by Stephen Lendman
Capitalism has succeeded in capturing governments around the world.

German DAX stock exchange board. The stuff that dreams are made of.

Forget everything you learned about markets, economics and finance. Perhaps Newton, Galileo, Copernicus, Darwin, Freud, Einstein, and other noted figures were wrong.  Central banks run today’s world. Major ones matter most. Money printing madness controls everything. Love doesn’t make the world go round. Liquidity-driven markets reflect the power of bankers to do it. 

They’re more powerful than standing armies. They can levitate markets. They can enrich themselves at the same time.  They can do it while economies crater. The power of massive liquidity infusions combined with market manipulation generates huge profits.

What can’t go on forever, won’t. What’s going on now defies reason. Disconnect barely explains it. US equity markets hit record highs. So did Germany’s DAX. Japan’s Nikkei reached a five and a half year high. One recent headline read “Central banks pop champagne corks as stock markets soar.” Another said “Which European Market Will Hit a Record High Next?”

Turkey’s BIST-100 topped 91,000 for the first time. Switzerland’s SMI has a ways to go. It’s headed in the right direction. Sweden’s OMX Stockholm 30 and the OMX Nordic are closer.  London’s FTSE 100 looks poised for a record high. It could do so in weeks. Who said defying gravity’s impossible? Markets are doing it with ease.  Record valuations bear no relation to economic reality. Today’s disconnect is unprecedented. Paul Craig Roberts expects an eventual triple bubble explosion. On the one hand, he says “rich elites are stealing everything for themselves.” At the same time, he cites “three of the biggest bubbles in history.”

“The bond market, stock market and the US dollar” are levitating. (S)omething is going to go. This is possibly one of the riskiest years in Western civilization.”

Combined with police state enforcement and imperial wars, it’s menacing.  Australian economist Steve Keen‘s Debtwatch web site “analyses the collapse of the global debt bubble.” He calls America’s stock market a giant one. It’s debt-fueled. Margin debt levels match 2000 and late 2007 highs, he says.

“Nothing can accelerate forever. At some point the acceleration stops, and when it does the market breaks.”   He believes trouble’s coming in one or two years. He thinks America’s stock market will burst the way Japan’s did in the early 1990s.

The key Nikkei Index peaked near 39,000. It did so on 1989’s last trading day. It fell 63% in less than three years. Rolling recessions and recoveries followed. It didn’t bottom until February 2009. It closed at 7,163. On May 17, it closed at 15,138.

According to Keen:

“I think we’re (heading for) a long slow bleed, much longer and slower than the Japanese stock market crash. The dynamics are similar.”

“In 500 years time,” he added, “people will look back and see this as the biggest debt-financed bubble in human history and ask, ‘why didn’t we realize it?’ ”  Bruce Kasting worked on Wall Street for 25 years. He’s no longer there. His blog site discusses financial issues. He calls Bernanke’s policy “reckless endangerment.”  He claims he can cease QE with no ill consequences. “It’s never been done before. Not by the Fed. Not by any Central Bank.”

“To think that such a daunting task can be accomplished without negative consequences is foolish,” said Kasting.

PIMCO’s Bill Gross sees bubbles everywhere. It doesn’t mean they’ll pop immediately.  Speculators assume Fed policy will remain accommodative “over the long-term and under the assumption that the US economy is doing better than most economies.”  Lots of money is chasing lots of risk, says Gross. Central banks are “blowing bubbles. When that stops, there will be repercussions. Not just in the bond market but in the stock market as well and a developing one in the hous(ing) market.”

Gross warned that the multi-decade US bond bull market ended. Higher interest rates will eventually follow. A 1% rise means over $100 billion in more interest. It’s negative for economic growth. Most developed countries have debt to GDP ratios above 100%.   They’re manageable with record low interest rates. Higher ones risk default in troubled economies. European PIIGS countries are most vulnerable (Portugal, Italy, Ireland, Greece and Spain).

Marc Faber warns that “something will break very badly.”

“In the 40 years I’ve been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality.”

“Asset markets are in the sky and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.”

Graham Summers warns “It’s official: Stocks are in a bubble.” It’s worse than anything he’s seen in his career.  Stocks rallied every Tuesday for 17 straight weeks. Traders “are now conditioned to play for this move.”

It’s “POMO day.” The Fed pumps markets with liquidity. Doing so drives stocks higher.

“The market is beyond overstretched. We have not had a 5% correction in six months. Stocks have gone almost straight up for 89 days (we haven’t had a 3+day correction in that long).”

“This is an all time record. The last time stocks rallied without a 3+ day correction was in the buildup to the Crash of 1987.”

“Copper is great at predicting economic growth.” It’s trending lower. Stocks are poor predictors. Major divergences between them will be resolved sharply.

Rampant insider selling continues. Stocks are disconnected from reality. They’re “totally out of control.” Most days hit record highs. It’s unprecedented.

“At this point, no long term investor in their right mind should be buying. This is especially true given that the S&P 500 is now not only totally disconnected from economic reality, but is disconnected from every other asset class.”

Stocks diverged from bonds, gold, copper and oil. They’re last to react. “This bubble will end as all bubbles do: in disaster.”

Main street conditions are worse than during the Great Depression. Europe’s as disconnected as America. More on that below.

Paul Craig Roberts calls offshoring US jobs a greater threat than terrorism. It’s been ongoing for years. It’s most felt when jobs are scarce. Good ones are fast disappearing.  Politicians remain in denial. Millions more jobs remain vulnerable. Displaced employees “left unemployed or in lower paid work have a reduced presence in the consumer market.”

Outsourcing jobs erodes US economic strength. China, India, Brazil and other developing countries gain at America’s expense.  Instead of using the nation’s resources for economic growth, Washington prioritizes militarism, permanent wars, and corporate giants’ interests at the expense of ordinary people.

It’s madness. It’s self-destructive. It sacrifices longterm economic health for short and intermediate term gains. WW III already started. So far, it’s unlike WW I and II. It’s international, unconventional, asymmetric, disruptive, anti-democratic, lawless, low to higher intensity, political, psychological and financial.

Financial schemes involve:

• massive wealth transfers from ordinary people to corporate giants and super-rich elites;

• bail in confiscation of assets;

• lawless sanctions, embargoes and blockades;

• schemes to control natural resources, trade and money;

• entrapping nations in unrepayable debt;

• manufacturing financial crises, and more.

On May 16, the Global Europe Anticipation Bulletin (GEAB) headlined “Systemic crisis 2013: with record exchange highs, the planet’s imminent plunge into recession.”   Prevailing calm is deceptive. It often precedes the storm. “(S)everal signals show that a reversal in the economic situation is imminent.”

Economies never recovered from 2008. Conditions continue to deteriorate. Europe’s in recession. More on that below. China’s growth is slowing. It exports are declining.  Australia’s export dependent economy makes it a good indicator. It’s “struggling. Consumers are also marking time. US wholesale and retail sales are on the decline.”

Most “US benchmark indices are swinging into the red.” Major banks know a storm looms. They’re using “all the means at their disposal (legal and illegal) to shelter themselves.”

BRICS countries are some of the world’s fastest growing. They have their own strategy. They’re gradually moving away from the dollar.

They’re “building a (multipolar) world system where they would have greater representation.” They’re doing so at the expense of America and other Western countries.  America’s economy is troubled. Four years of QE haven’t worked. Pushing on a string defines Fed policy. Money sits on bank balance sheets as excess reserves. Credit expansion’s anemic. Manufacturing’s contracting. Fiscal tightening exacerbates things.

Europe’s in recession. Southern Europe’s in Depression. Eurozone economic data are negative. In Q I, Italy contracted 0.5% from the previous quarter.  Seven straight quarterly declines reflect its troubled economy. It’s been so longterm. From 2000 – 2010, it expanded an anemic 2.5%. The current trend is negative. Protracted decline appears likely.

It’s not alone. ECB policy hasn’t worked. Mario Monti’s no more effective than Bernanke. Markets are disconnected from economic reality.  The Eurozone’s in recession. Nine of its 17 countries have negative growth. They include Italy, France, Greece, Spain, Cyprus, Portugal, Belgium, Finland and the Netherlands.

So do EU members Hungary and the Czech Republic. Expect more to follow.  Slovenia’s deeply troubled. It looks like the next Cyprus. Britain teeters on recession. So does Germany. Monetary madness achieved little. Force-fed austerity is self-defeating.

Confiscating bank deposits is the new normal. It’s a diabolical plot. It’s consolidating financial power. It’s price is economic decline. Equities are the last asset class to react. When it does, watch out.

Stephen Lendman lives in Chicago. He can be reached at lendmanstephen@sbcglobal.net.  His new book is titled “Banker Occupation: Waging Financial War on Humanity.”

http://www.claritypress.com/LendmanII.html

Visit his blog site at sjlendman.blogspot.com. 

by Stephen Lendman

The rot is systemic, bipartisan. Both JFK and Nixon set up “enemies” lists to harass via the IRS and other agencies. They are not the only presidents to do so.

More than targeting political enemies is involved. More on than below. The practice is longstanding. Republican and Democrat administrations use the IRS abusively.  During the Coolidge administration, Republican Senator James Couzens investigated the IRS’ predecessor – the Bureau of Internal Revenue (BIR). 

Treasury Secretary Andrew Mellon sued him. University of Virginia Law Professor George Yin called doing so the “greatest tax suit in the history of the world.” At issue was political intrigue, backstabbing, and unintended consequences.

Franklin Roosevelt targeted William Randolph Hearst, Louisiana Governor Huey Long, and anti-administration critic/popular radio host Father John Coughlin. IRS officials investigated their finances.  In the 1940s and 1950s, hundreds of IRS employees were sacked and/or indicted for involvement in widespread corruption and bribery.

San Francisco officials colluded with organized crime. The St. Louis office head, a practicing attorney, represented a client on a tax issue. Doing so was a clear conflict of interest. The Kennedy administration created an Ideological Organizations Audit Project. It did so to investigate conservative groups. It challenged their tax exempt status. Targets included the American Enterprise Institute and Christian Anti-Communist Crusade.

Nixon’s Opponents List and Political Enemies Project became known as his Enemies List.  His administration created the Special Services Staff. It targeted political opponents and activists.  According to his White House Counsel John Dean, it “deal(t) with persons known to be active in their opposition to our Administration; stated a bit more bluntly – how we (could) use the available federal machinery to screw our political enemies.”

In the 1990s, the Senate Finance Committee accused the IRS of “Gestapo-like” conduct. In 1998, the IRS Restructuring and Reform Act followed. At issue was curbing IRS enforcement powers. Little more than doing so nominally was achieved.  Shortly before the 1992 election, the Binghamton, NY Branch Ministries ran full-page newspaper ads. They claimed Clinton promoted policies “in rebellion to God’s laws.”

Doing so was illegal. Tax law prohibits 501c 3 organizations from engaging in electoral politics. In 2001, statistical evidence showed voters in key electoral districts experience disproportionately fewer election year audits.

During the 2004 electoral campaign, a Pasadena, CA All Saints Church minister criticized Bush’s attack, invasion and occupation of Iraq. An IRS investigation followed.  Obama’s accused of using the IRS against conservative non-profit groups and others seeking tax-exempt status. Organizations with “tea party,” “patriot,” or “9/12” in their names were targeted.

So were others challenging Obamacare or federal electoral integrity. All government critics are vulnerable. It’s true under Republican and Democrat administrations. In 2012, former IRS commissioner Douglas Shulman lied. He told House members “there’s absolutely no targeting. This is the kind of back and forth that happens to people.”

The IRS now claims targeting conservative groups was “in no way due to any political or partisan rationale.”

Some NGOs operate legitimately. Others don’t. No more than 49% of a group’s resources can be used for political purposes. Strict rules govern doing so.  In January 2013, Pro Publica discussed five conservative dark money groups. They were active during the 2012 election. The IRS illegally released information about their tax exempt status petitions. Doing so is a felony.

Former Obama Council of Economic Advisors chairman Austan Goolsbee divulged confidential Koch Industries tax information. After not levying gift taxes for decades, the IRS told five donors to conservative NGO advocacy groups that past donations could be taxed. Doing so retroactively raises legitimate concerns.

FOIA-obtained information revealed that the IRS “has long taken the position that (it) can read your emails without a warrant.” Doing so violates the Fourth Amendment.  Once Obamacare’s fully implemented in 2014, the IRS will enforce 47 new tax provisions. Doing so promises to be nightmarish. Giving the agency power over healthcare is scandalous. Enormous harm is likely.

After the Supreme Court’s 2010 Citizens United v. Federal Election Commission ruling, NGOs became more politically active. At the time, Ralph Nader denounced the decision, saying:

It “shreds the fabric of our already weakened democracy by allowing corporations to more completely dominate our corrupted electoral process.”

“It is outrageous that corporations already attempt to influence or bribe our political candidates through their political action committees (PACs), which solicit employees and shareholders for donations.”

“With this decision, corporations can now also draw on their corporate treasuries and pour vast amounts of corporate money, through independent expenditures, into the electoral swamp already flooded with corporate campaign PAC contribution dollars.”

“This corporatist, anti-voter decision is so extreme that it should galvanize a grassroots effort to enact a Constitutional Amendment to once and for all end corporate personhood and curtail the corrosive impact of big money on politics.”

“It is indeed time for a Constitutional amendment to prevent corporate campaign contributions from commercializing our elections and drowning out the civic and political voices and values of citizens and voters.”

“It is way overdue to overthrow “King Corporation” and restore the sovereignty of “We the People”!  Dark money infests politics. America’s political system is scandalous. Duopoly power corrupts it. Voters get the best democracy money can buy.

Corporations, NGO advocacy groups, and other powerful interest groups decide everything. Ordinary people have no say.  Today’s scandal is bipartisan. For example, Senator Pat Toomey (R. PA) accused the IRS of tactics “akin to an enemies list.” In his 2010 senatorial race, conservative NGOs contributed millions of dollars to his campaign.

The criminal class in Washington is bipartisan. Both sides of the isle share guilt. Big spenders flout the law repeatedly. Most do with impunity.  After Citizens United, the IRS struggled to determine which NGOs deserved “social welfare” status. The ruling lets corporations and unions raise and spent unlimited amounts of political money.

Other groups can accept undisclosed contributions as long as their “primary purpose” is apolitical.

House and Senate committees announced investigations. Capitol Hill is rife with corruption. Legislation if enacted won’t improve things. It hasn’t before. It won’t now.  After Watergate, the White House was legally barred from contacting the IRS about tax matters. The agency can only release information about petitions for tax exempt status after they’ve been approved or denied.

On May 16, Public Citizen said the IRS controversy doesn’t “diminish the need for fair and balanced disclosure of corporate political spending.”

According to Public Citizen’s Congress Watch division director Lisa Gilbert:

“The IRS controversy is about partisanship, not disclosure. Tying the IRS’s problems to the SEC rulemaking on corporate political spending is the height of political theater.”

Public Citizen’s Craig Holman added:

“The real issue with the IRS controversy is whether the agency was enforcing the tax code in a partisan, discriminatory manner, not whether electioneering nonprofit organizations should disclose the sources of their campaign funds.”

The Center for Responsive Politics (CRP) headlined “The Real IRS Scandal,” saying:

It’s not about targeting tea party or other conservative groups. It’s “the shocking lack of much scrutiny at all of the vast majority of politically active nonprofits that poured hundreds of millions of dollars into our elections over the last four years.”

CRP executive director Sheila Krumholz and chairman Robert Weinberger explained, saying:

“The majority of the organizations that appear to be most politically active – from groups that run their own ads, like American Action Network and Americans for Prosperity, to the mysterious Center to Protect Patient Rights, which distributes money to other political groups – already have exempt status.”

“There’s little evidence that the IRS is looking into these groups.”

The current scandal will make it harder to do so. Groups targeted “received more scrutiny and suspicion than they deserved.”

“(M)ore regrettable is the long-term damage to the credibility of the IRS as an impartial arbiter of whether organizations merit tax-exempt status.”

“With the surge of dark money into politics, we need to ensure that the IRS is capable of rigorously enforcing the law in a nonpartisan, but also more effective, way.”

“While we focus on the rickety raft of minor Tea Party groups targeted by the IRS, there is an entire fleet of big spenders that are operating with apparent impunity.”

Obama faces a trifecta of scandals. Perhaps more will surface. Cover up followed last September’s Benghazi killings. The official narrative doesn’t wash.  Institutional spying targeted AP. Manufactured national security threats violate press freedom. Doing so is rife.

First Amendment rights are threatened. Dissent increasingly is criminalized. Obama’s targeted more whistleblowers than all previous administrations combined. He’s heading America toward full-blown tyranny. The IRS scandal shows the dark side of electoral politics. America’s system is scandalous. It mocks democracy. It lacks legitimacy.

Monied interests control things. Duopoly power rules. Wealth, power and privilege alone matter. America’s broken system is too corrupted to fix. Change requires tearing it down and starting over.

A good start entails excluding money from politics and creating a level playing field for all political parties and aspirants.

ABOUT THE AUTHOR

Stephen Lendman lives in Chicago. He can be reached atlendmanstephen@sbcglobal.net.  His new book is titled “Banker Occupation: Waging Financial War on Humanity.” http://www.claritypress.com/LendmanII.html

Visit his blog site at sjlendman.blogspot.com.