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March 25, 2012
Issue 191  -  Do the Government
Outrages Ever End?
Sometimes when I hear or read about government intrusions into privacy and/or encroachment of personal liberties, I feel like the baby in the picture.  Total outrage and frustration that we, the sheeple permit, and even encourage these losses of liberties for "protection."  I've met people who say that they would welcome someone going through their car or bag, because they've "got nothing to hide."  Privacy and liberty have nothing to do with someone hiding something.  They are innate and should never be infringed.  As more and more rights and freedoms are lost it becomes harder and harder to regain them.  Here is a video of the TSA demonstrating what I'm talking about.  If you haven't seen this it will make furious.
The TSA is instituting an indoctrination regimen of the populace.  This is deliberate and meant to further "submit" the people to government force and authority.  As we become more and more used to these intrusions, it becomes far easier to enact bigger and more wide reaching ones. 
The latest Obama health care bill is an attempt to see how far government can push their control.  The supreme court will hopefully not go along with this nonsense.  The idea that the government can fine you for not getting health care is so foreign to the constitution as to be laughable.  The silver lining is that if the supremes don't overturn Obamacare it will save us money, right?   Maybe not....
byPhilip Klein Senior Editorial Writer

President Obama's national health care law will cost $1.76 trillion over a decade, according to a new projection released today by the Congressional Budget Office, rather than the $940 billion forecast when it was signed into law.

Democrats employed many accounting tricks when they were pushing through the national health care legislation, the most egregious of which was to delay full implementation of the law until 2014, so it would appear cheaper under the CBO's standard ten-year budget window and, at least on paper, meet Obama's pledge that the legislation would cost "around $900 billion over 10 years." When the final CBO score came out before passage, critics noted that the true 10 year cost would be far higher than advertised once projections accounted for full implementation.

Today, the CBO released new projections from 2013 extending through 2022, and the results are as critics expected: the ten-year cost of the law's core provisions to expand health insurance coverage has now ballooned to $1.76 trillion. That's because we now have estimates for Obamacare's first nine years of full implementation, rather than the mere six when it was signed into law. Only next year will we get a true ten-year cost estimate, if the law isn't overturned by the Supreme Court or repealed by then. Given that in 2022, the last year available, the gross cost of the coverage expansions are $265 billion, we're likely looking at about $2 trillion over the first decade, or more than double what Obama advertised.

 As with EVERY government program in human history, it's going to cost more, much, much more, than was estimated upon proposal.  Of course this was known by Obama and the democrats before the bill was passed.  They knew that passing the bill was the most important thing due to the difficulty in "undoing" a bill.
This will lead to higher and higher deficits as we move forward.  Not exactly something the populace can easily deal with as gas prices continue higher.  Our debt problem is only getting worse and has reached critical mass whereby there is no escape from a debt collapse or a super inflationary cycle.  This is completely obvious in this graph:
What you notice here is that 14% of all student loan holders are past due.  This is a GIANT number in relation to loans of any type.  Banks just wouldn't remain in business with this type of nonperformance.  Couple in the purple part of the graph where the balance is actually growing due to a deferral and this doesn't bode well for our future work force.  They are being yoked with this debt for control purposes.  As I've said before, this is all part of the plan to have a nation of serfs.  Remember that student loans can NOT be expunged in bankruptcy.  They're like a diamond....forever.
This next story will just leave you stunned.  Please read it to understand what we face as this crisis intensifies:
Welcome to the Predatory State of California--Even If You Don't Live There   (March 20, 2012)

Theft has been "legalized" for governments and banks in America.

Every once in a while an event crystallizes the stark reality behind the lacy curtain of propaganda and artifice. Here is one such event.

Correspondent R.T. is a retired accountant who has resided in Arizona since 2001. Prior to 2001, he resided in California.

On March 14, he received a letter from the California Franchise Tax Board (the agency that collects income taxes) claiming that he owed $1,343 for the tax year 2006. This was the first notification he'd ever received of this claim. This was an interesting claim given that R.T.:

-- Did not reside in California in 2006

-- Did not file a State income tax return in California in 2006

-- Did not have any outstanding tax issues with California in 2006

-- Did no business in California in 2006

-- Owned no property in California in 2006

The number $1,343 is also interesting, as R.T.'s total Federal tax liability in 2006 was $650. Since the top income tax rate in California is about 9%, and that only kicks in at relatively high income levels above $100,000 annually, then it's difficult to see how anyone could owe double their Federal tax in California state tax.

But the truly interesting part of the story is that the state took $1,343 out of R.T.'s Wells Fargo bank account on March 2, prior to notifying him of the claim. Wells Fargo charged R.T. $100 for handling the removal of his $1,343.

As R.T. observed: "If I had filed a 2006 California tax return the statute of limitations would have run out, but since I did not file a 2006 tax return there is no statute of limitations. This is the classic catch 22."

I do not have copies of the correspondence so I cannot verify this sequence of events, but I have corresponded with R.T. for many years and have found him to be a credible witness to national events. While some might claim he invented this story of state theft out of whole cloth, there is no basis in our years of correspondence to support that claim.

What is entirely believable is that the state of California, desperate for revenue, is churning out dubious income tax claims stretching back years and collecting the money without due process. This is theft, pure and simple, and charging the account owner $100 for transacting the theft is also theft.

Welcome to the predatory State of California--even if you don't live there. If any mainstream media journalist wants to pursue this story, email me and I will put you in touch with R.T.

Somehow I doubt this is a unique story. R.T. said he immediately tried to call the California Franchise Tax Board and was on hold for some time before his call was dropped. As of yesterday his attempts to contact the agency via phone were unsuccessful. Why are we not surprised by any of this? Perhaps it's because government/bank thievery and Catch-22 incompetence is now the backdrop of our culture.

Think about this for a second.  The state of California took money from a PRIVATE bank account, without permission or notification from a NON resident.  This is a fascist type of behavior.  The kicker is getting charged $100 for the deduction.  Government is supposed to work for us.  WE are the bosses.  WE pay their salaries and yet this type of behavior turns that idea on it's head.  Until the people demand a stop to this nonsense, there isn't much hope.
I'm sure you all remember MF Global and their theft of customer (supposedly) segregated funds.  Well it looks like Europe has their own.  I'm really doubting this will be the last domino on this type of story:  (tickerguy)
Oh Look, MF Global In Europe!

You knew it was going to happen again, right?

WorldSpreads, an AIM-listed operator of online and phone betting services   based in Dublin, was placed in administration late on Sunday after the Financial Services Authority (FSA) uncovered “accounting irregularities”.

Possible translation: They stole customer money?

It is believed that the company broke the golden rule that client money should   not be “co-mingled” with company money.

Administrators KPMG said the clients were owed £29.7m, which should have been held in a segregated customer account, but that the group’s total cash   balance – including “segregated money” – was just £16.6m. The police have   been alerted over suspected criminal action.


Of course we'll probably get treated to yet another dog and pony show about how this sort of thing isn't criminal, and it's just a civil matter (oh, and we have corporate liability shields too since this was an "accident" or "unforeseen circumstances" and not deliberate activity.)

The FSA said: “Clients should be aware that any shortfall in the client money accounts will impact the amount of money that can be returned.”

In other words your money was stolen -- again.

Why is it exactly that the executives of these firms are not held personally responsible for this sort of crap?

This is no different then breaking into your house and taking your tv and jewelry.  This is no different than holding you up on the street at gun point and making off with your wallet.  The only difference is that these crooks have the law enforcers doing their bidding.  No one is going to jail.  No one is taken in for questioning and no one is indicted.  And you know what?  My guess is that no one ever will be!  Don't believe me?  Then explain this:
MF’s Corzine Ordered Funds Moved to JP Morgan, Memo Says

Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave "direct instructions" to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co. (JPM), according to a memo written by congressional investigators.

Edith O’Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was "Per JC’s direct instructions," according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.

O’Brien’s internal e-mail was sent as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify at the hearing after being subpoenaed this week.

"Over the course of that week, MF Global (MFGLQ)’s financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers’ segregated funds were safe," said the memo, written by Financial Services Committee staff and sent to lawmakers.

Steven Goldberg, a spokesman for Corzine, said in a statement that Corzine "never gave any instruction to misuse customer funds and never intended anyone at MF Global to misuse customer funds."

Vinay Mahajan, global treasurer of MF Global Holdings, wrote an e-mail on Oct. 28 that said JPMorgan was "holding up vital business in the U.S. as a result" of the overdrawn account, which had to be "fully funded ASAP," according to the memo.

Barry Zubrow, JPMorgan’s chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. The letter was not returned to JPMorgan, the memo said.

The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.

Corzine Testimony

Corzine, 65, in testimony in front of the House panel in December, said he did not order any improper transfer of customer funds. Corzine also testified that he never intended a misuse of customer funds at MF Global, and that he doesn’t know where client funds went.

"I never gave any instruction to misuse customer funds, I never intended anyone at MF Global to misuse customer funds and I don’t believe that anything I said could reasonably have been interpreted as an instruction to misuse customer funds," Corzine told lawmakers in December.

In his statement, Goldberg said Corzine did not specify which funds should be used to replenish the JPMorgan account.

"He never directed Ms. O’Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose," Goldberg said. "Nor was he informed that customer funds had been used for that purpose."

$1.6-Billion Shortfall

The bankruptcy trustee overseeing the liquidation of the company’s brokerage subsidiary has estimated a $1.6-billion shortfall between customer claims and assets available.

Lawmakers and investigators from the Commodity Futures Trading Commission, Securities and Exchange Commission and Department of Justice have been reviewing events leading up to MF Global’s bankruptcy filing. Executives including Corzine, a Democrat who served in the Senate before he was elected governor of New Jersey, gave testimony on the collapse at three congressional hearings last year.

"If client funds were transferred at his direction, it raises new questions," Seth Berenzweig, managing partner at Berenzweig Leonard LLP, a law firm in McLean, Virginia, said in an interview with Bloomberg Television. "This is a new storm cloud that is now headed for Jon Corzine and it raises a lot of issues."

Representative Randy Neugebauer, a Texas Republican and chairman of the Financial Services oversight and investigations subcommittee, is preparing a final report on his investigation into the firm’s failure.

‘What Went Wrong’

"One of the goals of our investigation is not only to find out where the money went but to identify what went wrong in order to prevent this from happening again," Neugebauer said in a statement.

O’Brien is scheduled to appear before lawmakers with Christine Serwinski and Laurie Ferber, two other MF Global executives named by Corzine as being involved in the transaction, according to the memo. Henri Steenkamp , the firm’s chief financial officer, is also scheduled to testify, as is a representative from JPMorgan who has not yet been identified.

MF Global and its brokerage sought Chapter 11 bankruptcy after a $6.3 billion bet on the bonds of some of Europe’s most indebted nations prompted regulator concerns and a credit rating downgrade. Corzine quit MF Global Nov. 4.

During his testimony, O’Brien was identified by Corzine as someone with knowledge of a transfer of funds from customer accounts before the firm sought bankruptcy protection Oct. 31.

Reid H. Weingarten, O’Brien’s lawyer, did not immediately respond to a phone call and e-mail seeking comment.

The memo’s account of the e-mail exchanges aligns with what Terrence Duffy, the executive chairman at CME Group Inc. (CME), told lawmakers during a December congressional hearing. Auditors at CME, which had authority to oversee MF Global, learned from an employee of the brokerage that Corzine knew about the loans involving a European affiliate, Duffy told committee members.

Here's the situation.  A former Senator, ordered CUSTOMER'S money be diverted to another account right BEFORE they went bankrupt.  Wanna bet he doesn't go to jail?  I will be shocked if anything other than a slap on the wrist is administered to this member of the "elite."
I continue to believe that the elite are taking as much out of the system as possible before the collapse happens.  Here is an exchange with Tim Geithner and Trey Gowdy (R-SC), read what his incredible answer is to how much debt would be needed to "fix" everything:
Tim Geithner (along with Bernanke) was testifying before the House Committee on Government Oversight and Reform yesterday. Congressman Trey Gowdy (R-SC) - in a display of forcing Geithner to answer a question directly that Ron Paul should take notes on - asked Geithner if he had only ONE more debt increase request that could possibly be made, how big would it be.

After trying to shuffle - very awkwardly, I might add - around answering the question, Geithner responded with, "It would be a lot - it would make you uncomfortable." Here's the exchange, which I found spine-chilling:

Geithner: "That I’d have to get to you in writing, I can’t do it in my head though." (note: in the background someone says "he can't put that in writing.")
Gowdy: "How about a round number?"
Geithner: "No idea….
Gowdy: "$20 trillion?"
Geithner: "I just can’t do it in my head."
Gowdy: "$50 trillion?"
Geithner: "I don’t know..."
Gowdy: "A lot? Can we agree it would be a lot?"
Geithner: "It would be a lot. It would make you uncomfortable."

Let that sink in for a moment. Please note that Geithner did not try to dispute the $20/$50 trillion number that Congressman Gowdy threw out. Here's the 3 minute video of the exchange, which I sourced from Ed Steer's Gold and Silver Daily:

Let me be very clear about one thing. This is not a joke and this not some sort of absurd exaggeration. This is where we are right now with the finances of our country. The fact that the Government-reported economic numbers are fraudulent is finally getting acknowledgement in the mainstream media is one thing. But you can't find any mention of the real spending and real debt numbers. You have to dig for the Truth on that and it requires understanding - in general - how Government accounting works and where the numbers are buried.

The REAL direct Treasury/Taxpayer guaranteed debt number right now is at LEAST $25 trillion. This includes the $16.2 Trillion current limit PLUS the $7 Trillion in FNM/FRE Goverment guaranteed debt PLUS the Treasury bonds sitting in the Social Security Trust ($2.5 trillion last time looked). I have not included a lot of other small off-balance-sheet guarantees like GMAC (now called Ally) debt, Fed assets which are direct off-balance-sheet liabilities of the Treasury/Taxpayer and some other stuff. I would bet real money that the REAL number is closer to $30 Trillion.

This does not include the GAAP accounting for the all of the future entitlement and welfare obligations. The net present value of this - i.e. if the Government had to account for its numbers like a corporation does - is more like $100 Trillion. That is not my estimate. That is a number that comes from David Walker, the former chief of the Congressional Budget Office. On a yearly GAAP accounting basis, the Government spending deficit is more like $5 trillion (see John Williams' The $100 trillion is how a corporation would have to account on its balance sheet for its future obligations given what is known about future spending escalations and future estimated funding of that spending. That would be the number on the balance sheet reported in a corporation's 10Q/10K.

This is reality people. What is so completely horrifying about Geithner's statements - and complete kudos to Congressman Gowdy for pressing Geithner the way he did - is that Geithner, who is not known to be politically adept, was so flustered by the thought of getting caught in a lie that he really had no way to cover-up the truth. The truth is not in what he said, the truth is in his lack of ability to refute the $20/$50 trillion number thrown at him by Gowdy. The best he could come up with is that the number is so big "it would make you uncomfortable." We know $16 trillion plus whatever is requested this fall is not big enough to make Congress or Obama "uncomfortable."

This country is broke, it's insolvent and it's collapsing. This is why the elitists - i.e. those who are in a position to steal everything not nailed down - are openly grabbing what they can. THAT is what the MF Global felony was all about. Obama knows a collapse is near. This is why the war rhetoric is escalating, this is why Obama signed legislation authorizing the Government to seize all national resources for the purposes of military defense in the event of an "emergency."

Do not be scared off by the current correction going on in the precious metals. By the time most of the people in this country understand why gold and silver are superior currencies to paper fiat dollars, the exchange price of dollars to bullion will make that exchange nearly impossible in any meaningful way for most. The current correction is somewhat mild compared to the correction experienced in 2008. At some point, probably sooner than most are willing to believe, the price of gold and silver will shoot up very quickly. By then it will be too late for most people watching to afford the true flight safety of owning gold and silver rather than paper assets and money sitting in potentially Government controlled accounts.
So the Treasury Secretary doesn't completely dismiss out of hand that we may need $50 Trillion more in debt?  To put this into perspective, imagine you were having your house renovated and the estimate was $100,000 for everything.  About a month into the job, the contractor comes to you and says he needs another $100,000.  The next month he wants another $50,000.  You finally ask him, "What is the most it can cost to finish my house?"  He refuses to answer.  Frustrated you say well is it $3,000,000?....... $5,000,000?  He responds that he can't say but it would make you feel uncomfortable.  I guess I'd feel uncomfortable knowing my renovation might cost $5,000,000, huh?  That example pretty much equates to our current national situation only $100,000 is equal to 1 trillion dollars.  How does that make you feel?  But not to worry, those prevous trillions have yielded fine results:
I guess it's fair to say that the budget deficit is in a bull market.  Not so much the stock market as it is still below 2000 levels 12 years later.  More debt perspective:
We are at the mercy of interest rates.  If they rise in any significant way, it's basically lights out.  Higher rates would be a disaster.  Interest rates will be managed for as long as possible.  Please make sure your debt level is completely manageable for your situation as we have no idea how long this management can last.  Gold and silver will serve as the perfect insurance policy for this situation so make sure you have some in your possession.
I'll end with a video that is the aptly named, "Worst Band Ever."  If they aren't the worst, they are certainly close, have a great week!