After years of operation, Retireonsocialsecurity.com is
closing down.

We have enjoyed providing you the news and commentary that the maimed street media chooses to ignore.

We appreciate the thousands of readers who have contacted us over the years.  Your comments have been encouraging.  However, the cold hard fact is, a business must generate a profit to remain in operation and while our website has been popular it has fallen short of being profitable.  Consequently we have made the difficult decision to cease operation.

We particularly wish to thank those of you who have purchased our books and products (these will continue to be available on Amazon.com).  You are the ones that actually kept this website in operation.

In closing, we wish you all good health, happiness, and prosperity in the years ahead.

Jim

Our E-Book, Retire on Social Security, is being updated for 2012.

Look for it and other of our books at Amazon.com starting in January

 The New Age: S. O. L. P. (Standard of Living Plunging) - United Serfs of America

First, for background, click below for some “Straight Talk” from Wall Street:  http://www.dailymotion.com/video/x71zxa_straight-talk-stock-market_fun

(Keep in mind the previously posted articles regarding Insider Trading in the District of Corruption and Hank Paulson and the select group who received inside information.)

I had originally planned to write a major commentary on the longer-term economic future but this work, submitted by Ron Hera of Hera Research, covers much of what I had intended to examine.  The comments are his, (mine, or other’s, are in parenthesis and italics)

Submitted by Ron Hera of Hera Research

How the United States Will Become a 3rd World Country (What it means to your future)

The United States is quickly coming to resemble a post-industrial neo-3rd-world country. Unemployment, lack of economic opportunity, falling real wages and household incomes, growing poverty and increasing concentration of wealth are major trends in the U.S. today.  Behind these growing problems are monetary inflation created by the Federal Reserve’s monetary policies, federal government deficit spending and the dominant influence of “too big to fail” banks and large corporations in Washington D.C., which has altered the direction of law in the United States. To make matters worse, the U.S. government faces a historic fiscal crisis.

High unemployment, lack of economic opportunity, low wages, widespread poverty, (By last count a record number of Americans are on food stamps – over 46,000,00, about one out of every six.  Guess we lost that “War on Poverty”.) extreme concentration of wealth, unsustainable government debt, control of the government by international banks and multinational corporations, weak rule of law and counterproductive policies are defining characteristics of 3rd world countries. Other factors include poor public health, nutrition and education, as well as lack of infrastructure—factors that deteriorate rapidly in a failing economy.

Apparently ineffective regulation and relatively little law enforcement action by the federal government in the wake of the sub-prime mortgage meltdown resulted in widespread speculation that special interests had taken priority over the rule of law. Critics have also charged that the federal government’s policies threaten to eliminate what remains of the American middle class.

Accelerating Concentration of Wealth

In response to the economic downturn that began in 2007 and the start of the financial crisis in 2008, the U.S. federal government and the Federal Reserve resorted to a radically inflationary policy intended to save banks and to shepherd the U.S. economy through a recession. Instead, radically inflationary policies greatly increased the concentration of wealth.

(The $7,770,000,000,000,000,000.00 Bailout!)

(Bloomberg News sued the Federal Reserve for documents under the Freedom of Information Act regarding the Fed’s activities in the wake of the 2008 financial crisis.  The Fed fought them all the way to the Supreme Court where it lost. . 

Bloomberg Markets said it went over 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions.

“Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse,” Bloomberg reported.

Fed Chairman Ben Bernanke had argued back in 2008 when the crisis hit that revealing borrower details would create a stigma that would have led to more banks collapsing.

And the Fed fought to keep the details of the loans, which totaled $7.77 trillion, secret long after.”

Full Article :  http://abcnews.go.com/blogs/business/2011/11/fed-gave-banks-trillions-in-bailout-bloomberg-reports/

Have we gone insane?  The Fed secretly creates 7.77 Trillion Dollars out of thin air?  Where’s the oversight?  Where is the Maimed Street Media?  Where is the outrage over this rogue bankster organization’s actions?)

Under ordinary circumstances, monetary inflation has the effect of redistributing wealth in favor of those who receive newly created money first. The value of money is reduced as a function of the number of currency units in the economy but recipients of newly created moneycan spend it before it loses value. In a declining economy, however, the wealth redistribution effects of inflation are magnified.

When the Federal Reserve or the federal government supports banks and financial markets through liquidity injections, bailouts, asset purchases, quantitative easing, etc., the lion’s share of financial support, i.e., newly created money, is captured by the largest financial institutions and by the wealthiest 1% of Americans. Money printing skews the distribution of money over the economy while the value of money, i.e., the purchasing power of wages and savings, is reduced. The overall effect is a wealth transfer from proverbial Main Street to literal Wall Street.

(One measure of wealth distribution is the percentage of national income that the top 10% of the country’s population earns. Using the World Banks’ data base, http://data.worldbank.org/indicator/SI.DST.10TH.10, based on the most recent data (mostly 2007), the following are some representative nations and the percentages of that nation’s income earned by the top 10% of its population:

Argentina 36.1%         Brazil 43%                  Cambodia 36.9%

China 31.4%               Ghana 32.5%              India 31.1%

Indonesia 30.1%         Mexico41.3%             Philippines 33.9%

Russia 34.3%              Ukraine 22.5%

Peculiarly, income distribution figures are not available on the World Bank data base for Western Europe or the United States. However, the World Institute for Development Economics Research did a study on wealth (not just income) distribution in 2006 using figures for 2000, as follows:

Canada 53%               Denmark 65%             France 61%

Germany 44.4%          Norway 50.5%            Sweden 58.6%

Switzerland 71.3%      U. K. 56%

So, care to guess what percent of the nation’s wealth is owned by the top 10% of households in the United States?

Go ahead, guess.

In searching for the figures for the U.S., the most recent I could find was research done by Professor G. William Domhoff which was updated as of September 2010. His analysis is also based not just on income but on “wealth”, as a better measure of wealth distribution. As he states, “It’s important to note that for the rich, most of their income does not come from “working”: in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.”

His analysis (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html) concludes: “In the United States, wealth is highly concentrated in a relatively few hands. As of 2007:

The top 1% of households (the upper class) owned 34.6% of all privately held wealth in the United States. (Compare that with what 10% own in so-called “less developed countries”)

In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%. (!!!!)

The top 5% of American households owned 62% of the wealth.

The top 5% of American households owned 72% of the financial wealth! (OMG!!)

To try to equate Domhoff’s methodology to those of the World Bank’s 10% base, the
approximate figures would be:

The top 10% of U. S. households owned 73% of the wealth.

The top 10% of U. S. households owned 83% of the financial wealth (#%^$#@%$!!!)

He concludes: “Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.”

He goes on to add, “The effects of the Great Recession on the wealth distribution suggest that average American has been hit much harder than wealthy Americans. Edward Wolff, the economist we draw upon the most in this document, concludes that there has been an “astounding” 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So, as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007.”

And the distribution will get worse in the future. Domhoff exposes the fact that it is the rich who write the laws to – perpetuate their wealth. “Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever — for generations and generations — thanks to bankers (banksters). After Congress passed a reform in 1986 making it impossible for a “trust” to skip a generation before paying inheritance taxes, bankers (banksters) convinced legislatures in many states to eliminate their “rules against perpetuities,” (a rule that had existed since the late 1600s) which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these “dynasty trusts” (which could be the basis for an even more solidified “American aristocracy“) in a New York Times opinion piece published in July 2010 http://www.nytimes.com/2010/07/12/opinion/12madoff.html?_r=1 by Boston College law professor Roy Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).

The wealth distribution of the United States, the wealthiest nation on earth, appears to be one of the worst on earth. Certainly it is far far worse than any of those nations for which data is available on the World Bank’s data base. It borders on the distribution curve of a feudal society. You remember feudalism from your history class, right? The age of lords and their serfs. Well, welcome back to the U.S; back to the U.S.; back to the U.S. of A, United Serfs of America, one nation under guard with bailouts and tax favors for lords.

I strongly recommend that you read the Domhoff analysis in full. It contains far more astounding facts than what is presented here. The site again ishttp://sociology.ucsc.edu/whorulesamerica/power/wealth.html and read the News York Times article: http://www.nytimes.com/2010/07/12/opinion/12madoff)

Looming Fiscal Crisis

U.S. government debt and deficit spending have markedly accelerated over the past decade. For example, The U.S. Department of Homeland Security (DHS) was created and the U.S. military grew to 3 million active duty and reserve personnel, not including contractors. Since 2001, the U.S. spent approximately $1 trillion on military expansion while the total cost of the U.S. wars in Afghanistan and Iraq has been estimated to exceed $3.7 trillion.

Although the U.S.federal government remains in denial, the Congressional debt ceiling debate and subsequent U.S. credit rating downgrade on August 5, 2011 were only the tip of the iceberg.  In fact, the United States faces a historic fiscal crisis.  As of 2012, the majority of new federal government debt will stem from interest on existing debt. Treasury bond issues totaled $2.55 trillion in 2010, roughly 2x the federal budget deficit of $1.3 trillion. Artificially low U.S. Treasury bond yields, created by the Federal Reserve’s quantitative easing (QE1 and QE2) programs and by its current “Operation Twist,” only slow the rate at which the federal debt balloons.

The U.S.federal government’s fast-growing debt is $14.94 trillion, approximately 100% of GDP. Additionally, future liabilities total $66.6 trillion based on generally accepted accounting principles (GAAP accounting) and using official data from the Medicare and Social Security annual reports and from the audited financial report of the federal government. (The 2009 Financial Report of the U.S. Government was recently released, and it basically says that the U.S. government is facing financial Armageddon if something drastic is not done….” http://www.gao.gov/financial/fy2009/09frusg.pdf

Entitlements, like Social Security, Medicare and other government social programs are a financial tsunami of unmanageable magnitude. Rapidly growing interest costs on the national debt together with spending on major entitlement programs will absorb approximately 92 cents of every dollar of federal revenue by the year 2019 (by the way, that’s only 8 years away). By 2020, that figure will be up around 100 cents of every dollar of federal revenue. So, that means that interest on the debt and spending on entitlement programs will eat up everything the U.S. government takes in before a penny is spent on anything else (Except, of course, government payrolls and benefits – That comes right off the top.) like defense, health care, education, homeland security, job creation etc. That is a recipe for national financial suicide.

And unfortunately, the problem is only going to get far, far worse when you project things out beyond the year 2020. Right now, interest on the debt and spending on entitlement programs like Social Security and Medicare eat up only about 10 percent of GDP (That’s not revenue, that’s 10% of our entire Gross Domestic Product! That’s a whole lot of money!). In fact, things are even more dire than that.  The projections are based on previous government figures that projected that mandatory spending will exceed government revenues at some point between 2030 and 2040, but the latest government figures now project that this will happen right around 2020. So that actually understates the magnitude of the problem we are facing….)

The eventual insolvency of the U.S. federal government cannot be averted through any combination of taxes, budget cuts or realistic GDP growth. Inflationary policies, i.e., increasing deficit spending by the federal government and debt monetization by the Federal Reserve, would devalue the U.S. dollar and potentially trigger a hyperinflationary collapse of the currency. To stave off the inevitable, interim measures might include tax increases, exchange controls, nationalization of pension funds or other measures similar to those taken in 3rd world countries.

(Current estimates are that we spend more on Defense than the rest of the world COMBINED! Not to mention the human suffering (Which really needs to be more than mentioned!), since 2001 we have spent over $1,155,000,000,000 for war. Even a “moron” has to ask, “Why are we spending so much?”

The answer: http://www.youtube.com/watch?v=8y06NSBBRtY

The President’s warning fell on deaf ears.

There’s an old economic expression: you can have guns or you can have butter. You can’t have both. When we spend this much money on guns (defense, wars) we don’t have the money left over for butter (Medicare, Medicaid, and Social Security). So
guess where the bulk of the proposed cuts are to come from? You got it – “butter”: Medicare, Medicaid and Social Security.

But even IF we enacted ALL the “proposed” (dead-on-arrival) cuts AND cut defense by 50%, we would still face a financial crisis; just not as catastrophic a crisis.

What no one seems to want to talk about is – the $627 billion pound gorilla in the room: interest on the national debt. Even using the White House’s own “estimates” (Lies, damn lies and …) the interest bill in 2017 will be $627,000,000,000. By 2018 the interest on the debt will exceed the costs of Medicare. Between 2017 and 2021 interest payments will total $4.5 trillion. Based on the White House’s own figures (remember: lies, damn lies and…) the national debt will QUADRUPLE over the next decade. And that’s using their “statistics” (Lies…etc) and assuming that interest rates don’t rise above their “expectations”. “Expectations?” They “expect” interest rates to be 3% on ten-year treasury bonds.

So… what happens if interest rates across the board increase just 1%?  The interest bill alone in 2017 will explode to one trillion dollars! We can’t afford to pay the current interest on the debt and that’s with interest rates between ZERO and Three Percent!!   What the hell do you think is going to happen when those who have been buying our debt decide that zero return isn’t worth the investment when we’re printing dollars in amounts approaching the entire federal budget?  I’ll tell you what happens – It’s OVER!

Interest on the debt is NOT discretionary. It MUST be paid! So, who’s do you think is gonna’ pay this bill? Guess.

Just to pay the interest on that debt every man, woman and child in the United States will have to pony up $2,500 every
year – and more!

• That’s just to pay the interest.
• That’s using White House “statistics” (pah—leeze!).
• That’s assuming interest rates don’t rise above their “expectations”. )

Dominant Corporate Influence

In a 2009 radio interview on Elmhurst, Illinois’ WJJG 1530 AM, Senator Dick Durbin (D-Ill.) explained that “…the banks—hard to believe in a time when we’re facing a banking crisis that many of the banks created—are still the most powerful lobby on Capitol Hill. And they frankly own the place.” Senator Durbin was unequivocal in saying that the federal government of the United States is controlled by banks. Simon Johnson, former chief economist of the International Monetary Fund (IMF), had reached the same conclusion one month earlier in his widely read article The Quiet Coup. Johnson explained that the finance industry had effectively captured the U.S. government, a state of affairs typical of 3rd world countries.

(The Top Ten Corporate Contributors:

(1 AT & T

2 National Association of Realtors

3 Goldman Sachs (Bankster Organization)

4 American Association for Justice

5 Citigroup (Bankster Organization)

6 American Medical Association

7 National Automobile Dealers Association

8 United Parcel Service

9 Altria

10 American Bankers Association (Bankster Organization)

Corporate influence over the political process, as well as over the tax and regulatory policies of the United States, is at an all time high. The federal government is the largest single customer in the U.S. economy and, through taxation or regulation, the government can grant or deny market access to private companies and can either prevent or mandate the consumption of their products and services. As a result, virtually every large corporation in the United States seeks to win the government’s business and to steer government tax policies and regulations in their favor. Naturally, politicians who accede to the wishes of particular corporations are given campaign funds to ensure their reelection. In the past decade, the amount of money spent on lobbying has more than doubled and there are currently 24 lobbyists for every 1 member of Congress.

The interdependence of elected officials and the largest U.S. corporations reached a new high with the 2008 bank bailouts. The influence of private corporations and de facto industrial cartels (comprising the largest corporations in each major industry) over tax and regulatory policies creates significant economic distortions that ultimately compromise the sustainability and the stability of the economy. Ideally, the government would be an impartial referee, rather than an active business partner that overwhelmingly favors large businesses over small businesses, despite the fact that small businesses account for the vast majority of American jobs.

Impact on the Rule of Law

Corruption, cronyism and weak rule of  law are typical of 3rd world countries. The United States exhibits a clear corporate influence over elections and legislation and, arguably, relatively little law enforcement action where large, legally well-equipped corporations are concerned. Reports of so-called crony capitalism have appeared in the U.S. news media, but the term “corruption” has been avoided, along with discussion of fundamental reforms.

A cursory examination of legal developments over roughly the past decade evidences a pattern in which U.S. federal law systematically favors the largest financial institutions, as well as a paradigm in which financial institutions heavily influence both the regulations that putatively govern their activities and the laws that apply to consumers of their products and services. The financial crisis that began in 2008 and the subsequent response of the federal government appear to follow logically from prior legislative events:

1. 1999 Gramm–Leach–Bliley Act (GLB). The Act repealed key provisions of the Banking Act of 1933, commonly known as the Glass–Steagall Act. In the aftermath of the Great Depression, the Glass–Steagall Act prevented depository institutions from engaging in high risk financial speculation.
2. 2000  The Commodity Futures Modernization Act (CFMA). The Act deregulated over-the-counter (OTC) derivatives, such as credit default swaps, referred to by Warren  Buffett as “financial weapons of mass destruction.” OTC derivatives were at the heart of the financial crisis that began in 2008 and are the root cause of the “too big to fail” doctrine. The Act preempted state gaming laws that had prevented banks from speculating in OTC derivatives with no connection to underlying assets.
3. 2001 USA PATRIOT Act. The financial provisions of the Act allow banks to collect additional financial information about account holders, for example, linking business accounts to the personal financial records of business owners, thus weakening both financial privacy and the corporate veil. The Act enhances the ability of creditors to collect and allows federal authorities to monitor financial transactions and to obtain financial records without a subpoena.
4. 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The Act, which was sponsored by banks and credit card companies, effectively eliminated the concept of a “fresh start” by allowing banks and credit card companies to engage in collections activities, in effect, forever. As a result, small business owners who end in bankruptcy are less likely to ever start another business. The Act places banks in front of bankruptcy courts, creates liabilities for bankruptcy attorneys and contains many widely criticized, anti-consumer provisions.
5. 2008 Emergency Economic Stabilization Act. The Act, commonly referred to as a “bank bailout,” authorized the United States Secretary of the Treasury to spend $700 billion to purchase distressed assets, especially mortgage-backed securities (MBS). Instead, the funds were given to foreign and domestic banks to offset their risky MBS, OTC derivatives and other losses. The bank bailout set a precedent of socializing losses but keeping gains private. The Act effectively bound the fate of the U.S. Treasury to that of the largest U.S. financial institutions.
6. 2010 Citizens United v. Federal Election Commission. The Supreme Court of the United States held that corporate funding of independent political broadcasts in candidate elections cannot be limited under the First Amendment, overruling prior case law and guaranteeing the ability of corporations to influence elections without meaningful restrictions. The Court’s decision gave carte blanche to corporations to influence elections, legitimized the interdependence of elected officials and large corporations and created a precedent under which the rights of corporations supersede those of citizens.
7. 2010 The Dodd–Frank Wall Street Reform and Consumer Protection Act. The Act failed to restore critical provisions of the Glass–Steagall Act, significantly regulate OTC derivatives, break up “too big to fail” banks, prevent another financial crisis and prevent further bailouts. The Act created a Consumer Financial Protection Bureau, but did not repeal any provision of BAPCPA or restore the financial privacy of U.S. citizens removed by the USA PATRIOT Act. The Act failed to provide adequate funding to the government’s watchdogs, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Federal Bureau of Investigation (FBI), potentially hobbling enforcement. The Act has also been criticized for the burden it places on smaller competitors in the financial sector, which could ultimately result in an increased concentration of financial power in “too big to fail” banks.

Critics have alleged that, underlying the sub-prime mortgage meltdown that triggered the financial crisis in 2008 was rampant fraud. Fraud has been alleged at virtually every level from the assessment of property values and credit risk; to the loans themselves and to their securitization as MBS assets; to the ratings of MBS assets as AAA; to hedging or betting against MBS assets in the OTC derivatives market (perhaps including financial firms allegedly betting against MBS assets that they themselves created and sold to clients as AAA assets). After the crisis, a seeming pattern of fraud continued apparently unabated in the robo-signing foreclosure scandal where documents submitted to courts were falsified. Despite an avalanche of alleged crimes under existing federal law, no firm or individual of any significance in the financial crisis has yet been prosecuted.

President Barack Obama said in October 2011 that the mortgage finance practices leading to the economic meltdown were “immoral, inappropriate and reckless … but not necessarily illegal.” Since fraud is, in fact, illegal, critics claim that the U.S. federal government has simply failed to enforce the law. Adding fuel to the fire, the Solyndra loan scandal could be construed to suggest corruption at high levels and the MF Global debacle could be construed as indicative of weak regulation and law enforcement and even of questionable market integrity.

In theory, selective enforcement of the law risks the creation of two sets of laws: one for big banks and corporations, and for their executives, i.e., those with connections in Washington D.C. or on Wall Street, and one for everyone else. Among other things, failure to enforce the law could create an environment in which crime pays, but, for ordinary citizens, hard work, prudent financial decision making, saving and investing for the long term do not.

More than any other aspect of America’s progression towards 3rd world status, the federal government’s low level of law enforcement action where “too big to fail” banks are concerned is perhaps the most insidious because it raises questions of legitimacy and of the social contract. A financial and legal system of moral hazard implies that victims face double jeopardy while they are deprived of legal recourse, i.e., those allegedly defrauded might face inflation and tax burdens stemming from preferential treatment of favored corporations or from further bailouts.

Destructive Tax Policies

In the face of rising government debt, the rapidly shrinking American middle class is the primary target of the U.S. federal government’s tax policies. The eventual extinction of the American middle class would be a key milestone along the road to 3rd world status. Current U.S. tax policies favor the largest corporations and this is unlikely to change in the foreseeable future. Although tax increases exacerbate economic downturns, several tax options have been or are being discussed. However, none of them are likely to be put in place.

Assuming that big banks, multinational corporations and the wealthiest 1% of Americans remain off limits in terms of tax policy, the range of income taxed is likely to widen from the current tax on households earning more than $250,000 per year to progressively lower income levels. In fact, the government’s intended revenue source is precisely what remains of the once much larger middle class: professionals, small business owners and dual income families in urban areas, etc. These are the households that have managed to stay ahead of inflation, declining real wages and falling household incomes.

Among other things, U.S.tax policies will erode capital formation within the remnants of the middle class, which is the engine of small business creation and the source of most American jobs. The eventual result will be a three-tier socioeconomic structure
consisting of a super rich wealthy class, a much poorer working class and a massive, politically and financially disenfranchised underclass, similar to that of a 3rd world country.

(U.S. Is Bankrupt and We Don’t Even Know It

By Laurence Kotlikoff – Aug 10, 2010 Bloomberg Opinion

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills. This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

It will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

Read the full article: http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html

Via Dolorosa

The United States increasingly resembles a 3rd world country in terms of unemployment, lack of economic opportunity, falling wages, growing poverty and concentration of wealth, government debt, corporate influence over government and weakening rule of law. Federal Reserve monetary policies and federal government economic, regulatory and tax policies seem to favor the largest banks and corporations over the interests of small businesses or of the general population. The potential elimination of the middle class could reshape the socioeconomic strata of American society in the image of a 3rd world country. It seems only a matter of time before the devolution of the United States becomes more visible. As the U.S. economy continues to decline, public health, nutrition and education, as well as the country’s infrastructure, will visibly deteriorate. There is little evidence of political will or leadership for fundamental reforms. All other things being equal, the United States will become a post industrial neo-3rd-world country by 2032.

“Tomorrow” has arrived:  http://www.youtube.com/watch?v=Ket-ndpxhPg

 (Some Final Words of Wisdom and Warning – now too late – From One of Our Founding Fathers)

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations that will grow up around the banks, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”

Thomas Jefferson – 1802

A  hundred years after this warning we established the Federal Reserve to manage the nation’s money supply (it has devalued our currency over 95% since its inception). In the 1970’s we had double digit inflation. In 2008 we began deflation. Already one-quarter of all homeowners owe more on their mortgage than their home is worth. Unemployment is at its highest level since the Great Depression while the banksters earn mega million dollar bonuses and own the government.

Over two hundred years ago, Thomas Jefferson foresaw it all. Yet despite his warning, here we are today, approaching the time when our children are indeed “waking up homeless on the continent our forefathers conquered”.

Before this is over (many many years from now) things are going to get very very ugly.  Americans are already preparing.  Care to guess what product had the greatest increase in its sales history this past Black Friday?  Watch this video: http://www.youtube.com/watch?v=WM_3M8Tf24Q

We have been warning for three years, don’t rely on or expect the government to take care of you. Plan and prepare to take care of yourself and those you love. Begin by living beneath your means. For help in doing this, see our book, Retire on Social Security – A Guide to Living Well on a Budget of $1,000 a Month)

It takes only two words to describe the future of the United States as the world’s economic powerhouse.  Watch the following music video and particularly after 1minute and 30 seconds.  http://www.youtube.com/watch?v=1iABFZGzEjY&ob=av2n

I wish every one Good Luck with their lives in the years immediately ahead.  You’re going to need all the luck and planning you can get!

Please view this video clip from 60 Minutes before reading the rest of this article  http://www.cbsnews.com/video/watch/?id=7388130n

These “legal” actions by – exempt – members of CONgress violate the integrity of the capital markets of theUnited States of America.  “They” profit from actions that all other citizens would go to jail for – remember Martha Stewart, Ivan Boesky?

An investment services organization has taken up the cause of bringing these self-serving (but totally legal actions -due their own self-written laws of exemption) actions to an immediate end.  Please read the following from Money Morning:

“The folks who actually caused much of our current economic crisis – our vaunted elected leaders down in Washington
- continue to live in a plastic-bubble-encased dream world. Our friends in Congress, whose collusion with Wall Street actually created the mess that we’re in right now, are largely oblivious to the very real pain being experienced by the people they’re supposed to represent and protect.

“Free travel, triple pensions, 58% are millionaires …the perk list for our friends in Congress goes on and on. So while the typical American family on Main Street has to scratch and struggle just to get by – with most family members living in fear as they do so – our congressional leaders live a dream life that’s totally disconnected from the terrifying reality that they’ve created for the “other 99%.”

“And now we find out that some of the top congressional members are getting rich off of the “inside information” they routinely come across as part of the jobs that we elected them to do. For the rest of us, insider trading is a federal offense, a felony that would lead to an indictment and conviction, a jail sentence, and a financial forfeiture so onerous that it usually leads to financial ruin. Hell, even Martha Stewart wasn’t immune to insider-trading allegations.

“But for members of Congress, insider trading is perfectly legal. In fact, it’s actually commonplace, if not rampant, according to a recent CBS News “60 Minutes” segment.

“According to that CBS report, former Rep. Dennis “Denny”Hastert, R-IL, made $2 million selling land he owned after receiving a federal earmark to build a parkway near his property. Rep. Nancy Pelosi, D-CA, bought shares of the 2008 Visa Inc. (NYSE: V) initial public offering (IPO) while legislation affecting credit card companies was debated in the House.

“And Rep. Spencer Bachus, R-AL, chairman of the House Financial Services Committee, was warned that a “global financial
meltdown” was about to occur during closed-door briefings with then-Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben S. Bernanke back in September 2008.

“You know what Bachus did? The next day, Bachus bought stock options that allowed him to profit if and when the economy tanked, “60 Minutes” reported.

“And we all know how that trade must’ve turned out, given the recession and bear market that followed.

“This is an outrage. And it’s time for it to stop. It’s time to send a message.

“Congress should be watching out for us – not profiting off our pain. In fact, it’s time for Congress to live like we do.

“Money Morning is conducting an online vote to see if you think insider trading by our congressional leaders should be banned. We’re going to deliver the results right to the source – to the majority and minority leaders of Congress.

“We need your vote.

“If you want to help us send that message, please click here (http://stopinsidertradingincongress.com/vote/)

If you want to help us send that message, please click here. And forward this to family and friends – we want all the votes we can get.

Thanks for your help on this.

Respectfully yours,

William (Bill) Patalon III

Executive Editor Money Morning & Private Briefing

P. S. In the comments window of this survey, I added the following:

(“It is also time to call for a special prosecutor to go after all our exempt leaders “friends” who received inside information from them. Maybe we can’t put our CON-gressmen in jail but we can put their friends in.

Additionally, findings of the special prosecutor should be made public so voters can – act in accordance.” – Jim)

The Lost Decade of Stock Market Returns Puts Retirement
Benefits in Jeopardy

What many retirees fail to realize is how dramatically their retirement benefits are affected by the overall returns of the stock and bond markets.  To understand the impact lets create a simple hypothetical retirement plan.

The plan has one employee, Bill, who is 55 in 2001.  The employee will retire in ten years and will live only ten years.  The plan will pay him a defined benefit of $10,000 a year when he reaches the age of 65.  Note that even in this simple example we have already made an actuarial assumption: he will live only 10 years.

In 2001 we begin depositing money into Bill’s account.  We shouldn’t have to deposit the full $10,000 today because the money won’t be disbursed for ten years and it will grow in value.  The money will be invested in the stock market (bonds make up a large portion of retirement funds and we will cover that problem in a separate analysis) but how much should we deposit?  For a guide we look to past history.  Over the prior ten years (1991 – 2001) the stock market rose by about 120% (12% per year).  Wishing to be conservative, we assume that the money will grow by only 10% a year.

That means, for example that if there were only one $10,000 payment and it was the next year then we would deposit $9,000 today.  If it were two years out we would deposit $8,100.  Similarly, since the disbursements are a rolling ten years out, we only deposit $3,487 each year (based on those assumptions) which will pay Bill $10,000 a year for his ten year life expectancy.   Thus, over ten years we deposited a total of $34,870 into Bill’s account and are committed to pay him a total of $100,000 during his retirement.

You can probably see the problem right away.  What happens if the account earns less than the 10% annual growth rate assumption?  What happens when the stock market goes nowhere for a decade (as has just happened)?

(That’s why Social Security, as it was originally constructed, was such a brilliant – Tax.  When Social Security was established they assumed – based on life-expectancy then – that most contributors would: one, die before they collected any money or two, die very soon after retirement.  The survivors would be happy voters and those who got nothing would not complain because they would be – dead.  The government gets a lot of money and will only repay a pittance.  Brilliant!  Except…beneficiaries did the unthinkable, due to advances in medicine etc., they didn’t die as planned.  But Social Security’s problems are another subject)

Well, it’s now 2011 and Bill retires.  Guess what?  The total gains from the stock market are zero.  So, there is only $34,870 in his account and a “promise” to pay him $100,000.  The account is only 35% funded.  It is – underfunded – by $65,130!  How long can you pay Bill the $10,000 a year he is expecting?  How much can the account actually afford to pay him each year for life?

Bill may not know it yet, but he has a BIG problem.  Now that you understand the nature of the problem you will appreciate the meaning of what “underfunded” means to your retirement and what kind of problem you may be facing.

The American Enterprise Institute estimates that public pensions are currently underfunded by THREE TRILLION DOLLARS!  If you are the beneficiary of a public pension plan I suggest – STRONGLY – that you go to their study to see just how secure your benefits are. Go to this link:  http://www.aei.org/docLib/Biggs-WP-164.pdf  (page 42 – 44).

Here are some representative levels of funding:

AlaskaTeachers          37%     Alabama  Teachers   42%      Arkansas Teachers      45%

Arizona S.R.S.            44%     Calif.Teachers            47%      Colorado State             34%

Conn. Teachers          32%     FloridaR.S.                 57%       GeorgiaTeachers        54%

HawaiiE. R. S.           36%      Iowa                            51%        Idaho                           51%

IllinoisTeachers         28%    IndianaP.E.R.F.          57%          Kansas P.E.R.S.         38%

KentuckyE.R.S.         30%    LouisianaS.E.R.S.      35%          Mass. Teachers          38%

MarylandP.E.R.S.     43%    MaineState                  41%          Mich. S.E.R.S             46%

Minnesota                  45%     Missouri                      43%         Missippi P.E.R.S.       39%

MontanaP.E.R.S.      48%    N. Carolina                   60%        N. Dakota P.E.R.S.     49%

Nebraska Schools     48%    New Hampshire         34%        New JerseyP.E.R.S.    38%

New MexicoP.E.R.F. 50%   Nevada                        42%        N.Y. State & Local        56%

Ohio P.E.R.S.             51%     Oklahoma P.E.R.S.   42%       Oregon P.E.R.S.           58%

Penn. State E.R.S.     44%     Rhode Island E.R.S. 29%       S. Carolina                     42%

S. Dakota                    53%     Tenn.State &  Teach. 51%     Texas E.R.S.                   49%

Utah                            45%      Virginia R.S.              47%      Vermont State               50%

Wash.P.E.R.S. 2/3    54%      Wisconsin                   54%         W. VirginiaP.E.R.S.     48%

Wyoming                    46%

You can’t look at these levels of funding and believe that everyone is going to get what they think.  Should the markets – decline further – these coverage figures will get even worse.  This is why we have been urging retirees not to expect that they will get what they’ve been promised and to live beneath their means.  When it comes to your retirement it may prove best to plan that it is you ultimately who may be the main source of your financial security.

A good way to get your expenses under control and save money is to invest in our guide: Retire on Social Security, available on this website.

The table below is for beneficiaries who were born between the years 1943 and 1954. Full retirement age for those born in this period is 66 years. You can begin collecting benefits as early as age 62.  The following table provides the percentage of your full retirement benefits that you will receive should you decide to retire early.

Examples of how much your Social Security benefit will be reduced by early retirement if you would receive $1,000 a month at full retirement age of 66. You decide to retire early at age 63 and three months. You would receive 81.7% of your full retirement benefit ($1,000) which would be $817.00 a month. Wait one more month and the monthly benefit would be $822.00. You want to retire early but need at least $900 a month in benefits. You would have to wait until age 64 and 6 months before you would get (90% of your full benefit) $900.00.

Age You Retire        % of Benefit You Receive       Spouse % of Benefit

62                                  75.0%                                                 35.0%

62 + 1 month                75.4                                                     35.2

62 + 2 months             75.8                                                     35.4

62 + 3 months             76.3                                                     35.6

62 + 4 months             76.7                                                     35.8

62 + 5 months             77.1                                                      36.0

62 + 6                          77.5                                                      36.3

62 + 7 months             77.9                                                      36.5

62 + 8 months            78.3                                                      36.7

62 + 9 months            78.8                                                      36.9

62 + 10 months          79.2                                                      37.1

62 + 11 months           79.6                                                     37.3

63                                80.0                                                    37.5

63 + 1 month              80.6                                                    37.8

63 + 2 months            81.1                                                     38.2

63 + 3 months            81.7                                                     38.5

63 + 4 months            82.2                                                     38.9

63 + 5 months            82.8                                                     39.2

63 + 6 months            83.3                                                     39.6

63 + 7 months            83.9                                                     39.9

63 + 8 months           84.4                                                     40.3

63 + 9 months           85.0                                                     40.6

63 + 10 months         85.6                                                     41.0

63 + 11 months          86.1                                                     41.3

64                               86.7                                                     41.7

64 + 1 month             87.2                                                     42.0

64 + 2 months          87.8                                                      42.4

64 + 3 months          88.3                                                      42.7

64 + 4 months          88.9                                                      43.1

64 + 5 months          89.4                                                      43.4

64 + 6 months         90.0                                                       43.8

64 + 7 months         90.6                                                       44.1

64 + 8 months         91.1                                                        44.4

64 + 9 months         91.7                                                        44.8

64 + 10 months       92.2                                                        45.1

64 + 11 months        92.8                                                       45.5

65                             93.3                                                       45.8

65 + 1 month           93.9                                                        46.2

65 + 2 months        94.4                                                        46.5

65 + 3 months        95.0                                                        46.9

65 + 4 months        95.6                                                        47.2

65 + 5 months        96.1                                                         47.6

65 + 6 months        96.7                                                        47.9

65 + 7 months        97.2                                                        48.3

65 + 8 months        97.8                                                       48.6

65 + 9 months        98.3                                                       49.0

65 + 10 months      98.9                                                       49.3

65 + 11 months       99.4                                                      49.7

66                            100.0                                                    50.0

So, we have health care reform – Obamacare. In case you missed it, as part of the new health care, your contributions to Medicare will skyrocket. But guess when the big increases come? Come on, this shouldn’t be difficult. Let’s see…it is now 2011 and the election is when?

Here is how much the government will be deducting from your Social Security checks.

2011 Monthly deduction – $96.40

2012 Monthly deduction – $104.20

2013 Monthly deduction – $120.20

2014 Monthly deduction – $247.00

That’s a 150%+  increase in three years!

Care to guess what the deduction was when Medicare began in 1965? How about $3.00.

Remember the old adage about never letting the camel stick its head in the tent? Government intrusion always starts small and for the common good but just like the camel, once you let the head in, the whole camel will soon follow and you’ll be the one out in the cold (or eaten alive).

Today’s video: http://www.youtube.com/watch?v=XhyRpvgm03g

The Economic Outlook from London

Watch the video:  http://www.youtube.com/watch?v=aC19fEqR5bA

Military pensions and health care for active and retired troops now cost the government about $100 billion a year, representing an expanding portion of both the Pentagon budget and the deficit.  Last year, for every dollar the Pentagon paid service members, it spent an additional $1.36 for its military retirees, a much smaller group. Even in the troubled world of state and municipal pension funds, pensions almost never cost more than payrolls.

The Defense and Treasury Departments set aside more than $75 billion each year to pay current and future benefits.  As of year end 2009, the retirement fund is far short of enough money to cover its total costs, with assets of $278 billion and obligations of about $1.4 trillion.  The government covers the shortfall by – you guessed it –  issuing more debt.

Currently service personnel who retire after 20 years are eligible for pensions that pay half their salaries for life, indexed for inflation, even if they leave at age 38. The typical beneficiary is a retired noncommissioned officer, with an average pension of about $26,000 a year.

They are also eligible for lifetime health insurance through the military’s system, Tricare, for a small fraction of the cost of private insurance.  The annual fee is just $460 for families and has not risen in years, even as health care costs have skyrocketed.  Consequently, working veterans shun employer health plans in favor of military insurance.  Critics of the system say the contribution could be raised substantially and still be far lower than what civilians pay for employer-sponsored health plans, typically about $4,000.

Under the debt ceiling agreement the Pentagon must find $400 billion in reductions over the next 12 years (A whole $400 B over the next TWELVE Years – how will they ever manage?).  Even this small reduction may make the unthinkable – thinkable: reduction in retirement benefits for the military.   Further, if Congress does not adopt the recommendations of the “super” committee the mandated reductions in Pentagon spending would more than double, to about $900 billion, (a whole $75 B a year)and that would hit just about every category of defense spending.

One of the proposals in Washington from the Defense Business Board would make the military pension system more like a 401k plan.  Under it, the Pentagon would make defined contributions to a service member’s individual account  (service members may make additional contributions). Mr. Panetta has said that if adopted, the plan would not apply to current military personnel.

We’ve said it before, we’ll say it again about retirement benefits - this is just the beginning.  It’s going to get a whole lot of ugly in the years ahead.  Govern your actions accordingly.  Live beneath your means and put money aside for your future.  Our guide will help you cut your expenses and still live well – available on this site. 

Read more:

http://www.nytimes.com/2011/09/19/us/retiree-benefits-for-the-military-could-face-cuts.html

Faced with a possible 23% tax increase, taxpayers in Hollywood, Florida voted to cut the pensions of its firefighters, police and city employees.

With their backs against the wall, facing a $38 million deficit, and unable to reach an agreement with the city’s unions, Hollywood leaders took the high risk action of putting the issue to a public referendum.  If taxpayers chose to vote down the pension changes, the city would be forced to lay off 75 employees and consider raising the tax rate by 23%.

Taxpayers responded by casting their votes to strip the city’s police, firefighters and general employees of their current pension plans, saving the city $8.5 million.

The changes, which go into effect October 1, mean fire, police and general employees will have to work longer in order to retire, will receive a smaller percentage of their salary as pension and will no longer be able to include vacation and cost of living increases into the pension formula.

The yes vote on the referendum has broad implications for other Florida cities who are struggling with the costs of public pension benefits.  (This is only just beginning.  Don’t be surprised in two years if we’re reading about stripping benefits to those already retired! It’s going to get a whole lot of ugly.)

Union leaders responded by saying they will challenge the vote in court. (Eye roll)

Read more: http://www.miamiherald.com/2011/09/13/2404725/hollywood-voters-getting-say-on.html#ixzz1XwU2pfvO