YAHOO: Preparing for the Worst

by Robert Kiyosak

Posted on Monday, August 24, 2009, 12:00AM

“Is the crisis over?” is a question I am often asked. “Is the economy coming back?”
My reply is, “I don’t think so. I would prepare for the worst.”

Like most people, I wish for a better future for all of us. Life is better when people are working, happy, and spending money.

The stock market has been going up since March 9, 2009. Talk of “green shoots” fill the air. Yet, in spite of the more positive news, I continue to recommend that people prepare for the worst. The following are some of my reasons:

1. I believe the stock market is being manipulated. I suspect the government, banks, and Wall Street are doing everything they can to keep the market from crashing. Our leaders know that nothing makes the world feel better than a raging bull market.

Do I have any proof that the market is being manipulated? No. I just smell a rat, or a pack of rats. I believe greed, self-interest, arrogance, and fear control the financial markets. I suspect those in charge will do anything to keep us all from panicking… and I don’t blame them. A global panic would be ugly and dangerous.

2. In my view, this global crisis has been caused by the Federal Reserve Bank, the U.S. Treasury, Wall Street, and the central banks of the world. They caused the problem, profited excessively in doing so, and now profit by being asked to fix the problem.

Every time I hear a politician mention the word stimulus, my mind flashes back to high school biology class, when I touched battery wires to a dead frog to make it twitch. Today, you and I are the dead frogs. Pretty soon the dead frog will be fried frog.

In the 1980s, our government’s hot money stimulus was measured only in the millions of dollars. By the 1990s, the government had to ramp the stimulus voltage into the billions in order to get the frog to twitch. Today the frog has jumper cables with trillions in high-voltage hot money pouring through the lines.

While most us feel better when we have more high-voltage money in our hands, none of us feel good about higher taxes, increasing national debt, and rising inflation for the long term. Another old saying goes, “Sometimes the cure is worse than the disease.” I say the government stimulus cure is killing us frogs.

3. Old frogs don’t hop. Another reason I am cautious about the future is that the Western world has a growing number of old frogs. Between 1970 and 2000, the economy responded to bailouts and stimulus packages because the baby boomers of the world were entering their greatest earning years — their purchasing power increased, and demand for homes, cars, refrigerators, computers, and TVs boosted the economy.

The stimulus plans seemed to work. But when a person turns 60, their spending habits change dramatically. They stop consuming and start conserving like a bear preparing for winter. The economy of the Western world is heading into winter. Hot wires and hot money will not get old frogs to hop. Old frogs will simply join the bears and stick that money in the bank as they prepare for the long, hard winter known as old age. The businesses that will do well in a winter economy are drug companies, hospitals, wheelchair manufacturers, and mortuaries.

4. The dying frog economy will lead us to the biggest Ponzi schemes of all: Social Security and Medicare. If we think this subprime financial crisis is big, it’s my opinion that this crisis will be dwarfed by the crisis brewing in Social Security and Medicare…Medicare being the biggest crisis of all. As old frogs head for the big lily pad in the sky, they will demand young frogs spend even more in tax dollars just to keep old frogs from croaking.

5. The 401(k)Ponzi scheme. A Ponzi scheme, like the scheme Madoff ran, depends upon young money to pay off old money. In other words, a Ponzi scheme needs tadpoles to finance old frogs. The same is true for the 401(k) and other retirement plans to work. If young money does not come into the stock market, the old money cannot retire. One reason so many people my age are worried, not only about Social Security and Medicare, is because they’re concerned about getting their money out of the stock market before the other old frogs decide to drain the swamp.

The facts are that the 401(k) plan has a trigger that requires old frogs to begin withdrawing their money at a certain age. In other words, as baby boomers grow older, more and more will be required, by law, to begin withdrawing their money from the market. You do not have to be a rocket scientist to know that it is hard for a market to keep going up when more and more people are getting out.

The reason the 401(k) has this law related to mandatory withdrawals is because the Federal government wants to collect the taxes that they deferred when the worker’s money went into the plan. In other words, the taxman wants their pound of flesh. Since they allowed the worker to invest without paying taxes, the government wants their tax dollars when the employee retires. That is why the laws require older workers to sell their shares ¬– and pay their pound of flesh.

Demographics show that we are entering a battle between young and old. I call it the “Age War.” The young want to hang onto their money to grow their families, businesses, and wealth. The old want the tax and investment dollars of the young to sustain their old age.

This war is not coming…it is upon us now. This is one of many reasons why I remain cautious and say, “The worst is yet to come.”

Stock Market History – Dow Jones 1990 to 2009

The market has been looking pretty good over the past few months. Do not get too excited. The market becomes very volitile in recession/depression times. Jobs have not recovered.

dow07-2009The above chart shows the dow from 2007 (the peak) and now. Its highest point was about 14000 (which was WAY overvalued fueled by bubbles) and the lowest point is the trough, around 6800 (still overvalued). Now we are approaching back to 9000+ levels, seen during 90’s. I am sorry, but we HAVE NOT recovered. 26 MILLION jobs are still lost. In case you forgot, America has about 300 million people.

dow90-2009Look at the above chart from 1990’s until now. We have not reached the bottom of the market yet. Expect the Dow to drop to BELOW 4000 sometime. Our media and financial gurus are pushing the market back up to rediciculous highs because we want it that high. It does not mean that our economy is actually improving. Nobody ever said that the Dow was a definite indicator of the economy, but seriously, look at the chart. We are nowhere near a recovery. The only companies making profits recieved huge bailouts. Banks are losing money as we speak (despite their new overdraft fee increases). We are in for some trouble when the commercial real estate bubble goes pop! I believe that the mainstream media will do its job at keeping it on the hush.

EFF: Boston College Campus Police: “Using Prompt Commands” May Be a Sign of Criminal Activity

On Friday, EFF and the law firm of Fish and Richardson filed an emergency motion to quash [pdf]and for the return of seized property on behalf of a Boston College computer science student whose computers, cell phone, and other property were seized as part of an investigation into who sent an e-mail to a school mailing list identifying another student as gay. The problem? Not only is there no indication that any crime was committed, the investigating officer argued that the computer expertise of the student itself supported a finding of probable cause to seize the student’s property.

The warrant application [pdf] cites the following allegedly suspicious behavior:

 

 


 


Should Boston College Linux users be looking over their shoulders?

In his application, the investigating officer asked that he be permitted to seize the student’s computers and other personal effects because they might yield evidence of the crimes of “Obtaining computer services by Fraud or Misrepresentation” and “Unauthorized access to a computer system.” Aside from the remarkable overreach by campus and state police in trying to paint a student as suspicious in part because he can navigate a non-Windows computer environment, nothing cited in the warrant application could possibly constitute the cited criminal offenses. There are no assertions that a commercial (i.e. for pay) commercial service was defrauded, a necessary element of any “Obtaining computer services by Fraud or Misrepresentation” allegation. Similarly, the investigating officer doesn’t explain how sending an e-mail to a campus mailing list might constitute “unauthorized access to a computer system.”

During its March 30th search, police seized (among other things) the computer science major’s computers, storage drives, cell phone, iPod Touch, flash drives, digital camera, and Ubuntu Linux CD. None of these items have been returned. He has been suspended from his job pending the investigation. His personal documents and information are in the hands of the state police who continue to examine it without probable cause, searching for evidence to support unsupportable criminal allegations.

Next up? An emergency court hearing as soon as the court will hear us in which we will ask that the search warrant be voided and the student’s property returned. Stay tuned…

UPDATES & Full Article

GLOBAL RESEARCH: World Depression: Regional Wars and the Decline of the US Empire

by Prof. James Petras

Introduction

            All the idols of capitalism over the past three decades crashed.  The assumptions and presumptions, paradigm and prognosis of indefinite progress under liberal free market capitalism have been tested and have failed.  We are living the end of an entire epoch:  Experts everywhere witness the collapse of the US and world financial system, the absence of credit for trade and the lack of financing for investment.  A world depression, in which upward of a quarter of the world’s labor force will be unemployed, is looming.  The biggest decline in trade in recent world history – down 40% year to year – defines the future.  The immanent bankruptcies of the biggest manufacturing companies in the capitalist world haunt Western political leaders.  The ‘market’ as a mechanism for allocating resources and the government of the US as the ‘leader’ of the global economy have been discredited.  (Financial Times, March 9, 2009)  All the assumptions about ‘self-stabilizing markets’ are demonstrably false and outmoded.  The rejection of public intervention in the market and the advocacy of supply-side economics have been discredited even in the eyes of their practitioners.  Even official circles recognize that ‘inequality of income’ contributed to the onset of the economic crash and should be corrected.  Planning, public ownership, nationalization are on the agenda while socialist alternatives have become almost respectable. 

            With the onset of the depression, all the shibboleths of the past decade are discarded:  As export-oriented growth strategies fail, import substitution policies emerge.  As the world economy ‘de-globalizes’ and capital is ‘repatriated’ to save near bankrupt head offices – national ownership is proposed.  As trillions of dollars/Euros/yen in assets are destroyed and devalued, massive layoffs extend unemployment everywhere.  Fear, anxiety and uncertainty stalk the offices of state, financial directorships, the office suites the factories, and the streets…

            We enter a time of upheaval, when the foundations of the world political and economic order are deeply fractured, to the point that no one can imagine any restoration of the political-economic order of the recent past. The future promises economic chaos, political upheavals and mass impoverishment.  Once again, the specter of socialism hovers over the ruins of the former giants of finance.  As free market capital collapses, its ideological advocates jump ship, abandon their line and verse of the virtues of the market and sing a new chorus: the State as Savior of the System – a dubious proposition, whose only outcome will be to prolong the pillage of the public treasury and postpone the death agony of capitalism as we have known it.

Full Article

THE ATLANTIC: The Quiet Coup

FACTSNEWS- MUST READ! Lengthly, we will only post the first paragraph.

Full Article

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

ONE THING YOU learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.

Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.

But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.

No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.

In Russia, for instance, the private sector is now in serious trouble because, over the past five years or so, it borrowed at least $490 billion from global banks and investors on the assumption that the country’s energy sector could support a permanent increase in consumption throughout the economy. As Russia’s oligarchs spent this capital, acquiring other companies and embarking on ambitious investment plans that generated jobs, their importance to the political elite increased. Growing political support meant better access to lucrative contracts, tax breaks, and subsidies. And foreign investors could not have been more pleased; all other things being equal, they prefer to lend money to people who have the implicit backing of their national governments, even if that backing gives off the faint whiff of corruption.

But inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt. Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them. Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms. Full Article

NYTIMES: Adults Spend 8 Hours a Day Spent on Screens, Study Finds

By BRIAN STELTER

IN a world with grocery store television screens, digitally delivered movie libraries and cellphone video clips, the average American is exposed to 61 minutes of TV ads and promotions a day.

Some people may think that amount seems excessive. But “people don’t seem to be getting up and running away,” said Jack Wakshlag, chief research officer at Turner Broadcasting.

In fact, adults are exposed to screens — TVs, cellphones, even G.P.S. devices — for about 8.5 hours on any given day, according to a study released by the Council for Research Excellence on Thursday. TV remains the dominant medium for media consumption and advertising, the study found. The data suggests that computer usage has supplanted radio as the second most common media activity. (Print ranks fourth.)

Full Article

LINK: For Those Who Want To Know

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Did you know that:

  • Twenty leading journalists, including winners of several Emmys and a Pulitzer, have described being prevented by corporate media ownership from reporting riveting stories on major cover-ups.
  • BBC News has exposed plans of the U.S. military to “provide maximum control” of the Internet, as detailed in a declassified secret Pentagon document signed by the U.S. Secretary of Defense in 2003.
  • CBS News report quotes former U.S. Secretary of Defense Rumsfeld, “According to some estimates, we cannot track $2.3 trillion in transactions.” That’s $8,000 for every man, woman and child in America.
  • Government documents released through the Freedom of Information Act show that the top Pentagon generals once approved plans to foment terrorism in major U.S. cities and even kill innocent civilians.
  • Multiple, reliable sources show that you may be eating genetically modified food every day whichscientific experiments have repeatedly demonstrated can cause sickness and even death in lab animals.
  • Detroit’s leading newspaper reported that the 1908 Ford Model T boasted a fuel economy of 25 miles per gallon. Yet 100 years later, the EPA average mileage for all cars is under 21 mpg.
  • A highly decorated US General wrote a book titled War is a Racket, which clearly depicts how he was manipulated and how most wars are waged largely to keep the coffers of certain big corporations filled.
  • The former chief of a prestigious medical journal has revealed that the total profits of the ten drug companies in the Fortune 500 were more than the profits of the other 490 businesses combined.
  • Declassifed CIA documents open to the public leave no doubt that through hypnosis, drugs, and electric shock, secret mind control projects created super spies, terrorists, assassins, and more.
  • More than 50 senior government officials and 100 professors have publicly expressed significant criticism of the 9/11 Commission Report. Many even allege government complicity in the 9/11 attacks.
  • For more highly revealing media articles hidden in plain sight with links for verification, click here.

Note: If you are already aware of these cover-ups, please visit our page which will take you even deeper.