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With authentic growth scarce, there’s no other way to reap huge profits but cannibalism.

When people say “capitalism has failed” or “capitalism has succeeded,” we have to ask: what type of capitalism do you mean? Authentic capitalism, in which capital is placed at risk to earn a return in a competitive, transparent marketplace, or do you mean cartel-state capitalism, or crony-capitalism, or monopoly capitalism or finance capitalism, i.e. the types that dominate the global economy?

As long as most startups crash and burn, and anyone with a few bucks and plenty of inner drive can start an enterprise, authentic capitalism still lives. But let’s face it, authentic capitalism occupies a diminishing corner of the U.S. and global economies.

With a work force of 150 million and around 120 million fulltime workers, the U.S. economy has about 6 million small businesses with employees and a few million self-employed (sole proprietors) who earn a middle-class livelihood: Endangered Species: The Self-Employed Middle Class.

The political and financial influence of small business and the self-employed barely registers on K Street, Wall Street and in Washington D.C. Politicos praise small business in the same way they speak of small family farms as the backbone of American agriculture–as a form of pandering for PR purposes while they pocket the big campaign contributions from Monsanto and Big Ag.

Meanwhile, in the real world, small business is in decline while corporate money floods the financial sector and Washington D.C.

The Washington Post published a study that found U.S. businesses are being destroyed faster than they’re being created. While not exactly a surprise, this is sobering evidence that small enterprise is in structural decline:

The 22.4 million with some self-employment income looks like a big number, but most earn a pittance: only a relative few earn what qualifies as a middle-class income, and 3 million of these are professional-sector corporations or partnerships:

…click on the above link to read the rest of the article…

How Fascist Capitalism Functions: The Case of Greece

July 12, 2015

How Fascist Capitalism Functions: The Case of Greece

There is democratic capitalism, and there is fascist capitalism. What we have today is fascist capitalism; and the following will explain how it works, using as an example the case of Greece.

Mark Whitehouse at Bloomberg headlined on 27 June 2015, “If Greece Defaults, Europe’s Taxpayers Lose,” and presented his ‘news’ report, which simply assumed that, perhaps someday, Greece will be able to get out of debt without defaulting on it. Other than his unfounded assumption there (which assumption is even in his headline), his report was accurate. Here is what he reported that’s accurate:

He presented two graphs, the first of which shows Greece’s governmental debt to private investors (bondholders) as of, first, December 2009; and, then, five years later, December 2014. This graph shows that, in almost all countries, private investors either eliminated or steeply reduced their holdings of Greek government bonds during that 5-year period. (Overall, it was reduced by 83%; but, in countries such as France, Portugal, Ireland, Austria, and Belgium, it was reduced closer to 100% — all of it.) In other words: by the time of December 2009, word was out, amongst the aristocracy, that only suckers would want to buy it from them, so they needed suckers and took advantage of the system that the aristocracy had set up for governments to buy aristocrats’ bad bets — for governments to be suckers when private individuals won’t. Not all of it was sold directly to governments; much of it went instead indirectly, to agencies that the aristocracy has set up as basically transfer-agencies for passing junk to governments; in other words, as middlemen, to transfer unpayable debt-obligations to various governments’ taxpayers.

…click on the above link to read the rest of the article…

Capitalism Has Devolved Into Looting

June 30, 2015

Capitalism Has Devolved Into Looting

In the Western World Capitalism Has Devolved Into Looting

…when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. – Ayn Rand, “Atlas Shrugged”

There’s no such thing as markets anymore – only interventions. – Chris Powell, co-founder and Treasurer of GATA

Ayn Rand is a pariah among those who believe that government is our benefactor. There are times and conditions when government can be a benefactor of the people. But not in the Western world at the present time. As Michael Hudson and I agree, Western central banks refuse to create money to finance economy recovery. Money is created only for the benefit of the oligarchs’ banks in order that the oligarchs can continue to control the governments.

In the US for the past seven years the Federal Reserve has provided cheap bank reserves for the banks to lend at a markup or to speculate with. Banks are no longer suppliers of capital for productive investments and employment. Instead banks invest in speculation, arbitrage, derivatives, financing corporate takeovers and stock buybacks. The Fed has made it unnecessary for banks to pay for deposits. Instead, the banks get free money and charge consumers with negative interest rates for making deposits. For seven years Americans have, thanks to the utterly corrupt Federal Reserve and US government, been deprived of interest on their savings. In the Western world today, savers are penalized, not rewarded.

In Greece and Europe the banks are the oligarchs’ method of control just as the Federal Reserve is in the US and the Bank of England in the UK and the European Central Bank in the EU. The same in Canada, Australia, and Japan.

…click on the above link to read the rest of the article…

Collapsing CDS Market Will Lead To Global Bond Market Margin Call

June 28, 2015

Collapsing CDS Market Will Lead To Global Bond Market Margin Call

As Zero Hedge previously noted, liquidity is there when you don’t need it, and it promptly disappears once it is in demand. Consider it “cocktease capitalism.” If liquidity lasts longer than 4 hours, call the CFTC because you may be experiencing a spoof. Right now, the ultimate spoof is setting up as the credit default swap market collapses, and a global bond market margin call is just around the corner.

The most serious risk at the moment is the lack of bond market liquidity. This problem was created by the Federal Reserve. By flooding the market with liquidity, the Federal Reserve paradoxically destroyed the liquidity it sought to create. Initially, the Federal Reserve’s actions helped stem the panic selling when it stepped in as the buyer of last resort. However, the Fed is quickly becoming the buyer of first resort. The CME even has a Central Bank Incentive Program to encourage foreign central banks to buy S&P 500 futures. It’s not a stretch of the imagination to presume the Federal Reserve is buying S&P 500 futures alongside the foreign banks.

As the Fed’s balance sheet expanded ever larger, they transformed from being a mere market participant to becoming the market itself. The Federal Reserve, along with the rest of the world’s central banks, are essentially engaging in a multi-year effort to corner the global bond market. As we have seen in every case, no one has ever successfully cornered a market indefinitely. From the Hunt Brothers in the 1980 silver market to the Saudi royal family in the modern fractured oil market to the Duke brothers in the frozen concentrated orange juice market, it simply has not worked. Running a monopoly is an uphill battle that eventually results in a spectacular blowup. Why would the central banks be any different?

As Zero Hedge pointed out recently, the run on the central banks has already begun. For the first time ever, QE failed. The first casualty was the Riksbank in Sweden.

…click on the above link to read the rest of the article…

The Futility of Our Global Monetary Experiment

June 15, 2015

The Futility of Our Global Monetary Experiment

Jeff Deist: The Fed recently announced just this past week that it would not use specific dates for targeting higher Fed funds rate this year and you almost get the sense that poor Janet Yellen is at the end of this Greenspan-Bernanke experiment and there’s not much left for her to do. I mean, what’s our sense of Yellen and her position?

David Stockman: Yeah, I agree with that. I think in some ways they’re petrified as to where they ended up or they should be. After all, we’re in an experiment of monumental proportions.

Let’s just assess where we are. If they don’t raise the interest rate in June — and I think all the signals now are pretty clear they’re going to find another reason to delay — that will mean seventy-eight straight months of zero rates in the money market. As I always say, the money-market price, that is the Federal Funds Rate or Overnight Money or a short term treasury bill, is the most important price in all of capitalism because that determines the cost of carry, the cost of speculation and gambling.

When you conduct a monetary policy that says to the speculators, to the gamblers, “come and get it,” you are guaranteed free money to carry your positions, whether you’re buying German Bonds or you’re buying the S&P 500 Stock Index or the whole array of yielding or price gaining assets that are available in the financial market. This monetary policy also sends the message that you can leverage and carry those positions for free and roll it day after day without worry because the central bank has pegged your cost and production, and in a sense has pledged on its solemn honor that it will not change without many months of warning. And that’s what this whole thing is about — changing the language and so forth. I think you have created a massive distortion in the very heart of capitalism in the financial system.

…click on the above link to read the rest of the article…

March Toward Global War

June 9, 2015

March Toward Global War

Obama = McCarthy + Dulles Brothers

The New York Times (NYT) is a trusted source of Administration thinking, particularly in foreign policy, more, an uncanny, sensitive barometer of deep-lying structural-military-diplomatic events which are presently culminating, beyond the New Cold War brewing since Clinton’s international posture in Europe and the Pacific, in the actuality of heated confrontation directed against both Russia and China. Under Obama, the page has turned. No longer can we pretend a chess match in which tough rhetoric and vast expenditures form a comfortable (and highly profitable) surrogate for open warfare, a stage of inner discipline favorable to the suppression of dissent, the creation of industrial-financial-commercial fortunes, and the habituation to violence (transmissible in spirit and acquiescence from urban settings to foreign interventions). Now is different. Capitalism in America has reached the point of definitive sclerosis, a terminal, pathological hardening of the ideological arteries, in which the overgrowth of the fibrous/ interstitial tissue of profit-madness, hubris, and conquest for its own sake, has won out, has defeated whatever has been left of the Constitutional rights of the American formative context. We are a long way from the late 18th century, and with brief exceptions, notably, those brought on by the struggles of the exploited and the persecuted themselves, the progression has been downhill all the way, coinciding with the falsification of government’s public trust and the concentration of private wealth and power.

So what is happening now is not surprising. Upper groups, in their narcissistic death wish, want it all, the entire globe at their feet—and sensing ultimate defeat are prepared to bring the curtain down.

…click on the above link to read the rest of the article…

Memo to the Fed and its Media Tool Hilsenrath: We’re Not Here to Enrich Your Corporate Cronies

June 5, 2015

Memo to the Fed and its Media Tool Hilsenrath: We’re Not Here to Enrich Your Corporate Cronies

Memo to the Fed: you are the enemy of the middle class, capitalism and the nation.

The Federal Reserve is appalled that we’re not spending enough to further inflate the value of its corporate and banking cronies. In the Fed’s eyes, your reason for being is to channel whatever income you have to the Fed’s private-sector cronies–banks and corporations.

If you’re being “stingy” and actually conserving some of your income for savings and investment, you are Public Enemy #1 to the Fed. Your financial security is nothing compared to the need of banks and corporations to earn even more obscene profits. According to the Fed, all our problems stem from not funneling enough money to the Fed’s private-sector cronies.

Fed media tool Jon Hilsenrath recently gave voice to the Fed’s obsessive concern for its cronies’ profits, and received a rebuke from the middle class he chastised as “stingy.” Hilsenrath Confused Midde-Class “Responded Strongly” To “Offensive” Question Why It Isn’t Spending.

Memo to the Fed and its media tool Hilsenrath: we’re not here to further enrich your already obscenely rich banker and corporate cronies by buying overpriced goods and services we don’t need. Our job is not to spend every cent we earn on interest to banks and mostly-garbage corporate goods and services. Our job is to limit the amount we squander on interest and needless spending. Our job is to build the financial security of our families by saving capital and prudently investing it in assets we control (as opposed to letting Wall Street control our assets parked in equity and bond funds).

…click on the above link to read the rest of the article…

Inspiration For the Burned-Out Localizer

June 2, 2015

Richard Heinberg wants you to “learn to be successfully and happily poorer.” Photo: video screenshot.

Inspiration For the Burned-Out Localizer

While Marx predicted that socialism would follow capitalism, Richard Heinberg predicts the next thing will be localism.

“All roads appear to lead eventually to localism; the questions are: how and when shall we arrive there, and in what condition? (And, how local?),” Heinberg writes in his latest book, Afterburn: Society Beyond Fossil Fuels.

But that’s not what’s new in this collection of Heinberg’s essays. Anyone following the Transition movement has been hearing for nearly a decade that more active local economies are the inevitable future once the triple threat of climate change, peak oil and economic crisis topples global industrial capitalism as we know it. The message came through loud and clear in 2008 with The Transition Handbook by Rob Hopkins and the world’s local future has been a core tenet of Transition ever since.

What’s new about Afterburn is that it offers two things that Transitioners or anyone else who forecasts a more local future needs today: inspiration and advice for the future that’s better than most of what you’ll read elsewhere.

Inspiration

These days, with gas prices hovering around $2.50 a gallon and all the talk about cheap gas from fracking, if you still care about peak oil, then you’re going to be pretty lonely. It’s easy to feel like you’re the crazy person for seeing an end to fossil fuels and thinking it’s a big deal when everybody else acts like the party of cheap energy and economic growth is going to last forever.

– See more at: http://transitionvoice.com/2015/06/inspiration-for-the-burned-out-localizer/#sthash.LLWef4Ru.dpu

This Time is Different

May 28, 2015

This Time is Different

For years, I have warned that we will face our worst nightmare – the collapse of socialism. In the death throes of this abomination that even the Ten Commandments listed as a serious sin, equal to “thou shalt not kill”, government will become the ugly beast that will devour society to retain power. Of course, they will never see themselves that way, but they will justify in their minds that stripping us of our freedom, rights, privileges, and immunities, is necessary to maintain socialism for the good of the people.

We are running out of other peoples’ money, as Margaret Thatcher warned. Karl Marx, who sought to change society by sheer force, set all this in motion. What has taken place is really scary, for indeed they have altered society far more than anyone dares to ponder.

Why is this Sovereign Debt Crisis collapse different from 1931? When the governments of the world defaulted on their debts in 1931, there were no pension funds. Government has exempted itself from all prudent reason for you take the state operated pension funds, like Social Security in the USA, where 100% of the money is in government bonds. They may have no intention of defaulting, but very few government have ever paid off their debts in the end.

Then there are states who regulate pension funds requiring more than 80% to be in government bonds. A Sovereign Debt Default this time around will wipe out socialism, yet the bulk of the people are clueless not merely about the risk, but the ramifications. Younger generations do not save to support their parents for that was government’s job post-Great Depression. Socialism has altered thousands of years of family structure following the ranting of Karl Marx. This has been one giant lab experiment that ended badly in China and Russia and is coming to a local government near you.

…click on the above link to read the rest of the article…

The Regulatory State – Central Planning and Bureaucracy on a Rampage

May 14, 2015

The Regulatory State – Central Planning and Bureaucracy on a Rampage

The New 10,000 Commandments Report – It’s Worse than Ever

Before we begin, we should mention that the US economy has long been one of the least regulated among the major regulatory States of the so-called “free” world, and to a large extent this actually still remains true. This introductory remark should give readers an idea of how terrible the situation is in many of the socialist Utopias elsewhere.

climbing_in_bureaucracy__alfredo_martirena

Even in the US though, today’s economic system is light years away from free market capitalism or anything even remotely resembling a “laissez faire” system. We are almost literally drowning in regulations. The extent of this regulatory Moloch and that the very real costs it imposes is seriously retarding economic progress. It is precisely as Bill Bonner recently said: the government’s main job is to look toward the future in order to prevent it from happening.

A great many of today’s regulations have only one goal: to protect established interest groups. Regulations that are ostensibly detrimental to certain unpopular corporatist interests are no different. Among these is e.g. the truly monstrous and nigh impenetrable thicket of financial rules invented after the 2008 crash in a valiant effort to close the barn door long after the horse had escaped. They are unlikely to bother the established large banking interests in the least. The banking cartel is probably elated that it has become virtually impossible for start-ups to ever seriously compete with it. The same is true of many other business regulations; their main effect is to protect the biggest established companies from competition.

…click on the above link to read the rest of the article…

The problem isn’t overproduction; it’s malinvestment

May 7, 2015

The problem isn’t overproduction; it’s malinvestment

Mr. Max Ehrendfreund, writing in the Washington Post’s Wonkblog, believes that he has discovered something new: that the world is producing too much and doesn’t know what to do with it. His solution, of course, is to confiscate the overproduced products, such as oil and cotton, from its rightful owners and give it to the people who need it. This phony problem and its statist solution goes back at least as far at the 1930’s socialist calls for “production for use” vs. the hated capitalist concept of “production for profit“.

Mr. Ehrenfreund commiserates that a “surplus…challenges some basic principles of conventional economics…”. Ah, now we see why Mr. Ehrenfreund has a problem; he understands only “conventional economics”. Austrians have no such problem understanding why many commodities are currently in surplus. Our understanding of Austrian business cycle theory tells us that years of interest rate suppression by monetary authorities worldwide has disrupted the time structure of production; i.e., that artificially low interest rates have led entrepreneurs and their business partners to believe that sufficient resources exist for the profitable completion of longer term projects, such as increasing investment in oil and cotton production. Austrians do not contend that there cannot be a surplus of some goods. Of course, there can! But we know that a surplus of some goods means that there is a scarcity of others. Resources were “malinvested” in some projects instead of those more urgently desired by the public.

…click on the above link to read the rest of the article…

Our Financial Future: Infinite Greed Meets a Funny Thing Called Karma

April 26, 2015

Our Financial Future: Infinite Greed Meets a Funny Thing Called Karma

All those angered by the mere question of the viability of this predatory pillaging in the name of capitalism are incapable of even admitting this cultural crisis exists.

Somewhere along the line, we lost the ability to distinguish between earning a profit and maximizing private gain by any means, i.e. Infinite Greed. If you insist on making this distinction now, you anger a lot of people, as it blows the capitalist cover of Infinite Greed.

If you make the distinction between earning a profit and maximizing private gain by any means, then you realize the status quo is neither sustainable nor good: it is unsustainable and evil. This angers everyone who has rationalized their investment in (and defense of) an evil system, because, well, it’s hard to feel all warm and fuzzy about your choices if the phony facade falls and the evil of the system you’ve defended is starkly revealed.The distinction between earning a profit and maximizing private gain by any means angers not just the few benefiting from the useful delusion that Infinite Greed is simply profit on overdrive; it seems to anger everyone who believes the Status Quo of burning mountains of coal to power towel warmers, sitting in traffic burning petrol two hours a day and central banks enriching the already wealthy is not just sustainable but gol-darned good.

Every enterprise must earn a profit to survive. A worker-owned collective must earn a profit, as it needs money to reinvest in the business and reward those who have invested their capital (human, social, financial, intellectual, etc.) in the enterprise.

…click on the above link to read the rest of the article…

A Mountain of Debt and no Growth

April 24, 2015

A Mountain of Debt and no Growth

Too Many Geezers

So far, we’ve proposed two reasons why the 21st century has been such a dud …

First … the developed nations are cursed with too many geezers. We have nothing against old people (especially as we hope to be one ourselves all too soon). But old people do not build a new economy; young people do. And today, there are not enough young people to power the kind of economic growth we’ve gotten used to.

Second… rules, regulations, subsidies, laws and orders now protect established financial interests against upstart competitors. Businesses get older along with the population, as government creeps over more and more of the economy.

The feds use monopoly force to prevent competition and reward today’s voters and capital owners. The baby born in 2015 finds himself subject to debts, obligations and restrictions that were meant to benefit his grandparents. Today, we give you another reason for the flop that is the 21st century. As you will see, they are all related…

Pages in the Federal Register. There was a brief reprieve from over-regulation in the Reagan era, but shortly thereafter the regulatory State went into action again at full blast. Capitalism is slowly but surely asphyxiated, and with it any chance to escape the debt trap is dying with it (chart source: the George Washington University regulatory studies center) – click to enlarge.

…click on the above link to read the rest of the article…

The Oceans Are Dying

March 31, 2015

The Oceans Are Dying

I am an admirer of Dahr Jamail’s reporting. In this article, Oceans In Crisis, Jamail tells us that we are losing the oceans. http://truth-out.org/news/item/29930-oceans-in-crisis-one-woman-will-cross-the-pacific-to-raise-awareness He reports on the human destruction of the oceans. It is a real destruction with far-reaching consequences.

That fact is indisputable.

From my perspective the human destruction of the oceans is yet more evidence of the ruinous nature of private capitalism. In capitalism there is no thought for the future of the planet and humanity, only for short-term profits and bonuses. Consequently, social costs are ignored.

Capitalism can work if social or external costs can be included in the costs of production. However, the powerful corporations are able to block a socially functioning capitalism with their political campaign contributions.

Consequently, capitalists themselves make the capitalist system dysfunctional. We may have reached the point where the external costs of production are larger than the value of capitalist output. Economist Herman Daly makes a convincing case that this is the fact.

While the powerful capitalists use the environment for themselves as a cost-free dumping ground, the accumulating costs threaten everyone’s life. It appears that nothing can be done, because the oceans are “common property.” No one owns them, so no one can protect them and their contents.

What we are faced with is the most destructive force in history: the short-sightedness of humans. Humans are willing to destroy the environment that sustains them, the law that sustains them, the truth that sustains them. Indeed, humans will destroy everything that sustains life if they can raise their incomes for another quarter or another year.

…click on the above link to read the rest of the article…

Naomi Klein Calls for System Change to Address Climate and Inequality

March 29, 2015

Naomi Klein Calls for System Change to Address Climate and Inequality

A radically new economic and social system is urgently needed to tackle climate change and address intersecting social justice issues, the internationally bestselling author Naomi Klein told activists meeting in London today.

“It’s not too late to get off the road, to grab the wheel of history and swerve,” the author of This Changes Everything told an audience of more than 1,000 attending a one-day interactive conference on climate change and social justice inspired by her book.

“It is possible to lower our emissions in line with what science is telling us,” she said via Skype. “But to do that means we need to change everything about our system.”

Klein argued that individual actions alone aren’t going to bring the level of emission reductions needed to avoid catastrophic climate change. Instead, “we need to look at large scale policies that make good decisions easier.”

The all-day event held at Friends Meeting House in Euston, London, included breakout workshops and tactic sessions – while also giving a platform speakers from across the environment and social justice movement.

Among those to join the debate were Green Party leader Natalie Bennett, Channel 4 economics editor Paul Mason, and John Broderick, a research fellow at the Tyndall Centre for Climate Change Research. There was a consensus among all speakers that bold and broad social change is required to meet the climate challenge.

…click on the above link to read the rest of the article…

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