Tuesday, April 30, 2013

"How It Really Is"

“Aw, You're Just Figuring It Out, Are You? (WSJ)”

“Aw, You're Just Figuring It Out, Are You? (WSJ)”
by Karl Denninger

“One of the more-amusing aspects in observing and commenting on whatever goes on in a given day, whether it be in the political or business arena, is how many editors and writers ignore the obvious for weeks, months, years or even decades and then drop a "quip" that sounds pithy but in fact illustrates the vapidity of their mental prowess.

This is one of those times: One of the enduring—by now even touching—assumptions of people who advocate for ideas like gun control is that if the government waves its hand toward some such identified good, it will happen. Really? What's becoming evident by the day is that whether the issue is gun registration, air-traffic control, electric cars or health care, a lot of people no longer believe the federal bureaucracies will get it right. They don't trust them. Witness the current, terrifying rollout of Obamacare's first phase.

Oh really?

When it comes to "gun control" there is an 80 year record of fraud and failure. Starting with the National Firearms Act government has repeatedly claimed that we needed to "tighten" firearms laws and some supervision in some form or fashion and that by doing so we would be made "safer." The facts say otherwise. As just two examples of the above when Florida went to mandatory "must-issue" concealed carry the gun-banners actually ran ads saying that we were now the "Gunshine State" and predicting shootouts in the streets by citizens who couldn't be trusted to keep their weapons holstered except when needed for self-defense. They were dead wrong; what happened instead was that violent crime dropped precipitously.

When Massachusetts adopted strict gun control the number of people who the state knew had guns dropped by 80%, from about 1.5 million to about 200,000. The murder rate doubled during a time when nationally it was falling, and other violent crimes also increased. Both of these things happened during approximately the same period of time in the same country- this one.

Obamacare was sold to the American public with the claim that medical insurance costs would drop for most people by about $2,000 a year. They instead went up by nearly twice that much, and the law hasn't taken full effect yet. The number of lawmakers who have gone to prison for fraudulent misrepresentation as to the effects of the laws they have championed?  

Zero.

That's very similar to the number of executives who have gone to prison for fraudulently misrepresenting the financial condition of their public companies since 2008, even though after the 2000 crash a law was adopted to make such a specific criminal offense due to the public outrage at rampant "book-cooking" during the 1990s and the resulting market crash in 2000.

That anyone is surprised that the public has come to understand that whatever government touches turns to crap is the real point of astonishment here. You would think that lawmakers, like business executives, would have some sort of fiduciary responsibility to those who pay their salaries and that such would result in at least a moral and ethical obligation if not a legal one.

You'd be wrong because even in the instances where such a formal legal obligation exists it is not enforced. Witness "Fast And Furious" where we still have no accountability for conduct that our government undertook that is blatantly felonious for any person to undertake under existing black-letter firearms law. There is no exception in that law for BATFE employees conducting so-called "stings"; knowing involvement in the transfer of a weapon to a prohibited person or for prohibited purposes, such as a straw purchase, is a felony. Witness the young woman who knowingly was involved in a straw purchase in upstate NY, with said gun being used to shoot firefighters. She was arrested and charged, as she should be- that's illegal.

Why haven't all the BATFE people involved in "Fast and Furious" come under indictment? Why hasn't Issa issued public referrals for prosecution, done what is necessary to appoint a special prosecutor, and backed both up with similarly-public threats of immediate impeachment if there is no contemporary follow-through? Again, there is no exception in the law for these individuals and/or agencies!

Should we trust government in anything? Oh hell no. Not until and unless they start enforcing the law against members of government who in fact break the law. Until those lawmakers who knowingly lie to their constituents and promote and promulgate laws that violate rights and wind up having the exact opposite effect of that which they promote to get them passed are at minimum removed from office for malfeasance and dereliction of duty and face prosecution for fraud upon the public.

There will undoubtedly be apologists who say that this is unrealistic and will simply never happen. The latter may well be true but it is immaterial if government becomes nothing more than an impediment and bad joke among the public at large, and we're basically there in America today.

Trust requires accountability. When the only accountability that lawmakers and executives have is to those writing the checks from industries and other interest groups and not to the people and the claimed outcomes that are used to sell policies that not only fail to materialize but in fact wind up turning into gigantic screwjobs upon the public there should be no surprise when the influence and trust by the people toward the government fades into insignificance.

What follows next, unfortunately, if government does not cut this crap out is the fact that distrust quickly becomes contempt and revulsion.

Those in DC and in State Governments ought to contemplate that, because among those of us who are willing and able to start new enterprises and employ people- myself included- have already largely thrown up our hands and refused to do so as a direct and proximate result of this lack of accountability. This is why our economy is moribund and refuses to recover and no amount of force from government can change that. Only a restoration of trust can solve that problem.

Government exists only with the consent of and funding by the governed. Without the former you wind up with anarchy and potentially revolution. But without the latter government is left with only the ability to try to bribe people with their own money, which never works for long because without productive people willingly paying taxes the emission of unbacked currency or credit takes as much out of the pockets of alleged "recipients" as it "gives" them, in real time. It cannot be otherwise as arithmetic always trumps politics and when this scam sinks into the skulls of the people the consequence is exactly what we are seeing now.”

“Off to See the Wizard”

“Off to See the Wizard”
by Byron King

“Author Lyman Frank Baum wrote the original book, “The Wonderful Wizard of Oz”. The book, published in 1900, was whimsical. But among other things, it poked fun and caricatured the gold and silver debate in the U.S. in the 1890s. More broadly, Wizard was an allegory about life and political populism in the U.S. in the 1890s. Author Baum had a keen eye for the gold-silver debate because he knew something about the subject. Baum was wealthy, and heir to serious family money that came from the 19th-century oil fields of Pennsylvania. So he took the idea of debased currency and ran with it.

Just look at just the title, “The Wonderful Wizard of… Oz”, where “Oz” stands for “ounces.” I’ve heard that in the real story, the “Emerald City” of Oz was a city of gold. (It became emerald when MGM Studios made the famous Depression-era movie in 1939.) The yellow brick road was a metaphor for gold. Dorothy’s slippers were silver in the book, and changed to ruby in the movie.

The Tin Woodman stood for the urban workers of America, who were left out in the cold and rain by the forces of banker capitalism. The Scarecrow stood for the farmers- and recall that he had no brain, because many East Coast snobs thought farmers were dumb hicks, ripe for the picking. The Cowardly Lion was a dead ringer for William Jennings Bryan, who made good speeches, but could not stand up to the entrenched big guys.

The Wizard was all smoke and mirrors, reflecting the political classes as a bunch of charlatans who promised much and delivered little.

Hey, “Wizard” is a children’s story. It’s not a cookbook for what ails us today. If there are any real answers in the “Wizard book”, it’s along the lines that things aren’t what they may at first appear. And the common people- workers and farmers- are smarter and nobler than the elites think.”

The Economy: "On the Value of Information"

"On the Value of Information"
by David Galland

“It has become tradition at La Estancia de Cafayate for Casey Research to host an intimate conference in conjunction with the Harvest Celebration. In the most recent of the series, Bill Bonner, co-founder of The Daily Reckoning, kicked the program off with a thought-provoking discussion about the nature of information. With a nod to Nietzsche, Bill dissected the nature of information into two categories.

The first sort is that which is derived from direct observation. For an example, Bill pointed to the tangible information that comes from living in a tribal village. As a member of the tribe, you knew your neighbors, you knew what sort of crops would grow in the different seasons, where and when to hunt, etc. Paraphrasing Bill, “If a member of the tribe came running into the village yelling that an enemy tribe was about to attack, you would have direct knowledge that there was an enemy tribe residing in the area and that the fellow doing the yelling wasn’t the sort to just make it up. So you could be certain an attack was likely.”

Given this high quality of information, Bill continued, you would be able to make an informed judgment about what action to take. You could, for instance, prepare to defend your village against the intruders, take flight, or remain and hope for the best. Regardless of how you acted, at least you knew you were acting on good information.

By contrast, there is the second type of information, that which Bill calls “public information.” This is the sort of information that people believe is “true,” but only tangentially and without having personally observed it. In other words, it is extremely poor-quality information, the sort of thing regularly ginned up in modern times by the media to attract eyeballs on advertisements, or promoted by politicians or businesses to further their own interests.

It’s Bill’s hypothesis that because the evolution of the human mind occurred against a backdrop of life-and-death decision-making based on hard information, our modern minds are genetically ill-equipped to deal with public information. In other words, we evolved trusting that the information we were receiving was reliable, leaving us susceptible to believing that substantially all the information we receive today is reliable. Making the point, Bill referred back to the case of the villagers being alerted by a fellow villager to a pending attack. So alerted, the villagers knew all they needed to know in order to decide which of the aforementioned actions to take.

But what happens when, in today’s world, someone comes running into the virtual village shouting “The globe is warming, the globe is warming?” Or, “The economy needs quantitative easing!” Because of the entirely understandable evolutionary precedent that we pay attention to hard information or risk being erased from the genetic pool, the human mind is essentially wired to accept that the threat from global warming is real… or that quantitative easing is needed. Or that Iraq somehow posed a threat requiring the spending of trillions of dollars and wasting untold lives to blow it to pieces.

How can we really know that any of this public information is true? We can’t. Yet with a sufficient amount of arm-waving in the global media, large swaths of the populace accept the information as true, setting in motion a giant snowball of political policy and the attendant massive misallocation of resources.

As a related aside, during the two-day break between the events, Doug and Ancha Casey, John Mauldin, and I made the trip to Bill Bonner’s estancia- a fairly grueling four-and-a-half-hour drive on bad roads (and in some parts, no roads at all) into the mountains above Cafayate. Like many of Bill’s friends, I was never quite sure why anyone would want a home on a property that is a seven-hour drive from the nearest commercial airport, and most of the drive on washboard roads. But when you get there, you understand. The estancia encompasses a massive and surprisingly verdant valley — I think on the order of 200,000 hectares-  a veritable Shangri-La stretching as far as the eye can see.

Now, Bill is a pretty well-off guy, but unlike many people who have amassed considerable wealth, Bill generally shuns the superficial trappings in favor of simple pleasures and in undertaking hands-on projects that are anything but simple. For instance, along with his sons and a couple of gauchos, he designed and built a small villa with three vaulted ceilings, using methods perfected by the Romans (he got the basic idea from a book on Roman architecture). Very impressive, but more to the point, over the course of his life and his many studies, Bill has become a skeptic about much and maybe most of what he hears in the media, or that spews forth from the mouths of the politicians. Instead, he has developed a Missouri-like attitude of needing to observe something himself before believing it.

The important idea that Bill shared and that I am trying to share, is that if you take the time to step back and analyze the information you receive and parse it into that which you know to be true based on your own observations, as opposed to what is popularly accepted as true simply because it was printed in a news journal or said in a broadcast, your attitude about many things may change.

It may take some time and practice to hone your skills in separating discernible facts from public information that may actually be utter fiction… but the payoff in adopting this attitude can be significant. In addition to saving yourself time and worries by mostly ignoring public information, learning to discern the difference between the two can lead to better decision making, in your everyday life and in your investments.

As a case in point, during the conference here, someone in the audience asked a question about quantitative easing. Doug Casey took hold of the microphone and replied along the lines of, “People need to stop using constructs such as ‘quantitative easing.’ Those are just terms that politicians have come up with to obfuscate the truth. The proper term for quantitative easing is currency debasement, plain and simple.” Going back to the observable, we know from history what happens when a king or officialdom adopts a policy of energetic currency debasement: the currency units being debased invariably become worth less and less. There is no example in history where debasing a currency doesn’t drive the purchasing power down over time. And certainly none where debasing a currency causes it to appreciate over time.

Jumping back to public information, “everyone” knows that the dollar is king…the best car in the junkyard, the two-ply toilet paper in a world where all other currencies are mere single ply. But is that accepted truth actually true?

Take a look at the following chart, taken from the presentation that Frank Trotter, president of EverBank Direct, gave in Cafayate. It shows the US dollar against 19 major currencies. It’s hard not to note that the mighty dollar has been in a long-term downtrend.


I want to toss out one more item of observable information as it relates to today’s economy, political environment, and the outlook for the dollar. The chart here is of federal spending in trillions of inflation-adjusted dollars. That means that the increase in spending shown accurately reflects the growth in government in real terms (as opposed to reflecting the decline in purchasing power from the currency debasement).


It also shows the scale of the purportedly draconian cuts in federal spending to be made as part of proposed austerity measures…revealing all the hand-wringing about the severe consequences of said cuts as just so much public information…or, if you prefer, misinformation. Better to cling to the facts you know, rather than the “facts” that circulate in the public domain.”

Monday, April 29, 2013

Chet Raymo, “Asperges Me, Domine”

“Asperges Me, Domine” *
by Chet Raymo

“Greystone Books publishes a series of "Literary Companions" to natural environments- mountains, rivers and lakes, deserts, gardens, and the sea, so far. Now they come to my environment- night- and have been kind enough to include a chapter from “The Soul of the Night”, the chapter called "The Shape of Night." I am in lovely company, admired companions of several generations- Diane Ackerman, Timothy Ferris, Annie Dillard, Henry Beston, Loren Eiseley, Louise Erdrich, Pico Iyer, and Gretel Ehrlich, to name but a few- all connoisseurs of darkness.

Our earliest mammalian ancestors were presumably nocturnal- to escape the predations of dinosaurs- but for most of human history we have been afraid of the dark, huddling in caves around stuttering fires, curled together in darkness like mice in a burrow. Night belonged to animals with big, dark-adapted eyes and sharp teeth, to footpads and graverobbers, to werewolves and vampires. Ironically, it was with the coming of electric illumination that it became reasonably safe to go out and about at night, even as the illumination erased the best reason to do so.

William Blake called day Earth's "blue mundane shell... a hard coating of matter that separates us from Eternity." At night we peer into infinity, awash in a myriad of stars. We creep to the door of the cave and look up into the Milky Way and catch a glimpse of divinity- everlasting, all-embracing, utterly unknowable. Night- that cone of shadow, that wizard's cap of spells and omens- is the chink in Earth's shell through which we court Ultimate Mystery the way Pyramus courted Thisbe.

Which is why, I suppose, that whenever I think of "the porch" of people who visit here, I imagine Carolina rockers on a southern summer verandah, far from city lights, Vega, Deneb and Altair swimming in the Milky Way, fireflies flickering on the lawn. At some point the conversation ceases and we simply sit, rock, and listen to the sounds of the night- the whippoorwill, the bullfrog, the cricket and the owl- and let starlight fall upon our heads like a sprinkling of holy water.”
* “Wash me, Lord. Sprinkle me with hyssop and I shall be clean.”
- The Catholic Mass

The Daily "Near You?"

  Rio De Janeiro, Brazil. Thanks for stopping by.

"Fear..."

“I was as afraid as the next man in my time and maybe more so. But with the years, fear had come to be regarded as a form of stupidity to be classed with overdrafts, acquiring a venereal disease or eating candies. Fear is a child's vice and while I loved to feel it approach, as one does with any vice, it was not for grown men and the only thing to be afraid of was the presence of true and imminent danger in a form that you should be aware of and not be a fool if you were responsible for others.”
- Ernest Hemingway, True at First Light”

Mark Twain, "Congress"

 "Suppose you were an idiot. And suppose you were a member of Congress.
But I repeat myself."

"All Congresses and Parliaments have a kindly feeling for idiots,
and a compassion for them, on account of personal experience and heredity."

"...the smallest minds and the selfishest souls and the cowardliest hearts that God makes."

"The lightning there is peculiar; it is so convincing, that when it strikes a
thing it doesn't leave enough of that thing behind for you to tell whether-
Well, you'd think it was something valuable, and a Congressman had been there."

"It could probably be shown by facts and figures that there is no distinctly
native American criminal class except Congress."

"Fleas can be taught nearly anything that a Congressman can."

- Mark Twain

"How It Really Is"


“The Incredibly Uneven Recovery"

 “The Incredibly Uneven Recovery: 
Net worth of bottom 93 percent declines by $0.6 trillion 
while top 7 percent net worth increases by $5.6 trillion.”
by mybudget360

"One unique signature of this economic recovery is how narrow it is. When we look at actual wealth, the net worth figures of Americans, we see some dismal numbers. In fact, what we find really isn’t a recovery at all if we look at 93 percent of the country. Then again, with most of Congress being millionaires they are so far removed from the real lives of the public that reality has become encapsulated in a very tiny bubble. One piece of data that recently came out highlights this uneven recovery. From 2009 to 2011, the heart of the so-called recovery, the net worth of Americans went up by $5 trillion. Sounds great right? Well, when the data is actually carefully examined we find out that the net worth of the bottom 93 percent of Americans actually fell by $0.6 trillion and the top 7 percent saw all the gains of $5.6 trillion.  In other words, for most Americans, this isn’t a recovery at all.

There is more mounting evidence that a modern day Gilded Age is in full effect: “(CNN Money) The dividing line between the two sides is $836,033 in 2011. The 8 million U.S. households with a net worth at or above that point got richer as America pulled out of its recession: Their average net worth rose by 28% from 2009 to 2011. Meanwhile, the 111 million remaining American households saw their wealth decline by 4%.

Why such a difference in fortunes? It’s because the rich are much more heavily invested in the stock and bond markets, which rallied during the recovery. Less affluent households typically have their wealth tied up in their homes, and the housing market remained flat between 2009 and 2011.” This is what we have discussed in prior articles. 1 out of 3 Americans have no savings so the stock market rally is merely a sideshow. Also, the vast majority of stock wealth is basically in the hands of the top 10 percent. The recent data highlights this even further. Most Americans derive their wealth from housing wealth:


When we exclude home equity we realize that most Americans have very little stored in items outside of real estate.  What is more disturbing is how poorly younger Americans are doing:

The median net worth for a household under 35 is around $2,000. How is this even remotely construed as being financially well off. One paycheck hiccup and people will be out on the streets. Many are. Of course, simply watching the mainstream press you are bombarded by advertising and a very inclusive circle that caters to small audience. They want Americans to keep spending money they don’t have on items they really don’t need. The real wealth continues to aggregate in a very small group. One way to see this rise in income inequality is through the Gini ratio:


The data on this chart only goes to the 1960s but income inequality is now at levels last seen during the years prior to the Great Depression. The only reason you don’t see the mass upheaval is because we have 47 million Americans on food stamps. The unemployment rate keeps moving lower but a large reason for this is many Americans are simply dropping out of the labor force. The numbers are skewed. When you hear “a rise in household wealth of $5 trillion” most Americans think this is for everyone. The above data makes it very clear that it is not. The actual numbers paint a much more troubling picture:

Does the above look like an even recovery?  And now you have the Fed subsidizing big banks to enter the domain of average Americans and inflating housing bubbles all over the nation. Many of these new buyers are hiking rents up on households that have seen their wealth decline and incomes have gone stagnant over the years. In other words, the one tiny spot where Americans had some wealth is now being gobbled up by the financial sector and Fed.”
- http://www.mybudget360.com/

"You say you want a revolution, well, you know..."
- The Beatles

Satire: “Republicans: Obama Must Take Action in Syria So We Can Criticize Action He Took in Syria”

“Republicans: Obama Must Take Action in Syria So 
We Can Criticize Action He Took in Syria”
by Andy Borowitz

WASHINGTON (The Borowitz Report)— "A growing chorus of Republican lawmakers are demanding that President Obama take some action in Syria so that they can attack whatever action he took in Syria. Appearing on CBS’s “Face the Nation” on Sunday, Sen. Lindsey Graham (R-South Carolina) laid out the situation in stark terms: “The time for President Obama to do something in Syria that we can eviscerate him for is long overdue.” Arguing that there are a variety of options available to Mr. Obama for dealing with Syria, Sen. Graham said, “The President needs to choose one of those options so that we can immediately identify it as a catastrophic choice and demand that he be impeached.”

Sen. John McCain (R-Arizona) used an appearance on NBC’s “Meet the Press” to express impatience with Mr. Obama’s “steadfast refusal to give us something new to rake him over the coals for.” “The American people have grown weary of my nonstop criticism of the President’s handling of Libya,” he said. “They are ready to hear me incessantly berate him for his handling of a different country.” At the end of his television appearance, Sen. McCain seemed to draw a line in the sand, making a direct challenge to Mr. Obama: “Mr. President, we are sick and tired of attacking you for your inaction. The time has come for us to attack you for your action.”

“Everything Is Rigged: The Biggest Price-Fixing Scandal Ever”

“Everything Is Rigged: The Biggest Price-Fixing Scandal Ever”
The Illuminati were amateurs. The second huge financial scandal of the year 
reveals the real international conspiracy: There's no price the big banks can't fix.
by Matt Taibbi

"Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that’s trillion, with a “t”) worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it “dwarfs by orders of magnitude any financial scam in the history of markets.”

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It’s about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.”
Read the full article here:

Musical Interlude: Michael Franti, "Hey World (Don't Give Up)"

Michael Franti, "Hey World (Don't Give Up)"

“Latest D.C.-Wall Street Brainstorm– Bailouts With Your Bank Deposits”

“Latest D.C.-Wall Street Brainstorm– 
Bailouts With Your Bank Deposits”
by Martin Berg

“Think your federally insured bank deposits are safe? Think again. The geniuses that are supposed to be protecting your money have dreamed up a scary idea to use your money to help fund the next bailout. This is not some paranoid conspiracy theory. 

In December, the U.S. Federal Deposit Insurance Corp. (which is supposed to insure your money in the bank) and the Bank of England proposed using your bank deposits to defray the costs of rescuing a too big to fail bank when it gets in trouble. Wall Street hates the term “bailout,” so they’ve came up with a more innocuous term: “resolution.” The report, “Resolving Globally Active, Systematically Important Financial Institutions,” is linked here. “In all likelihood [in a bank collapse],” the report’s authors write, “shareholders would lose all value and unsecured creditors [including depositors] should thus expect that their claims would be written down to reflect any losses that shareholders did not cover.” People who trusted the bank and put their money there would not get their money back under this proposal. Instead their deposits would be turned into shares in the newly resuscitated bank.

A version of this already happened as a result of the Cyprus financial crisis. Now FDIC/BOE have proposed a similar approach for the U.S. and England the next time the big bankers fail. Inside the Washington-Wall Street bubble, that’s not an “if.” It’s a “when.”

This latest proposal is what passes for smart thinking inside the bubble, untroubled by the bad banker behavior it enables or any concern for the public outrage simmering outside. The proposal stems from a fact that surprised me when I learned it: when you put your money in the bank, you no longer own it; the bank does. It becomes the banks’ asset, which it promises to give you back under certain conditions. In legal terms, the depositor becomes an “unsecured creditor” of the bank. Under the terms of the FDIC/BOE joint December 2012 proposal, the unsecured creditors’ money could be used to offset the costs of resuscitating a bank that the geniuses in Washington and Wall Street determine is too big to fail.

The bankers and their faux regulators are in the hunt for new source of bailout fund because, under Section 716 of the Dodd-Frank law passed in the aftermath of the 2008 meltdown, they can’t use taxpayer funds the next time the $230 trillion derivatives market tanks. [$1.4 QUADRILLION worldwide. - CP]

Derivatives, you will recall, are those pieces of paper, unconnected to any physical assets, that created the house of cards that collapsed back in 2008 because nobody could figure out what the derivatives were worth. Why not just let banks that engage in derivatives speculations and lose fold? The firms’ executives, bondholders and investors would get hurt. And we can’t let that happen, of course. So they want to “resolve” a bank’s excessive risk-taking with our money.

In Cyprus, only the wealthiest’s deposits were seized. The FDIC is supposed to insure individual depositors’ account up to $250,000 per depositor per account. But under the FDIC/BOE proposal, even accounts of $250,000 or less could be seized by the failing bank and converted to stock as part of a bailout scheme.

Meanwhile, what about the purchasers of those risky derivatives, which the banks are still trafficking in more than ever? They would fare better than lowly depositors because they are treated as “secured creditors,” under a little-noticed provision that the bankers’ lobbyists had inserted into a 2005 rewrite of U.S. bankruptcy law. 

I’ve been surprised by how little attention this proposal has gotten. It’s been covered mainly by Ellen Brown, a longtime critic of the banking sector and the government’s failure to regulate it. Certainly a major reason for the paucity of mainstream coverage is the lack of transparency around the regulation of banking institutions, and the media’s failure to push back against that. The big media, with few exceptions, has largely bought the narrative that the Obama administration has been selling, which is that the Dodd-Frank financial reform law successfully reined in banks and solved the TBTF issue, and that we have left the bad old days of financial collapses and bailouts behind us. 

Nothing could be further from the reality, as the FDIC/BOE proposal makes clear. The banks continue to engage in risky derivatives gambling, resist any efforts to get them to stop, and enlist their allies at the Fed and other faux regulators to find someone else to absorb the costs of their own inevitable gambling losses. Much of the regulations that would implement Dodd-Frank are being watered down behind closed doors, where the public is locked out and bank lobbyists have easy access to apply relentless pressure.

Even after multiple foreclosure fraud scandals, the LIBOR interest-rate fixing scandal, and the J.P. Morgan London Whale derivatives trade scandal, the media is more interested in touting the revival of the merger and acquisitions market than doing skeptical reporting on big banks and regulators.

Another reason that the reality gets lost is that it doesn’t fit neatly into the Republican-Democrat frame through which most of the media sees all policy. While Democrats at least rhetorically favor regulation and Republicans blame government for all the banks’ problems, beyond a little political stagecraft the two parties have collaborated smoothly to continue to bury the issue and let the bankers off the hook. This gives members of both parties a wide berth to keep raising campaign money from the bankers, and their congressional staffers a pathway unobstructed by any unpleasantness on their way to lucrative employment on Wall Street when they want to cash in.

This FDIC/BOE proposal is just the latest example of the government regulators protecting the bankers’ interests and throwing the rest of us to the wolves. That’s not what a majority of Americans want, obviously. According to this Rasmussen poll, 50 percent of all Americans favor breaking up the big banks so they don’t pose such a threat to our financial future, and can’t continue to dominate our political landscape. Only 23 percent oppose such a breakup. 

Sen. Bernie Sanders, the independent socialist from Vermont, has introduced legislation to break up the banks. Rep. Brad Sherman, a Democratic legislator from Los Angeles, has said he will introduce companion legislation in the House. Breaking up the banks is critical, but its only the first step. We need the re-imposition of a modern-day version of the Glass-Steagall Act, the Depression-era law that barred banks from mixing in other financial businesses that place depositors’ money at risk. Its repeal in 1999 led directly to the 2008 meltdown. In the updated Glass-Steagall, federally insured banks should be barred from gambling in derivatives or other complicated investments. 

Meanwhile, we need full public hearings on the FDIC/BOE proposal, and any other proposals regulators are considering about how to pay for future bailouts that involves taxpayers or consumers. Contact your senator and representative and demand an end to big banks and publicly insured bank gambling.  This FDIC/BOE proposal is a grim reminder of what we get when we’re left out of the political process, and we leave our financial system in the hands of the politicians, the experts and the bankers.”

Musical Interlude: Jason Mraz, “I Won't Give Up”

Jason Mraz,  “I Won't Give Up”

Sunday, April 28, 2013

"Dog 'Cries' At Grave: 'Wiley Crying Over Grandma' (VIDEO)"

"Dog 'Cries' At Grave: 'Wiley Crying Over Grandma' (VIDEO)"
by The Huffington Post

"Brace yourselves, because this video is probably going to make you cry. In this viral video, a service dog named Wiley appears to cry at the grave of his handler's grandmother. The video was posted to YouTube by user sarahvarley13 on April 14 and had received more than 79,000 views at the time of writing. It was also posted to the website of the Lockwood Animal Rescue Center (LARC), a Ventura County, Calif., shelter that specializes in the care of wolfdogs and horses.


The short clip shows Wiley makes crying noises at the grave of Gladys, described by the LARC website as "a family member, and a supporter" of the animal rescue center. "She will be forever missed, especially by Wiley," the site reads. "I can tell you that he has never done that before and hasn't done it since. I may be anthropomorphosizing his actions but its how I'm choosing to deal with loss," sarahvarley13 wrote in the description of the video on YouTube. According to sarahvarley13, Wiley is a "service wolf" that helps veterans returning from war, providing therapy and care through LARC and a program called Warriors and Wolves. A spokesperson for LARC was not immediately available to comment on Gladys' relationship with Wiley.”

Saturday, April 27, 2013

"How It Really Is"


“No Bank Deposits Will Be Spared from Confiscation”

“No Bank Deposits Will Be Spared from Confiscation”
By Matthias Chang

"I challenge anyone to prove me wrong that confiscation of bank deposits is legalized daylight robbery. Bank depositors in the UK and USA may think that their bank deposits would not be confiscated as they are insured and no government would dare embark on such a drastic action to bail out insolvent banks. Before I explain why confiscation of bank deposits in the UK and US is a certainty and absolutely legal, I need all readers of this article to do the following:

Ask your local police, sheriffs, lawyers, judges the following questions:

1) If I place my money with a lawyer as a stake-holder and he uses the money without my consent, has the lawyer committed a crime?

2) If I store a bushel of wheat or cotton in a warehouse and the owner of the warehouse sold my wheat/cotton without my consent or authority, has the warehouse owner committed a crime?

3) If I place monies with my broker (stock or commodity) and the broker uses my monies for other purposes and or contrary to my instructions, has the broker committed a crime?

I am confident that the answer to the above questions is a Yes!

However, for the purposes of this article, I would like to first highlight the situation of the deposit/storage of wheat with a warehouse owner in relation to the deposit of money/storage with a banker. First, you will notice that all wheat is the same i.e. the wheat in one bushel is no different from the wheat in another bushel. Likewise with cotton, it is indistinguishable. The deposit of a bushel of wheat with the warehouse owner in law constitutes a bailment. Ownership of the bushel of wheat remains with you and there is no transfer of ownership at all to the warehouse owner. And as stated above, if the owner sells the bushel of wheat without your consent or authority, he has committed a crime as well as having committed a civil wrong (a tort) of conversion – converting your property to his own use and he can be sued.

Let me use another analogy. If a cashier in a supermarket removes $100 from the till on Friday to have a frolic on Saturday, he has committed theft, even though he may replace the $100 on Monday without the knowledge of the owner/manager of the supermarket. The $100 the cashier stole on Friday is also indistinguishable from the $100 he put back in the till on Monday. In both situations– the wheat in the warehouse and the $100 dollar bill in the till, which have been unlawfully misappropriated would constitute a crime.

Keep this principle and issue at the back of your mind. Now we shall proceed with the money that you have deposited with your banker. I am sure that most of you have little or no knowledge about banking, specifically fractional reserve banking. Since you were a little kid, your parents have encouraged you to save some money to instil in you the good habit of money management. And when you grew up and got married, you in turn instilled the same discipline in your children. Your faith in the integrity of the bank is almost absolute. Your money in the bank would earn an interest income. And when you want your money back, all you needed to do is to withdraw the money together with the accumulated interest. Never for a moment did you think that you had transferred ownership of your money to the bank. Your belief was grounded in like manner as the owner of the bushel of wheat stored in the warehouse.

However, this belief is and has always been a lie. You were led to believe this lie because of savvy advertisements by the banks and government assurances that your money is safe and is protected by deposit insurance. But, the insurance does not cover all the monies that you have deposited in the bank, but to a limited amount e.g. $250,000 in the US by the Federal Deposit Insurance Corporation (FDIC), Germany €100,000, UK £85,000 etc.

But, unlike the owner of the bushel of wheat who has deposited the wheat with the warehouse owner, your ownership of the monies that you have deposited with the bank is transferred to the bank and all you have is the right to demand its repayment. And, if the bank fails to repay your monies (e.g. $100), your only remedy is to sue the bank and if the bank is insolvent you get nothing. You may recover some of your money if your deposit is covered by an insurance scheme as referred to earlier but in a fixed amount. But, there is a catch here. Most insurance schemes whether backed by the government or not do not have sufficient monies to cover all the deposits in the banking system.

So, in the worst case scenario– a systemic collapse, there is no way for you to get your money back. In fact, and as illustrated in the Cyprus banking fiasco, the authorities went to the extent of confiscating your deposits to pay the banks’ creditors. When that happened, ordinary citizens and financial analysts cried out that such confiscation was daylight robbery. But, is it?

Surprise, surprise! It will come as a shock to all of you to know that such daylight robbery is perfectly legal and this has been so for hundreds of years. Let me explain.

The reason is that unlike the owner of the bushel of wheat whose ownership of the wheat WAS NEVER TRANSFERRED to the warehouse owner when the same was deposited, the moment you deposited your money with the bank, the ownership is transferred to the bank. Your status is that of A CREDITOR TO THE BANK and the BANK IS IN LAW A DEBTOR to you. You are deemed to have “lent” your money to the bank for the bank to apply to its banking business (even to gamble in the biggest casino in the world – the global derivatives casino).

You have become a creditor, AN UNSECURED CREDITOR. Therefore, by law, in the insolvency of a bank, you as an unsecured creditor stand last in the queue of creditors to be paid out of any funds and or assets which the bank has to pay its creditors. The secured creditors are always first in line to be paid. It is only after secured creditors have been paid and there are still some funds left (usually, not much, more often zilch!) that unsecured creditors are paid and the sums pro-rated among all the unsecured creditors.

This is the truth, the whole truth and nothing but the truth. The law has been in existence for hundreds of years and was established in England by the House of Lords in the case Foley v Hill in 1848. When a customer deposits money with his banker, the relationship that arises is one of creditor and debtor, with the banker liable to repay the money deposited when demanded by the customer. Once money has been paid to the banker, it belongs to the banker and he is free to use the money for his own purpose.

I will now quote the relevant portion of the judgment of the House of Lords handed down by Lord Cottenham, the Lord Chancellor. He stated thus: “Money when paid into a bank, ceases altogether to be the money of the principal… it is then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into the banker’s, is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains himself…"

The money placed in the custody of the banker is, to all intent and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable TO THE PRINCIPAL IF HE PUTS IT INTO JEOPARDY, IF HE ENGAGES IN A HAZARDOUS SPECULATION; he is not bound to keep it or deal with it as the property of the principal, but he is of course answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.” (quoted in UK Law Essays,  Relationship Between A Banker And Customer,That Of A Creditor/Debtor, emphasis added,)

Holding that the relationship between a banker and his customer was one of debtor and creditor and not one of trusteeship, Lord Brougham said:  “This trade of a banker is to receive money, and use it as if it were his own, he becoming debtor to the person who has lent or deposited with him the money to use as his own, and for which money he is accountable as a debtor. I cannot at all confound the situation of a banker with that of a trustee, and conclude that the banker is a debtor with a fiduciary character.”

In plain simple English– bankers cannot be prosecuted for breach of trust, because it owes no fiduciary duty to the depositor/customer, as he is deemed to be using his own money to speculate etc. There is absolutely no criminal liability.

The trillion dollar question is, why has no one in the Justice Department or other government agencies mentioned this legal principle? The reason why no one dare speak this legal truth is because there would be a run on the banks when all the Joe Six-Packs wise up to the fact that their deposits with the bankers CONSTITUTE IN LAW A LOAN TO THE BANK and the bank can do whatever it likes even to indulge in hazardous speculation such as gambling in the global derivative casino. The Joe Six-Packs always consider the bank the creditor even when he deposits money in the bank. No depositor ever considers himself as the creditor!

Yes, Eric Holder, the US Attorney-General is right when he said that bankers cannot be prosecuted for the losses suffered by the bank. This is because a banker cannot be prosecuted for losing his “own money” as stated by the House of Lords. This is because when money is deposited with the bank, that money belongs to the banker.

The reason that if a banker is prosecuted it would collapse the entire banking system is a big lie. The US Attorney-General could not and would not state the legal principle because it would cause a run on the banks when people discover that their monies are not safe with bankers as they can in law use the monies deposited as their own even to speculate.

What is worrisome is that your right to be repaid arises only when you demand payment. Obviously, when you demand payment, the bank must pay you. But, if you demand payment after the bank has collapsed and is insolvent, it is too late. Your entitlement to be repaid is that of a lonely unsecured creditor and only if there are funds left after liquidation to be paid out to all the unsecured creditors and the remaining funds to be pro-rated. You would be lucky to get ten cents on the dollar.

So, when the Bank of England, the FED and the BIS issued the guidelines which became the template for the Cyprus “bail-in” (which was endorsed by the G-20 Cannes Summit in 2011), it was merely a circuitous way of stating the legal position without arousing the wrath of the people, as they well knew that if the truth was out, there would be a revolution and blood on the streets. It is therefore not surprising that the global central bankers came out with this nonsensical advisory: “The objective of an effective resolution regime is to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to losses, while protecting vital economic functions through mechanisms which make it possible for shareholders and unsecured and uninsured creditors to absorb losses in a manner that respects the hierarchy of claims in liquidation.”(quoted in  FSB Consultative Document: Effective Resolution of Systemically …)

This is the kind of complex technical jargon used by bankers to confuse the people, especially depositors and to cover up what I have stated in plain and simple English in the foregoing paragraphs. The key words of the BIS guideline are: “without severe systemic disruptions” (i.e. bank runs), “while protecting vital economic functions” (i.e. protecting vested interests– bankers), “unsecured creditors” (i.e. your monies, you are the dummy), “respects the hierarchy of claims in liquidation” (i.e. you are last in the queue to be paid, after all secured creditors have been paid). This means all depositors are losers!

Please read this article carefully and spread it far and wide. You will be doing a favor to all your fellow country men and women and more importantly, your family and relatives.”

"The Decline of Critical Thinking"

"The Decline of Critical Thinking"
by Lawrence Davidson 

"In 2008 Rick Shenkman, the Editor-in-Chief of the History News Network, published a book entitled "Just How Stupid Are We? Facing the Truth about the American Voter" (Basic Books). In it he demonstrated, among other things, that most Americans were: (1) ignorant about major international events, (2) knew little about how their own government runs and who runs it, (3) were nonetheless willing to accept government positions and policies even though a moderate amount of critical thought suggested they were bad for the country, and (4) were readily swayed by stereotyping, simplistic solutions, irrational fears, and public relations babble.

Shenkman spent 256 pages documenting these claims, using a great number of polls and surveys from very reputable sources. Indeed, in the end it is hard to argue with his data. So, what can we say about this? One thing that can be said is that this is not an abnormal state of affairs. As has been suggested in prior analyses, ignorance of non-local affairs (often leading to inaccurate assumptions, passive acceptance of authority, and illogical actions) is, in fact, a default position for any population.

To put it another way, the majority of any population will pay little or no attention to news stories or government actions that do not appear to impact their lives or the lives of close associates. If something non-local happens that is brought to their attention by the media, they will passively accept government explanations and simplistic solutions.

The primary issue is “does it impact my life?” If it does, people will pay attention. If it appears not to, they won’t pay attention. For instance, in Shenkman’s book unfavorable comparisons are sometimes made between Americans and Europeans. Americans often are said to be much more ignorant about world geography than are Europeans. This might be, but it is, ironically, due to an accident of geography. Americans occupy a large subcontinent isolated by two oceans. Europeans are crowded into small contiguous countries that, until recently, repeatedly invaded each other as well as possessed overseas colonies. Under these circumstances, a knowledge of geography, as well as paying attention to what is happening on the other side of the border, has more immediate relevance to the lives of those in Toulouse or Amsterdam than is the case for someone in Pittsburgh or Topeka.  If conditions were reversed, Europeans would know less geography and Americans more.

Ideology and Bureaucracy: The localism referenced above is not the only reason for widespread ignorance. The strong adherence to ideology and work within a bureaucratic setting can also greatly narrow one’s worldview and cripple one’s critical abilities. In effect, a closely adhered to ideology becomes a mental locality with limits and borders just as real as those of geography. In fact, if we consider nationalism a pervasive modern ideology, there is a direct connection between the boundaries induced in the mind and those on the ground. Furthermore, it does not matter if the ideology is politically left or right, or for that matter, whether it is secular or religious. One’s critical abilities will be suppressed in favor of standardized, formulaic answers provided by the ideology.

Just so work done within a bureaucratic setting. Bureaucracies position the worker within closely supervised departments where success equates with doing a specific job according to specific rules. Within this limited world one learns not to think outside the box, and so, except as applied to one’s task, critical thinking is discouraged and one’s worldview comes to conform to that of the bureaucracy. That is why bureaucrats are so often referred to as cogs in a machine.

Moments of Embarrassment:  That American ignorance is explainable does not make it any less distressing. At the very least it often leads to embarrassment for the minority who are not ignorant. Take for example the facts that polls show over half of American adults don’t know which country dropped the atomic bomb on Hiroshima, or that 30% don’t know what the Holocaust was. We might explain this as the result of faulty education; however, there are other, just as embarrassing, moments involving the well educated. Take, for instance, the employees of Fox News. Lou Dobbs (who graduated from Harvard University) is host of the Fox Business Network talk show Lou Dobbs Tonight. Speaking on 23 March 2013 about gun control, he and Fox political analyst Angela McGlowan (a graduate of the University of Mississippi) had the following exchange:

McGlowan: “What scares the hell out of me is that we have a president... that wants to take our guns, but yet he wants to attack Iran and Syria. So if they come and attack us here, we don’t have the right to bear arms under this Obama administration.”

Dobbs: “We’re told by Homeland Security that there are already agents of Al Qaeda here working in this country. Why in the world would you not want to make certain that all American citizens were armed and prepared?”

Despite education, ignorance plus ideology leading to stupidity doesn’t come in any starker form than this. Suffice it to say that nothing the president has proposed in the way of gun control takes away the vast majority of weapons owned by Americans, that the president’s actions point to the fact that he does not want to attack Syria or Iran, and that neither country has the capacity to “come and attack us here.” Finally, while there may be a handful of Americans who sympathize with Al Qaeda, they cannot accurately be described as “agents” of some central organization that dictates their actions.

Did the fact that Dobbs and McGlowan were speaking nonsense make any difference to the majority of those listening to them? Probably not. Their regular listeners may well be too ignorant to know that this surreal episode has no basis in reality. Their ignorance will cause them not to fact-check Dobbs’s and McGlowan’s remarks. They might very well rationalize away countervailing facts if they happen to come across them. And, by doing so, keep everything comfortably simple, which counts for more than the messy, often complicated truth.

Unfortunately, one can multiply this scenario many times. There are millions of Americans, most of whom are quite literate, who believe the United Nations is an evil organization bent on destroying U.S. sovereignty. Indeed, in 2005 George W. Bush actually appointed one of them, John Bolton (a graduate of Yale University), as U.S. ambassador to the United Nations. Likewise, so paranoid are gun enthusiasts (whose level of education varies widely) that any really effective government supervision of the U.S. gun trade would be seen as a giant step toward dictatorship. Therefore, the National Rifle Association, working its influence on Congress, has for years successfully restricted the Bureau of Alcohol, Tobacco, Firearms and Explosives from using computers to create a central database of gun transactions. And, last but certainly not least, there is the unending war against teaching evolution in U.S. schools. This Christian fundamentalist effort often enjoys temporary success in large sections of the country and is ultimately held at bay only by court decisions reflecting (to date) a solid sense of reality on this subject. By the way, evolution is a scientific theory that has as much evidence to back it up as does gravity.

Teaching Critical Thinking? As troubling as this apparently perennial problem of ignorance is, it is equally frustrating to listen to repeated schemes to teach critical thinking through the public schools. Of course, the habit of asking critical questions can be taught. However, if you do not have a knowledge base from which to consider a situation, it is hard think critically about it. So ignorance often precludes effective critical thinking even if the technique is acquired. In any case, public school systems have always had two primary purposes and critical thinking is not one of them. The schools are designed to prepare students for the marketplace and to make them loyal citizens. The marketplace is most often a top-down, authoritarian world and loyalty comes from myth-making and emotional bonds. In both cases, really effective critical thinking might well be incompatible with the desired end.

Recently, a suggestion has been made to forget about the schools as a place to learn critical thinking. According to Dennis Bartels’s article “Critical Thinking Is Best Taught Outside the Classroom” appearing in Scientific American online, schools can’t teach critical thinking because they are too busy teaching to standardized tests. Of course, there was a time when schools were not so strongly mandated to teach this way and there is no evidence that at that time they taught critical thinking. In any case, Bartels believes that people learn critical thinking in informal settings such as museums and by watching the "Daily Show" with Jon Stewart. He concludes that “people must acquire this skill somewhere. Our society depends on them being able to make critical decisions.” If that were only true it would make this an easier problem to solve.

It may very well be that (consciously or unconsciously) societies organize themselves to hold critical thinking to a minimum. That means to tolerate it to the point needed to get through day-to-day existence and to tackle those aspects of one’s profession that might require narrowly focused critical thought. But beyond that, we get into dangerous, de-stabilizing waters. Societies, be they democratic or not, are not going to encourage critical thinking about prevailing ideologies or government policies. And, if it is the case that most people don’t think of anything critically unless it falls into that local arena in which their lives are lived out, all the better. Under such conditions people can be relied upon to stay passive about events outside their local venue until the government decides it is time to rouse them up in some propagandistic manner.

The truth is that people who are consistently active as critical thinkers are not going to be popular, either with the government or their neighbors. They are called gadflies. You know, people like Socrates, who is probably the best-known critical thinker in Western history. And, at least the well-educated among us know what happened to him.”

Friday, April 26, 2013

"How It Really Might Be..."


“A Message for America's Middle and Lower Class Slaves”
by Jeff Berwick

“Hi Slaveys,

What a month... near economic collapse in Cyprus giving us a taste of what's going to happen to our bank accounts here when things start to really fall apart (Bitcoin, anyone?), people blowing up people with bombs, badly maintained factories (inexplicably built near homes) exploding, Chicago under water, and a government that's 100% unresponsive and useless to anyone who isn't lining their pockets.  Time to revisit Maslow’s Hierarchy of Needs for some tips on how to live the calmest life possible for people who aren't able to leave the States.


We're up to the Safety Level. The theory is that if you aren't secure - you won't be equipped to experience anything in your life shown on the levels above (let alone physically survive). It’s a path to happiness that's firmly entrenched in reality, not religion. Here are some quick tips on tackling the second level of the pyramid for an American.

Security Of Body:  Realize you're living in a police state where a lot (a LOT) of people have guns and aren't afraid to use them (especially the police), so watch where you go and when you go there. Get a long deadbolt lock for your door and a peephole so you can see who's knocking. Stop thinking that anywhere in the US is like it was in the 1950s no matter how rural. Don't ever open your door to someone unless you know who they are. Get to a gym - be fit so you can run if you have to, and maybe even take a self-defense course. Lock your car doors always and carry a whistle so you can freak someone out if they seem threatening and perhaps they'll leave you alone. And in the big cities, don't walk down quiet streets alone late at night. Walk with a friend or drive.

Security of Employment: DON'T expect a corporation you take a low-wage hourly job with to take care of you in any way, shape, or form. Don't work extra hours to impress them - use to foster your own happiness. It's not their job to take care of you. Their job is to make money for their executives and shareholders. That isn't cold, it's just the truth. And as I said last time, and I can't stress it enough, create your own income providing a product or service that's needed in your community.

Security of Resources: I'll be honest. I don't have a clue what this point is driving at. Perhaps security of resources involves a backup plan. A network of friends, family, and business associates you can use as a resource (probably to help you with security of employment if you can't make your own work).

Security of Morality: The only thing I'll say about this is that if you have no integrity, eventually no one will want to deal with you personally or professionally and you'll be alone. That DOESN'T include credit card debt or medical debt, if you can't pay that, walk away. It's not a moral issue even though they'll try to make you think it is. Bottom line: if you can look yourself in the mirror in the morning without feeling ashamed, you're probably doing ok.

Security of the Family: If I see one more 3 year-old kid wandering around without a parent nearby I'm gonna lose it. Stop that. Keep your little kids close and don't leave them or your pets in hot cars this summer. They will die. And remember that pets are part of your family too. Treat them with respect — they aren't fashion accessories. Always know where your kids are and who they're hanging out with and be there for them if they need to talk. Make sure if times are tough for you that you save up extra food when you have extra money so during the lean weeks you can eat.

Security of Health: A lot of middle class people in the US don't have health coverage and the prices the doctors and hospitals are charging for medical services these days are pure extortion. Hygiene is the number one reason people started to live past 45 in the 20th Century. If you have a wound, clean it and keep it wrapped so it won't get infected. Take a damn shower every couple days at least, and get enough sleep so your immune system doesn't start to fail you. Even if you're poor, eat less, but don't eat junk - no aspartame, no high fructose corn syrup and if you're overweight cut out all bread and pasta (substitute the long acting carbs from grains with veggies) and you'll be amazed how much weight you lose.

Security of Property: Lock your doors, make sure your smoke detectors are working, don't leave your stove on when you go out, and y'know what the best way to secure your property is? Get to know your neighbors so you can watch each other's backs.

I'm going to visit another level of Maslow’s Hierarchy of Needs every other month this year and give you advice on how to get to the top and survive living in America. It gets a bit more complicated as we move forward, just like living here in this very strange place. Our middle and lower class Slaveys can’t get out anyway, so it’s time to make the best of it!” 
Slavey makes his middle class living on a contract basis in Southern California. He's not poor but definitely not rich - and plans to stay in California for the duration of the economic collapse. The opinions and advice in Dear Slavey should always be checked by your own experts, but has guerrilla style street-smart advice for middle class people on how to negotiate their way through the Police State of America. For more check out TDV Homegrown where Slavey is a regular contributor.