Paul Craig Roberts
GCN Live.com
July 29, 2010

The White House is screaming like a stuck pig. WikiLeaks’ release of the Afghan War Documents “puts the lives of our soldiers and our coalition partners at risk.”

What nonsense. Obama’s war puts the lives of American soldiers at risk, and the craven puppet state behavior of “our partners” in serving as US mercenaries is what puts their troops at risk.

Keep in mind that it was someone in the US military that leaked the documents to WikiLeaks. This means that there is a spark of rebellion within the Empire itself.

And rightly so. The leaked documents show that the US has committed numerous war crimes and that the US government and military have lied through their teeth in order to cover up the failure of their policies. These are the revelations that Washington wants to keep secret.

If Obama cared about the lives of our soldiers, he would not have sent them to a war, the purpose of which he cannot identify. Earlier in his regime, Obama admitted that he did not know what the mission was in Afghanistan. He vowed to find out what the mission was and to tell us, but he never did. After being read the riot act by the military/security complex, which recycles war profits into political campaign contributions, Obama simply declared the war to be “necessary.” No one has ever explained why the war is necessary.

The government cannot explain why the war is necessary, because it is not necessary to the American people. Any necessary reason for the war has to do with the enrichment of narrow private interests and with undeclared agendas. If the agendas were declared and the private interests being served identified, even the American sheeple might revolt.

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The Obama regime has made war the business of America. Escalation in Afghanistan has gone hand in hand with drone attacks on Pakistan and the use of proxy forces to conduct wars in Pakistan and North Africa. Currently, the US is conducting provocative naval exercises off the coasts of China and North Korea and instigating war between Columbia and Venezuela in South America. Former CIA director Michael Hayden declared on July 25 that an attack on Iran seems unavoidable.

With the print and TV media captive, why doesn’t Washington simply tell us that the country is at war without going to the trouble of war? That way the munitions industry can lay off its workers and put the military appropriations directly into profits. We could avoid the war crimes and wasted lives of our soldiers.

The US economy and the well-being of Americans are being sacrificed to the regime’s wars. The states are broke and laying off teachers. Even “rich” California, formerly touted as “the seventh largest economy in the world,” is reduced to issuing scrip and cutting its state workers’ pay to the minimum wage.

Supplemental war appropriations have become routine affairs, but the budget deficit is invoked to block any aid to Americans — but not to Israel. On July 25 the Israeli newspaper, Haaretz, reported that the US and Israel had signed a multi-billion dollar deal for Boeing to provide Israel with a missile system.

Americans can get no help out of Washington, but the US ambassador to the UN, Susan Rice, declared that Washington’s commitment to Israel’s security is “not negotiable.” Washington’s commitment to California and to the security of the rest of us is negotiable. War spending has run up the budget deficit, and the deficit precludes any help for Americans.

With the US bankrupting itself in wars, America’s largest creditor, China, has taken issue with America’s credit rating. The head of China’s largest credit rating agency declared: “The US is insolvent and faces bankruptcy as a pure debtor nation.”

On July 12, Niall Ferguson, an historian of empire, warned that the American empire could collapse suddenly from weakness brought on by its massive debts and that such a collapse could be closer than we think.

Deaf, dumb, and blind, Washington policymakers prattle on about “thirty more years of war.”

Paul Craig Roberts was Assistant Secretary U.S. Treasury, Associate Editor Wall Street Journal, Columnist for Business Week, Senior Research Fellow Hoover Institution Stanford University, and William E. Simon Chair of Political Economy in the Center for Strategic and International Studies, Washington, D.C. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press. He can be reached at PaulCraigRoberts@yahoo.com.

Joe Weisenthal
Business Insider
July 29, 2010

Yesterday we noted how, absurdly, The White House blog was trumpeting a new cheap housing program as part of its recovery efforts.

Actually, not just its recovery efforts, but its Recovery Summer efforts. That’s right, the recovery, over the past month, has been branded. So, for example, Joe Biden recently visited Yellowstone National Park as part of this Recovery Summer.

Presumably the idea is: get everyone repeating this phrase, recovery summer, over and over again, and maybe it will actually happen.

Of course, the risk is that unemployed voters will wonder if there’s a recovery summer for everyone else, and get even more angry that they’re not taking part, punishing the Democrats in November.

As silly as it sounds though, pretty much everything gets branded like this. Heck, we’ve been branding wars (like Desert Storm) for a couple of decades now. Why not brand the comeback from the greatest recession since the Depression?

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Jim Willie
Kitco
July 28, 2010

A significant feature of fiat money systems is the privilege for the custodian of the reserve currency to engage in regular practices of ham-fisted monetary management, even permission for fraudulent centers to flourish, surely developing a debt monster that an economy grows dependent upon. Fannie Mae might be the most offensive blight on such privilege. Unfortunately, many shenanigans have matured into grand fraud. They are smoking guns of USTreasury fraud and counterfeit, with strong whiffs of monetization. Much more monetization is to come, fully endorsed and sanctioned. Other clever techniques are being used, given the Quantitative Easing has officially been halted. A close look reveals that Excess Cash Reserves at the USFed are being drawn down, which are thus funding the USGovt deficits in the last couple months. Ironically, such reserves held by big banks at the US Federal Reserve were the only thing preventing vast insolvency. Now that cash is being used, and the USFed insolvency is slowly exposed. Details can be found in the July Hat Trick Letter reports. Evidence is compelling, and grand motive for foreign creditors to reject the USDollar, whose active control strings are traced to Wall Street. When recognized monetization destroys the last vestige of trust and confidence in the USDollar, when more official rounds of sponsored Quantitative Easing arrive, the USDollar will be on a downward spiral. In fact, all major currencies face the same prospect of vast monetary expansion. They will all fall sharply in value, and by counter-effect, the Gold price will rise powerfully.

CHINESE WARNING SHOTS ACROSS THE BOW

This story is a gem. The Chinese Dagong credit agency made an inaugural splash with a debt downgrade of the USTreasury Bonds. They called the US-based trio of debt rating agencies politically biased, an under-statement. The Dagong agency used its first splash into sovereign debt to establish a bold standard of creditworthiness around the world, giving much greater weight to wealth creating capacity and foreign reserves than Fitch, Standard & Poors, or Moodys. Dagong pays more attention to rapidly escalating debt levels. The Chinese Govt has coordinated their strategy, selling off short-term USTreasury Bills, but hangs onto a large raft of long-term USTreasury Bonds. On a net basis, the Chinese purchases have hit a plateau.

Meanwhile, with distracting commentary, China has doubled its gold holdings. At least the Chinese Govt has promised not to use their foreign reserves as a weapon. What a relief!! And Wall Street promises no more bond misrepresentation, no insider trading, no more fraud, no more drug money laundering (see Wachovia & Wells Fargo). What a relief!! The USGovt strives for clarity about management of China’s $2.5 trillion in FOREX reserves, the world’s largest. It contains $868 billion in USTreasurys at last count. The growing fear is that, in anger over trade friction, or in disgust over reckless USDollar management, or from a response to discovered hidden USTBond monetization, or with ambition to displace the US from its dominant post, China could dump USTreasury Bonds with a vengeance. The credit market analysts justifiably call it the Nuclear Option. The Beijing officials have given veiled warning to reduce the USGovt deficits and to put aside thoughts of another Quantitative Easing. The next QE2.0 comes as sure as night follows day. It comes with a heavy cost. The message is written on the wall, that the United States has forfeited its sovereignty with rampant debt production rather than industrial production.

US TREASURY ISSUANCE EXCEEDS US GOVT DEFICITS

This story is a gem. USTreasury bond issuance exceeds even the gargantuan USGovt deficits. The gap is $1.5 trillion over four years. One could guess that Wall Street is selling bonds and squirreling the money in foreign banks, a basic counterfeit in a syndicate operation. The operation might bring new meaning to monetization. At least a parallel exists. The majority of home mortgages have their income stream used in more than one mortgage bond. That is the real reason why home loan modification is a thin farce. The MERS database conceals the game, but the public has the satisfaction of knowing that MERS has no legal standing. The state courts are declaring no legal standing, and foreclosure procedures are blocked as a result. People cannot be removed from their homes when the database is used in handoffs of notes and titles.

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Adrian Ash
BullionVault
July 27, 2010

THE PRICE OF GOLD slipped back below $1185 an ounce in London trade on Tuesday morning, holding above yesterday’s 1-week closing low but remaining “directionless” according to one Chinese dealer.

“Investors are unclear about the immediate trend,” agrees Pradeep Unni at Richcomm Global Services in Dubai, telling Reuters that “physical gold buying is only expected to emerge by the end of this month.”

But “Current levels [of physical gold buying] compare well with previous highs reached earlier this year and late-2009,” says Walter de Wet at Standard Bank.

“We expect support from the physical market to increase towards Q4:10. Buying of gold for jewelry demand, especially in India, may increase in August/September.”

On the broader financial markets today, European equities rose to new 10-week highs as Deutsche Bank and UBS both reported stronger-than-expected revenues, and Britain’s BP oil giant slated $30 billion of assets for sale to help fund the Gulf of Mexico clean-up.

All major commodities rose in price, with US crude oil contracts gaining above $79 per barrel and silver prices rising to $18.30 an ounce.

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The Pragmatic Capitalist
July 27, 2010

At least Ben Bernanke isn’t the only person in government who doesn’t really understand our monetary system. Over the weekend Tim Geithner paraded himself all over the weekend talk shows while he proved that he barely deserved to pass econ 101. That’s right, the Secretary of the US Treasury doesn’t get it.

The interviews mostly began with Mr. Geithner distancing himself from the entire cause of this crisis. Although he was effectively the fox in the hen house (he was President of the NY Fed while we experienced the grossest bank expansion/leveraging experiment in the history of the world) Mr. Geithner continues to make it sound as if he was saddled with this problem and played no role in its cause:

“I, I think I disagree slightly in the sense that, you know, remember, this was a recession caused by a set of policies that left us with a $1.3 trillion deficit when the president came into office, an economy that was falling off the cliff. Millions of Americans had already lost their jobs. The recession was a year old at that point.”

Mr. Geithner goes on to explain that there is no chance of a double dip (famous last words?). He displays absolutely zero sense of risk management and prescience. This shouldn’t be surprising to anyone. It is the tendency of government officials to adhere to the scientific method – “let’s wait for the dust to settle before we make our next moves”. Unfortunately, that’s not how markets work and it’s certainly not how economies work. Mr. Geithner is blindingly optimistic:

“MR. GREGORY: So just to be precise, you do not believe in a double-dip recession, that it will get worse before it gets better?

SEC’Y GEITHNER: No, I don’t. I think the most likely thing is, you see an economy that gradually strengthens over the next year or two, you see job growth start to come back again.”

Mr. Geithner then goes on to explain how he totally misunderstands how a fiat currency system in a floating exchange system works. It’s 100% crystal clear that Geithner is living in his textbook gold standard world where the USA borrows money to finance spending - nothing could be farther from the truth. The Treasurer of the USA says we “borrow” to “finance” our spending:

“I think this is a responsible way to do it. You know, my job, David, is to help make sure we can borrow to finance the obligations that Congress gives us.”

Mr. Geithner then continues his rambling diatribe by offering up an explanation for why we can afford to continue borrowing and why interest rates are so low:

“David, we can afford to do it this way. I’m completely confident we can. And if you look, again, at what we’re paying to borrow now, we’ve got very low interest rates as a country, in part because people around the world and Americans have a lot of confidence in our capacity as a country to make sure we manage through these challenges.”

Of course we can afford it. We are the largest and most productive economy in the world. There is enormous demand for our currency. We have an output have you could drive a Mack Truck though. We have Harvard graduates applying for jobs at Starbucks. The amount of idle capacity is an outrage. As a nation, we can always always afford to spend in the currency we create so long as there is a productive economy that backs that currency and the USA does not lose its ability to tax that productivity.

Mr. Geithner believes interest rates are low because the risk of insolvency is low. Of course the risk of insolvency is low in the USA – because there is no insolvency risk in the USA. Despite the ranting and raving of many market pundits in recent years a bet on US insolvency has been an absolute disaster. Interest rates are low today because the market is worried that the USA is at risk of years of very low growth and below trend inflation rates. Insolvency is not an issue, yet Mr. Geithner believes we need to cut the deficit so we can reassure the rest of the world:

“But we have to make some choices, too, and we have to make sure we can continue to earn confidence around the world that we’re going to have the will as a country to bring these large inherited deficits down over time to a much more manageable level. We think that’s the responsible thing to do because we need to make sure we can show the world that (we’re) willing as a country now to start to make some progress bringing down our long-term deficits.”

And we wonder why the economy in this country is such a mess after all this time? Mr. Geithner has no clue how the system actually works. If he did, he would have taken responsibility for his part in the crisis and never taken a job that is clearly well beyond his capabilities. He would have never helped Ben Bernanke devise his great bank rescue plan which has been an utter waste of government resources and failed on all levels (except making bankers more wealthy).

Mr. Geithner might have sounded at least partially credible if he’d spent more time talking about cutting wasteful spending as opposed to letting tax cuts expire (which is an effective tax hike – the last thing the debt saddled private sector needs right now). But it’s clear Mr. Geithner doesn’t understand how a sovereign issuer of currency in a floating exchange system actually functions. He’s more worried about non-existent bond vigilantes and China as our banker (which they aren’t). Let’s just hope Geithner’s model isn’t as horribly flawed as Mr. Greenspan’s was. Unfortunately, the evidence leads me to believe it might even be worse….