold for $500,000 or more. But combined sales, due to the collapse at the low end, dropped 14.3% from a year ago to 17,638, the worst March in six years, and the second-worst in nearly two decades.
“Southland home buying got off to a very slow start this year,” said DataQuick analyst Andrew LePage. Among the culprits: the suddenly absent large-scale investors, the jump in home prices, and the increase in mortgage rates.
And he put his finger on a new culprit: potential move-up buyers were stymied because they’d refinanced their current home at a “phenomenally low” interest rate. They can’t afford to abandon their relatively low payment, which they already stretched to reach, and buy a much more expensive home – a move-up home during a pandemic of inflated home prices financed at a higher mortgage rate. They’re trapped by the consequences of the Fed’s policies:
They could sell, but they can’t afford to buy!
“Lately on Saturdays and Sundays, you see open house signs everywhere,” Carey Chenoski, a real estate agent in Redlands, told the LA Times. “The houses that last spring would be gone in the first day are sitting maybe 60 days.” That’s at the low end. At the high end, at prime beachfront locations in Manhattan Beach, the wealth effect runs the show. Agents are getting “multiple offers on just about everything,” said Barry Sulpor, with Shorewood Realtors. “The market is really on fire.”
In the nine-county Bay Area, the median price paid for a home in March jumped  to $579,000, up a bubblelicious 23.2% from a year ago, the highest since December 2007, according to DataQuick. In my beloved San Francisco, the median price jumped 14.6% to $937,500. In Solano County, the “cheapest” county in the Bay Area, the median price soared 30.4% to $300,000.
Alas, sales plummeted 12.9% to 6,308 houses and condos in the Bay Area, the worst March since 2008, and the second-worst in the history of the data series going back to 1988. And the debacle was concentrated at the lower end: while sales of homes over $500,000 rose 5.2%, sales of those under $500,000 collapsed by 32.9%.
The same phenomenon is playing out across the nation.
Redfin, an electronic real-estate broker that covers 19 large metro areas around the country, saw year-over-year price gains of 9.9% in March, after 17 months in a row of double-digit gains. Las Vegas topped the list with an annual gain of 20.8%.
But home sales in these 19 markets dropped 11.6% year over year, the fifth month in a rowof sales declines. Beyond California, where sales fell off a cliff, sales in Washington DC tumbled 13.5%, in Las Vegas 15.8%, and in Phoenix 17.3%. It’s tough out there.
Some analysts, tired of looking silly blaming the weather, started blaming low inventories. So inventories were flat in the 19 markets overall compared to March last year; no reason for plunging sales. In Boston, Portland, and Austin inventories dropped. But in the cities where the sales plunge has been particularly nasty, inventories skyrocketed: up 41.9% in Phoenix, 28.9% in Ventura, 25.7% in Riverside, 24.8% in Los Angeles, 23.1% in Sacramento, 21.3% in San Diego.
And the number of new listings across the 19 markets rose by 6.3%, the first year-over-year growth in March in three years. The usual suspects in California saw the largest jump, with listings in Ventura up 13.1%. But they were up elsewhere too: in Long Island 12.7%, in Las Vegas 11.9%, in Chicago 10.6%, in Phoenix 7.8%, etc.
You get the idea: rising inventories, rising new listings, soaring prices, and plunging sales. Something has to give.
Unlike stocks, housing is subject to the real economy. When the price at the bottom half of the spectrum soars beyond what people can afford even with today’s still extraordinarily low interest rates, and beyond what makes sense for speculators that fix them up and rent them out, then demand stalls. Homes sit. Sellers get frustrated. People who need to move can’t move because they can’t sell their house for the price they want. People who want to move up can’t. Pressure builds. And eventually, the prices that the Fed conspired to inflate into the stratosphere, well…. This is like so 2006.
Giant PE firms and REITs have become the largest landlords in the country over the last two years because “there was a moment in time where it made sense,” but now home prices are too high and the business model has cratered. Read….. Hot Air Hisses Out Of Housing Bubble 2.0: Even Two Middle-Class Incomes Aren’t Enough Anymore To Buy A Median Home

Prelude to Economic Disaster: Billionaire Liquidates All Real Estate Ahead of Crash

economy-rip
If you were to contact a real estate agent in any major market today they’d likely advise you the market is so “hot” that if you intend on purchasing property you’d better be prepared to act fast. They’ll adamantly point out, contrary to reality, that the housing market has recovered, available inventory is dropping, prices are rising, and they can only go higher from here.
But if you’re paying attention to what’s happening around us, and not just with our own economy here in the United States, then you’d likely have noticed that while many Americans are flying high on hopes of change and recovery, there is an economic disaster of unprecedented scale in the making.
First, we know that the third largest economy in the world, China, is going through a massive credit crunch as bad loans there have soared to near all time highs, meaning that loans are quickly becoming non-existent and credit markets are now frozen. This means that no one is going to be building ghost cities and empty malls in the Peoples’ Republic again any time soon. Moreover, it means no more easy cash. We know what happened in the United States and the rest of the world when the last credit crunch hit.
Second, as Sovereign Man points out, the richest man in Asia Li Ka-Shing (their version of Warren Buffet or Bill Gates with a reported net worth of $30 billion) has rapidly liquidated his real estate holdings and is existing the market as quickly as possible.
Here’s a guy you want to bet on– Li Ka-Shing.
Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor.
Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.
Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $928 million sale of the Pacific Place shopping center in Beijing– this deal was inked just days ago.
Once the deal concludes, Li will no longer have any major property investments in mainland China.
This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?
Simple. China’s credit crunch.
But Li Ka-Shing isn’t the only one bailing. Luxury real estate investors are unloading their real estate assets as well in an effort to raise cash and not be the last one holding a dead asset. For all intents and purposes, the music in China has stopped:
Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.
On the domestic front we’ve seen stock markets drop a fairly significant level in recent weeks. So much so that company’s hoping to launch new IPO initiatives have chosen to just sit this one out as they are worried that investors are running out of money to help fund their operations.
You wouldn’t know that, of course, because mainstream media pundits like Dennis Kneale continue to sell Americans on the notion that we’re in a robust recovery:
Yet the economy, both locally and globally, is in vastly better shape than it was when we took that terrible tumble, down to Dow 6,800 in March 2009.
Americans have cut back on debt, and so have companies.
Karl Denninger of the Market Ticker calls this one what it is – a complete lie – and points out that we are nowhere near cutting back on our debt.
I Despise Liars
US debt to present
“Cut back”?  Really?  Worse, ex mortgages this is not true at any level; there is $3,733.5 billion in non-mortgage consumer debt outstanding.  That is an all-time high; in Q4/2006 (just before the crash, remember?) that stood at $3,047.2 billion or nearly $700 billion less.
An awful lot of that increase since 2007, incidentally, is student loans — exactly where it cannot be for sustainable economic progress since the younger generation has to eventually take the reins from us older folks.  This is nothing more than an economic Ponzi scheme with its cheering section led by people like Dennis who refuse to look at and argue from facts.
As for corporate debt it never decreased at all.
Something is amiss, and the fact that no one in the mainstream, which is where tens of millions of Americans get their “facts,” is really talking about it should be a blaring alarm.
There are, however, some Americans paying attention. As in China, it’s the billionaires and elite who have direct access to the puppeteers pulling the strings, and like Li Ka-shing, they have been quietly and rapidly dumping millions of shares of stock:
Despite the 6.5% stock market rally over the last three months, a handful ofbillionaires are quietly dumping their American stocks . . . and fast.

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.
Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.
The big money, often referred to as the smart money, is getting out of the game and they are dumping these assets on unsuspecting investors.
They know, for example, that earnings growth has now plunged to its lowest levels since 2012.
As these in-the-know elites unload their positions, average investors depending on their financial advisers to tell them the truth are slamming money into these stocks and paying, in some cases, 500 times earnings. Real estate investors are, likewise, overpaying for homes based on the idea that markets are “hotter” than they’ve been in years.
It’s a recipe for disaster and it won’t end well – at least for 99% of people who blindly believe the opinions of their favorite “experts.”

Money and Income Inequality – Why the Fight Must be Broadened

Part of the challenge of addressing political economy is the different realms that economic and philosophical discourse exist in. Western (capitalist) economics can be informed by history but it can’t accommodate it. This can be seen in response to French economist Thomas Piketty’s new book ‘Capital in the Twenty First Century.’ The effort, nay contrived ‘necessity,’ of quantifying income distribution across history, as Piketty has done, places it at the center of what could in different terms leave it as bit player, as artifact rather than base discursive fact. This isn’t to argue that income distribution isn’t ‘important.’ It is to argue that there are other, possibly more illuminating, ways of getting to issues of economic cum political asymmetries and their role in social outcomes. By staying within the anti-historical historiography of ‘income’ and its quantification across time a limited history is presented as the addition of ‘facts’ when it could alternatively be understood to be a detraction that leaves the base premises of capitalist theory largely untouched by design. This probably won’t make much sense to those raised in the Western economic tradition so I will spend some time below trying to relate the thesis across different modes of discourse. This effort bears some relation to the Cambridge Capital Controversy in the sense that the terms exist in what appear to be irreconcilable realms.
For instance, the Western storyline of the IMF’s (International Monetary Fund’s) role in Ukraine is of providing financial ‘assistance’ to a nation in need. The point has been made that IMF loans will simply replace Ukraine’s debt to Russia with debt to it, ‘the West.’ That is, ‘Western’ funds will be used to pay for energy sold to Ukraine by Russia at a subsidized price in exchange for Ukraine implementing ‘austerity’ policies at the behest of the IMF. When considered in conjunction with CIA and EU machinations to assert political control over Ukraine the intersection of geopolitics and economics is exposed. Debt is being used as a weapon to exert economic control over Ukraine under the guise of providing financial assistance. ‘Privatization’ of nominally public assets is a central goal of IMF imposed austerity. Lest the point be taken too narrowly, since the 1980s U.S. investment banks have used debt to wrest control of Western corporations from ‘stakeholders’ in order to loot worker’s resources like pension funds and wage agreements leaving behind de facto ‘private’ austerity. And in the 1970s and 1980s ‘money center’ banks in New York made loans to ‘nations’ across South America at the behest of the US government with the ultimate result being neo-liberal ‘reforms’ forced onto ‘debtor countries’ and citizenries who saw little to no benefit from this debt being forced to repay it. In the terms associated with ‘income inequality,’ is asymmetrical income distribution cause or effect? And in what way is it dissociable from three centuries of Western imperial history? Where precisely does the ‘state of nature’ exist that renders reduction to quantum of interest—‘income,’ addition?
When it comes to ‘discussing’ income distribution, particularly in the US, a tightly circumscribed storyline is near instantaneously brought forward where variants on anomaly, institutional particularity and ‘nature’ are intermingled to assert a patina of gentility to facts of history better described as barbarous. Current Western geopolitical machinations in / on Iran date to the decision by US and British ‘intelligence’ agencies in 1953 to overthrow the democratically elected President of Iran in order to secure Iranian oil for what is today British Petroleum. British Petroleum is presently the major supplier of oil and oil products to the US military. Mid-twentieth century US incursions into South and Central America and Cuba at the behest of the United Fruit Company, today re-branded ‘Chiquita,’ were similarly undertaken in Honduras, Nicaragua and El Salvador by US President Ronald Reagan in the 1980s to protect Coca Cola bottlers from nationalization (Nicaragua) and to ‘free’ regional labor to sew underwear for Wal-Mart and Target for pennies an hour. Regular US incursions into Haiti since the 1940s left Democrat President Bill Clinton with the brilliant-lite, but instinctually neo-imperialist, insight that Haitians could likewise sew underwear for rich Americans for pennies an hour. (See Haitian debt to France for additional insight). The Mexican migration northward to the US in the 1990s and early 2000s coincided with NAFTA (North American Free Trade Agreement) destroying indigenous agriculture in Mexico by flooding it with subsidized industrial corn from the US. Of relevance: economic relations with basis in history are only claimed ‘natural’ by emptying the term of meaning. A history of income inequality that poses concentrated income and wealth as potential cause of economic dysfunction, ‘patrimonial capitalism,’ reifies the Western economic conceit that an anti-historical ‘state of nature’ from whence ‘inequality’ arises is either plausible or even vaguely theoretically coherent.
On a different path American economist-historian Robert Heilbroner argued in 1966 in ‘The Limits of American Capitalism’ that a residual plutocracy (my term) and corporate executives earning ten times the average wage of ‘their’ workers ran the American economy and US foreign policy. Today the ratio of executive to average worker compensation is 341:1. This isn’t to infer / require either that Heilbroner was ‘right’ or that greater concentration of income is without effect. But there was no ‘clean’ dissociation of economic outcomes from expression of political power either then or now. As uncomfortable and cluttered as this may be to discussion of income distribution, the very premise of ‘income inequality’ is that income equality would in some way resolve the barbarous genesis of Western ‘wealth.’ The point in raising Heilbroner isn’t of relative versus absolute wealth distribution but of the historically indissociable role of capitalist ‘wealth’ to its broader social facts and in the acts that place it at the center of interest. To the extent Heilbroner was ‘right’ the quantity of income, either relative or absolute, is artifact of capitalist (anti) social relations. Capitalism is an approach to ‘the world,’ not simply to its economic ‘aspect.’ By framing income inequality as cause and leaving ‘its’ genesis in imperial history as ‘unrelated,’ or even marginally related through coincidence, the problem raised— the creation, persistence and self-perpetuating character of social asymmetries and their related facts, is left unarticulated and therefore necessarily unresolved.
The conspicuous concentration of ‘wealth’ in recent decades has led to the term ‘income inequality’ being thrown around as if it has meaning outside of a much broader set of premises about the social relations that Western economics purports to address. The very idea of ‘equality’ behind the phrase is a restatement of the social role of money— ‘income,’ the quantum that is the theorized basis for the possibility of equivalence behind ‘inequality.’ Phrased differently, of what coherence is ‘equality’ without a place for it to reside beyond the particular (the concept is wholly metaphysical). Money is the social creation that reifies this metaphysical space, which poses thought as ‘fact’ and puts it back as personal possession. ‘Income’ as money receipts is the metric, the thing that answers its own question: by what measure does this inequality have meaning?—by its own. You and I form the ‘we’ of theorized in / equivalence but I am not you and you are not me. This ‘we’ is social ‘object’ as are money and income, the difference being that money is reified social relation, the ‘object’ of social division into ‘yours’ and ‘mine.’ To invert the high-capitalist metaphor, or rather Marx’s critique of it, the billionaire left alone on a desert island with her money has but piles of paper or digital entries— the fishes and the palm trees exist outside the ‘we’ that give money the only meaning / ‘value’ it has, social meaning.
Framed differently, under what set of premises should the social allocation of money— ‘income,’ be ‘equal?’ The answer implied in use of the phrase ‘income inequality’ is that there is basis. Capitalism is in theory premised on social allocation according to economic contribution— unless contribution is under some measure ‘equal’ then unequal distribution is the ‘correct’ outcome of capitalism. Ironically, ‘homogenous’ labor is in neo-classical (capitalist revival) economics the ‘equivalent’ labor used to legitimate outsourcing, unequal pay for ‘equivalent’ work, through relocating economic production to areas with lower wages. Assuming similar capacities a worker in a factory in China or a McDonalds in Paris (sorry France) will produce the same physical quantity of product as workers in Des Moines or Pittsburgh, but the difference in pay that they receive is used to claim that the ‘value’ that each produces is a function of the wages paid. And the wages paid are used to argue that workers are paid according to the ‘value’ that each produces. The argument is wholly circular, but so is the whole of capitalist economics. To be clear, this isn’t a gratuitous slam; it is a function of the basis of capitalist economics in Cartesian metaphysics. The starting point for this economics is ‘first principles’ that are dogma— they can’t be refuted without discarding Western economics in its entirety. The narrower point is the nexus of income and labor, or income and ‘capital,’ as both determinant of and measure of ‘their’ ‘product.’ Income is the explanation of ‘value,’ which in turn is the alleged basis of income (disparities) in capitalist economics.
This brings us to Piketty’s r>g, the rate of return on capital (wealth) is greater than the rate of economic growth. The basic argument is that in recent history, as well as in select earlier periods, wealth has accumulated faster than its ‘material’ base in goods and services produced. If left unchecked the logical (mathematical) consequence is that concentrated wealth will continue to concentrate until a few people own all economic production. To relate the issue to the Cambridge Capital Controversy, one problem with this formulation is that both ‘r’ and ‘g’ are placed in the dimension of ‘r’ through the use of money as the metric of commensurability. A ‘twenty-thousand dollar car’ is a car regardless of the monetary value assigned to it— it is ‘its’ own fact related to all of the ‘facts’ that went into its production regardless of their monetary value. The reason why this might matter is that there are the facts of economic production— the making of things and the things used to make things, ‘technology,’ and there are social claims on this economic production. These are two separate things. The contemporary capitalist claim that ‘technology’, or more broadly ‘capital’ in its neo-classical understanding, is the cause of income inequality is circular in the sense that the assignment of ‘value’ produced by it is both input and output, it is a base assertion that is put forward as fact of ‘nature.’ Without the imposition of money as metric of commensurability (metaphysical ‘equivalence’) Marx’s labor theory of value is more coherent than the capitalist explanation leaving technology in the realm of embedded labor rather than as ‘capital’ posed in (confused) opposition to it. The Cambridge Controversy was in part over the issue of logical circularity but the larger issue was / is of the imposition of capitalist metaphysics through rate of profit that simply assumes that its imposition ‘settles’ issues that in fact result from the premises being irreconcilable. With r>g Piketty asserts that a ‘twenty-thousand dollar car’ is a ‘twenty-thousand dollar car’ as if the claim had basis in nature rather than in social relations. (Marx’s labor theory of value is more coherent than capitalist theories because of its basis in  / tie to the act of production. Capitalist theories are circular because they are metaphysical— they derive from logical first principles that not even capitalist economists care to defend as plausible. The two theories are wholly irreconcilable because they proceed from different dimensions).
The concentration of social claims on social production, ‘wealth,’ poses particular arrangement of circumstance as indubitable fact. Mountain top removal to mine for coal assumes commensurability between the price paid for the land, the cost of removing the mountaintop and mining the coal and the price paid for the coal in ‘exchange.’ Left unaccounted for are the social and environmental costs of mining for and burning coal. There is no commensurability, no crossing of dimensions, that makes money and monetary ‘value’ equivalent to what was destroyed. There may be some residual accounted for in capitalist theory, some ‘externality,’ but there is no ‘equivalence’ that leaves mountaintops undestroyed and air unpolluted. Likewise, the ‘income’ of ‘income inequality’ is abstracted from its social facts, from its broader genesis in historical relations and pre-existing social asymmetries, and put back as object of wholly implausible equivalence. It is this base idea of equivalence, of the very possibility of equivalence, that renders the idea of ‘income in / equality’ fundamentally incoherent. Through this idea of equivalence the dodge is to keep the facts of Western capitalism: imperial history, the persistence, in fact the creation, of asymmetrical social relations and social and environmental dysfunction increasingly in evidence, at the level of a counting game. To be clear, this isn’t to argue against income redistribution. It is to broaden the fight, and a fight it is, to argue that capitalist theories of economic production are fundamentally incoherent and that theoretical incoherence is closely related to the accumulating social and environmental dysfunction that are its facts. Phrased differently, arguing over income restates  / legitimates its role as claim on social resources when it is the facts of capitalist economic production that are of greater consequence.
The ‘pragmatic’ rationale for addressing income inequality appears to be to ‘improve’ capitalism. This is the apparent point behind the distinction of productive and unproductive wealth / capital. But either there exists a benevolent ‘nature’ that distributes income justly or there isn’t. This phrasing may seem quaint, but what then is the reason for wanting to improve capitalism if this isn’t the case? And wanting to improve capitalism bears no necessary relation to alleviating the social and environmental pathologies it creates. An argument is even being put forward that ‘solving’ global warming can leave the capitalist ‘growth’ imperative intact. ‘Externalities,’ e.g. global warming, are costs of capitalist production that others are forced to bear. If capitalists benefit from forcing others to bear their costs of production (income inequality anyone? Anyone?) why would they forego this ‘benefit’ without being forced to? The central hindrance to addressing global warming has been Western governments held captive by particular economic interests who benefit from not solving environmental issues. Wall Street wants to not solve the problem by trading pollution rights. Big oil wants to not solve the problem to maintain its role in the fossil fuel economy. If it is possible to resolve the social and environmental consequences of capitalism while leaving it intact, where is the evidence? Efforts made in the 1970s to regulate industrial pollution were abandoned under the argument that ‘we all’ benefit from capitalist production. The redistribution schemes of the New Deal were abandoned under the quaint theoretical premise of ‘disincentives’ at the heart of capitalist theory. In other words, the problems were known and understood before they were mis-re-forgotten. Claims that these issues are solvable within the existing order are clearly contradicted by history.
Rob Urie is an artist and political economist. His book Zen Economics will be published by CounterPunch / AK Press shortly.

Fed Has Lost Control?

Jim Willie: Fed Has Lost Control, Systemic Failure Flashing Warning Signals Now!

The US Federal Reserve has been printing money since 2011 to cover USGovt debt securities in a frenetic mannerThey have lost control.They call it stimulus, when it is actually the opposite. It does assist the speculators with nearly zero cost money to borrow, but one must be a club member to win loan grants. The Quantitative Easing programs are deceptive. When the program was initially announced, the Jackass claimed it would be part of an endless sequence. With QE1 and QE2 and Operation Twist and QE3, following the failed trial balloon called Taper Talk, it is quite clear to anyone with an active brain stem and absent rose colored glasses that the USFed is caught in a trap called QE to Infinity. It is not stimulative. Instead, the uncontrollable bond monetization causes capital destruction. It causes economic degradation. It causes lost jobs and vanished income. It is a gigantic wet blanket to smother and destroy the USEconomy slowly, amidst unending propaganda. QE is the device that will result in Systemic Failure, which is already flashing signals of its arrival.

Out of Ammo? The Eroding Power of Central Banks

Since the financial crisis, central banks have slashed interest rates, purchased vast quantities of sovereign bonds and bailed out banks. Now, though, their influence appears to be on the wane with measures producing paltry results. Do they still have control?
Once every six weeks, the most powerful players in the global economy meet on the 18th floor of an ugly office building near the train station in the Swiss city of Basel. The group includes United States Federal Reserve Chair Janet Yellen and her counterpart at the European Central Bank (ECB), Mario Draghi, along with 16 other top monetary policy officials from Beijing, Frankfurt, Paris and elsewhere.
The attendees spend almost two hours exchanging views in a debate chaired by Bank of Mexico Governor Agustín Carstens. Waiters serve an exquisite meal and expensive wine as the central bankers talk about the economy, growth and market prices. No one keeps minutes, but the world’s most influential money managers are convinced that the meetings help expand their knowledge in important ways. “We learn what makes our counterparts tick,” says one attendee.
These closed-door meetings, which are held on Sunday evenings, have a long tradition. But ever since many central banks lowered their interest rates to almost zero, bought up sovereign debt and rescued banks, a new, critical undertone has crept into the dinner conversations. Monetary experts from emerging economies complain that the measures taken by Europeans and Americans are pushing unwanted speculative money their way. Western central bankers say they have come under growing political pressure. And recently, when the host of the meetings — head of the Basel-based Bank for International Settlements Jaime Caruana — speaks in one of his rare public appearances, he talks about “chronic post-crisis weakness” and “risk.” Monetary institutions, says Caruana, are at “serious risk of exhausting the policy room for manoeuver over time.”
These are unusual words, especially now that the world’s central bankers, five years after the Lehman crash, are more powerful than ever. They set interest rates and control the money supply, oversee governments and banks and, like Bank of England Governor Mark Carney, are treated a bit like movie stars by the public.


USAID Top Scientist: "For the first time food production will be limited on a global scale"

Jeffrey Green
Activist Post

The U.S. Agency for International Development is a government body in charge of taking taxpayer dollars and doling it out to foreign projects that will theoretically bring humanitarian aid to struggling regions.  No matter what one might think about the nobility of such a mission, the agency has been much maligned for its decades-long mismanagement and outright theft of those funds (see here, here, and here among many sources), as well as being in a direct or indirect position to enable the use of food as a weapon.

Nevertheless - and perhaps because of such activities - USAID is well aware of the economic trends they need to address and/or manage. So, when their top science advisor speaks, it is essential to hear what he is saying. Disregarding any overarching agenda, let's see what is in store for the global food supply, according to Dr. Fred Davies, advisor for the bureau of food security and a Texas A&M AgriLife Regents Professor of Horticultural Sciences.

Most people are already aware that major droughts in California and Brazil are taking a dramatic toll on the price of food. Based on this alone, and the threat that these droughts could morph into mega droughts, food prices are expected to double in the next decade. Add in a pig virus in the U.S. and it's looking to be a rocky road ahead. In fact, even being strictly vegan - usually a surefire way to keep a grocery bill as low as possible - will still be challenging. From a recent article by Michael Snyder, we see the following:

A professor at the W. P. Carey School of Business at Arizona State University named Timothy Richards has calculated what the drought in California is going to do to produce prices at our supermarkets in the near future. His projections are quite sobering...
  • Avocados likely to go up 17 to 35 cents to as much as $1.60 each.
  • Berries likely to rise 21 to 43 cents to as much as $3.46 per clamshell container.
  • Broccoli likely to go up 20 to 40 cents to a possible $2.18 per pound.
  • Grapes likely to rise 26 to 50 cents to a possible $2.93 per pound.
  • Lettuce likely to rise 31 to 62 cents to as much as $2.44 per head.
  • Packaged salad likely to go up 17 to 34 cents to a possible $3.03 per bag.
  • Peppers likely to go up 18 to 35 cents to a possible $2.48 per pound.
  • Tomatoes likely to rise 22 to 45 cents to a possible $2.84 per pound. (Source)



This hasn't just dropped in out of the blue either. Holly Deyo discussed the comprehensive problems which were manifesting in 2010 as a global grain reserve crisis. As she stated succinctly:
If the root cause were a single issue, it might be absorbable or at least less damaging. However, multiple factors are hiking food prices and they are only expected to climb.
And they certainly have, with the Ukraine crisis making matters even worse. Beyond the price increases, however, Dr. Fred Davies is cautioning about the ability to produce enough food for a rising population at any price. He sees the consequences as manifesting in earnest within 40 years:
"For the first time in human history, food production will be limited on a global scale by the availability of land, water and energy,"
[...] 
"Food issues could become as politically destabilizing by 2050 as energy issues are today."
Davies goes on to project that a 70 percent increase in food production will be required to meet rising demand and population.

Naturally, being an advisor to a government agency, Davies urges better intercommunication among seemingly disparate groups in order to presumably find better solutions for his agency to employ.
He also made the connection between the consumption of fruits and vegetables and chronic disease prevention and pointed to research centers in the U.S. that are making links between farmers, biologists and chemists, grocers, health care practitioners and consumers. That connection, he suggested, also will be vital in the push to grow enough food to feed people in coming years.
As is very often the case, government agencies are great at pointing out problems - and much of what Davies mentions is spot-on. The following, for example, is contextually accurate:
"The U.S. agricultural productivity has averaged less than 1.2 percent per year between 1990 and 2007," he said. "More efficient technologies and crops will need to be developed -- and equally important, better ways for applying these technologies locally for farmers -- to address this challenge." Davies said when new technologies are developed, they often do not reach the small-scale farmer worldwide. 
"A greater emphasis is needed in high-value horticultural crops," he said. "Those create jobs and economic opportunities for rural communities and enable more profitable, intense farming." Horticultural crops, Davies noted, are 50 percent of the farm-gate value of all crops produced in the U.S. 
[...] 
"Agricultural productivity, food security, food safety, the environment, health, nutrition and obesity -- they are all interconnected," Davies said. One in eight people worldwide, he added, already suffers from chronic undernourishment, and 75 percent of the world's chronically poor are in the mid-income nations such as China, India, Brazil and the Philippines. 
"The perfect storm for horticulture and agriculture is also an opportunity," Davies said. "Consumer trends such as views on quality, nutrition, production origin and safety impact what foods we consume. Also, urban agriculture favors horticulture." For example, he said, the fastest growing segment of new farmers in California, are female, non-Anglos who are "intensively growing horticultural crops on small acreages," he said.
Ironically, his statements would seem to promote local community initiatives. However, USAID and other agencies responsible for food management and safety have been restrictive for so long that it can be argued that we are in the position we are in right now because of their management practices. It is without debate, for example, that in the U.S. many areas have begun eradicating any possibility of urban farming, front or backyard gardens, or any attempt at community self-sufficiency. Luckily, people are learning where the lines in the sand really are and have been heavily pushing back against rising bureaucracy. When it comes to feeding one's family, there can be no compromise; it's a human right.

Regardless of the debate over government intrusion and mismanagement, we are indeed facing food shortages and it is going to get much worse. With this in mind, and given that we are being offered a timeline of what is about to transpire right from the top of the pyramid, it would behoove us to take immediate action and break as much of our reliance on whatever managed food systems are offered as a solution. In fact, the statements of Dr. Davies could be seen as a tacit admission that their systems will simply never be sufficient, so we cannot count on receiving "aid."

For a quick, but comprehensive guide to surviving the coming age of food austerity, please review the following list of articles and share with your friends and family. Now that everyone is talking about food prices, we have a perfect opportunity to go beyond trying to convince people of what is coming and help one another attain food freedom right now. There are also some very exciting open-source, hi-tech solutions being offered, which are also part of this list.

How to Beat Coming Killer Food Shortages, part 1 (part 2, part 3)
New Research Supports Many Benefits of Local Farming
Alternative Markets, Barter Systems, and Local Co-ops are the Lifeboats That Will Save Us
Where to Find Local Food, Family Farms, Markets, & Co-ops
Bulk Food Storage: Best Investment of the Decade
You Can Grow Organic Food from Table Scraps
Food Security: Ramping Up The Amount You Harvest
5 New Solutions For Growing Healthy Produce Indoors
New High Tech GrowCubes Offer Indoor Gardening Solutions
Lessons in Farming with Limited Space on a Limited Budget
Introducing "The Spark"
10 Simple, Cheap Home Gardening Innovations to Set You on the Path to Food Independence
As always, please leave your tips in the comment section below for how to survive the worsening food crisis.

Recently by Jeffrey Green:

Privatization of Space? and Big Banks in Foreign Policy with Nomi Prins

Our lead story: This past Monday, SpaceX was scheduled to launch a cargo rocket into space to carry five thousand pounds of supplies up to the International Space Station. However, they scratched those plans following a computer glitch aboard the spacecraft. Erin brings you the details.Erin brings Robert Pringle back to talk about the problems of the banking system. He argues that we are gambling immense amounts of money on sustaining the current system. Then for our second interview, Nomi Prins continues her discussion of the influence and power big bankers have in our political system.For today’s Big Deal, Edward Harrison and Erin talk about numbers coming out of China for the first quarter of 2014. Is it good? Is it bad? Edward takes a look at the numbers.

Dollar dying; multi-polar world in offing

“The very rich and powerful families who control the US military industry complex reacted by trying to revert to their tried strategy of re-activating a new Cold War that paints Russia as evil and tries to cripple or severely weaken her. Ultimately it was a stupid decision being implemented by very stupid people, who believe they are very smart.”
From ‘ PressTVBy F. William Engdahl . An excellent coverage of the real world and the current unrest in Ukraine. The enormous repercussions of the Western world, per the US hegemony and out-of-control leaders, on the already disastrous global financial state.
Washington’s decision to go for the military coup in Ukraine was intended to rupture the emerging cooperation between key Eurasian nations that ultimately would have isolated the power of US hegemony and opened the door for a genuine multi-polar world where peaceful cooperation replaced military threats and sole Superpower domination.
The very rich and powerful families who control the US military industry complex reacted by trying to revert to their tried strategy of re-activating a new Cold War that paints Russia as evil and tries to cripple or severely weaken her. Ultimately it was a stupid decision being implemented by very stupid people, who believe they are…

Texas Congressman Accuses Obama, DOI, and BLM Of Illegal Action At Bundy Ranch

...Texas Republican Rep. Steve Stockman sent a letter to Barack Obama, Department of the Interior Sec. Sally Jewell, and BLM Director Neil Kornze, laying out his position that any such action by the agency would violate the U.S. Constitution.
“Because of this standoff,” he wrote, “I have looked into BLM’s authority to conduct such paramilitary raids against American citizens, and it appears that BLM is acting in a lawless manner in Nevada.”
He cited the limited powers granted to the federal government, noting the bureau has no “right to assume preemptory police powers, that role being reserved to the States,” and explained “many federal laws require the federal government to seek assistance from local law enforcement whenever the use of force may become necessary.”
The letter included a section of the U.S. Code — 43 U.S.C. Section 1733, Subsection C — stating exactly that point.
“When the Secretary determines that assistance is necessary in enforcing Federal laws and regulations relating to the public lands or their resources he shall offer a contract to appropriate local officials having law enforcement authority within their respective jurisdictions with the view of achieving maximum feasible reliance upon local law enforcement officials in enforcing such laws and regulations.”
Continue Reading: http://www.westernjournalism.com/congressman-pens-letter-oba...