Astonishing report from the Fed says US banks are not “sound”

banking-system-collapse

Late last week, a consortium of financial regulators in the United States, including the Federal Reserve and the FDIC, issued an astonishing condemnation of the US banking system.

Most notably, they highlighted “continuing gaps between industry practices and the expectations for safe and sound banking.”

This is part of an annual report they publish called the Shared National Credit (SNC) Review. And in this year’s report, they identified a huge jump in risky loans due to overexposure to weakening oil and gas industries.

Make no mistake; this is not chump change.

The total exceeds $3.9 trillion worth of risky loans that US banks made with your money. Given that even the Fed is concerned about this, alarm bells should be ringing.

Bear in mind that, in banking, there are three primary types of risk, at least from the consumer’s perspective.

The first is fraud risk.

This ultimately comes down to whether you can trust your bank. Are they stealing from you?

MF Global was once among the largest brokers in the United States. But in 2011 it was found that the firm had stolen funds from customer accounts to cover its own trading losses, before ultimately declaring bankruptcy.

It’s unfortunate to even have to point this out, but risk of fraud in the Western banking system is clearly not zero.

The second key risk is solvency.

In other words, does your bank have a positive net worth?

Like any business or individual, banks have assets and liabilities.

For banks, their liabilities are customers’ deposits, which the bank is required to repay to customers.

Meanwhile, a bank’s assets are the investments they make with our savings. If these investments go bad, it reduces or even eliminates the bank’s ability to pay us back.

This is precisely what happened in 2008; hundreds of banks became insolvent in the financial crisis as a result of the idiotic bets they’d made with our money.

The third major risk is liquidity risk.

In other words, does your bank have sufficient funds on hand when you want to make a withdrawal or transfer?

Most banks only hold a very small portion of their portfolios in cash or cash equivalents.

I’m not just talking about physical cash, I’m talking about high-quality liquid assets and securities that banks can sell in a heartbeat in order to raise cash and meet their customer needs to transfer and withdraw funds.

For most banks in the West, their amount of cash equivalents as a percentage of customer deposits is extremely low, often in the neighborhood of 1-3%.

This means that if even a small number of customers suddenly wanted their money back, and especially if they wanted physical cash, banks would completely seize up.

Each of these three risks exists in the banking system today and they are in no way trivial.

Very few people ever give thought to the soundness of their bank, ignoring the blaring warning signs that are right there in front of them.

Every quarter the banks themselves send us detailed financial statements reporting both their low levels of liquidity and the accounting tricks they use to disguise their losses.

Now we have a report from Fed and the FDIC, showing their own concern for the industry and foreshadowing the solvency risk I discussed above.

Every rational person ought to have a plan B to hedge these risks. And I would propose three methods:

1) Transfer a portion of your funds to a much safer, stronger banking jurisdiction, preferably one with zero net debt.

2) Hold physical cash. Physical cash serves as a great short-term hedgeagainst all three risks, with the added benefit that there’s no exchange rate risk.

All you have to do is go to your nearest ATM machine, take out a small amount at a time and build up a small pool of cash savings.

3) Hold gold and silver.

While physical cash is a great short-term hedge against risk in the banking system, gold and silver are excellent hedges against long-term risks in the monetary system and global financial system as a whole.

There may be a time where we are faced with the consequences not only of a poor banking system, but also of decades of wanton debt and monetary expansion.

At that point, the only thing that will make any sense at all is direct ownership of real assets.

Meet the entire town in Wales that went ‘offshore’

welsh-offshore-tax

On September 25, 1794, US President George Washington issued a proclamation authorizing the use of military force against a group of defiant citizens.

It had all started a few years before when a handful of politicians had succeeded in passing an excise tax on liquor, something that became known as the Whiskey Tax.

The Whiskey Tax was the brainchild of Treasury Secretary Alexander Hamilton, who was under pressure to pay off the government’s debts from the Revolutionary War.

The thing is, much of the debt had been originally owed to soldiers who fought in the war. They had been paid in IOUs, many of which had been scooped up by bankers in New York for pennies on the dollar.

Hamilton had family connections to prominent New York banks– the first example of Wall Street infiltrating the Treasury Department. It wouldn’t be the last.

(Over 200 years later, the American taxpayer would again be on the hook to bail out banks.)

Back then the Whiskey Tax was a big deal. America was a ‘whiskey nation’.

Whiskey was such a prevalent part of American culture in the 1790s, in fact, that it was even commonly used as a medium of exchange in parts of the country.

So you can imagine that the government’s intent to tax whiskey distillation was met with pockets of staunch opposition, especially once people found out that the entire reason for the tax was to pay back the New York bankers.

In some cases the opposition was militant. Parts of Pennsylvania, Maryland, and Virginia swelled with local resistance to the point that people began physically assaulting federal tax collectors and forming rebel militias.

Washington eventually had to dispatch federal troops (which he personally commanded) to put down the insurrection.

The rebels lost. But this conflict between government and the taxpayer continued to run deep.

It still exists to this day. It’s ingrained in the DNA of the nation, and in every free individual around the world.

At its core, taxation is an elaborate form of theft based on deeply flawed premises that we all have a claim on each others’ earnings, and that the government knows how to spend your own money better than you do.

There are certainly some places where people do receive value for the taxes that they pay.

Norwegians are commonly cited as tolerating their incredibly high levels of taxation because they receive relatively good quality medical care, education, etc. in return.

But for most people in the West, taxes fund wars, debt, dropping bombs on brown people by remote control, and yes, bailing out banks.

It’s perfectly natural to be enraged at such immoral waste, and people deal with it in different ways.

Some take the approach that if we’re going to be screwed then we should all be screwed together, equally.

They throw childish temper tantrums when anyone uses perfectly legal means to reduce their taxes, labeling them ‘tax dodgers’.

Usually this is an emotion grounded in petty jealousy and ignorance, wanting everyone to be equally miserable, and failing to realize that tax mitigation solutions are open to everyone.

Right now there’s actually an entire town in Wales called Crickhowell that is ‘protesting’ how big businesses use the tax code to slash what they owe.

They’re angered that Facebook, Google, Amazon, etc. pay very little tax.

And to voice their frustration, the butcher, the baker, and candlestick maker decided to employ the exact same tax strategies used by big companies to reduce their own tax burdens.

As the proprietor of the local smokery put it, the plan is “jolly clever.”

Clever indeed. Because they’ll soon realize the tremendous power and freedom of using completely legal solutions to keep more of what you’ve earned.

Doing this is not immoral or unpatriotic.

In fact, if you believe that your government makes your country worse off and less free, then reducing the financial resources available to them is a highly effective expression of patriotism.

Rather than people whining about everyone else paying less tax, it would be a much better use of time to learn about ways to reduce their own taxes.

This is a far more powerful way of voicing your opposition to a government than standing in a voting booth. And you’ll be better off financially as well.

To be fair, most of these concepts aren’t far fetched or complicated.

How many of us have gone shopping at a duty-free store in order to save a few bucks from not paying taxes?

Plenty of people already incorporate businesses in no-tax states like Delaware. Or they’ll work in a place like Boston (high tax) but live nearby in New Hampshire (zero tax).

There are plenty of other solutions. US taxpayers who live on investment income can move down to the beach in Puerto Rico and pay 0% tax.

Or you can move abroad and earn over $100,000 per year (per spouse) tax free.

There are also more complicated solutions such as setting up captive insurance companies to reduce business profits tax, trust structures to eliminate estate tax, and much more.

These aren’t ‘loopholes’ where you need teams of lawyers to misuse or take advantage of some cryptic language in the tax code.

It’s all right there in black and white, part of the law.

Criticizing a very sensible, legal strategy to keep more of what you earn is like criticizing someone for driving the speed limit, claiming that it’s some sort of traffic ‘loophole’.

There are completely legal options out there for everyone. Taking advantage of them just makes sense.

It’s official: Barack Obama wants to ‘help’ you manage your retirement savings

Obama-thinking

In 1875, right around the time the United States overtook the UK as the largest economy in the world, the American Express Company established the very first private pension plan in the US.

American Express had a simple goal: attract the best and brightest employees by giving them retirement security.

At the time, this was a revolutionary idea. The concept of “retirement” was practically martian.

Back then, most people worked until they were no longer medically fit to do so.

To voluntarily stop working and live out your golden years on perpetual vacation was a complete fantasy.

But a century after American Express, thanks in large part to rising prosperity in the 20th century, retirement had become the norm.

Private companies’ pension plans covered over 40% of the American workforce and millions of Americans were receiving Social Security by the 1970s.

Then in 1974 the government passed the Employee Retirement Income Security Act, establishing Individual Retirement Accounts (IRAs) to help people save for retirement in a tax advantageous way.

Fast-forwarding to 2015, we can see that none of this turned out quite like they’d expected. The state of retirement in America is now pretty abysmal.

First and foremost, Social Security is desperately, woefully unfunded.

Again, this is not Simon Black’s conjecture. The Treasury Secretary and the Labor Secretary both sign an annual report stating that Social Security is close to “trust fund depletion”.

In fact one of Social Security’s major trust funds is literally days away from running out of money.

Federal retirement trust funds across the board, like the Railroad Retirement Fund, are also nearly exhausted.

Meanwhile, private companies have followed the government’s example, with many private pension funds similarly approaching insolvency.

You see this frequently in the news as the cost of their pension funds push airlines and manufacturers into bankruptcy. They simply cannot pay their retirees.

Not to worry, the federal government has an agency called the Pension Benefit Guaranty Corporation to bail out guarantee insolvent private pensions.

It’s like the FDIC for private pension funds.

There’s just one problem. The PBGC itself needs a bailout.

PBGC’s latest report shows a net financial position of NEGATIVE $62 billion, which is how much more they have in liabilities than assets. There’s another word for that: insolvent. So there goes that idea.

Last, there are individual retirement plans, like IRAs and 401(k)s.

Unfortunately, most Americans’ individual retirement plans are woefully underfunded.

According to the Employee Benefit Research Institute, the median IRA balance in the US was just $32,179 at the end of 2013.

And the median amount saved by baby boomers amounts to just 13% of what their projected retirement needs are.

But not to worry, once again the federal government is to the rescue.

Last week the Obama administration officially rolled out its MyRA program.

MyRA is a special form of IRA that ‘helps’ Americans save for retirement by making it easy for you to loan your money to the federal government.

Like a retirement account, the idea is to save a little bit every month or every year to be set-aside in a tax-advantageous way for retirement.

The big catch here is that for MyRA accounts, there’s only one investment: US government bonds.

At present, US government bonds fail to pay interest rates that meet the government’s officially published rate of inflation.

So with these MyRA accounts, when adjusted for inflation, you’re guaranteed to lose money.

The Obama administration, of course, entirely dismisses this criticism, saying that these MyRA accounts are for “people who aren’t saving and who have a fear of losing their principal.”

It’s pretty appalling when you think about it.

Private pensions are nearing insolvency, and the government’s guarantee agency is insolvent.

Public pensions and retirement funds are also nearing insolvency. And individual retirement funds are completely undercapitalized.

This will become an epic retirement funding crisis..

Yet the government ‘solution’ is to encourage Americans who are at risk of losing their retirement to loan their money to the greatest debtor that has ever existed in the history of the world at interest rates that don’t even keep pace with inflation.

The government claims that MyRAs are guaranteed.

But the only thing guaranteed is that you’ll lose money… whether through inflation, default, or confiscation.

The lesson here is clear: don’t rely on the government for your retirement. YOU are a far more reliable manager of your own money.

But as with anything, financial success starts with financial education.

So before you invest your money, invest your time in learning about winning investment strategies, unconventional investments, and real retirement options.

You might find that you could live in absolute luxury somewhere overseas for a tiny fraction of what it would cost you back home. (Colombia comes to mind)

Or that you can generate substantial rates of return from buying high-yielding private businesses, or through asset-backed peer-to-peer lending programs.

You won’t hear about any real solution from the government. But with a reset in thinking, that dream of sipping Mai Tai’s by the pool can still be a realistic vision.

The Age of Despair: Reaping the Whirlwind of Western Support for Extremist Violence

Tales from the Conspiratum

Source: The Age of Despair: Reaping the Whirlwind of Western Support for Extremist Violence

With permission of

http://www.counterpunch.org

parisattacksWe, the West, overthrew Saddam by violence. We overthrew Gaddafi by violence. We are trying to overthrow Assad by violence. Harsh regimes all — but far less draconian than our Saudi allies, and other tyrannies around the world. What has been the result of these interventions? A hell on earth, one that grows wider and more virulent year after year.

Without the American crime of aggressive war against Iraq — which, by the measurements used by Western governments themselves, left more than a million innocent people dead — there would be no ISIS, no “Al Qaeda in Iraq.” Without the Saudi and Western funding and arming of an amalgam of extremist Sunni groups across the Middle East, used as proxies to strike at Iran and its…

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Perfect Storm? Will NATO mobilize in Wake of Paris Attacks?

As Washington’s narrative unfolds, the “war on terror” drags EU into the fold.

“The attacks in Paris, already blamed on ISIL and refugees, may trigger a tough response from the French government. The closure of other EU countries’ borders is also possible.
The most worrisome is that if it is classified as an attack on one of the NATO members, this may become the signal for NATO mobilization. We all know how much criticism NATO has drawn in recent years, some calling for its disbanding as an organisation that has outlived its usefulness. This is a perfect storm for NATO. Such situation may confirm their usefulness and provide justification for their existence. It appears that there is already a groundwork for such NATO mobilization being prepared by MSM and Obama.”

Futurist Trendcast

paris terror attacks 11 13 15

Paris attack sites:

Bataclan concert venue, 50 boulevard Voltaire, 11th district – gun and suicide bomb attacks

Stade de France, St Denis, just north of Paris – explosions near venue as France played Germany in football friendly

Le Carillon bar, 18 rue Alibert, 10th district – gun attack

Le Petit Cambodge restaurant, 20 rue Alibert, 10th district – gun attack

La Belle Equipe, 92 rue de Charonne, 11th district – gun attack

La Casa Nostra restaurant, 2 rue de la Fontaine au roi, 11th district – gun attack

What we know

From BBC: Busiest time

The attack on the 1,500-seat Bataclan hall was by far the deadliest of Friday night’s attacks. Gunmen opened fire on concert-goers watching US rock group Eagles of Death Metal. The event had been sold out.

The series of attacks not far from the Place de la Republique and the Place de la Bastille…

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