Facebook’s Failure May Be Part of Government Plan to Control Internet [Video]

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The 2 Billion Dollar Loss By JP Morgan Is Just A Preview Of The Coming Collapse Of The Derivatives Market

Staff Report | May 11, 2012 | The Economic Collapse Blog

When news broke of a 2 billion dollar trading loss by JP Morgan, much of the financial world was absolutely stunned.  But the truth is that this is just the beginning.  This is just a very small preview of what is going to happen when we see the collapse of the worldwide derivatives market.  When most Americans think of Wall Street, they think of a bunch of stuffy bankers trading stocks and bonds.  But over the past couple of decades it has evolved into much more than that.  Today, Wall Street is the biggest casino in the entire world.  When the “too big to fail” banks make good bets, they can make a lot of money.  When they make bad bets, they can lose a lot of money, and that is exactly what just happened to JP Morgan.  Their Chief Investment Office made a series of trades which turned out horribly, and it resulted in a loss of over 2 billion dollars over the past 40 days.  But 2 billion dollars is small potatoes compared to the vast size of the global derivatives market.  It has been estimated that the the notional value of all the derivatives in the world is somewhere between 600 trillion dollars and 1.5 quadrillion dollars.  Nobody really knows the real amount, but when this derivatives bubble finally bursts there is not going to be nearly enough money on the entire planet to fix things.

Sadly, a lot of mainstream news reports are not even using the word “derivatives” when they discuss what just happened at JP Morgan.  This morning I listened carefully as one reporter described the 2 billion dollar loss as simply a “bad bet”.

And perhaps that is easier for the American people to understand.  JP Morgan made a series of really bad bets and during a conference call last night CEO Jamie Dimon admitted that the strategy was “flawed, complex, poorly reviewed, poorly executed and poorly monitored”.

The funny thing is that JP Morgan is considered to be much more “risk averse” than most other major Wall Street financial institutions are.

So if this kind of stuff is happening at JP Morgan, then what in the world is going on at some of these other places?

That is a really good question.

For those interested in the technical details of the 2 billion dollar loss, an article posted on CNBC described exactly how this loss happened….

The failed hedge likely involved a bet on the flattening of a credit derivative curve, part of the CDX family of investment grade credit indices, said two sources with knowledge of the industry, but not directly involved in the matter. JPMorgan was then caught by sharp moves at the long end of the bet, they said. The CDX index gives traders exposure to credit risk across a range of assets, and gets its value from a basket of individual credit derivatives.

In essence, JP Morgan made a series of bets which turned out very, very badly.  This loss was so huge that it even caused members of Congress to take note.  The following is from a statement that U.S. Senator Carl Levin issued a few hours after this news first broke….

“The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making.”

Unfortunately, the losses from this trade may not be over yet.  In fact, if things go very, very badly the losses could end up being much larger as a recent Zero Hedge article detailed….

Read the full article here.

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The Big Picture: Our Curiously Failing Civilization

By Jack Curtis | May 7, 2012 | American Thinker

Governments around the world are in various stages of financial failure, all seemingly trying to be Argentina.  Curious, no?  Look at debt and deficits; you see government spending issues; most of the few exceptions have other problems.  Look then at global migration patterns showing people leaving poor places for places going broke, an unhappy trend line.  Look anywhere; we can’t seem to govern ourselves worldwide, while people protesting are multiplying everywhere.

The U.S. and the EU can’t stop borrowing and spending, though no one can expect their stultified economies to bear the debt they’ve run up.  Arab riots and civil wars reflect those countries’ corrupt dictators’ inability to sufficiently subsidize the citizens.  Armed insurrections and massive demonstrations plague Russia, India, China, and Latin America; Africa has more than its share of failed and failing states.  The Global Incident Map shows worldwide terrorism and both underlines instability and helps explain the migrations.  Predictable civil order seems lost.

For “rich” Europe and North America, it’s the famous doom of all democracies: the citizens have learned to vote others’ wealth to themselves via a devil’s compact with demagogues.  Once in place, such deals can’t be controlled (Who’s re-elected for shutting off the goodies?) until they outrun available resources and impoverish the economy.  “Kick the can down the road” (meaning past the next election) is the U.S. mantra for postponing the end-game; in the EU, it’s quasi-austerity.  It’s the same game in both places: Save the Banks.  The people?  Let them eat cake…

For everybody outside the rich world, it’s the same thing at one remove.  That rich world has been such an engine of the world economy that most of the rest are, in varying degrees, dependents.  When the rich customer cuts back, the dependent suffers.  For those living hand-to-mouth in the first place, the suffering is worse; that puts those governments at more immediate risk.  If we really look, much post-WWII stability has been a wire-walking façade.

Civilization: a state of social culture characterized by relative progress in the arts, science, and statecraft.  Start with the Babylonians; the picture is later expanded by the multicultural Romans (equal opportunity conquerors) and expanded again by the widely differing but integrated Europeans, Indians, and Chinese.  Perhaps it’s time we recognized an additional element in the mix that now defines civilization: technology.

Modern transport, communication, and information technology have linked the whole planet into a functional unity irrespective of language, culture, religion, or other differences.  Whether very poor or wealthy, educated or illiterate, nearly everybody on earth is in reach of a network of information and services via a common, worldwide technology.  The only obvious threats to that lie with paranoid governments insistent on controlling it and various Luddites intent on its destruction to preserve interests under threat.

Such miracles, like free lunches, carry costs.  One cost of the world’s economic integration: a cold in the rich world quickly produces sneezes everywhere else, an unsung partner of things like just-in-time inventory control.  Another cost is the greater awareness of events and conditions everywhere.  The whole world knows at once of riots anywhere; if cell phones organize the rioters, the world knows that, too.  And how a local dictator reacts will appear quickly on YouTube, with any blood in full color.  Poorly informed people are becoming much more knowledgeable and sophisticated, seeing how others live, and developing greater expectations that their governments aren’t prepared to accommodate.  As citizens’ expectations rise, governments facing them before a world audience find their control of events affected, more so when such strategic interests as oil are involved.  An event anywhere can light a fire under a planetary pot; the technology that spreads civilization also expands risk.

When considering political collapse, we look for the signature social meltdown; a strong civilization may work through bad finances.  Before they’re swept from history’s stage, civilizations rot from inside.  What do we see?

Western civilization was the Judeo-Christian replacement for failed Classical Europe.  Its centrality was the general acceptance of Christian morality, built on widespread religious belief and embedded in governments and law.  In what’s being called a post-Christian era, that’s dissolving; Western citizens are struggling with each other over such basics as human rights, obligations, behavior, and the value of human life.

Read the full article here.

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The Obama Contradiction

By Tom Engelhardt | April 29, 2012 | TomDispatch.com

Weakling at Home, Imperial President Abroad 

He has few constraints (except those he’s internalized).  No one can stop him or countermand his orders.  He has a bevy of lawyers at his beck and call to explain the “legality” of his actions.  And if he cares to, he can send a robot assassin to kill you, whoever you are, no matter where you may be on planet Earth.

He sounds like a typical villain from a James Bond novel.  You know, the kind who captures Bond, tells him his fiendish plan for dominating the planet, ties him up for some no less fiendish torture, and then leaves him behind to gum up the works.

As it happens, though, he’s the president of the United State, a nice guy with a charismatic wife and two lovely kids.

How could this be?

Crash-and-Burn Dreams and One That Came to Be

Sometimes to understand where you are, you need to ransack the past.  In this case, to grasp just how this country’s first African-American-constitutional-law-professor-liberal Oval Office holder became the most imperial of all recent imperial presidents, it’s necessary to look back to the early years of George W. Bush’s presidency.  Who today even remembers that time, when it was common to speak of the U.S. as the globe’s “sole superpower” or even “hyperpower,” the only “sheriff” on planet Earth, and the neocons were boasting of an empire-to-come greater than the British and Roman ones rolled together?

In those first high-flying years after 9/11, President Bush, Vice President Dick Cheney, and their top officials held three dreams of power and dominance that they planned to make reality.  The first was to loose the U.S. military — a force they fervently believed capable of bringing anybody or any state to heel — on the Greater Middle East.  With it in the lead, they aimed to create a generations-long Pax Americana in the region.

The invasion of Iraq in 2003 was to be only the initial “cakewalk” in a series of a shock-and-awe operations in which Washington would unilaterally rearrange the oil heartlands of the planet, toppling or cowing hostile regimes like the Syrians and the Iranians.  (A neocon quip caught the spirit of that moment: “Everyone wants to go to Baghdad. Real men want to go to Tehran.”)  This, in turn, would position the U.S. to control the planet in a historically unique way, and so prevent the rise of any other great power or bloc of nations resistant to American desires.

Their second dream, linked at the hip to the first, was to create a generations-long Pax Republicana here at home. (“Everyone wants to go to Kansas, but real men want to go to New York and LA.”)  In that dream, the Democratic Party, like the Iraqis or the Iranians, would be brought to heel, a new Republican majority funded by corporate America would rule the roost, and above it all would be perched a “unitary executive,” a president freed of domestic constraints and capable — by fiat, the signing statement, or simply expanded powers — of doing just about anything he wanted.

Though less than a decade has passed, both of those dreams already feel like ancient history.  Both crashed and burned, leaving behind a Democrat in the White House, an Iraq without an American military garrison, and a still-un-regime-changed Iran.  With the arrival on Bush’s watch of a global economic meltdown, those too-big-not-to-fail dreams were relabeled disasters, fed down the memory hole, and are today largely forgotten.

It’s easy, then, to forget that the Bush era wasn’t all crash-and-burn, that the third of their hubristic fantasies proved a remarkable, if barely noticed, success.  Because that success never fully registered amid successive disasters and defeats, it’s been difficult for Americans to grasp the “imperial” part of the Obama presidency.

Remember that Cheney and his cohorts took power in 2001 convinced that, post-Watergate, post-Vietnam, American presidents had been placed in “chains.”  As soon as 9/11 hit, they began, as they put it, to “take the gloves off.”  Their deepest urge was to use “national security” to free George W. Bush and his Pax Americana successors of any constraints.

From this urge flowed the decision to launch a “Global War on Terror” — that is, a “wartime” with no possible end that would leave a commander-in-chief president in the White House till hell froze over.  The construction of Guantanamo and the creation of “black sites” from Poland to Thailand, the president’s own private offshore prison system, followed naturally, as did the creation of his own privately sanctioned form of (in)justice and punishment, a torture regime.

At the same time, they began expanding the realm of presidentially ordered “covert” military operations (most of which were, in the end, well publicized) — from drone wars to the deployment of special operations forces.  These were signposts indicating the power of an unchained president to act without constraint abroad.  Similarly, at home, the Bush administration began expanding what would once have been illegal surveillance of citizens and other forms of presidentially inspired overreach.  They began, in other words, treating the U.S. as if it were part of an alien planet, as if it were, in some sense, a foreign country and they the occupying power.

With a cowed Congress and a fearful, distracted populace, they undoubtedly were free to do far more.  There were few enough checks and balances left to constrain a war president and his top officials.  It turned out, in fact, that the only real checks and balances they felt were internalized ones, or ones that came from within the national security state itself, and yet those evidently did limit what they felt was possible.

Read the full article here.

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Choosing the Road to Prosperity: Why We Must End Too Big to Fail — Now

		
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The Ryan Test: Demagoguery Versus Ideas

August 12, 2012 By John Malcolm Leave a Comment

By Jonathan S. Tobin | August 11, 2012 | Commentary Magazine As John wrote earlier today, liberals are convinced that Mitt Romney’s choice of Paul Ryan to be his running mate offers them a golden opportunity to savage the Republicans about the Wisconsin congressman’s budget plans. Predictably, the New York Times delivered one of the first such salvos in its editorial posted […]

Smoking Obama’s Crack and Yearning for the Mud

August 12, 2012 By John Malcolm Leave a Comment

By Vanderleun | August 10, 2012 | American Digest [From 2008. Only the names have been changed because the target has changed.] This downward flight of intellectuals has been going on ever since the Romantic movement began its counter-revolution a couple hundred years ago. No matter how much they flap their lips it’s a fall, not […]