Remember the Star Trek movie where a mad alien attacks Spock’s home planet? It was red matter that was inserted into Vulcan’s core collapsing the entire planet in a matter of minutes. What I am going to be talking about today is this happening, in not-so-slow motion, across America and across the world.
It is the end of times for American civilization and society as a black financial hole sucks hard at the center pulling essential services down. One can imagine a sink hole–now imagine simultaneous holes opening up beneath most municipalities, cities and eventually states, none of which have the power of the federal government and Federal Reserve to create money and unlimited debt.
We see the damage in terms of loss of basic services in education, police, fire services, libraries and even garbage removal. That’s the short list, but in the end the money and all the financial games of local governments will run into a hard brick wall. Local governments have to make difficult choices that have a direct impact on the lives and livelihoods of regular people. The end game is on as cities, towns, states and counties are fighting over a continually shrinking pie.
Former New York State Assemblyman Richard Brodsky has this to say about the current crisis. “It’s as though we stand on the shore and watch a tsunami gather and shrug and hope we’ll get through it…That needs to change, and if the list of endangered cities gets larger this will force itself onto the national stage. [For now] the great national battle about the size of government and the level of taxation will be played out in the streets of small cities across America, with school kids, garbage pick-up, fire-protection, and safe streets competing with each other for inadequate resources. It’s an ugly way to solve a problem.”
Let’s Get Real
Pensioners and bond-holders in Detroit face 90% cuts, or what are known as “haircuts” on what they believed to be secure commitments. What is going to happen to all the old people in America when the money dries up? They are going to lose their shirts and more because the money simply is not going to be there. Few of the promises in terms of extended healthcare or pensions are going to be kept. The promises were insane to make and impossible to keep.
Watching the decline of a major city is heartbreaking. A community that was once thriving and prosperous now owes money to more than 100,000 creditors – totaling $20 billion in debt and unfunded liabilities. Detroit, once the fourth-largest city in the US, has had to cut their police force by 40%, less than half of the residents over the age of 16 are employed, and 30% of the cities’ 140 square miles is either vacant or derelict.
Competition for a slice of the remaining pie will get fiercer as the economy continues to contract. States have been downloading responsibilities without the funding improving their own finances at the expense of municipalities, which in turn have no choice but to further squeeze residents for the cost or to fail to deliver on the responsibilities. Nicole Foss details this entire story more than doing the job of redeeming Meredith Whitney, who is famous for previewing this deteriorating situation well ahead of the pack.
Suicides rates rose sharply in Europe in 2007 to 2009 as the financial crisis drove unemployment up and squeezed incomes, with the worst hit countries like Greece and Ireland seeing the most dramatic increases. Suicide rates among middle-aged Americans have risen sharply in the past decade, prompting concern that a generation of baby boomers who have faced years of economic worry and easy access to prescription painkillers may be particularly vulnerable to self-inflicted harm. More people now die of suicide than in car accidents, according to the Centers for Disease Control and Prevention.
Some of my readers through the years have wondered out loud why I don’t keep to medicine. The end result of economic and financial repression is human suffering, which leads to more human disease. Financial rape can devastate as sexual rape does. We now have the granddaddy of a confession from a “reluctant” financial rapist crying and apologizing in the Wall Street Journal that he, a former official of the Federal Reserve, admits to participation in a fraud to the tune of 1.3 trillion dollars.
“I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.”
Mike Whitney calls this fraud saying, “So far, no one at the Fed has responded to the charges, nor has Congress or the Department of Justice (DOJ) taken steps to investigate allegations that the multi-trillion dollar program was not intended to help Main Street as announced, but to shore up flagging bank balance sheets and zombie financial institutions that would have defaulted without the Fed’s stealth welfare program. Surprisingly, Huszar’s credibility has not yet been challenged nor his claim that he played a pivotal role in overseeing the program.”
"It’s only a question of time before the central banks lose control," David Stockman warns a shocked CNBC anchor, "and a panic sets in when people realize that these values are massively overstated." The outspoken author of The Great Deformation rages "the Fed is exporting its lunatic policies worldwide,"