HOW CAPITALISM DIES

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Can you think of a single thing a politician or central banker has contributed to the welfare of the world?

by BILL BONNER | ZERO HEDGE | JANUARY 27, 2015

Today, we’re going to tell you why America’s middle class is getting poorer. Or put another way, we’re going to show you how capitalism dies.

Two comedy acts appeared last week: President Obama’s State of the Union address and Mario Draghi’s QE announcement.

Mr. Obama claimed credit for a “recovery” that has left the typical American poorer than he was before. And not only is he poorer, but also he is more dependent on the very people who engineered the phony recovery. (See below.)

Mr. Draghi followed up with a series of one-liners, the gist of which was that he now proposes to save Europe from the specter of inadequate inflation.

ECB to the Rescue

Who could take Draghi seriously? After all, what’s wrong with stable prices? Nothing at all! The 19th century had fairly stable prices… as well as the fastest GDP and wage growth in human history. Serious consumer price inflation didn’t begin in the US until the 1970s, when America’s new flexible, adaptable, expandable, super-duper fiat money came into service.

Since then, the cost of living in the US is up roughly 600%. And the rate of economic growth has fallen. Mr. Draghi did not mention these facts when he announced his euro-debasement program. But it hardly mattered. The real purpose of euro-zone QE is the same as the real purpose of the US version – to prevent the cronies from getting what they deserve.

They own hundreds of billions of euro worth of European sovereign bonds – now trading at the highest prices and lowest yields in recorded history. Many were bought with negative yields. And now, with aging populations, rising debt levels, gummed-up regulations, rising living costs, rising taxes and falling revenues, there is almost no way these bonds can be worth what speculators paid for them.

How are the insiders going to get their money back? The ECB to the rescue! It promises to transfer $1.3 trillion to the financial elite over the next 21 months – buying sovereign bonds and other slippery obligations at the rate of €60 billion ($67 billion) every month. Not that we are complaining; we’ve got a sense of humor!

Besides, we’re card-carrying members of the 1%… and happy to get a share of the loot. If only we had bought those Italian sovereign bonds! So, there you have it…

In the New World, the commander-in-chief claims credit for something he didn’t do. In the Old World, the central-banker-in-chief claims to be doing something not worth doing. Neither is doing what he should do.

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    Germany’s 2 year note now sport a yield to maturity of minus 0.143%. All over the developed world, more than $ 4 trillion in sovereign debt are now trading at negative yields. This is no longer just return-free risk, it is at the next stage where you have to pay for the risk to lend money to governments that in a sober assessment cannot be called anything but effectively insolvent – click to enlarge.

America’s Disappearing Wealth Creators

We chuckle … and move on. We were supposed to tell you about how it was possible for the average American to get poorer at a time that should have been the most productive and prosperous ever. We won’t disappoint you.

Who makes people better off? President Obama? Mario Draghi? Can you think of a single thing a politician or central banker has contributed to the welfare of the world? We can’t.

Did they invent hamburgers? Did they pave roads? Did they produce wheat or lay bricks? We’re exaggerating to make our point. They are, no doubt, amusing at dinner parties. And they pet their dogs.

But sticking to the material world, the world of getting and spending, has a president or central banker ever put in a decent day’s work or added a single centime or farthing to the nation’s GDP? Not that we know of. Then who has?

If we had to put a title on this little discussion, we might call it: “America’s Disappearing Wealth Creators.” Or if we wanted to be more lurid: “How the Zombies Ate America’s Entrepreneurs.”

Last week, we reported on how more and more people depend on the US federal government for their daily bread. Here’s the chart from American Enterprise Institute’s Nicholas Eberstadt:

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As the number of zombies increases, it leaves fewer people creating real jobs, building real businesses and paying real taxes.

In short, the people who create wealth are vanishing.

Jim Clifton, the chairman of Gallup, reports that, for the first time ever, there are more US businesses closing than starting up:

“There continues to be a direct link between market cap (which measures the total value of all outstanding shares) and performance. The US now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.

We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.

The US Census Bureau reports that the total number of new business startups and business closures per year – the birth and death rates of American companies – has crossed for the first time since the measurement began.

I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.”
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US business start-up and closings – an ominous crossover.

In the early 1970s, there were about 200,000 new US businesses created each year (net of closures). Now, the number is negative. Why are Americans getting poorer?

Look no further. No new businesses (net). No new jobs (again net). No new wealth. Under Obama and Draghi, crony capitalism flourishes. Real capitalism dies.

ISIS threatens to kill 2nd Japanese hostage, Jordan pilot in 24 hours

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The Islamic State has released a video with a threat to kill a second Japanese hostage and a Jordanian pilot in the next 24 hours if the Japanese authorities fail to persuade Jordan to release failed suicide bomber Sajida al-Rishawi from prison.

The video uploaded on the web by the jihadist group is comprised of an audio message by Japanese hostage, Kenji Goto, and a picture of Goto, dressed in an orange jumpsuit, holding a portrait of a Jordanian military pilot, Muadh al-Kasasbeh.

“I’ve been told this is my last message,” Goto said as he began his address, adding that his life now depends on the government of Jordan, which is “delaying the handover of Sajida.”

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The hostage urges the Japanese authorities to put political pressure on Jordan to accelerate the release of the female terrorist.

“Her for me. A straight exchange. Any more delays for the Jordanian government will mean they’re responsible for the death of the pilot, which will then be followed by mine,” he said in the video.

Following the video’s release, Japan said it would renew its request for Jordan to help it secure Goto’s immediate release by Islamic State.

“The Japanese government in this extremely severe situation has asked for collaboration from the Jordanian government to help secure the release of Kenji Goto swiftly. There’s no change to this stance,” Yoshihide Suga, Japan’s chief cabinet secretary, was cited as saying by Reuters.

Goto, a freelance video journalist, was reported missing in Syria in October 2014, where he went to try and rescue another Japanese hostage, Haruna Yukawa.

Yukawa was beheaded by the Islamic State last week, and a picture of Goto holding a photo of his countryman’s severed head was then released.

READ MORE: Islamic State militants ‘behead Japanese hostage, offer swap for remaining one’

The jihadists initially wanted $200 million for Goto’s release, but then decided to swap him for Al-Rishawi, a woman who has been behind bars in Jordan since 2005 for a failed suicide bombing attempt.

Al-Kasasbeh, a first lieutenant in the Jordanian Air Force, was captured by the Islamic State in late December as his plane came down during an air raid by the US-led coalition.

Danish Islamists refuse to deradicalize, insist Danes change their values

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An Islamist group in Denmark has hit out at a local policy to de-radicalize Muslim youths. It cites “widespread depression, addiction… and alarming rates of suicide” as proof it’s really “sad Western culture” that is in dire need of help.

The scornful statement, which includes allusions to a “sad capitalist existential void,” was printed on the website for the group, called Hizb-ut-Tahrir. It’s a massive organization with branches in 40 countries and a regional chapter in Copenhagen.

There is no consensus in Hizb-ut-Tahrir worldwide on support or condemnation of terrorism, as both have taken place. The group is banned in Russia and some of its activities are proscribed in a number of Muslims countries.

Its statement comes weeks after a Copenhagen municipality decided on a plan to tackle Islamic radicalism at home.

It plans to do this over a period of four years, with the help of external experts working under the guidance of Sweden’s top expert on the matter.

The Sunday statements, made by group spokesman and Danish convert Junes Kock, see this as nothing but “manipulation” and “deception,” as well as an attempt to polarize the Muslim community and pigeonhole it into moderate and extreme categories. Kock believes that a plan of this sort intends to take things that are the staple of Islamic life – “a beard, prayer, scarf and general compliance with Islamic behavior” – and label them as radical in an agenda of stigmatization.

Despite the apparent belief that the West has invented the dangers of Islamism to split Muslims, Hizb ut-Tahrir has shown no willingness to cooperate with the more moderate members of the Muslim faith. On Sunday it rejected any Danish initiative to work together with other Muslims at preventing youths from joining up with terrorist movements.

Kock goes on to say that “It is clearly Danish people who need help finding the correct meaning of life… and here we can assist.”

As for the plans, “they are doomed to fail,” according to the author of the statement.

The group is no small adversary: it has been active since 1953 in calls to establish a global Islamic Caliphate, although it claims not to condone violence, the way the Islamic State and other extremist groups do.

However, despite its anti-violent stance, a 2002 controversy over pamphlets containing anti-Semitic messages could take on a new salience, especially now that the issue is back on the table and bigger than it has been in 70 years.

“The Jews are a people of slander… a treacherous people… they fabricate lies and twist words from their right context,” the text read. But it also went on to justify suicide bombings in Israel, calling the bombers martyrs and the acts as a “legitimate” response.

The group also recently staged a demonstration outside the national mosque in Bangladesh calling for the re-establishment of a unified Muslims Army. Members were seen celebrating the victories of the Islamic State.

In contrast, the group has in the past condemned both the September 11 attacks and the July 2005 London bombings on the grounds that the killing of innocents isn’t the way to go about achieving one’s aims.

VIDEO: ISIS Escapee Says: “ISIS Plans Attack More Brutal than 9/11”

By Clark Holmes

Up to now, Congress has stopped short of authorizing any full-scale military force against the Islamic State of Iraq and Syria (ISIS). Approval has been given to train Syrian rebels.

Obama’s Proposal Plays Into ISIS Plans
But President Obama called for authorizing increasing military force against ISIS in his State of the Union address, which reinforces and validates ISIS’ desire to be perceived as a global threat and a concern to the U.S. that is greater than al-Qaeda.

Ahmad Rashidi was interviewed on Meet the Press where he described how he was captured and held for a month by ISIS when he went to Syria on a rescue mission.

He detailed that ISIS is ‘happy’ about the increased bombing of ISIS strongholds by the U.S. led coalition forces in northern Syria and northwestern Iraq.

Rashidi learned that ISIS goal is to be “better” than al-Qaeda. They intend to perform a more disastrous attack on the west than 9/11, “They want to be more… better than al-Qaeda. This is why they need to do something more brutal than the World Trade Center.”

He describes how ISIS is not deterred by coalition efforts against it, but takes inspiration from it. He spoke of the hatred ISIS has toward the west. “If you smell like a European, they’re going to kill you.”

Rashidi was able to learn that ISIS communicates every day via telephone with its network of operatives in Europe and abroad. He said the attack in Paris was unsurprising and that he expects to see many more and bigger attacks as ISIS asserts itself as a force to be reckoned with.

BERGDAHL: The High Price of 6 Dead Servicemen, $5 Billion & 5 Terrorists for One Deserter

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By Brooke McGowan

Would the news that our president and current administration were aiding and abetting the enemies of America be a shock to you right now? Nah. Me neither.

I don’t know many people who would say that is a crazy statement any more. Nearly every day news makes that concept more substantial.

We were told back when the shocking details of Bergdahl’s trade for five terrorists and enough money to support several African countries that he was a deserter. His platoon gave the details of his desertion and their subsequent searches that resulted in deceased soldiers for his retrieval.

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With disbelief we witnessed the president march out with the parents of the deserter and then watched in horror as the father gave the “bismallah” on the lawn of our sacred White House. We also were in shock as we witnessed Obama smiling as soon as he heard that famous war cry of Islam, “bismillah al-rahman al-rahim,” which is Arabic for “in the name of Allah the most gracious, the most merciful.”

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We have been declared as conquered. The problem we have before us now is convincing others. Because of the silver tongues of the liberal left, and the clever mechanics of renaming war and the enemy, low information voters simply fall in line. Add to that a complicit media and the recipe for disaster is among us.

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Make no mistake, Bergdahl is a deserter. And Obama is a traitor. And should we remain silent over the matter, we deserve what we get for we are a dhimmitude.

PENTAGON ASKS COLLEGE TO ‘HONOR’ DEAD SAUDI KING IN ESSAY CONTEST

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U.S. establishment continues praise of tyrannical dictator

Pentagon officials announced the creation of an essay competition Monday to honor recently deceased Saudi King Abdullah bin Abdulaziz.

According to a press release from the U.S. Department of Defense, attendees of the National Defense University have been tasked with formulating a written tribute to the “life and leadership” of the “Saudi Arabian monarch.”

“The king, who died Jan. 23 at age 90, oversaw the modernization of his country’s military during the time he spent as commander of the Saudi Arabian National Guard, a position he held from 1963 until he became king in 2005,” the press release states.

Headed up by Joint Chiefs of Staff Chairman Gen. Martin Dempsey, the essay contest will focus on both Abdullah and the region as a whole.

“This is an important opportunity to honor the memory of the king, while also fostering scholarly research on the Arab-Muslim world, and I can think of no better home for such an initiative than NDU,” Dempsey said.

Marine Corps Major General and National Defense University President Frederick M. Padilla had no issue with praising the late King, calling the competition a unique research opportunity.

“This scholarly research competition presents NDU students with a unique opportunity to focus their research and writing efforts on relevant issues at the intersection of U.S. security interests and the Arab-Muslim world,” Padilla said.

Dempsey went one step further in his idolization of the ex-ruler by calling him a man of “remarkable character and courage.”

“In my job to train and advise his military forces, and in our relationship since, I found the king to be a man of remarkable character and courage,” Dempsey said.

Since Abdullah’s passing, members of the U.S. establishment have given endless praise to the former dictator, seemingly ignoring his barbaric rule and world-renowned brutality.

As noted by the Intercept’s Murtaza Hussain, prominent U.S. leaders such as John McCain, Joe Biden and John Kerry wasted no time in highlighting Abdullah’s alleged accomplishments following his death.

In a statement last night Senator John McCain eulogized Abdullah as ‘a vocal advocate for peace, speaking out against violence in the Middle East.’ John Kerry described the late monarch as ‘a brave partner in fighting violent extremism’ and ‘a proponent of peace.’ Not to be outdone, Vice President Joe Biden released a statement mourning Abdullah and announced that he would be personally leading a presidential delegation to offer condolences on his passing.
Similarly, President Obama expressed his grief over the loss of Abdullah as well, ridiculously pointing to his so-called “search for peace.”

“He took bold steps in advancing the Arab Peace Initiative, an endeavor that will outlive him as an enduring contribution to the search for peace in the region,” the President said. “At home, King Abdullah’s vision was dedicated to the education of his people and to greater engagement with the world.”

The British government and the Royal Family paid their respects to the dictator by ordering all flags over state buildings and palaces to be flown at half mast, a move which produced an almost immediate backlash.

In reality, King Abdullah’s leadership produced atrocities nearly identical to that of alleged U.S.-enemies in the Islamic State.

Western leaders made no mention of the country’s “record level” beheadings in 2014 for crimes such as adultery, apostasy and “sorcery.”

Self proclaimed women’s rights supporter Hillary Clinton, who publicly praised the Saudi king last week, had no issue with two females being taken to terrorism court last month over the offense of driving a vehicle.

Many politicians who claim to support free speech were silent as a Saudi court sentenced a human rights lawyer to 15 years in prison for “inciting public opinion” last July.