What would America look like with absolutely no electricity? Could you survive in a world with no lights, no cell phones, no computers, no televisions, no ATMs, no cash registers and no refrigerators? Such a world is not as far away as you might think. A very powerful nuclear blast directly over the center of the continental United States could potentially fry electronic equipment from coast to coast, and it would take months or even years to fully restore power. During that time, the entire country would be plunged into chaos and experts tell us that tens of millions of Americans would die. But even if we are never attacked by a nuclear weapon in that manner, scientists assure us that it is inevitable that a massive electromagnetic blast from the sun will produce a similar result someday anyway. In fact, back in 1859 a giant solar storm that came to be known as “the Carrington Event” fried telegraph machines all across North America and Europe. If a similar event happened today, life as we know it would be brought to an abrupt halt, and chaos would ensue from coast to coast.
In two days, a bold new movie will be released in theaters that portrays what the aftermath of such an event would look like in this country. It is entitled “AMERIGEDDON”, and it was directed by Mike Norris, the son of Chuck Norris. You can view the official trailer for the film right here…
I wish that more movies like this would come out, because most of what Hollywood produces these days is absolute garbage. Our entertainment-addicted society needs films like this that educate and inform, and I hope that as many Americans as possible get a chance to see it because this threat is very real.
In 2001, Congress established a commission to study the EMP threat, and those on the commission examined this problem quite extensively for a number of years. In 2008, members of the commission reported to Congress that they had come to the conclusion that the consequences of such an event would be absolutely catastrophic for this nation…
In 2008, the commission warned that “a high altitude nuclear explosion is one of a small number of threats that can hold our society at risk of catastrophic consequences.” If such an attack were to cause a nationwide blackout lasting as long as a year, up to 90 percent of the American people could die due to starvation, disease and societal collapse.
Personally, I think that the 90 percent figure is too high.
But what if it was just 50 percent of all Americans that died? We are still talking about the most horrific disaster in U.S. history by a very wide margin, and it would essentially mean the end of the Republic.
So what has Congress done about this threat?
Next to nothing, and this has many of the experts quite upset.
Ours is an electronic civilization. Electricity runs everything, including the economy. Electricity sustains the lives of 320 million Americans.
Terrorists could inflict “The greatest injury on the greatest number” by attacking the national electric grid and blacking-out all the life sustaining critical infrastructures.
A nationwide blackout would, in effect, turn the “off switch” for the United States. A terror blackout that lasts one year could kill so many people and cause such chaos that the lights might never come back on.
No less than two congressional commissions, the EMP Commission (2008) and the Strategic Posture Commission (2009) and numerous independent studies, including the recent books Lights Out and Blackout Wars, warn that an attack on the grid is an existential threat. A terror blackout could have such catastrophic consequences as to challenge the continued existence of our civilization.
And remember, no attack is even necessary in order for the power grid to be brought down. In fact, most Americans have absolutely no idea that our planet barely missed being fried by a massive EMP burst from the sun in both 2012 and 2013. Those two “near misses” were both extremely close, and if either of them had hit us directly you would not be reading this article today.
AMERIGEDDON, coming to theaters nationwide May 13, 2016, has been described as “the movie the establishment doesn’t want you to see.” Showing what happens when a not-so-future U.S. government conspires with the United Nations to stage an attack on the energy grid, AMERIGEDDON depicts a country ruled by martial law in which citizens are stripped of their constitutional rights and their guns. A group of patriots fight back and rescue the country from slipping into irreversible chaos.
AMERIGEDDON’s release in an election year is not coincidental. The film illustrates a dystopian future all patriots must guard against and is a call to action to preserve the Second Amendment and stop executive rule by fiat. Director Mike Norris, son of Chuck Norris, asks for like-minded Americans to support the film.
“The fact that a recent poll showed a majority of Americans are enraged with the federal government points to a frenzy of unrest with the dictatorial way in which our country has been run,” said Norris. “My family has long been involved in protecting the rights of Americans. We are concerned about the future and and see this film as a call to action. We urge people to join us in theaters and show Hollywood and politicians that true patriots will fight for their rights and want to see their values represented on-screen.”
A collaboration between Norris and entrepreneur and writer Gary Heavin, AMERIGEDDON seizes on fact-based threats and asks the ultimate question, “What happens when government turns on the people it’s supposed to protect?”
The sad thing is that the experts tell us that we could go a long way toward protecting our power grid from an EMP event for just a few billion dollars.
But there is absolutely no urgency among our leaders to get this done. They would rather waste our tax dollars in thousands of other ways.
And unfortunately, there is not much urgency to address this threat among ordinary Americans either. There are a variety of reasons for this, but I would like to touch on one. There seems to be a belief among many Americans that God would never allow something this bad to happen to us since we are so special. Of course this is complete nonsense, and anyone that doubts this should check out my new article in which I point out the parallels between modern America and Nazi Germany.
Over the years, I have repeatedly written about this EMP threat. There is a chapter in “Get Prepared Now” about it, and I extensively warn that a day of reckoning is coming for America in my new book.
Sadly, most people are not listening.
Most people just seem to believe that everything is going to be okay somehow.
But as far as this EMP threat is concerned, the experts assure us that it is absolutely certain that a massive burst from the sun will inevitably fry our electronics someday even if we are never attacked with a nuclear device. In addition, sources in the intelligence community are telling us that foreign hackers are becoming increasingly sophisticated and that someday they could bring down our power grid with just the push of a button. This is something that Ted Koppel is so alarmed about that he wrote an entire book about it.
So I don’t know why Barack Obama doesn’t want to do anything about this.
And I certainly can’t figure out why Congress doesn’t want to do anything about this.
It is almost as if a cloud of insanity has descended upon the land and nobody can think straight.
Let us hope that our leaders wake up and start addressing this threat, because someday we will most certainly have to deal with an event of this nature.
Did you know that 95 percent of all retail sales in Sweden are cashless? And did you know that the government of Denmark has a stated goal of “eradicating cash” by the year 2030? All over the world, we are seeing a relentless march toward a cashless society, and nowhere is this more true than in northern Europe. In Sweden, hundreds of bank branches no longer accept or dispense cash, and thousands of ATM machines have been permanently removed. At this point, bills and coins only account for just 2 percent of the Swedish economy, and many stores no longer take cash at all. The notion of a truly “cashless society” was once considered to be science fiction, but now we are being told that it is “inevitable”, and authorities insist that it will enable them to thwart criminals, terrorists, drug runners, money launderers and tax evaders. But what will we give up in the process?
In Sweden, the transition to a cashless society is being enthusiastically embraced. The following is an excerpt from a New York Times article that was published on Saturday…
Parishioners text tithes to their churches. Homeless street vendors carry mobile credit-card readers. Even the Abba Museum, despite being a shrine to the 1970s pop group that wrote “Money, Money, Money,” considers cash so last-century that it does not accept bills and coins.
Few places are tilting toward a cashless future as quickly as Sweden, which has become hooked on the convenience of paying by app and plastic.
During a recent Sunday service, the church’s bank account number was projected onto a large screen. Worshipers pulled out cellphones and tithed through an app called Swish, a payment system set up by Sweden’s biggest banks that is fast becoming a rival to cards.
Other congregants lined up at a special “Kollektomat” card machine, where they could transfer funds to various church operations. Last year, out of 20 million kronor in tithes collected, more than 85 percent came in by card or digital payment.
And of course it isn’t just Sweden that is rapidly transitioning to a cashless society. Over in Denmark, government officials have a goal “to completely do away with paper money” by the year 2030…
Sweden is not the only country interested in eradicating cash. Its neighbor, Denmark, is also making great strides to lessen the circulation of banknotes in the country.
Two decades ago, roughly 80 percent of Danish citizens relied on hard cash while shopping. Fast forward to today, that figure has dropped dramatically to 25 percent.
“We’re interested in getting rid of cash,” said Matas IT Director Thomas Grane. “The handling, security and everything else is expensive; so, definitely we want to push digital payments, and that’s of course why we introduced mobile payments to help this process.”
Eventually, establishments may soon have the right to reject cash- a practice that is common in Sweden. Government officials have set a 2030 deadline to completely do away with paper money.
Could you imagine a world where you couldn’t use cash for anything?
This is the direction things are going – especially in Europe.
As I have written about previously, cash transactions of more than 2,500 euros have already been banned in Spain, and France and Italy have both banned all cash transactions of more than 1,000 euros.
Little by little, cash is being eradicated, and what we have seen so far is just the beginning. 417 billion cashless transactions were conducted in 2014, and the final number for 2015 is projected to be much higher.
Banks like this change, because it enables them to make more money due to the fees that they collect from credit cards and debit cards. And governments like this change because electronic payments enable them to watch, track and monitor what we are all doing much more easily.
These days, very rarely does anyone object to what is happening. Instead, most of us just seem to accept that this change is “inevitable”, and we are being assured that it will be for the better. And no matter where in the world you go, the propaganda seems to be the same. For example, the following comes from an Australian news source…
AND so we prepare to turn the page to fresh year — 2016, a watershed year in which Australia will accelerate towards becoming a genuine cashless society.
The cashless society will be a new world free of $1 and $2 coins, or $5 or $10 bank notes. A new world in which all commercial transactions, from buying an i-pad or a hamburger to playing the poker machines, purchasing a newspaper, paying household bills or picking up the dry-cleaning, will be paid for electronically.
And in that same article the readers are told that Australia will likely be “a fully cashless society” by 2022…
Research by Westpac Bank predicts Australia will be a fully cashless society by 2022 — just six years away. Already half of all commercial payments are now made electronically.
Even in some of the poorest areas on the entire globe we are seeing a move toward a cashless society. In 2015, banks in India made major progress on this front, and income tax rebates are being considered by the government as an incentive “to encourage people to move away from cash transactions“.
Would a truly cashless society reduce crime and make all of our lives much more efficient?
But what would we have to give up?
To me, America is supposed to be a place where we can go where we want and do what we want without the government constantly monitoring us. If people choose to use cashless forms of payment that is one thing, but if we are all required to go to such a system I fear that it could result in the loss of tremendous amounts of freedom and liberty.
And it is all too easy to imagine a world where a government-sponsored form of “identification” would be required to use any form of electronic payment. This would give the government complete control over who could use “the system” and who could not. The potential for various forms of coercion and tyranny in such a scenario is obvious.
What would you do if you could not buy, sell, get a job or open a bank account without proper “identification” someday? What you simply give in to whatever the government was demanding of you at the time even if it went against your fundamental beliefs?
That is certainly something to think about.
Many will cheer as the world makes a rapid transition to a cashless society, but I will not. I believe that a truly cashless system would open the door for great evil, and I don’t want any part of it.
What about you?
Would you welcome a cashless society?
Please feel free to share what you think by posting a comment below…
What would you do if the power grid went down and never came back up? One of these days, and it could be a lot sooner than most people think, we will all wake up in a country without electricity. And considering how utterly dependent we have become on technology, that is a very frightening scenario to consider. How would Americans react if nothing worked? Just imagine a world where everything electronic is dead. I am talking about lights, cell phones, computers, televisions, ATMs, heating and cooling systems, credit card readers, gas pumps, cash registers, refrigerators, hospital equipment etc. When the power goes out for a few hours, that can be a major inconvenience, but what if it went out all over the nation and it didn’t come back on for months or even years? This is one of the greatest potential threats that the United States is facing, and yet very few people are even talking about it.
An electromagnetic pulse attack could potentially send our nation back to the 1800s in a single moment, but very few of us are equipped to handle life without technology. Tech guru John McAfee recently wrote an article in which he expressed his belief that 90 percent of the population would be dead within 2 years of such an attack…
You may think that is an unreasonably high estimate, but it turns out that it is the exact same number that the EMP Commission used in their report to Congress back in 2008…
What would a successful EMP attack look like? The EMP Commission, in 2008, estimated that within 12 months of a nationwide blackout, up to 90% of the U.S. population could possibly perish from starvation, disease and societal breakdown.
In 2009 the congressional Commission on the Strategic Posture of the United States, whose co-chairmen were former Secretaries of Defense William Perry and James Schlesinger, concurred with the findings of the EMP Commission and urged immediate action to protect the electric grid. Studies by the National Academy of Sciences, the Department of Energy, the Federal Energy Regulatory Commission and the National Intelligence Council reached similar conclusions.
So what has Barack Obama done to protect us from such an attack?
But there are others in the government that are very, very concerned about this threat. For example, NORAD recently moved back into Cheyenne Mountain, and the potential for an EMP attack was given as the primary reason for the move…
The Pentagon is moving the headquarters for the North American Aerospace Defense Command (Norad) back into Cheyenne Mountain near Colorado Springs, Colo., a decade after having largely vacated the site.
Why the return? Because the enormous bunker in the hollowed-out mountain, built to survive a Cold War-era nuclear conflict, can also resist an electromagnetic-pulse attack, or EMP. America’s military planners recognize the growing threat from an EMP attack by bad actors around the world, in particular North Korea and Iran.
An EMP strike, most likely from the detonation of a nuclear weapon in space, would destroy unprotected military and civilian electronics nationwide, blacking out the electric grid and other critical infrastructure for months or years. The staggering human cost of such a catastrophic attack is not difficult to imagine.
For years, most experts have assumed that an EMP attack would be conducted by exploding at least one nuclear weapon high up in our atmosphere. And that could definitely happen someday. But now governments all over the world are working on other ways to deliver an EMP strike, and many of them do not involve nuclear weapons at all.
The U.S. government is among those that have been doing this kind of research. The U.S. Air Force now reportedly has the capability to conduct an EMP assault against individual buildings or power stations. The following comes from the Daily Mail…
For years, scientists have been attempting to create such a weapon as part of Champ, or the Counter-electronics High-powered microwave Advanced Missile Project.
Now, the US Air Force claims it has advanced the technology, and says it can deploy it using the stealthy Joint Air-to-Surface Standoff Missile-Extended Range (JASSM).
There are fears a well targeted attack could knock out multiple power stations.
‘This technology marks a new era in modern-day warfare,’ said Keith Coleman, CHAMP program manager for Boeing Phantom Works.
And we also know that Russia, China, Iran and North Korea have also been developing EMP weapons. This next excerpt comes from DefenseNews…
The possibility of man-made EMP events has grown in tandem with the technological sophistication of America’s adversaries. It is widely known that both Russia and China already have this capability, and both countries have carried out serious work relating to the generation of EMP in recent years as part of their respective military modernization programs.
Now, rogue states Iran and North Korea may not be that far behind. Iran, for example, is known to have simulated a nuclear EMP attack several years ago using short-range missiles launched from a freighter. North Korea, meanwhile, has acquired the blueprints to build an EMP warhead, and in July of 2013, a North Korean freighter made it all the way to the Gulf of Mexico with two nuclear capable missiles in its hold.
Why are these other nations developing these technologies?
Iranian military documents describe such a scenario–including a recently translated Iranian military textbook that endorses nuclear EMP attack against the United States.
Thus, Iran with a small number of nuclear missiles can by EMP attack threaten the existence of modernity and be the death knell for Western principles of international law, humanism and freedom. For the first time in history, a failed state like Iran could destroy the most successful societies on Earth and convert an evolving benign world order into world chaos.
And it wouldn’t take much to completely disrupt electricity generation in America. In a previous article, I discussed a Federal Energy Regulatory Commission report which made the following jaw dropping statement…
“Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer.”
Are you starting to get the picture?
We are far more vulnerable than most people realize.
And even if we are never attacked by an EMP weapon, scientists tell us that it is inevitable that a massive solar storm will produce a similar result someday anyway. Back in 1859, a massive solar storm that came to be known as “the Carrington Event” fried telegraph machines all over Europe and North America.
NASA says that there is a 12 percent chance that a similar solar storm will hit us within the next ten years, and if that happens the consequences will be absolutely catastrophic…
NASA is warning that there’s a 12 percent chance an extreme solar storm will hit Earth in the next decade, sending out massive shock waves that would knock out grids across the world.
The economic impact of this doomsday scenario could exceed $2 trillion — or 20 times the cost of Hurricane Katrina, according to the National Academy of Sciences.
I don’t know why more people aren’t concerned about this. There are things that the federal government could do to harden our electrical grid, but they aren’t doing them.
This is a foreseeable danger, but our “leaders” are not taking it seriously.
And even if nobody ever purposely attacks us, scientists insist that it is only a matter of time before the sun unleashes an electromagnetic pulse that fries our electronics. In fact, we have had some very close calls in recent years. The following is an excerpt from a book that I co-authored with Barbara Fix entitled “Get Prepared Now“…
Most people have absolutely no idea that the Earth barely missed being fried by a massive EMP burst from the sun in 2012 and in 2013. And earlier in 2014 there was another huge solar storm which would have caused tremendous damage if it had been directed at our planet. If any of those storms would have directly hit us, the result would have been catastrophic. Electrical transformers would have burst into flames, power grids would have gone down and much of our technology would have been fried. In essence, life as we know it would have ceased to exist – at least for a time. These kinds of solar storms have hit the Earth many times before, and experts tell us that it is inevitable that it will happen again.
It amazes me that such a small percentage of the population is taking this threat seriously.
An electromagnetic pulse could bring down our entire society in a single moment at any time, and all of the experts assure us that it will happen someday.
But our politicians are just sitting on their hands and most Americans mock the idea that we need to be concerned about this.
So what do you think? Please feel free to add to the discussion by posting a comment below…
Did you notice that Greece’s creditors are not rushing to offer the Greeks a new deal in the wake of the stunning referendum result on Sunday? In fact, it is being reported that the initial reaction to the “no” vote from top European politicians was “a thunderous silence“. Needless to say, the European elite were not pleased by how the Greek people voted, but they still have all of the leverage. In particular, it is the Germans that are holding all of the cards. If the Germans want to cave in and give the Greeks the kind of deal that they desire, everyone else would follow suit. And if the Germans want to maintain a hard line with Greece, they can block any deal from happening all by themselves. So in the final analysis, this is really an economic test of wills between Germany and Greece, and time is on Germany’s side. Germany doesn’t have to offer anything new. The Germans can just sit back and wait for the Greek government to default on their debts, for Greek banks to totally run out of cash and for civil unrest to erupt in Greek cities as the economy grinds to a standstill.
In ancient times, if a conquering army came up against a walled city that was quite formidable, often a decision would be made to conduct a siege. Instead of attacking a heavily defended city directly and taking heavy casualties, it was often much more cost effective to simply surround the city from a safe distance and starve the inhabitants into submission.
In a sense, that is exactly what the Germans appear to want to do to the Greeks. Without more cash, the Greek government cannot pay their bills. Without more cash, Greek banks are going to start collapsing left and right. Without more cash, the Greek economy is going to completely and utterly collapse.
So yes, the Greeks voted for change, but the Germans still hold the purse strings.
And right now the Germans do not sound like they are in any mood to compromise. The following comes from a Reuters report that was published on Monday…
German Chancellor Angela Merkel’s deputy said Athens had wrecked any hope of compromise with its euro zone partners by overwhelmingly rejecting further austerity.
Merkel and French President Francois Hollande conferred by telephone and will meet in Paris on Monday afternoon to seek a joint response. Responding to their call, European Council President Donald Tusk announced that euro zone leaders would meet in Brussels on Tuesday evening (1600 GMT).
German Vice-Chancellor Sigmar Gabriel, leader of Merkel’s centre-left Social Democratic junior coalition partner, said it was hard to conceive of fresh negotiations on lending more billions to Athens after Greeks voted against more austerity.
Leftist Prime Minister Alexis Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise,” Gabriel told the Tagesspiegel daily.
In addition, Angela Merkel’s office released a statement on Monday that placed the onus on making a new proposal to end this crisis on the Greek government…
“It is up to Greece to make something of this. We are waiting to see which proposals the Greek government makes to its European partners,” the office of German Chancellor Angela Merkel, Europe’s leading austerity advocate, said in a statement.
Just because the Greek people want the Germans to give them a very favorable deal does not mean that the Germans will be inclined to do so. The Germans know that whatever they do with the Greeks will set a precedent for the rest of the financially-troubled nations all across Europe. If Greece gets a free lunch, then Italy, Spain, Portugal, Ireland and France will expect the same kind of treatment…
Angelos Chryssogelos, an expert on Greek politics at the London-based think tank Chatham House, said the strength of Sunday’s mandate handed to Tsipras means it will be almost impossible for the prime minister’s leftist Syriza party to make a deal with European creditors.
“The Europeans made it pretty clear where they stand, and they have been consistent,” Chryssogelos said, adding that the creditors also are unlikely to back down. “Right now, voters across the eurozone largely support the tough stance taken by the eurozone.”
Chryssogelos said Greek voters may have underestimated the resolve of the creditors to reach an accord on their terms. “If someone is seen getting preferential treatment, then someone else will want that treatment,” he said, referring to other eurozone debtors such as Ireland and Portugal.
And remember, there is a very important Spanish election coming up in December.
If Syriza comes out as the big winner in this crisis, it will empower similar movements in Spain and all over the rest of the continent.
In a move sure to increase pressure on Greece’s flailing banks, the European Central Bank on Monday decided not to expand an emergency assistance program, raising fears that Greece could soon go completely bankrupt.
The move put a swift crimp on Greek leaders’ jubilation after winning a landslide endorsement from their citizens to reject Europe’s austerity demands and seek a new bailout bargain. Now they must seek a bargain before the money runs out within days, which would likely force them off the euro.
Basically we are watching a very high stakes game of chicken play out. And as the cash dwindles, economic activity in Greece is slowly grinding to a halt. The following comes from the Washington Post…
The dwindling cash is sucking the life out of everything from coffee shops to taxis, as anxious Greeks economize amid fears for the future. Greek leaders also banned transfers of money abroad, meaning that very little can now be imported into the country.
Printing plants are warning that they may run out of paper to print newspapers by the end of the week. Butchers say that stocks of imported meat are dwindling.
Some are even projecting that we could see civil unrest erupt in Greece in about “48 hours” once the ATM machines run out of cash…
Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said.
Yes, the Greek people exhibited great resolve in voting against the demands of the creditors on Sunday.
But how long can they endure this economic siege?
It is inevitable that a breaking point will come. Either the Greek government will give in, or the Greeks will leave the euro and start to transition back to the drachma.
If we do see a “Grexit”, and many analysts believe that one is coming, it could set off a chain of events that could cause immense financial pain all over the planet. There are tens of trillions of dollars of derivatives that are tied to European bond yields, European interest rates, etc. The following is an excerpt from a piece authored by Phoenix Capital Research that explains what kind of jeopardy we could potentially be facing…
The global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.
Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.
Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.
If Greece gets a “haircut” on their debt, other European nations would want the same and that would cause massive chaos in the derivatives markets.
But if Greece does not get a deal and ends up leaving the eurozone, that will cause bond yields to go crazy all over Europe and that would also cause tremendous chaos in the derivatives markets.
So much depends on keeping this system of legalized gambling that we call “derivatives trading” stable. We have allowed the global derivatives bubble to become many times larger than the GDP of the entire planet, and in the end we will pay a great price for this foolishness.
Every pyramid scheme eventually collapses, and this one will too.
But the difference with this pyramid scheme is that it is going to take the entire global financial system down with it.
The debt crisis in Puerto Rico could potentially cost financial institutions in the United States tens of billions of dollars in losses. This week, Puerto Rico Governor Alejandro Garcia Padilla publicly announced that Puerto Rico’s 73 billion dollar debt is “not payable,” and a special adviser that was recently appointed to help straighten out the island’s finances said that it is “insolvent” and will totally run out of cash very shortly. At this point, Puerto Rico’s debt is approximately 15 times larger than the per capita median debt of the 50 U.S. states. Yes, the Greek debt crisis is larger, as Greece currently owes about $350 billion to the rest of the planet. But only about $14 billion of that total is owed to U.S. financial institutions. But with Puerto Rico, things are very different. Just about the entire 73 billion dollar debt is owed to U.S. financial institutions, and this could potentially cause massive problems for some extremely leveraged Wall Street firms.
There is a reason why Puerto Rico is called “America’s Greece”. In Puerto Rico today, more than 40 percent of the population is living in poverty, the unemployment rate is over 12 percent, and the economy of the small island nation has continually been in recession since 2006.
Yet all this time Puerto Rico has continued to pile up even more debt. Finally, it has gotten to the point where all of this debt is simply unpayable…
Steven Rhodes, the retired U.S. bankruptcy judge who oversaw Detroit’s historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment on Monday.
Puerto Rico “urgently needs our help,” Rhodes said. “It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer,” he added.
This is why I hammer on the danger of U.S. government debt so often. As we see with the examples of Greece and Puerto Rico, eventually a day of reckoning always arrives. And when the day of reckoning arrives, power shifts into the hands of those that you owe the money too.
It would be hard to understate just how severe the debt crisis in Puerto Rico has become. Former IMF economist Anne Krueger has gone so far as to say that it is “really dire”…
“The situation is dire, and I mean really dire,” said former IMF economist Anne Krueger, co-author of the report commissioned by the U.S. territory, which recommended debt restructuring, tax hikes and spending cuts. “The needed measures may face political resistance but failure to address the issues would affect even more the people of Puerto Rico.”
So who is going to get left holding the bag?
As I mentioned at the top of this article, major U.S. financial institutions are very heavily exposed. Income from Puerto Rican bonds is exempt from state and federal taxation, and so that made them very attractive to many U.S. investors. According to USA Today, there are 180 mutual funds that have “at least 5% of their portfolios in Puerto Rican bonds”…
The inability of the U.S. territory to repay its debt, combined with the financial crisis in Greece, would have far-reaching implications for financial markets and unsuspecting American investors. Morningstar, an investment research firm based in Chicago, estimated in 2013 that 180 mutual funds in the United States and elsewhere have at least 5% of their portfolios in Puerto Rican bonds.
It is important to keep in mind that many of these financial institutions are very highly leveraged. So just a “couple of percentage points” could mean the different between life and death for some of these firms.
And unlike what is happening with Greece, the private financial institutions that hold Puerto Rican bonds are not likely to be very eager to “negotiate”. In fact, the largest holder of Puerto Rican debt has already stated that it is very much against any kind of restructuring…
U.S. fund manager OppenheimerFunds, the largest holder of Puerto Rico debt among U.S. municipal bond funds, warned the island it stands ready to defend the terms of bonds it holds, a day after the governor said he wanted to restructure debt and postpone bond payments.
What Oppenheimer is essentially saying is that it does not plan to give Puerto Rico any slack at all. Here is more from the article that I just quoted above…
OppenheimerFunds, with about $4.5 billion exposure to Puerto Rico according to Morningstar, said it believed the island could repay bondholders while providing essential services to citizens and growing the economy. It said it stood ready “to defend the previously agreed to terms in each and every bond indenture.”
“We are disheartened that Governor Padilla, in a public forum, has called for negotiations with other creditors, representing and including the millions of individual Americans that hold Puerto Rico municipal bonds,” a spokesman for Oppenheimer said in a statement.
But Puerto Rico simply does not have the money to meet all of their debt obligations.
So somebody is not going to get paid at some point.
When that happens, those that insure Puerto Rican bonds are also going to take tremendous losses. The following comes from a recent piece by Stephen Flood…
Now, bondholders are at risk as are the funds which hold Puerto Rican bonds and, more importantly, those who insure them in the derivatives market.
Dave Kranzler, from Investment Research Dynamics has warned that there are signs that the Puerto Rico situation may not remain a local crisis for much longer.
He points out that share prices of MBIA, the bond insurers, have been plummeting. MBIA are valued at $3.9 billion whereas their exposure to Puerto Rican debt is around $4.5 billion. Kranzler reckons their exposure could even be multiples of that figure. A default could wipe them out.
He also points out that the firm’s largest shareholders are Warburg Pincus, the firm to which Timothy Geithner went after his stint as Treasury Secretary, when he helped paper over the chasms opening up in the financial system.
Did you notice the word “derivatives” in that quote?
Hmmm – who has been writing endless articles warning about the danger of derivatives for years?
When Puerto Rico defaults, bond insurers are going to be expected to step up and make huge debt service payments to investors.
But this just might bankrupt some of these big bond insurers. In fact, we have already started to see the stock prices of some of these bond insurers begin to plummet. The following comes from the Wall Street Journal…
Bond insurers MBIA Inc. and Ambac Financial Group Inc. are down again Tuesday as concerns over Puerto Rico’s ability to repay its debt multiply.
Investors fear that both firms face the potential for steep losses on their promises to backstop billions of Puerto Rico’s $72 billion of debt.
MBIA’s stock closed down 23% Monday, and fell more than 10% before rebounding Tuesday. By late afternoon, the stock was down 6%. Ambac’s stock fell 12% Monday and was off 14% Tuesday.
Of course Puerto Rico is just the tip of the iceberg of the coming debt crisis in the western hemisphere, just like Greece is just the tip of the iceberg of the coming debt crisis in Europe.
According to the Wall Street Journal, Greece staying in the eurozone is no longer “the base case” for European officials, and one even told the Journal that “literally nothing has been achieved” in negotiations with the new Greek government since the Greek election almost three months ago. In other words, you can take all of that stuff you heard about how the Greek crisis was fixed and throw it out the window. Over the next few months, a big chunk of Greek government bonds held by the IMF and the European Central Bank will mature. Unless negotiations produce a load of new cash for Greece, there will be a default, and right now there is very little optimism that we will see an agreement any time soon. In fact, as I wrote about the other day, behind the scenes banks all over Europe are quietly preparing for a Grexit. European news sources are reporting that the Greek banking system is on the verge of collapse, and over the past couple of weeks Greek bond yields have shot through the roof. Most of the things that we would expect to see in the lead up to a Greek exit from the eurozone are happening, and now we will wait and see if the Greeks actually have the guts to pull the trigger when push comes to shove.
It’s still possible that Greece can remain in the eurozone—though that is no longer the base case for many policy makers. At the very least, most fear the situation is going to get much, worse before it gets any better. No one now expects a deal to unlock Greek bailout funding at this week’s meeting of eurozone finance ministers in Riga—originally set as the final deadline for a deal. The new final, final deadline is now said to be a summit on May 11.
But among European politicians and officials gathered in Washington DC last week for the International Monetary Fund’s Spring Meetings, there was little optimism that a deal will be agreed by then.
The two sides are no closer to an agreement than when the Greek government took office almost three months ago. “Nothing, literally nothing has been achieved,” says an official.
Literally nothing has been achieved?
That is not what the mainstream media has been telling us over the past few months.
They kept telling us that agreements were in place and that everything had been fixed.
I guess not.
The Germans believe that the risks of a “Grexit” have already been priced in by the financial markets and that a Greek exit from the euro can be “managed” without any serious risk of contagion.
Greece’s Finance Minister Yanis Varoufakis said in an interview broadcast on Sunday that if Greece were to leave the euro zone, there would be an inevitable contagion effect.
“Anyone who toys with the idea of cutting off bits of the euro zone hoping the rest will survive is playing with fire,” he told La Sexta, a Spanish TV channel, in an interview recorded 10 days ago.
“Some claim that the rest of Europe has been ring-fenced from Greece and that the ECB has tools at its disposal to amputate Greece, if need be, cauterize the wound and allow the rest of euro zone to carry on.”
In this case, I believe that the Greeks are right about what a Grexit would mean for the rest of Europe and the Germans are wrong.
Once one country leaves the euro, that tells the entire world that membership in the euro is only temporary. Immediately everyone would be looking for the “next Greece”, and there are lots of candidates – Italy, Spain, Portugal, etc.
There is a very good chance that a Grexit would set off a full-blown European financial panic. And once a financial panic starts, it is very hard to stop. The danger that a Grexit poses is so obvious that even the Obama administration can see it…
A Greek exit from the euro zone would carry significant risks for the global economy and no one should be under the impression that financial markets have fully priced in such an event, the chairman of the White House Council of Economic Advisers said.
The comments by Jason Furman in an interview with Reuters in Berlin are among the strongest by a senior U.S. official and are at odds with those of German Finance Minister Wolfgang Schaeuble, who told an audience in New York last week that contagion risks from a so-called “Grexit” were limited.
“A Greek exit would not just be bad for the Greek economy, it would be taking a very large and unnecessary risk with the global economy just when a lot of things are starting to go right,” Furman said.
Meanwhile things continue to get even worse inside Greece. If you have any money in Greek banks, you need to move it immediately. The following comes from Zero Hedge…
Things for insolvent, cashless Greece are – not unexpectedly – getting worse by the day.
Following yesterday’s shocking decree that the government will confiscate local government reserves and “sweep” them into the central bank to provide the country more funds as it approaches another month of heavy IMF repayments, earlier today Bloomberg reported that the ECB would add insult to injury and may increase haircuts for Greek banks accessing Emergency Liquidity Assistance, thus “reining in” the very critical emergency liquidity which has kept Greek banks operating in recent weeks as the bank run sweeping the domestic banking sector has gotten worse by the day.
And many Greeks don’t even have any money to put in the banks because they haven’t been paid in months…
Meanwhile, the reality is that for a majority of the Greek population, none of this really matters because as Greek Ta Nea reports, citing Labor Ministry data, about one million Greek workers see delays of up to 5 months in salaries payment by their employers. The Greek media adds that about 45% of salaried workers in Greece make no more than €751 per month, the country’s old minimum wage; which also includes part-time workers.
No matter what European officials try, things just continue to unravel in Greece and in much of the rest of Europe.
We stand on the verge of the next great global economic crisis. The lessons that we should have learned from the last crisis were never learned, and instead global debt levels have exploded much higher since then. In fact, according to Doug Casey, the total amount of global debt is 57 trillion dollars higher than it was just prior to the last crisis…
In 2008, excess debt pushed the global financial system to the brink. It was a golden opportunity for governments and banks to reform the system. But rather than deal with the problem, they papered over it by issuing more debt. Worldwide debt levels are now $57 trillion higher than in 2008.
The eurozone as it is constituted today is doomed.
That doesn’t mean that the Europeans are going to give up on social, economic and political integration. It just means that we are entering a time of transition that is going to be extremely messy.
And once the European financial system begins to fall apart, the rest of the world will quickly follow.
The move to a cashless society won’t happen overnight. Instead, it is being implemented very slowly and systematically in a series of incremental steps. All over the planet, governments are starting to place restrictions on the use of cash for security reasons. As citizens, we are being told that this is being done to thwart criminals, terrorists, drug runners, money launderers and tax evaders. Other forms of payment are much easier for governments to track, and so they very much prefer them. But we are rapidly getting to the point where the use of cash is considered to be a “suspicious activity” all by itself. These days, if you pay a hotel bill with cash or if you pay for several hundred dollars worth of goods at a store with cash you are probably going to get looked at funny. You see, the truth is that we have already been trained to regard the use of large amounts of cash to be unusual. The next step will be to formally ban large cash transactions like France and other countries in Europe are already doing.
Starting in September, cash transactions of more than 1,000 euros will be banned in France. The following comes from a recent Zero Hedge article which detailed what these new restrictions will do…
Prohibiting French residents from making cash payments of more than 1,000 euros, down from the current limit of 3,000 euros.
Given the parlous state of the stagnating French economy the limit for foreign tourists on currency payments will remain higher, at 10,000 euros down from the current limit of 15,000 euros.
The threshold below which a French resident is free to convert euros into other currencies without having to show an identity card will be slashed from the current level of 8,000 euros to 1,000 euros.
In addition any cash deposit or withdrawal of more than 10,000 euros during a single month will be reported to the French anti-fraud and money laundering agency Tracfin.
French authorities will also have to be notified of any freight transfers within the EU exceeding 10,000 euros, including checks, pre-paid cards, or gold.
Of course Spain has already banned cash transactions of more than 2,500 euros and Italy has already banned cash transactions of more than 1,000 euros.
We don’t have these kinds of outright bans in the United States just yet, but what we do have are some very strict reporting requirements.
For example, if you regularly deposit large amounts of cash, there is a very good chance that you have been the subject of a “suspicious activity report”. In 2013, approximately 1.6 million suspicious activity reports were submitted to the federal government.
Banks, bank holding companies, and their subsidiaries are required by federal regulations53 to file a SAR with respect to:
Criminal violations involving insider abuse in any amount.
Criminal violations aggregating $5,000 or more when a suspect can be identified.
Criminal violations aggregating $25,000 or more regardless of a potential suspect.
Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more, if the bank or affiliate knows, suspects, or has reason to suspect that the transaction:
May involve potential money laundering or other illegal activity (e.g., terrorism financing).54
Is designed to evade the BSA or its implementing regulations.55
Has no business or apparent lawful purpose or is not the type of transaction that the particular customer would normally be expected to engage in, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.
Most people don’t realize this, but there are minimum quotas for suspicious activity reports that banks must meet. If they do not submit enough suspicious activity reports, they can be fined (or worse).
And now the Obama administration is saying that just filling out suspicious activity reports may not be good enough.
According to the Wall Street Journal, banks are actually being encouraged to directly contact law enforcement if they see something that does not look right…
The U.S. Justice Department’s criminal head said banks may need to go beyond filing suspicious activity reports when they encounter a risky customer.
“The vast majority of financial institutions file suspicious activity reports when they suspect that an account is connected to nefarious activity,” said assistant attorney general Leslie Caldwell in a Monday speech, according to prepared remarks. “But, in appropriate cases, we encourage those institutions to consider whether to take more action: specifically, to alert law enforcement authorities about the problem.”
The remarks indicate that banks may be expected to do more than just file SARs, a responsibility that itself can be expensive and time-consuming.
That should send a chill up your spine.
In a recent piece, Simon Black imagined a future scenario in which some unsuspecting American citizen goes to the bank to withdraw a large amount of cash…
Imagine going to the bank to withdraw some cash.
Having some cash on hand is always a prudent strategy, and especially today when more and more bank deposits are creeping into negative territory, meaning that you have to pay the banks for the privilege that they gamble with your money.
You tell the teller that you’d like to withdraw $5,000 from your account. She hesitates nervously and wants to know why.
You try to politely let her know that that’s none of the bank’s business as it’s your money.
The teller disappears for a few minutes, leaving you waiting.
When she returns she tells you that you can collect your money in a few days as they don’t have it on hand at the moment.
Slightly irritated because of the inconvenience, you head home.
But as you pull into your driveway later there’s an unexpected surprise waiting for you: two police officers would like to have a word with you about your intended withdrawal earlier…
Perhaps you don’t think that anything like that could ever happen to you.
A widow’s bank account was seized by the IRS and she now faces criminal charges for depositing her legal inheritance money in lumps instead of all together.
Janet Malone, 68, had $18,775 seized from her — money that was legally earned and was legally bestowed to her by her late husband, Ronald Malone. The problem, according to the government, was the fact that she deposited it in several lumps instead of all at once.
According to the Associated Press, Mrs. Malone deposited the cash in increments between $5,800 and $9,000. The widow’s private financial affairs evidently set off red flags under the watchful gaze of the federal government.
Remember, she was not guilty of committing any crime other than depositing cash in lumps instead of all at once.
If this is how ruthless the feds will be with an elderly widow, how would they treat you under similar circumstances?
So why are they doing this?
The truth is that they want to discourage the public from using cash. Our government, just like governments all over the planet, is not being shy about the fact that it does not like cash. If they can make people afraid to use cash, that suits their purposes very well.
And with each passing year the restrictions on the use of cash globally will just get tighter and tighter and the role that cash plays in our lives will just become smaller and smaller.
In the end, a transition to an almost entirely cashless society will seem almost natural. Cash is being killed off one slow step at a time, and at this point hardly anyone is objecting.
ISIS is marching through city after city in Iraq, and they are doing it with American weapons. Thanks to a series of stunning victories in recent months, ISIS has captured a vast array of U.S. military equipment including trucks, Humvees, rockets, artillery pieces and Stinger missiles. When the U.S. was pulling out of Iraq, we were extremely generous to the new Iraqi army. We basically armed them to the teeth with equipment that U.S. taxpayers paid for. But now that the new Iraqi army is folding like a 20 dollar suit in the face of ISIS jihadists, vast quantities of that military equipment are falling into the hands of some of the most radical jihadists the world has ever seen. And considering the fact that ISIS also recently seized the equivalent of nearly $500 million in cash from a bank in Mosul, the leadership of ISIS won’t be having much problem buying anything else that they might need either. ISIS is getting stronger with each passing day, and they are not going to be satisfied until the Iraqi government has been toppled. It is a geopolitical mess of epic proportions, and there don’t seem to be any easy solutions on the horizon.
To say that the new Iraqi army has been incompetent would be a massive understatement. Not only have they run away like scared kittens from these jihadists, they have also left behind staggering amounts of weaponry for them. According to the Los Angeles Times, ISIS has captured “the weapons stores of the 2nd and 3rd [Iraqi army] divisions in Mosul, the 4th division in Salah al Din, the 12th division in the areas near Kirkuk, and another division in Diyala”. And we aren’t just talking about rifles and ammunition. We are talking about some pretty impressive hardware…
Government forces retreated en masse from the onslaught, leaving behind a military hardware bonanza, including the U.S.-made armored Humvees as well as trucks, rockets, artillery pieces, rifles, ammunition, even a helicopter. Some of the seized materiel was old or otherwise non-functioning; but a lot was promptly put to use on the battlefield.
Pictures of grinning Islamist warriors cruising in U.S. Humvees bedecked with white-on-black militant flags flooded the Internet and became the signature image of the ISIS rampage.
ISIS social-media enthusiasts even mocked the global #BringBackOurGirls Twitter campaign, referring to girls kidnapped by an Al Qaeda offshoot in Nigeria. ISIS sympathizers began tweeting #BringBackOurHumvee.
One of the most popular photos mocking the Obamas and the U.S. military under the #BringBackOurHumvee hashtag is posted below…
We have become a laughingstock to ISIS. They know that we are not going to invade Iraq again. So they are laughing at us as they use our own equipment to take over the country.
As WND has documented, members of ISIS were actually trained by U.S. personnel at a secret base in Jordan back in 2012…
Members of the Islamic State of Iraq and the Levant, or ISIS, were trained in 2012 by U.S. instructors working at a secret base in Jordan, according to informed Jordanian officials.
The officials said dozens of ISIS members were trained at the time as part of covert aid to the insurgents targeting the regime of Syrian President Bashar al-Assad in Syria. The officials said the training was not meant to be used for any future campaign in Iraq.
The Jordanian officials said all ISIS members who received U.S. training to fight in Syria were first vetted for any links to extremist groups like al-Qaida.
So U.S. taxpayers have not just paid for their weapons.
The revelations comes as the State Department acknowledged that ISIS has captured a stockpile of old chemical weapons at the Al Muthanna chemical weapons production complex as its fighters sweep through Iraq’s Sunni- controlled region.
The access to a sarin poison gas production facility, and the man with the expertise to operate it, is the result of a new alliance between the brutal jihadist fighters and Izzat Ibrahim al-Douri, who was a top military commander and vice president to the deposed Saddam Hussein.
And the folks running ISIS are crazy enough to do just about anything. They are stone cold killers that will go to extreme lengths to advance their cause. If you are not very familiar with ISIS yet, the YouTube documentary posted below contains some footage from some of their recent triumphs…
Iraq is literally being torn to pieces by this conflict, and even young boys are getting swept up into the fighting.
It was a surprising sight. The customers standing in Haj Hamdoun’s store in central Mosul watched as a masked child came into the shop, bought what he wanted without saying a word and then left again, carrying a bag containing candies and milk in one hand and a heavy machine gun, which was just about as big as him, in the other.
This was Abdullah, who appears to be the city’s youngest volunteer with the Sunni extremist group, the Islamic State of Iraq and al-Sham, or ISIS, that took control of Mosul over two weeks ago.
Abdullah is not yet 11 years old. But his older brother and his father, who was a senior member of ISIS, were killed in fighting between the group and Iraqi security forces in 2013. That’s why Abdullah joined ISIS, although he is far from the only child in its ranks.