"Power corrupts, and absolute power corrupts absolutely."

-Lord Acton (1834-1902)

"The issue which has swept down the centuries and which will have to be fought sooner or later, is the people versus the banks."

-Lord Acton (1834-1902)

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."
-Lord Acton (1834-1902)

"Textbook Economics" Quote Of The Day

Submitted by Tyler Durden on 06/18/2012 - 21:35 NoneFor our quote of the day, we go to none other than the Fed's favorite mouthpiece, the WSJ's Jon Hilsenrath:

Fed officials have been frustrated in the past year that low interest rate policies haven't reached enough Americans to spur stronger growth, the way economics textbooks say low rates should... Multiply the fruit of cheap credit across millions of households—with healthy portions of interest savings spent on goods and services—and the U.S. should be recovering more quickly, according to textbook economics.

No... not the textbooks... Does this mean... Economics 101 is... nothing but one epic lie, based on Ponzi assumptions which work in a world of constant and gradual leveraging, and completely fall apart in a deleveraging world such as the one we have now?
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It ain't rocket science folks...

NO JOB SECURITY = NO ECONOMIC GROWTH

"The private sector created nearly 4.3 million new jobs in the last 27 months," the president said at a fundraiser in Baltimore recently.

Ignoring the fact that the man who pretends to be President has been in office 40 months, and millions of jobs were lost during his first year in office [a year he would like for you to forget], the Great Pretender fails to qualify these "created jobs" as either "full-time" growth engine jobs, or just a large collection of "part-time" making ends meet jobs.

America's Transition To A Part-Time Worker Society Accelerates As Part-Time Jobs Hit Record

Submitted by Tyler Durden on 06/02/2012 15:10 -0400

Back in December 2010 Zero Hedge was the first to point out what is easily the most troubling characteristic within America's evaporating labor force: its gradual transition to a part-time worker society. We elaborated on this back in February when we noted that the quality assessment of US jobs indicates that this most disturbing trend is accelerating. Finally, yesterday, the BLS' latest jobs report confirmed that our concerns have been valid all along: as of May, part-time jobs just as disclosed by the Bureau of Labor Statistics hit an all time high, over 28 million! These are people who traditionally have zero job benefits, including healthcare and retirement, and which according to the BLS "work less than 35 hours per week." In other words, as little as one hour per week of "work" is enough to classify one a part-time worker. More disturbing: the increase in part-time jobs in May compared to April: 618,000, or the fifth highest on record. It gets better: when added with the 508,000 increase in part-time jobs in April, this is the largest two month increase in part time-jobs in history. Which means of course that full time jobs in May must have declined: sure enough, at a -266,000 drop in full time jobs, the quality composition of the NFP report was just abysmal and makes any reported "increase" in those employed into a sad farce.

Part-time jobs:

Full-time jobs:

And the punchline: Part-time vs Full-time jobs:

Source: BLS

The chart above hardly needs further clarification: since the December 2007 start of the depression, full time jobs have declined by 6.9 million while part-time jobs have increased by 3.1 million.
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To be sure, part-time work — defined by the Labor Department as fewer than 35 hours a week — provides sorely needed income and experience that often can be leveraged into full-time jobs. And it’s far preferable to unemployment.

But it also creates financial uncertainty and instability for workers, economists say. Part-time work also can keep employees in a cycle that prevents them from advancing to more lucrative positions. Most part-time workers don’t get benefits, such as health insurance, sick days or paid vacation.

This small nugget of statistical data, that the current occupier of The White House "hopes" citizens will ignore...or never see for that matter...proves two things:

One, this White House Squatter's claims of "jobs creation" during his "presidency" are bloated and misleading. If they were accurate, the Fed's assumption that economic growth follows a lowering of interest rates would prove true.

Two, ALL growth in America over the past 40+ years has been debt driven. In other words, the great economic engine of the World for the past generation has been fueled by NOTHING BUT COMPOUNDING DEBT obfuscated by the smoke and mirrors of fabricated US Government economic data.

I have often written to inform readers that ALL MONEY IS DEBT. If people, businesses, or nations stop borrowing money, or are unable to continue borrowing money, today's economic system will collapse. We are witnessing the threat of this today.

Look no further than Europe, where not only has the cost of borrowing money become prohibitive for nations, but the source of funds to borrow has either dried up or does not even exist:

No One's Asking the REAL Question That Matters for the EU...

Submitted by Phoenix Capital Research on 06/17/2012 17:18 -0400

The following is an excerpt from my most recent issue of Private Wealth Advisory.

While everyone else is focusing on the Greek elections, the REAL issues pertaining to the EU (namely where the funding for Spain’s bailout as well as future bailouts will come from) continues to be ignored.

Indeed, no one seems to be asking THE key question regarding the EU: Just WHERE is the money for this bailout going to come from?

There are essentially four key options for this: the IMF, the EFSF, the ECB, and the ESM (the Fed won’t do it).

Unfortunately, NONE of them are viable options.

The IMF?

As noted earlier, the answer here is a resounding “NO!” as Obama won’t propose a European bailout during an election year (hence his desperate pleas to Angela Merkel to hold the EU together for the next six months).

The EFSF?

Germany won’t allow the EFSF to fund the Spanish bailout as it would increase Germany’s exposure to the Spanish fall-out. The public outrage regarding the EU is growing in Germany by the day (55% of Germans believe they would have been better off keeping the Deutschmark while another 78% believe the worst of the Euro is ahead)

The ECB?

The ECB has completely avoided any notion that it would fund the bailout. Indeed, at the ECB’s most recent press conference, ECB head Mario Draghi stated,

Draghi Says ECB is Ready to Act as Growth Outlook Worsens

“We monitor all developments closely and we stand ready to act,” Draghi told reporters in Frankfurt after the ECB left its benchmark rate at 1 percent. Downside risks to the economic outlook have increased and “a few” of the ECB’s Governing Council members called for rate cut at today’s meeting, he said…

“I don’t think it would be right for the ECB to fill other institutions’ lack of action,” he said.

http://www.businessweek.com/news/2012-06-06/draghi-says-ecb-is-ready-to-act-as-growth-outlook-worsens

An additional item I want to note regarding the ECB… it hasn’t actually bought any EU bonds in 13 weeks, signaling that while it may act in terms of providing liquidity to banks… it has ceased actually monetizing EU sovereign bonds (another indication that Germany is the REAL EU backstop as Germany was completely against monetization).

ECB keeps bond programme on ice, pressure on govts

The European Central Bankbought no government bonds for the 13th week running last week, ECB data showed on Monday as the bank judges the controversial programme of diminishing benefit in the face of the deepening euro zone debt crisis…

Two of the bank's German policymakers quit last year over

the purchases, which critics say treads dangerously close to the

ultimate ECB taboo of financing governments. The ECB also fears that its interventions give countries less of an incentive to implement the necessary and sometimes painful reforms.

http://in.reuters.com/article/2012/06/11/ecb-bonds-idINL5E8HBA6420120611

This ultimately leaves the ESM, the permanent European Stability Mechanism… which technically doesn’t evenexist yet (it’s supposed to be ratified by July 2012).

Indeed, in order for the ESM to be ratified it needs the individual EU member states that will contribute 90% of its capitalization to first ratify it on an individual basis.

Here’s the list of countries that represent that 90% of capital as well as the status of their individual ratifications and the percentage of funding they are to provide.

Country	Ratified?	Percentage of Capital
Germany	NO	27%
France	YES	20%
Italy	NO	18%
Spain	NO	12%
Netherlands	YES	6%
Belgium	NO	3%
Greece	YES	3%
Austria	NO	3%
Portugal	NO	2%
Finland	NO	2%
Ireland	NO	1%
Slovakia	NO	0.8%
Slovenia	YES	0.5%
Luxembourg	NO	0.2%
Cyprus	NO	0.1%
Estonia	NO	0.1%
Malta	NO	0.07%

To summate the above chart succinctly… only four of the required 17 countries have even ratified the ESM (it’s supposed to be completely ratified in July 2012).

Moreover, you’ll note that the PIIGS as a whole are meant to contribute 36% of the ESM’s FUNDING!!!! Spain and Italy alone are meant to contribute 30%!!!!

So… Spain is supposedly going to be bailed out by an entity that doesn’t even exist yet… for which Spain is mean to contribute 12% of the funding. And to top it off… Spain hasn’t even ratified the fund itself!!!

More importantly, neither has Germany. And it’s not clear that it will either.

Folks, the real deal is that Europe is out of money. End of story. The only entity that could prop up Spain is the ESM… which doesn’t even exist yet.

So if you’re banking on the fact that the Greek elections mean the EU will survive or that Spain’s “bailout” has solved its banking issues, you’re going to be in for a very rude surprise before the summer’s end.

On that note, if you’re not preparing for the collapse of the EU, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investments (both direct and backdoor) will profit from it.

This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com

Good Investing!

Graham Summers

PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com

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Now all of this then begs the question, how does issuing MORE debt solve the problem of BAD debt?

It doesn't...but it is how a system where ALL MONEY IS DEBT functions. In a system where ALL MONEY IS DEBT you must issue more debt to create more money [to pay off old/bad debt]. THERE IS NO OTHER WAY, because ALL MONEY IS DEBT!

Still confused? That is understandable! The following video should make it clear to everyone that ALL MONEY IS DEBT here in the US, AND all around the World.

Money as Debt [how our money system works]