Senate panel approves beefed-up oversight of drone attacks including American citizens

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WASHINGTON, Nov 8 (Reuters) – The U.S. Senate Intelligence Committee has quietly approved a plan to step up both public and internal government oversight of the use of armed drones to kill suspected militants overseas, including American citizens.

The committee voted in closed session earlier this week to approve legislative language that would require U.S. spy agencies to make public statistics on how many people were killed or injured in missile strikes launched from U.S.-operated drones.

The committee also approved language intended to bolster scrutiny of secret spy agency deliberations over decisions about targeting U.S. citizens or residents for lethal drone strikes overseas.

The Obama administration has been under heavy pressure from foreign governments, the United Nations and human rights groups to be more transparent and rigorous in accounting for the civilian casualties caused by drone strikes.

Though the committee did not release full details of its deliberations on the measures, sources familiar with the discussions said that some committee Republicans were opposed to the drone-related clauses in the bill, which would authorize intelligence activities for the current government fiscal year which began on Oct. 1.

Ultimately, according to a press release issued by Senator Dianne Feinstein, the Democrat who chairs the intelligence panel, the committee approved the bill by a vote of 13-2. The two senators who voted against it were Republicans, a congressional source said.

The press release makes no mention of the language in the bill about drones. An official familiar with the matter said that this was because some Republicans argued that, since drone attacks are officially covert actions by the U.S. government, it would be inappropriate to set rules for such operations in a public law.

The Obama administration drastically increased the number of drone strikes after it took office in 2009 but attacks have dropped off in the last year.

Pakistan’s North Waziristan is the area of the most intensive U.S. drone campaign in the world. The United States has also attacked militants in Yemen, Afghanistan and Somalia with drones.

Last month, Pakistan told the United Nations that at least 400 civilians were among the approximately 2,200 people killed by drone strikes in the past decade.

 

ANNUAL REPORT

The bill approved by the committee now must go before the full Senate. The House of Representatives would also have to approve the bill, and the president sign it, for it to become law.

If the language approved by the committee becomes law, once a year the president would be obliged to issue a report setting out the total number of combatants killed or injured in U.S. drone strikes abroad, as well as the number of “non-combatant civilians.”

Exempted from the report would be any drone strikes that were launched in Afghanistan before the end of U.S. combat operations there, which are due to conclude at the end of next year, and any drone strikes conducted in a war explicitly authorized by Congress.

An official familiar with the matter said that Feinstein had been trying, unsuccessfully, to persuade the administration of President Barack Obama to release such information voluntarily.

Administration officials have maintained privately that the numbers of non-combatant civilians killed or injured in U.S. drone strikes against militants have been relatively minimal – in the low dozens. By contrast, respected human rights groups have produced much larger totals.

The bill also would require the director of national intelligence, when considering whether a U.S. citizen or resident should be targeted for a drone strike overseas, to empower a so-called red team to conduct an “independent alternative analysis” of the intelligence that officials have put forward to justify the drone attack.

A second official familiar with this issue said intelligence agencies already follow a secret procedure similar to this, but that the bill would give this procedure more weight.

As far as is publicly known, only one U.S. citizen, Anwar al-Awlaki, a militant preacher who allegedly became involved in plotting attacks against U.S. targets while a leader of Al-Qaeda’s Yemen-based affiliate, was ever formally targeted by the United States for a lethal drone attack, though at least a handful of other Americans, including Awlaki’s teenage son, were also reportedly killed by drones.

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Obama Brags To Staff That He’s ‘Really Good At Killing People’

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This will not go over well for the 2009 Nobel Peace Prize winner.

 

According to the new book “Double Down,” in which journalists Mark Halperin and John Heilemann chronicle the 2012 presidential election, President Barack Obama told his aides that he’s “really good at killing people” while discussing drone strikes.

Peter Hamby of The Washington Post noted the moment in his review of the book.

The reported claim by the commander-in-chief is as indisputable as it is grim.

Obama oversaw the 2009 surge in Afghanistan, 145 Predator drone strikes in NATO’s 2011 Libya operations, the May 2011 raid that killed Osama bin Laden, and drone strikes that killed the Pakistani Taliban leader and a senior member of the Somali-based militant group al-Shabab this week.

His administration also expanded the drone war: There have been 326 drone strikes in Pakistan, 93 in Yemen, and several in Somalia under Obama — upwards of 4,000 people overall — compared to a total of 52 strikes under George Bush.

In 2011 two of those strikes killed American-born al-Qaeda propagandist Anwar al-Awlaki and his American-born, 16-year-old son within two weeks.

Under Obama U.S. drone operators began practicing “signature strikes,” a tactic in which targets are chosen based on patterns of suspicious behavior and the identities of those to be killed aren’t necessarily known. (The administration counts all “military-age males” in a strike zone as combatants.)

Furthermore, the disturbing trend of the “double tap” — bombing the same place in quick succession and often hitting first responders — has become common practice.

Obama has also embraced the expansion of capture/kill missions by Joint Special Operations Command (JSOC) after it developed into the primary counterterrorism tool of the Bush administration.

One JSOC operator told investigative journalist Jeremy Scahill, author of “Dirty Wars: The World Is A Battlefield,” that global operations under Obama became “harder, faster, quicker — with the full support of the White House.”

Scahill, who also made a “Dirty Wars” documentary, told NBC News that Obama will “go down in history as the president who legitimized and systematized a process by which the United States asserts the right to conduct assassination operations around the world.”

Needless to say, a lot of innocent people have been killed along with combatants. 

So although President Obama has proven to be “really good at killing people,” the demonstration has not necessarily been noble.

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WHY IS GOVERNMENT STOCKPILING GUNS, AMMO?

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WND EXCLUSIVE:

Is the U.S. government getting ready for a war we don’t know about?

And, if that’s why Washington is stockpiling massive amounts of ammunition (hollow points, by the way), why is Homeland Security doing the buying instead of the Defense Department?

I have some theories.

Many of you will remember a story I broke a long time ago – about presidential candidate Barack Obama’s little-noticed announcement that, if elected in 2008, he wanted to create a “civilian national security force” as big, as strong and as well-funded as the Defense Department.

Here’s what he actually said at a campaign stop in Colorado July 2, 2008: “We cannot continue to rely only on our military in order to achieve the national security objectives we’ve set. We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.”

Could what we see happening now in the Department of Homeland Security be the beginning of Obama’s dream and our constitutional nightmare?

We’ve learned more about Obama’s vision since then. Maybe it’s time for a review:

  • He made the campaign promise to build this $439 billion domestic army, but all references to the initiative were inexplicably deleted from the copy of his speech posted on his website while others mysteriously disappeared from transcripts of the speech distributed by the campaign. That was strange – and ominous.
  • At the time, I had never heard anyone use the phrase “civilian national security force” before. But I did a little homework and found out where it originated. It was first proposed by then Bush administration Defense Secretary Robert Gates. On that basis alone, I accurately predicted that, if elected, Obama would name Gates as his own defense secretary. Needless to say, when that appointment came to pass, no media outlet bothered to interview me about my foresight.
  • Still during the campaign of 2008, I suggested that what Obama had in mind might be something very sinister indeed – perhaps “some kind of domestic Big Brother program.”

We never heard another mention of Obama’s “civilian national security force” again. Not in 2008, 2009, 2010, 2011 or 2012.

But that brings us up to 2013 and the highly unusual stockpiling of firearms and ammo by Homeland Security – firearms and ammo that Obama would like to deny to ordinary citizens who are not members of his domestic army.

Well, I hate to say it, but I may have predicted this, too.

In a Halloween column last fall, I stated that, if re-elected, Obama would “declare a full-scale war on his domestic opposition.”

I wasn’t joking. I was deadly serious – so serious, in fact, that I did something I pledged I would never do: Vote for Mitt Romney. It was a matter of self-defense and self-preservation. I said then that a second term of Obama might mean we would never see another free and fair election in America. (I’m not even sure we saw one in 2012.) I suggested due process would go the way of the horse and buggy. I said I expected Obama would move to shut down or destroy all independent media. I even speculated that his biggest critics would eventually be rounded up in the name of national security.

Think about it.

Why does the civilian Department of Homeland Security need billions of rounds of ammunition?

This is the agency that is responsible for policing the border. But it doesn’t.

This is the agency that is responsible for catching terrorists. But it doesn’t.

So why does Homeland Security need so many weapons and enough hollow-point rounds to plug every American six times?

Maybe this is the “civilian national security force that’s just as powerful, just as strong, just as well-funded” as the Defense Department.

These words – “civilian national security force” – have haunted me ever since I first read them.

Obama has never explained what he meant.

He’s never been called to account for that remark.

Doesn’t this sound like police-state talk to you?

The U.S. Army alone has nearly 500,000 troops. That doesn’t count reserves or National Guard. In 2007, the U.S. defense budget was $439 billion. No one knows what the budget is today because Congress stopped passing budgets when Obama took office.

Is Obama serious about creating some kind of domestic security force bigger and more expensive than that? Is this part of his second-term agenda?

He has also set up, as I have reported, a new homeland security bureaucracy to operate under his own direction.

I think it’s worth recalling here that just over a year ago both houses of Congress unwisely passed the defense reauthorization bill that killed the concept of habeas corpus – legislation that authorized the president to use the U.S. military to arrest and indefinitely detain American citizens without charge or trial.

That legislation would empower a lame-duck Obama to use all of the power of the federal government – constitutional and unconstitutional – to target his political enemies.

If any Republican, conservative, independent journalist, pro-life activist, returning veteran, gun-rights activist, constitutionalist, Bible believer or critic of Obama thinks they will be safe in a second term under this would-be despot, they had better think again – real fast.

The “civilian national security force” is not here to protect any of them. It’s here to destroy the opposition. It’s here to destroy liberty. It’s here to destroy the Constitution.
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Obama preparing country for coup against Constitution

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During his October 3rd radio broadcast, conservative host and author Mark Levin warned his listeners that President Obama is moving beyond the current partial government shutdown and on to the debt ceiling. As he campaigns against Republicans, Obama is creating fear among those on government support programs and even in the financial markets, that Tea Party “extremists” will allow the government to “default,” paving the way for low-information Americans to support him as he bypasses Congress and unilaterally takes control of the country’s economy:

Default, default, default…why is he saying that? Just to scare people? Well, that’s part of it, obviously. But, it’s more than that, ladies and gentlemen. Barack Obama is plotting, that if he can’t get what he wants out of the House Republicans, that if he can’t get his Plan A, and get Boehner and the Republicans to buckle – not just on the Continuing Resolution – but on the debt ceiling, then he’s got his Plan B.

His Plan B is the most egregious attack on our Constitution by a President, not just in modern history, but in all our history, if, in fact, he unleashes it…

Levin said that, urged on by Democrats like Nancy Pelosi and Bill Clinton, Obama is primed to bypass Congress, “to raise the debt ceiling unilaterally as President of the United States, using the 14th Amendment as a fig leaf, to seize from Congress the power of the purse.”

Observing that Obama is already calling for liberal ideologues and academics to provide cover for his plan, Levin noted a recent New York Times op-ed by Henry J. Aaron, a senior fellow at the Brookings Institution, who point-blank recommends that Obama should “ignore the debt ceiling,” since doing so is the “least bad” law for him to break.

Under the dubious premise that the United States will default on its debts, and thereby incur a “full-blown constitutional crisis,” should the debt ceiling not be raised, Aaron writes that he agrees with Columbia Law professors Neil H. Buchanan and Michael C. Dorf whoargued that Obama’s disregard of the debt ceiling would be less incriminating than placing the nation in “default.” Aaron primes the courts as well for the ultimate plan:

In this case, the consequences are so overwhelmingly on one side that they cannot be ignored by the president and should not be ignored by the courts. If the debt ceiling is not increased, the president should disregard it, and honor spending and tax legislation.

A decision to cut spending enough to avoid borrowing would instantaneously slash outlays by approximately $600 billion a year. Cutting payments to veterans, Social Security benefits and interest on the national debt by half would just about do the job. But such cuts would not only illegally betray promises to veterans, the elderly and disabled and bondholders; they would destroy the credit standing of the United States and boost borrowing costs on the nation’s $12 trillion publicly held debt.

As Romina Boccia at the Heritage Foundation wrote recently, however, refusing an immediate hike in the debt limit does not automatically translate into the “crisis” that Obama and his supporters would like Americans to embrace:

If Congress does not raise the debt limit by mid-October, the Treasury would not necessarily default on debt obligations. Even while cash-strapped, the Treasury can reasonably be expected to prioritize principal and interest payments on the national debt, protecting the full faith and credit of the United States above all other spending. It is almost impossible to conceive that the Treasury and the President would choose to default on debt obligations because doing so would have damaging economic consequences.

Cuts in discretionary spending and reform of entitlement programs – beginning with the repeal of ObamaCare, yet a new entitlement – are the ways Congress can place the nation’s budget on a path to balance, says Boccia.

Aaron, however, using a frame of reference that asserts the U.S. is currently in an “economic recovery,” writes that spending cuts cannot be made because it is simply too difficult to decide which programs or education grants to limit.

“No matter how the cuts might be distributed, they would, if sustained for more than a very brief period, kill the economic recovery and cause unemployment to return quickly to double digits,” he writes.

In the end, Levin asserts, Obama is already campaigning and priming the country for his coup of the Constitution, the ultimate “fundamental transformation” of the nation as he has promised:

So, it is he who is prepared to extort and blackmail in ways that most of you, and most of my colleagues in this business can’t even imagine, or don’t even understand. And, if the President of the United States unilaterally lifts the debt ceiling, you can kiss the core functions of Congress goodbye, you can kiss this Republic goodbye, once and for all. And, then, I think, the focus can be on the Liberty Amendments.

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Pentagon Official: Obama Is Purging Military Commanders

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Nine senior commanding generals have been fired by the Obama administration this year, leading to speculation by active and retired members of the military that a purge of its commanders is underway.

Retired generals and current senior commanders that have spoken with TheBlaze say the administration is not only purging the military of commanders they don’t agree with, but is striking fear in the hearts of those still serving.

The timing comes as the five branches of the U.S. armed forces are reducing staff due to budget cuts, and as U.S. troops are expected to withdraw from Afghanistan next year.

“I think they’re using the opportunity of the shrinkage of the military to get rid of people that don’t agree with them or not tow the party line. Remember, as (former White House chief of staff) Rahm Emanuel said, never waste a crisis,” a senior retired general told TheBlaze on the condition of anonymity because he still provide services to the government and fears possible retribution.

“Even as a retired general, it’s still possible for the administration to make life miserable for us. If we’re working with the government or have contracts, they can just rip that out from under us,” he said.

Retired U.S. Army Maj. Gen. Paul Vallely, an outspoken critic of the Obama administration, said the White House fails to take action or investigate its own, but finds it easy to fire military commanders “who have given their lives for their country.”

“Obama will not purge a civilian or political appointee because they have bought into Obama’s ideology,” Vallely said. “The White House protects their own. That’s why they stalled on the investigation into fast and furious, Benghazi and Obamacare. He’s intentionally weakening and gutting our military, Pentagon and reducing us as a superpower, and anyone in the ranks who disagrees or speaks out is being purged.”

A Pentagon official who asked to remain nameless because they were not authorized to speak on the matter said even “young officers, down through the ranks have been told not to talk about Obama or the politics of the White House. They are purging everyone and if you want to keep your job — just keep your mouth shut.

THE NINE MILITARY COMMANDERS FIRED THIS YEAR BY THE OBAMA ADMINISTRATION

Blaze Sources: Obama Purging Military Commanders

Gen. Carter Hamm, Army

Served as head of the United States African Command during the bloodshed in Benghazi, Libya when four American citizens, including Ambassador Christopher Stevens and two retired Navy Seals, were murdered by militants on Sept. 11, 2012. Senior military officials told TheBlaze Hamm was extremely critical of the Obama administration, including when reinforcements were not sent to help the U.S. citizens under attack in Benghazi. Hamm “resigned and retired” in April 2013.

Blaze Sources: Obama Purging Military Commanders

Rear Adm. Charles Gaouette, Navy

Commander of Carrier Strike Group Three. He recently served as deputy commander of the U.S. Naval Forces, U.S. Central Command. He was in charge of Air Craft Carriers in the Mediterranean Sea the night of the Benghazi assault on Sept. 11, 2012. Under testimony, he told Congress there may not have been time to get the flight crews to Benghazi, but left the door open when he told Rep. Trey Gowdy (R-S.C.) under cross-examination that he could have launched aircraft to the destination. He was later accused of using profanity in a public setting and making at least two racially insensitive comments. While he was cleared of any criminal violations under the Uniform Code of Military Justice, he still faced administrative penalties that have ended his career.

Blaze Sources: Obama Purging Military Commanders

Maj. Gen. Ralph Baker, Army

Major General Baker served as commander of the Joint Task Force-Horn at Camp Lamar in Djibouti, Africa. According to several military officials who spoke to TheBlaze, he was also involved in some aspect with the Benghazi incident Sept. 11, 2012. He was relieved of command and fired for allegedly groping a civilian, but no assault charges or sexual misconduct charges were filed with military JAG officials.

Blaze Sources: Obama Purging Military Commanders

Brigadier Gen. Bryan Roberts, Army

General Roberts took command of Fort Jackson in 2011. He was considered a rising star in his field and served in Iraq during his service as the commanding officer of the 2nd Brigade Combat Team. He was the deputy commanding general of the United States Army Recruiting Command at Fort Knox, Ky. He was relieved of duty and fired for adultery — still on the books in the United States Code of Military Justice but rarely since President Bill Clinton’s indiscretions.

Blaze Sources: Obama Purging Military Commanders

Maj. Gen. Gregg A. Sturdevant, Marine Corps

Director of Strategic Planning and Policy for the U.S. Pacific Command and commander of the aviation wing at Camp Bastion, Afghanistan. He was a highly-decorated Marine with two Naval and Marine Commendations, two Naval and Marine Good Conduct medals, as well as the Air Medal with a gold star. He was one of two commanding officers suddenly relieved of command and fired from the military for failure to use proper force protection at the camp after 15 Taliban fighters attacked Camp Bastion on Sept. 14, 2012, resulting in the deaths of Lt. Col. Christopher K. Raible, 40, and Sgt. Bradley W. Atwell, 27.

Blaze Sources: Obama Purging Military Commanders

Maj. Gen. Charles M.M. Gurganus, Marine Corps

Regional commander in the Southwest and I Marine Expeditionary Force in Afghanistan. Highly decorated with a Defense Superior Service Medal, two Legion of Merit with Valor, and three Meritorious Service Commendations. According to several military officials, Gurganus questioned having to use Afghan security patrols alongside American patrols after two officers were executed at their desk and a platoon was lead into an ambush on the front lines.

Blaze Sources: Obama Purging Military Commanders

Lt. Gen. David Holmes Huntoon Jr, Army

Served as the 58th Superintendent of the United States Military Academy at West Point, N.Y. He graduated from the same academy in 1973 and had served in Senior Planning and Education Services through the majority of his career. He was “censored” for “an investigation” into an “improper relationship” according to the Department of Defense. Nothing was released to the nature of the improper relationship. Nothing was even mentioned if an actual investigation even took place.

Blaze Sources: Obama Purging Military Commanders

Vice Adm. Tim Giardina, Navy

Deputy Commander of the United States Strategic Command. He was commander of the Submarine Group Trident, Submarine Group 9 and Submarine Group 10, where every single one of the 18 Nuclear Submarines with Nuclear Trident Missiles of those three groups were in his command. This commander earned six Legions of Merit, Two Meritorious Service Medals, two Joint Service Commendation Medals, and several other medals and ribbons. He is under criminal investigation for the alleged use of counterfeit gambling chips, while playing a poker game at a western Iowa casino.

Blaze Sources: Obama Purging Military Commanders

Major Gen. Michael Carey, Air Force

Commander 20th Air Force in charge of 9,600 people and 450 Intercontinental Ballistic Missiles at three operational wings and served in both Operation Iraqi Freedom and Operation Enduring Freedom. Carry was fired October 11, 2013, for “personal misbehavior,” according to ABC News. Pentagon and Air Force senior officials have remained relatively tight-lipped about Carry’s firing.

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The Shut Down Shuts Down And Obama Get’s His Way

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The Senate is ending the government shutdown. By the time you read this, the Senate will likely have voted on a bill to fund the government through January 15 of next year and to raise the Federal debt limit until February 7. The only GOP “win” in the Senate bill involves new requirements that Obamacare buyers seeking government subsidies must prove their qualifications by demonstrating low income.

With a House vote expected later in the evening, President Barack Obama is expected to sign off on the bill before the Thursday debt limit “deadline,” as forecast by the U.S. Treasury.

House Speaker John Boehner (R-Ohio) is not expected to delay or attempt to amend whatever the Senate is passing. “We fought the good fight; we just didn’t win,” he said Wednesday on a Cincinnati radio show. “There’s no reason for our members to vote ‘no’ today,” he said later.

Boehner’s full capitulation comes just a day after House Republicans attempted to counter the Senate bill by cobbling together their own last-minute plan before realizing the votes to see it through simply weren’t there.

Even Senator Ted Cruz (R-Texas), who had stood firm against the debt limit deal unless Congress voted to defund Obamacare, stood aside Wednesday to allow the Senate to expedite a vote – even though   Senate Majority Leader Harry Reid (D-Nev.) cannot bring the measure before the full Senate for consideration today without unanimous consent.

Judging from conservative comments across the internet, there’s a great deal of ambivalence among Republicans as to whether Cruz is to be praised or blamed for his role in the shutdown debate – including Wednesday’s go-along.

On one hand, Cruz mobilized whatever conservative support might have been latent among Congressional GOP leaders and their constituents. He did strike early and often – when tapping into public opinion to defund Obamacare and pressuring Congress to listen to the people’s will would have mattered. He had little GOP support, as the ensuing weeks proved.

On the other hand, there’s no denying that Cruz kept up his tough talk while dialing down his walk, once it became clear that he and Mike Lee (and maybe Rand Paul) were becoming an increasingly isolated three-man army within their own party’s Senate bloc. He or Lee or anyone could filibuster today’s Senate vote and bide more time for leveraged compromise, if leveraged compromise were in the offing.

But the majority of spineless Senate Republicans simply wouldn’t sit at Cruz’ table. A unified pushback against the Democrats never stood a chance of coming together from the balkanized ranks of Republican Senators.

And it’s important to remember there’s little gain in vilifying the few Congressmen who put up a principled fight, when the entire charade was perpetrated from the far left. If Obama and Reid and lock-step Democrats weren’t hell-bent on borrowing more money – Obamacare concessions be damned – there would never have been a fight between the GOP-controlled House and the Democratic-controlled Senate in the first place.

Instead, we’re on track to make debt-ceiling history once again. Now that Obama and the Dems have carte blanche, we should be ticking past the $17 trillion threshold any day now.

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Obama Administration Proposes 2,300-Page “New Constitution”

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The U.S. Constitution leaves too many areas open to interpretation; a New Constitution of 2,300 pages (+ 200 redacted secret pages) is the solution.

The Obama Administration has proposed replacing the current U.S. Constitution (4,543 words, including the signatures with a 2,300-page “new Constitution” that in the words of an administration spokesperson, “clears up the gray areas in the current Constitution.”

The proposal was launched after the success of two recent 1,000+ page pieces of legislation, the Affordable Care Act and the Dodd-Frank financial reform act.

An additional 200+ pages of the “new Constitution” are redacted due to the sensitive nature of the National Security-related amendments.

Lobbyists from key industries were invited to contribute amendments to the new Constitution;” constitutional legal experts were also invited to submit improvements to the current law of the land.

Some critics who have reviewed the 2,300 pages of the proposed “new Constitution” have stated that the document is impenetrable even to those with law degrees. Average citizens “will be unable to understand the laws that govern their lives.”

Other observers note that the complexity and length of legislation such as the Affordable Care Act and the Dodd-Frank financial reform act are already beyond the comprehension of all but a handful of experts.

An administration spokesperson defended the proposed re-write on the grounds that “the new Constitution will provide the clarity that people want in their Constitution.”
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Catastrophic Default Looms As Global Economy On The Verge Of Collapse

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The foundation for the original financial architecture and economic systems of the modern era was laid over the last two to three centuries.  Much of the actual architecture and various systems were designed, engineered and constructed during a time that would be considered the Stone Age when compared to the Information Age of 2013.  Herein lies the crux of the matter.

Way back in the days there were relatively few stock and bond exchanges, as well as limited currency and commodity trading. Of course, real estate investments have always been around but certainly not in the form of Real Estate Investment Trusts, Real Estate Limited Partnerships, and Collateralized Debt Obligations that we see today.

Over the last century there has been exponential growth experienced in every single market across the globe.  Equity, bond, currency, commodity, real estate, derivative to name the primaries.  Each of their original trading platforms were built to accommodate a vastly different world.  You could say that the foundation specs were quite minimal, especially relative to the 21st century.

Was Superstorm Sandy really an OMEN?

By way of an analogy we all saw Superstorm Sandy blow through the Northeast in October of 2012.  As it wended its way though New York City, what was revealed was just how vulnerable the Big Apple really is.  Especially the business district in Lower Manhattan.  Even the subway lines from Wall Street down to the Battery were incapacitated for an unheard of amount of time.  Much of Wall Street all the way to the Battery was either without power or completely shut down for days after the storm.

What’s the point?

The city of New York was also built over a few centuries.  However, much of the infrastructure was built over the past one hundred years.  Each decade of expansion brought with it new layers of technology and building materials and design changes.

As each new phase of construction was overlaid on top of the preceding one, the infrastructure became burdened by the outdated or obsolete technology from previous times.  Equipment and machinery that was old and worn out became easily stressed when forced to operate under extraordinary pressures such as weather events like Superstorm Sandy.  Likewise, inferior parts and substandard components served to further weaken the entire system, especially the older infrastructure and creaking architecture, just as we saw happen in the wake of Sandy.

Images from the Metropolitan Transit Authority of Sandy damage in the NYC area.

The following statement concerning technospheric breakdown accurately describes not only the predicament of NYC infrastructure, it’s also applicable to the current state of the global economic foundation and financial architecture.

“Equipment, machinery and technology which has not been proportionately upgraded to meet obvious requirements, ever-growing needs, newly emerging challenges and contingencies of the 21st century will begin to fail and breakdown at an ever-increasing rate.”
– “Technospheric Breakdown: Ongoing, Ubiquitous and Unstoppable

When the economic foundation cracks and the financial architecture teeters

Herein lies the greatest challenge of the 21st century regarding the consequences of globalization and current state of worldwide commerce.  The world is now one huge marketplace. However, the current global marketplace was assembled over decades (and centuries) by the piecing together of a multitude of little markets. A veritable hodgepodge of financial patchwork and economic mishmash have been somehow jumbled together to make it all stick together to function as a cohesive global economy.

How the markets (read global marketplace) continues to function, given all of the obvious flaws and inherent weaknesses  is anybody’s guess. Truly, only by the daily manipulations and monthly machinations of the Hidden Hand does it really continue to present some semblance of order and efficiency. Were it not for the artificially propping up of so many collapsing platforms, the whole House of Cards would have fallen many years ago. The following quote sums up the true state of affairs quite well.

“The global money matrix, worldwide financial architecture and planetary economic landscape most closely resemble the proverbial House of Cards in the form of a Pyramid-Ponzi scheme superstructure built on quicksand.”
– “The FOUR HORSEMEN Herald the Death Knell of ‘Free Market’ Capitalism

US Government Shutdown, Debt Ceiling, and Budget Debate

Clearly Obamacare has served as a worthy pretext to initiate the much more serious issues facing the US Government and American people. Whereas it has the potential to bankrupt the nation over the long term, so does the failure to reign in the burgeoning $17 trillion dollar debt and ballooning federal budget deficits.

In this regard, Oct. 17 functions merely as the latest in a long series of wakeup calls. Managing the largest economy on earth with virtually no budgetary consensus or attention to a catastrophic national debt level is a recipe for disaster. Overlaying the most costly and forced piece of legislation (aka Obamacare) during this time of economic turmoil and financial uncertainty has only further upped the ante.

Kicking-the-can

No, the proverbial CAN can no longer be kicked down the road. And to continue to do so will only make matters much worse. The various market bubbles, which are expanding against all odds at this very moment, will deflate sooner or later. If they pop in a disorderly fashion, it will not be a pretty picture.

There’s no question that the derivative market provides the glue, tape and staples which hold the entire House of Cards together. The myriad bets being placed and hedge positions being held are literally keeping this global Ponzi scheme from falling apart. Therefore, it’s imperative that serious regulatory controls be enacted for this ever-burgeoning derivative market.  Otherwise, the consequences will be too great to even consider putting “Humpty Dumpty back together again”.

It would be much better for every stakeholder playing this game, if the current opportunity (read government shutdown) for a reality check triggers a genuine attempt toward finding real solutions. Denial is no longer an option. The whole world will fall victim to whatever financial apocalypse and/or economic armageddon awaits in the absence of a durable resolution.

If October 17th comes and goes without the President and Congress appropriately addressing the actual systemic issues related to government spending, tax reform and the national debt, the USA risks even greater calamity when things do reach the final breaking point.

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12 Very Ominous Warnings About What A U.S. Debt Default Would Mean For The Global Economy

american-debt-economic-collapse

A U.S. debt default that lasts for more than a couple of days could potentially cause a financial crash unlike anything that the world has ever seen before.  If the U.S. government purposely wanted to damage the global financial system, the best way that they could do that would be to default on U.S. debt obligations.  A U.S. debt default would cause stocks to crash, would cause bonds to crash, would cause interest rates to soar wildly out of control, would cause a massive credit crunch, and would cause a derivatives panic that would be absolutely unprecedented.  And that would just be for starters.  But don’t just take my word for it.  These are the things that top financial experts all over the planet are saying will happen if there is an extended U.S. debt default.

Because they are so close together, the “government shutdown” and the “debt ceiling deadline” are being confused by many Americans.

The “partial government shutdown” that we are experiencing right now is pretty much a non-event.  Yeah, some national parks are shut down and some federal workers will have their checks delayed, but it is not the end of the world.  In fact, only about 17 percent of the federal government is actually shut down at the moment.  This “shutdown” could continue for many more weeks and it would not affect the global economy too much.

On the other hand, if the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous.

And if the U.S. government is eventually forced to start delaying interest payments on U.S. debt (which could potentially happen as soon as November), that would be absolutely catastrophic.

Once again, just don’t take my word for it.  The following are 12 very ominous warnings about what a U.S. debt default would mean for the global economy…

#1 Gerald Epstein, a professor of economics at the University of Massachusetts Amherst: “If the US does default, that will make the Lehman Brothers bankruptcy look like a cakewalk”

#2 Tim Bitsberger, a former Treasury official under President George W. Bush: “If we miss an interest payment, that would blow Lehman out of the water”

#3 Peter Tchir, founder of New York-based TF Market Advisors: “Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman”

#4 Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp: “We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down”

#5 Jim Grant, founder of Grant’s Interest Rate Observer: “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”

#6 Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”

#7 Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”

#8 The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”

#9 Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”

#10 Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”

#11 Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”

#12 Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”

A U.S. debt default could be the trigger for the “nightmare scenario” that so many people have been writing about in recent years.  In fact, it could greatly accelerate the timetable for the inevitable economic collapse that is coming.  A recent Yahoo article described some of the things that we would likely see in the event of an extended U.S. debt default…

A default would upend money markets, destroy bond funds, slam the brakes on lending, cause interest rates to spiral, make our banks insolvent, and deal a blow to our foreign trading partners and creditors around the globe; all of which would throw the U.S. and the world into economic disarray.

And of course stocks would crash big time.  Deutsche Bank’s David Bianco believes that if the U.S. government starts missing interest payments on U.S. Treasury bonds, we could see the S&P 500 go down to 850 by the end of the year.

There would be almost immediate panic among ordinary Americans as well.  In fact, it is being reported that some banks are already stuffing their ATM machines will extra cash just in case…

With just 10 days left to raise the debt ceiling and congressional Republicans threatening to force the government to default on its obligations, banks are taking some dramatic steps to prepare for the economic chaos that would result should the brinkmanship continue.

The Financial Times reports that one major U.S. bank has started stuffing its automatic teller machines with extra cash in preparation for a possible bank run from panicked depositors. The New York Times reports that another bank is weighing a plan to advance funds to customers who rely on Social Security and other government payments that could stop in the event of a default.

Let’s hope that cooler heads will prevail and that a U.S. debt default will be avoided.

Unfortunately, it appears that the Democrats are absolutely determined not to be moved from their current position a single inch.  They have decided to refuse to negotiate and demand that the Republicans give them every single thing that they want.

And who can really blame them for adopting that strategy?  After all, it has certainly worked in the past.  Whenever Democrats have stood united and have refused to give a single inch, the Republicans have always freaked out and caved in eventually.

Will this time be any different?

The funny thing is that once upon a time, Barack Obama was adamantly against any increase in the debt limit.  The following comes courtesy of Zero Hedge

Obama Debt Ceiling

But now Obama says that it is so unreasonable to be opposed to a debt limit increase that any negotiations are out of the question.

So which Obama is right?

If the Democrats will not negotiate, a debt default could still be avoided if the Republicans give in.

And that is what they always do, right?

Perhaps not this time.  Just check out what John Boehner had to say on Sunday

“I, working with my members, decided to do this in a unified way,” the speaker said — with demands to defund, delay or otherwise alter the Affordable Care Act.

Boehner had expected that the Obamacare fight would come during the next vote to raise the debt ceiling, “but, you know, working with my members, they decided, let’s do it now,” he said. “And the fact is, this fight was going to come, one way or another. We’re in the fight. We don’t want to shut the government down. We’ve passed bills to pay the troops. We passed bills to make sure the federal employees know that they’re going to be paid throughout this.”

“You’ve never seen a more dedicated group of people who are thoroughly concerned about the future of our country,” he said of House Republicans. “It is time for us to stand and fight.”

But will the Republicans really stand and fight?

In the past, betting on the intestinal fortitude of the Republican Party has been a loser every single time.

So we’ll see.  Boehner insists that this time is different.  Boehner insists that he is not going to fold like a 20 dollar suit this time.  In fact, when he was asked if the U.S. government was headed toward a debt default if Obama continued to refuse to negotiate, Boehner made the following statement

“That’s the path we’re on.”

The mainstream media has certainly been placing most of the blame at the feet of the Republicans, but at least the U.S. House of Representatives has been trying to get an agreement reached.  The House has voted 26 times since the Senate last voted.  Harry Reid has essentially shut the Senate down until the Republicans fold and give the Democrats exactly what they want.

The funny thing is that this could probably be solved very easily.  If the Democrats agreed to a one year delay to the individual mandate, the Republicans would probably jump at it.  And because of epic technical failures, hardly anyone has been able to get signed up for Obamacare anyway.  So a one year delay would give the Obama administration time to get their act together.

Unfortunately, the Democrats seem absolutely obsessed with the idea that they will not give the Republicans one single inch.  They seem to believe that this will be to their political benefit.

But this is a very dangerous game that they are playing.  The U.S. government must roll over 441 billion dollars of short-term debt between October 18th and November 15th.

If a debt ceiling increase is not in place by that time, it will send interest rates soaring.  Borrowing costs for state and local governments, corporations, and ordinary Americans will go through the roof and economic activity will be hit really hard.

And as detailed above, we could potentially be looking at a financial crash that would make 2008 look like a Sunday picnic.

So let us hope for a political solution soon.  That will at least kick the can down the road for a little bit longer.

If a debt default were to happen before the end of this year, that would bring a tremendous amount of future economic pain into the here and now, and the consequences would likely be far greater than any of us could possibly imagine.

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