The New American
by Selwyn Duke
Photo of Donald Trump: Gage Skidmore
Political winds are giving The Donald the Trump bump, with the real-estate mogul taking second place in polls on the 2016 presidential race. But economic winds are a different matter, with the brash businessman becoming the latest American targeted for destruction by the politically correct powers-that-be.
Donald Trump (shown), who officially declared his White House run June 16, recently took second place in national, New Hampshire, and Iowa polling for the GOP nomination (in Iowa he’s tied with renowned physician Ben Carson). But after making comments about the criminal nature of far too many illegal migrants, he has lost a certain place: in the hearts of some business interests. NBC dropped The Apprentice franchise and the Miss USA and Miss Universe beauty pageants, Spanish-language network Univision has also dropped Miss Universe, Macy’s has kicked his clothing line to the curb, and Mayor “Bolshevik” Bill de Blasio announced that NYC was reviewing its contracts with Trump.
The comments in question were made during the mogul’s campaign announcement. Here they are in toto:
When do we beat Mexico at the border? They’re laughing at us, at our stupidity. And now they are beating us economically. They are not our friend, believe me. But they’re killing us economically.
Thank you. It’s true, and these are the best and the finest. When Mexico sends its people, they’re not sending their best. They’re not sending you. They’re not sending you. They’re sending people that have lots of problems, and they’re bringing those problems to us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.
Trump has stood by his remarks, only issuing the clarification that illegal migrants from other nations enter the United States via Mexico as well. Yet given that we share a border with Mexico, 50 percent of illegals now hail from that nation, fully 67 percent of American Hispanics have origins there, and that the Mexican government has actually issued its citizens pamphlets on how to sneak into the United States and game our system, the nation will naturally draw focus when the subject is illegal migration.
Of course, Trump’s comment was not exactly politician-like; it was extemporaneous and a tad hyperbolic, more suggestive of boiling radio-talk passion than campaign-trail boilerplate. But aside from name recognition, that’s Trump’s appeal: He’s offering the plain talk for which so many hunger. If you want canned and carefully cultivated PC political statements, well, that’s why Jeb Bushes were invented.
Many would also aver that Trump’s statements were essentially true. It isn’t Mexico’s Carlos Slims furtively traversing the Rio Grande, and we can read stories almost daily about rapes and other crimes committed by illegals; moreover, while the numbers are disputed by some, it has been said that almost 30 percent of federal prison inmates are non-Americans. Of course, many of these felons are no doubt incarcerated for immigration violations (or at least were when Obama still enforced immigration law). Critics, however, would say this gets at the point:
All illegal migrants are by definition criminals. Illegal entry is just that — illegal.
In addition, as pundit Ann Coulter opined on the matter:
A curious media might also wonder why any immigrants are committing crimes in America. A nation’s immigration policy, like any other government policy, ought to be used to help the people already here — including the immigrants, incidentally.
It’s bad enough that immigrants, both legal and illegal, are accessing government benefits at far above the native rate, but why would any country be taking another country’s criminals? We have our own criminals! No one asked for more.
No one did, but it’s not the first time they’ve come. After the Mariel Boatlift brought 125,000 Cubans to Florida in 1980, it was discovered that the nation’s Marxist dictator, Fidel Castro, included perhaps as many as 40,000 criminals and mental-asylum patients among the refugees. This is the inevitable result of loose immigration policy.
Yet none of this may matter. As Coulter also said when addressing Trump’s comments, “The media’s response was to boycott him. One thing they didn’t do was produce any facts showing he was wrong.”
And that is the reality. Whether or not the Trump comments’ substance was true or the style tactful is irrelevant to today’s “elites.” He transgressed against their politically correct agenda, and for that he must be destroyed. And this is why his travails reflect an issue far larger than even Trump and his empire: The Left’s use of economic persecution to silence dissenters.
A while back the news was buzzing with stories of bakers, wedding planners, and other businessmen boycotted, fined, and otherwise persecuted for refusing to service faux weddings. Some were driven out of business. A Miami high-school principal was removed from his job early last month merely for disagreeing — quite soberly — with the conventional narrative on the McKinney, Texas, arrest incident. Also in June, a Nobel Prize-winning scientist was forced out of his position at the University College London for making an innocuous joke about women. In 2010, pundit Juan Williams was fired by National Public Radio for saying he gets nervous when seeing traditional-garb bedecked Muslims on airplanes. And this is just a small sampling of people crushed by the Iron Muzzle descending across the West.
Of course, the United States isn’t yet like most of the West, where one can be imprisoned for politically incorrect commentary under hate-speech law. But as ancient Chinese sage Confucius noted, social pressure can be more effective than law; when you know dissent can mean losing your livelihood and reputation, well, it has a way of stilling the tongue.
And that’s the whole idea.
As I’ve written before, the Culture War is long over. What we’re witnessing now is a “pacification effort”: The Left is in the process of stamping out the last vestiges of dissent because, if the Truth is never heard, a monopoly over future generations’ hearts and minds is made possible.
This is why “offensive” leftist comments rarely carry consequences. Boston University professor Saida Grundy said that white males were a “problem population” and viciously taunted a white rape victim on Facebook. Dalhousie University professor Jacqueline Warwick suggested in January that teachers should enforce an “explicit” rule stating that “men are not allowed to speak first” in class. And vile anti-Christian bigot and “sex columnist” Dan Savage told Christians at a high school conference to “ignore the bull[**]*t in the Bible” and called students who walked out on one of his speeches “pansy-a**ed.” All these individuals still have their jobs — and Savage can command $24,000 for one speech.
And Donald Trump is currently on the wrong side of the pacification effort. The difference is that he doesn’t face impoverishment and has the resources to strike back; in fact, he’s filed a breach-of-contract suit against Univision for $500,000 and plans similar action against NBC. But what of everyone else?
There is only one way to avoid being silenced (for now). In April I cited the case of Memories Pizza in Walkerton, Indiana, which was targeted for destruction after owners Kevin and Crystal O’Connor said they would decline to service a faux wedding. In this case, however, the couple was spared economic destruction: A GoFundMe.com campaign raised $842,000 for the O’Connors in just two days. I then pointed out that this effort needs to be consistently replicated, writing:
To this end, traditionalists need to create a quick-response organization that can provide material aid to any businessman persecuted by the [Left]…. For average traditionalist entities are small and can easily be picked off one by one. But unite them, ah — that’s a formidable force. And if this organization had 500,000 citizen members — precious few in a nation of 317 million — each pledging to donate a mere $2 to any targeted business, that’s $1,000,000. And it would send a message: “You want to ‘hurt’ Christians who disagree with you? You can try. But you’ll impoverish no one. Your actions will result in the object of your hate becoming rich.”
This would powerfully negate the Left’s strategy, as it uses their characteristic envy to neutralize the actuation of their characteristic hate. As this research shows, they cannot stand others having more than they do. And the prospect of their actions making a despised target wealthy is intolerable to them. This was evidenced, mind you, in left-wing websites’ comments sections after the Memories Pizza affair: Posters were absolutely livid that the O’Connors were making out like, uh, let’s say, global-warming/green-business con-artists or the Clintons. Some even accused the couple of orchestrating the whole incident as a scam.
In fact, if Trump and some other wealthy Americans organized and funded the above endeavor, they could probably do far more good than a presidential run would realize. We all should remember that tyrannical movements aggregate power by creating disunity and then picking off the isolated. And as Ben Franklin warned, “If we do not hang together, we shall surely hang separately.”
New Eastern Outlook
by Janet Phelan
The fourth of July. This is the day for Americans to go down to the beach with a picnic basket loaded up with ham sandwiches and to drink more beer than can possibly be recommended during the work week. This is the day to gather with friends and family and to ooh and aah at pyrotechnics dazzling the sky. It is a day, if we stop to think, to be grateful that we are not living in a country which produces lock- step conformity and fear in its citizenry. It is a day, traditionally, to be thankful for our freedoms.
This July 4th, it would be useful to take a look at what we have lost, in terms of freedoms, and what we still stand to lose. Like some other institutions in America, the July 4th celebration of freedom has become something of an obligatory exercise of patriotic fervor. And given the developments of the last few years, it may now be relatively empty of meaning.
For the first time in US history, we have a President who has created—and invoked — the executive privilege ofordering the murders of US citizens without due process. While this has only been exercised a few times (to our knowledge), most notably with the 2011 assassination by drone strike of US born Muslim cleric Anwar al -Awlaki and subsequently of his son, Abdulrahman al-Awlaki, the precedent now exists. This is not a privilege generally granted to a President in a free society. In fact, it is an action that is more redolent of a dictator, a Hitler or a Pol Pot whose purges of not only “enemies of the state,” but also of whomever pissed off the dictator, became part of our collective awareness that we, as Americans, were very fortunate not to live under these sorts of rulers.
The media seems to have forgotten the lessons of history, as far as tracking the slide into tyranny. Certainly, we are not seeing any general forum of public discussion as to how to respond to this level of legalized attack.
In 2014, the Department of Justice reluctantly declassified and released the DOJ memo which provided the legal analysis to support murder by Presidential dictum. This memo was released when its author, David Barron, was up for Congressional approval as a federal judge (He was subsequently approved for the position). Alarmingly, the memo was not released in its entirety. Critical sections dealing with how to resolve the inherent contradictions between the right of a President to decide whom to kill and the Fifth Amendment were redacted, so that we were not able to see how the right to not be “deprived of life, liberty, or property, without due process of law” could be reconciled with murder by Presidential order.
The potential repercussions of this prerogative seized by President Obama await realization. In the meantime, certain other blips on the political radar point to possible future outcomes. One of these potential outcomes is the possibility of the deployment of drones against US citizens within the borders of the US.
In a widely circulated letter, written by former US Attorney General Eric Holder in response to an inquiry by US Senator Rand Paul, Holder admitted that such drone deployment could be lawful. Wrote Holder:
“It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate under the Constitution and applicable laws of the United States for the President to authorize the military to use lethal force within the territory of the United States.
There is more evidence that “life, liberty and pursuit of happiness” have gone out the window. When The Guardian broke the story this past February that the Chicago police were using a “black site” to detain people in Illinois without processing them legally and without allowing the detainees the right to contact anyone on the outside world, those on the “human rights watch” felt a collective shiver. Subsequent revelations that a mini-“black site” was extant in Los Angeles County simply confirmed the perception that the erosion of rights has become a landslide.
It is not only illegal police detentions that should alarm us about the boys in blue. Police in the US are now murdering US citizens — largely black, Latino or allegedly mentally ill—at an alarming rate and with virtually no culpability.
What we are seeing is in part the disparity between “paper rights” and real rights.
In other words, what is considered to be lawful versus what really happens may be two entirely different critters. Recent US Supreme Court decisions affirmed that the detainees in Guantanamo have rights under US law. Even with the highest court in the land affirming these rights, the detainees have remained in custody for years without a single habeas corpus being granted and, in many cases, without being charged.
One bright spot, according to the Second Amendment’ers, is that our gun rights are still intact. Those who believe that guns are a protection against intrusive government agents are still pounding on their virtual pulpits, insisting that these rights to bear arms will prove to be our salvation, should push come to .well, shoot.
Let’s get real, here. The US government has stockpiles of both chemical and biological weapons, and as far as “paper rights” go, the government has great latitude to use these against US citizens. The Chemical Weapons Convention, which the US is a party to, allows the discretion of the party nations to allow domestic law enforcement agencies to use these weapons against their own citizens.
According to the Biological Weapons Convention, the use of biological weapons is not so permitted. However, when the United States Congress passed the USA PATRIOT Act in 2001, that permission was indeed self-dealt. In the now infamous Section 817, the Expansion of the Biological Weapons Statute, the US government gave itself immunity from violating its own biological weapons laws.
And as far as this being a domestic violation of the BWC, one can imagine the satisfaction of the legal team whocooked up Section 817, given their awareness that there is nothing that the treaty organization can do about this. The BWC, unlike other arms treaties, has no verification protocol and no mechanisms to enforce its own regulations.
In addition, there has been a landslide of reports that directed energy weapons,which are classified as non-lethal, are being tested on US citizens, without consent.
In the face of the reality that the US has drones, chemical and biological weapons and a whole mish mosh of other assault capabilities, and can use these against its citizens without legal culpability — at least given how the laws are currently configured — how does the gun lobby actually imagine that a 22 rifle is going to protect anyone? Did anyone at the shooting range ever try to shoot a germ?
Snowden’s revelations of the extent of US spying clarified and confirmed for us the uneasy perception that we had utterly lost our privacy rights. As it turns out, we have lost a whole lot more.
It might be time to reassess the fourth of July celebrations. Rather than munching on hot dogs and downing a few Budweisers and cooing at the gorgeous pyrotechnics, it might be time instead to hold a wake. And after we have buried Lady Liberty, maybe we can get down to the serious work of figuring out what to do now.
Janet C. Phelan, investigative journalist and human rights defender that has traveled pretty extensively over the Asian region, an author of a tell-all book EXILE, exclusively for the online magazine “New Eastern Outlook”.
Desperate Greeks Dumpster Dive for Food As Crisis Means “Americans May Face Severe Food Shortages” Too
by Mac Slavo
It wouldn’t take much for these events to come home to America… and plenty of fuel for a further crisis is in the works.
Record numbers of struggling Americans are already on SNAP food stamps and welfare; tens of millions are out of work and with a bleak job outlook; the federal government has advertised and encouraged people to join those on the dole.
Millions of aging Americans have nothing else but social security and medicare benefits (which they earned, but which are meager) and pension money that has been swindled away behind the scenes in a complex and toxic investment scheme. Low interest rates imposed by the Fed are bringing everything to a grinding halt, and there will be no switching gears without a bumpy ride.
Of course, it is worse in Greece, but that’s only because the music has stopped for them. Attempting to pay Europe’s central banksters while forcing austerity on the people and hoping for the best was an impossible conundrum. It only left a ticking time bomb….
As a result, many people have now been out of work for years in Greece, and large sectors of the population have been unable to cope with the burdens that financial woes have saddled upon them. With the latest flash point, Greeks have rushed to ATMs, grocery stores and gas stations to make last minute desperate attempts to brace for collapse.
Now, with the crisis becoming critical once again, far too many are being forced to dumpster dive to scavenge for food just to stay alive. Natural News reports:
As Greece slides ever deeper into its debt crisis with no real hope of a solution on the horizon, many average citizens have been reduced to scavenging in dumpsters just to stay alive.
A recent article in The Telegraph details the plight of formerly employed Greek nationals who now must resort to scouring the streets to find scraps of cardboard, plastic bottles, metal or anything else that can be sold at recycling centers for a few meager euros per day.
Some of these unfortunate people are even forced to eat discarded food found in the trash bins of cities such as Athens, the article reports.
Sometimes I’ll find scrap metal that I can sell, although if I see something that looks reasonably safe to eat, I’ll take it. Other times you might find paper, cans, and bottles that you can get money for if you take them back to the shops for recycling.
The massive debt crisis may force Greece to leave the Euro, a move that could lead to a wave of exits by other countries frustrated with the strong armed banking tactics of the European Central Bank and blighted horizon under the Euro.
Watch video here.
With Greece once again on the brink, it is clear that the core problems are common to many Western countries and many more including Spain, Portugal, Cyprus and Ireland may collapse as well.
Americans could be next in line, too… it simply wouldn’t take much for bank runs and cash controls to hit home. In fact, those in power might welcome it. How quickly would a crisis bring millions of poor and working class people to their knees, or their breaking point?
[I]f the crisis that many experts are predicting actually takes place, millions of average Americans may end up facing severe food shortages and find themselves in the same situation as the Greeks.
Let’s pray that our tipping point isn’t as close as many have warned.
Meanwhile, there is another stark reminder of the need to prep.
This Picture and Video Explain Exactly Why Doomsday Preppers Are Getting Ready For An Imminent Collapse
by Mac Slavo
For years the mainstream media and their following of myrmidons have made a joke out of those who have taken time, effort and money to prepare their homes, assets and families for “Doomsday” scenarios that may include anything from financial collapse to natural disasters.
For those who laugh at “preppers” it boils down to the belief that this time is different from the countless historical examples showing just how bad things can get. World wars, monetary hyperinflations, depressions, tyrannical governments, pandemics, Tsunamis, you name it; according to the experts, these things can never happen, especially not here in America. Plus, in the off chance that something does go wrong, we can always depend on our government to bail us out.
But what if, for the sake of argument, something does go wrong? And what if – just humor us here – the government doesn’t have the ability to help? What happens then?
The answer is simple and can be summed up in the following picture and video taken within the last 24 hours in Greece, where their financial and economic systems have collapsed to such an extent that people are now hoarding food, gas and even money (if they can get their hands on it).
Do you want to know why your prepper relatives, friends or neighbors are so adamant about being ready for disaster? It’s because they don’t want to end up like the hundreds of pensioners shown below. As Zero Hedge notes, the situation was heartbreaking:
1,000 Greek bank branches chanced a stampede in order to open their doors to the country’s retirees on Wednesday.
The scene was somewhat chaotic as pensioners formed long lines and the country’s elderly attempted to squeeze through the doors in order to access pension payments.
As Bloomberg reports, payouts were rationed and disbursals were limited according to last name.
As you’ll see in the video, it was virtually impossible to get through the bank’s door and tensions were running high:
Such scenes have played out time and again throughout the course of the financial crisis since late 2008.
In the following video, shot in February of 2008, Greeks were fighting for food in the streets:
And for those who would still argue that the American government, through multi-billion dollar FEMA and DHS initiatives, is ready for such a crisis, we direct your attention to these images taken in the aftermath of Hurricane Sandy.
Within 72 hours people were starving, had no clean water, no gas and were standing in hours-long food lines in the hopes of getting an MRE (Meals-Ready-To-Eat) from the National Guard. Some were even dumpster diving looking for scraps:
And this all happened in modern-day America, just a few years ago.
So, if you happen to be one of those people laughing at the preppers, think about how funny it will be when you’re having to dig through the trash for your next meal, because that is how bad it can get.
According to analyst Greg Mannarino, the debt collapse could be so severe that millions of people may die from starvation as credit lines lock up and the normal flow of commodity commerce ceases.
That may sound impossible, but consider what happens when the food stamp Electronic Benefits Transfer system goes down for just 12 hours. You guessed it – complete pandemonium. When the system failed across 16 states in 2013 one person dependent on these benefits summed it up with this one statement:
“How Am I Going to Feed My Family?”
The simple answer in a real crisis where our currency crashes or a cyber attack takes down payment systems?
Your family will starve.
In his book The Modern Survival Manual: Surviving the Economic Collapse Fernando “Ferfal” Aguirre puts a first-hand perspective on the plausibility of these types of events coming to pass:
During good times people can afford to be spoiled, lazy, and let others handle issues that they should solve themselves. Crime rates are low and “those things” just don’t happen where you live. It doesn’t happen to people like you, or those around you.
The survivor of the Argentine collapse and hyperinflation of the early 2000’s explains that drastic changes can come out of nowhere and so quickly that they seemingly happen overnight:
But one day that changes and it does happen. The guy next door, a friend or a family member gets hit and you see how vulnerable you are.
I’m not talking about crime alone. I’m talking about serious problems or disasters of all sorts. It can range from floods to hurricane, social disorder or a family member getting sick and requiring medical attention. You didn’t have the foresight to prepare for it financially and with proper medical and insurance.
…And you may live like that for years without worrying about a thing, simply because the system is working better than usual.
But once you realize that our society is based on rather complex and fragile structures that can fail, or when you see how life just enjoys throwing you a hardball every now and then, then you see the wisdom in preparing.
Those who would target preppers with jokes or humiliating one-liners often suggest that the preparedness community is doing nothing more than creating fear. But nothing could be further from the truth, as Tess Pennington explains in her widely popular best seller The Prepper’s Blueprint:
I don’t want to promote distress, or for that matter, teach others to live in it. Rather than staying in the presence of trepidation, I chose to take another daring step and search for a way to prepare that promotes the freedom and gratification we are all searching for. My goal was to be 100% self-reliant during a short or extended disaster.
Once I adopted this mind-set my attitude shifted from living in fear to living with courage to face whatever may come.
Tess and Ferfal, like many preppers out there, realize that the system within which we live is fragile and that even a minor disturbance could lead to widespread implications.
In Greece today there were thousands of retirees lining up at banks. Most assumed that now that they are retired the government would always be there to help them. Others assume the government will always find a way to feed them and provide them with health care.
As we now know, the reality is starkly different.
Those who ridicule the preparedness movement may be laughing and snickering today. But you can be certain that when it hits the fan and America goes the way of Greece, they’ll be the first ones knocking on the door looking for help.
End Of The American Dream
by Michael Snyder
In this article, I am going to share with you some statistics that prove that most Americans are completely and totally unprepared for a Greek-style economic crisis. According to one recent survey, an all-time high 72 percent of all Americans are concerned about an economic downturn, and yet the amount of actual preparation that is taking place for the next economic downturn is very low. As 2008 has faded into our memories, most Americans have been lulled into a false sense of security. Most people seem to be far more concerned about the latest exploits and scandals of their favorite celebrities than they are about the very real problems that this nation is steamrolling toward. Hopefully what is going on in Greece right now will serve as a wake up call, because the truth is that similar things could happen in the United States much sooner than most of us would dare to imagine.
When a major financial crisis strikes, what is one of the first things that usually happens?
People start pulling their money out of the banks.
A few years ago when problems erupted in Cyprus, photos of long lines at ATMs rapidly circulated all over the Internet. And now the same thing is happening in Greece. The following is just one example…
— Los Angeles Times (@latimes) June 29, 2015
This is why it is so important to not put all of your eggs into one basket and to always have some emergency cash at home. Most Americans just assume that the money that they have in the banks will always be available, but that is not necessarily true. When a major emergency erupts, you don’t want to end up like this guy…
On Monday, cash machines remained closed until midday, and then opened for withdrawals of no more than 60 euros a day. “I’ve got five euros in my pocket, I thought I would try my luck here for some money. The queues in my neighbourhood were too long yesterday,” said plumber Yannis Kalaizakis, 58, outside an empty cash machine in central Athens on Monday.
Sadly, a lot of Americans don’t have any money saved up for emergencies at all, so they wouldn’t even have any reason to line up at the ATMs. According to a survey that was just recently released, 29 percent of all Americans do not have a single penny in emergency savings. That was the highest level that has ever been recorded. An additional 21 percent of all Americans have less than 3 months of expenses saved up. Those are some incredibly disturbing numbers. A different study posed the following question to people…
“Do you have 3 months emergency funds to cover expenses in case of sickness, job loss, economic downturn?”
Incredibly, 60 percent of all respondents could not answer that question affirmatively. In addition, another recent survey found that 57 percent of all Americans do not consider themselves to be ready for a “sudden financial setback”. So what will all of those people do when things start melting down? Yes, there are a few people that are trying to financially prepare for the hard times that are coming, but they represent only a small percentage of the U.S. population. It has been estimated that less than 10 percent of all Americans own any gold or silver for investment purposes. To me, that is an absolutely frightening number. But of course it isn’t just money that we need to be concerned about when a major crisis strikes. In many U.S. cities, even the threat of a major storm can cause people to storm the supermarkets and clear the shelves of essential supplies. So what would happen if there was actually a major national crisis? In Greece, supermarkets are doing a booming business at the moment as people feverishly stock up for the coming days. Right now, Twitter is being flooded with pictures like this one…
When things get bad, food becomes an extremely high priority for most people. During a major emergency, you won’t necessarily be able to rely on being able to go to your neighborhood store to get the things that you need. That is why it is so alarming that 53 percent of all Americans do not have a minimum three-day supply of nonperishable food and water at home.
Just think about that. If they were not able to resupply themselves at the stores, more than half of the country would start running out of food and water within days.
And let’s not forget about medicine either. During a major emergency, people still need to take their daily medicines, and this is becoming a significant problem in Greece right now…
Drugmakers said they would continue to ship medicines to Greece in coming weeks despite unpaid bills, but warned that supplies could soon be in jeopardy without emergency action.
So what about you?
Do you have extra medicines stored up for an emergency?
And what would you do if a family member sustained a major injury and you were not able to get to the hospital?
One survey found that 44 percent of all Americans don’t even have first-aid kits in their homes.
To say that we are woefully unprepared as a nation would be a massive understatement.
We don’t think ahead, we don’t plan, and we are exceedingly dependent on the system. If the system fails, we are going to be in a massive amount of trouble. Here are some more numbers that come directly from the official FEMA website…
A recent Federal Emergency Management Agency (FEMA) survey found that nearly 60 percent of American adults have not practiced what to do in a disaster by participating in a disaster drill or preparedness exercise at work, school, or home in the past year. Further, only 39 percent of respondents have developed an emergency plan and discussed it with their household. This is despite the fact that 80 percent of Americans live in counties that have been hit with a weather-related disaster since 2007, as reported by the Washington Post.
In the final analysis, a Greek-style economic crisis is not the only threat that we need to be prepared for. In the United States, we also face the threat of natural disasters such as hurricanes, tornadoes, earthquakes, tsunamis and even volcanic eruptions.
Even if you are not a “prepper“, it only makes sense to do certain common sense things to prepare yourself and your family for a major emergency.
Sadly, most Americans will not listen until it is far too late. And then once a major crisis strikes, they will be forced to rely on the kindness of others because they have not made any preparations themselves.
The Economic Collapse
by Michael Snyder
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.
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?
Who has been warning that “this gigantic time bomb is going to go off and absolutely cripple the entire global financial system“?
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.
So stay tuned, because the second half of 2015 has now begun, and the remainder of this calendar year promises to be extremely “interesting”.