Dr. Paul Craig Roberts: Financial Collapse At Hand!

Ever since the beginning of the financial crisis and Quantitative Easing, the question has been before us: How can the Federal Reserve maintain zero interest rates for banks and negative real interest interest rates for savers and bond bond holders when the US government is adding $1.5 trillion to the national debt every year via its budget deficits? Not long ago, the Fed announced that it was going to continue this policy for another 2 or 3 years. Indeed, the Fed is locked into the policy for another 2or 3 years. Indeed, he Fed is locked into the policy. Without the artificially low interest rates, the debt service on the national debt would be so large that it would raise questions about the US Treasury's credit rating and the viability of the dollar, and the trillions of dollars in Interest Rate Swaps and other derivatives would come unglued. In other words, financial deregulation leading to Wall Street gambles, the US governments decision to bail out the banks and keep them afloat, and the Federal Reserves zero interest rate policy have put the economic future of the US and its currency in an untenable and dangerous position. It will not be possible to continue to flood the bond markets with $1.5 trillion in new issues each year, when the interest rate on the bonds is less than the rate of inflation. Everyone who purchases a Treasury bond is purchasing a depreciated asset. Moreover, the capital risk of investing in Treasuries is very high. A rise in interest rates, which must come sooner or later, will collapse the price of the bonds and inflict capital losses on bond holders, both domestic and foreign. The question is: When is sooner or later? The purpose of this article is to examine that question. Let us begin by answering the question: How has such an untenable policy managed to last this long?

Jorge Otaola: Argentina Loses a Third of its Dollar Deposits!

Argentine banks have seen a third of their US dollar deposits withdrawn since November, as savers chase greenbacks in response to stiffening foreign exchange restrictions, local banking sources said n Friday. Depositors withdrew a total of about $100 million per day over the last month in a safe-haven bid fueled by uncertainty over policies that might be adopted as pressure grows to keep US currency in the country. The chase for dollars is motivated by fear that the government may further toughen its clamp down on access to the US currency, as high inflation and lack of faith in government policy erode the local peso. "Deposits keep going down," said one foreign exchange broker who asked not to be named. "There is a disparity among banks, but in total it's about $80 million to $120 million per day." US dollar deposits of Argentina banks fell 11.2 percent in the preceding three weeks to $11.5 billion, according to central bank data released on Friday. The run on the greenback has waxed and waned since November, after President Cristina Fernandez won a second term on promises of deepening the state's role in the economy. From May 11 until Friday, data compiled by Reuters from private banks showed $1.9 billion in US currency had been withdrawn, or about 15 percent of all greenbacks deposited in the country. Feisty populist leader Fernandez was re-elected in October, vowing to "deepen the model" of the interventionist policies associated with her predecessor, Nestor Kirchner, who is also her late husband. Since then she has limited imports, imposed capital controls and seized a majority stake in top energy company YPF.  

Brian Cloughley: From Hitler to Panetta: The Limits of Patience!

"With respect to the Sudeten German problem my patience is now exhausted! I have made Mr Benes an offer, which contains nothing but the realization of what he himself assured as would be done. The decision is in his hands! Peace or war! Adolf Hitler, Berlin, September 26, 1938. "We are reaching the limits of our patience here, and for that reason it is extremely important that Pakistan take action to prevent this kind of safe haven from taking place, and allowing terrorists to use their country as a safety net in order to conduct their attacks on our forces." Leon Panetta, Kabul, June 7, 2012. So what is Leon Panetta going to do if militant attacks on US forces in Afghanistan continue? Of course it's easy to blame Pakistan for the outcome of the war begun by America in Afghanistan. After all, somebody has to take the blame for the shambles, ans it can't possibly be Washington. But Mr Panetta and the rest of the blame-shifters had better take care, because if they try to do to Pakistan what Hitler did to Czechoslovakia in 1939, they will find rather stiffer opposition than that offered by the poor bullied Czechs. Mr Panetta and the rest of the blame-shifters had better take care, because if they try to do to Pakistan what Hitler did to Czechoslovakia in 1939, they will find rather stiffer opposition than that offered by the poor bullied Czechs. Mr Panetta's complaint is that militants based in Pakistan , mainly tribal Afghans, Arabs of various weird persuasions, and gangs of thugs from the Central Asian Republics cross into Afghanistan and join their comrades there to conduct attacks on foreign and Afghan forces. But before the US invasion of Afghanistan in 2001-2002, there were no Afghan Taliban or other foreign extremists in Pakistan. There were no militant bases in Pakistan's tribal areas. The region was hardly tranquil, simply because the tribes continued to be as hot-blooded as they have been for centuries!

John Kozy: Darkness in the Academy!

Carl Jung: As far as we can discern, the sole purpose of human existence is to kindle a light in the darkness of mere being. Knowledge does not always prevail or even endure. When the Empire fell, the Justinian Code was replaced by Canon Law. The augustness of knowledge was transformed into heresy and mankind's curiosity was virtually extinguished. The age became dark. In the 11th century, people began to study rediscovered Greek and Roman texts. The darkness of the age had begun to lift, but the lifting took seven hundred years and was never completed. Today, nothing ensures the light's endurance despite our pious accolades to learning and science. But anti-intellectualism never died. It continued to live in the dark alcoves of the religious institutions of the Middle Ages. That darkness came to America when its first universities were established. These universities were established as fundamentalist vocational training institutions. They were not established to further knowledge. They are madrassas, Sunday Schools, one and all. Now even this conservative educational system is under attack by ideological fundamentalists. Professors throughout the Western world, stock up on lanterns. The darkness is returning! During the Golden Age of Greece, Athens was populated by enough curious people to cause Aristotle to write, "all men by nature desire to know." He was wrong, of course, but his compatriots certainly had an intellectual bent. Athens experienced a period during which the Parthenon was built, and the city became the artistic, cultural, intellectual, and commercial center of what was then known as the civilized world. Among its inhabitants were Socrates, Plato, Aristotle, Aeschylus, Aristophanes, Euripides, Meander, Sophocles, the sculptor Praxiteles, the orator Demosthenes, Herodotus, Thucydides, and others. A love of learning was prevalent. The Socratic method, consisting of asking questions until the essence of a subject is found by eliminating the hypotheses that lead to contradictions, was developed, and mathematics was expanded by Pythagoras. 

Bruce Gagnon: Pumping Up the Next Military Conflict?

US Secretary of War Leon Panetta is making a tour of the Asia-Pacific, where he is pumping up the next military conflict. Yesterday I hear he was in Vietnam, trying to close a deal to allow the US Navy to once again have access to the base at Cam Ranh Bay. Before leaving on his trip, Panetta made the speaking rounds back home to consolidate US media and build public support for Obama's "pivot" into the Asia-Pacific. "One of the key projects that our generation will have to face is sustaining and enhancing American strength across the great maritime region of the Pacific," he told graduates of the US Naval Academy at Annapolis, Maryland last week. "China's military is growing and modernizing. We must be vigilant. We must be strong. We must be prepared to confront any challenge," Panetta said. While in Singapore Panetta stated, "By 2020, the Navy will re-posture its forces from today's roughly 50/50 percent split between the Pacific and the Atlantic to about a 60/40 split between those oceans. That will include six aircraft carriers in this region, a majority of our cruisers, destroyers, littoral combat ships, and submarines, to project power and operate in the Asia-Pacific." He told an audience of Asian military officials that the US planned new investments in capabilities needed "to project power and operate in the Asia-Pacific," including radar-evading fighter jets, a new long-distance bomber, electronic warfare and missile defenses. The message to them is essentially, play along with us, and we will share a piece of the action with you. The Pentagon has a name for this new strategy - its called the Air-Sea Battle fighting "concept".

Jim Miklaszewski: Suicide Among US Troops Spike!

The suicide rate among US troops has spiked, and military officials studying the spike have found no apparent reason for this developing trend. There were 154 suicides in the first 155 days of the year, nearly one a day. The Army convened its suicide prevention group this week to study the alarming numbers, but could not pinpoint a cause. "There's obvious concern, but we've seen the numbers spike and fall before," a senior military official told NBC News, particularly during the past three years, when the number of suicides among active and reserve forces skyrocketed. Army data suggest soldiers with multiple combat tours are at greater risk of committing suicide, although a substantial proportion of Army suicides are committed by soldiers who never deployed, the Associated Press reported. A joint military-civilian task force, including some of the nation's top mental health experts has been investigating military suicides for a couple of years, military officials said. The group will unveil its findings in 2014, and has yet to pinpoint a specific catalyst. For the previous three years, the number of suicides among active duty and reserve forces has hovered around 300. The unpopular war in Afghanistan is winding down, with the last combat troops scheduled to leave at the end of 2014. But this year has seen record numbers of soldiers being killed by Afghan troops, and there also have been several scandals involving US troop misconduct. The 2012 active-duty suicide total of 154 through June 3 compares to 130 in the same period last year, an 18 percent increase, and it's more than the 136.2 suicides that the Pentagon had projected for this period based on the trend from 2001-2011. This year's January-May total is up 25 percent from two years ago, and is 16 percent ahead of the pace for 2009. 

Sarah Seltzer: Jailing Teens for Being Late to School?

Last week, the country was riveted by the story of young Diane Tran, a high school junior age 17,who was tossed in jail for a night because she was missing too much school. The reason her case attracted so much attention. She worked two jobs to help support her siblings. Her parents had split and moved out of town. She became, in essence, a poster-girl for both the recession and for the criminalization of youth. Even those local newscasters expected to be dispassionate were moved to say their "hearts went out" to this girl. One of Tran's employers is a wedding planning business, which she assists and whose owners house her with her parents out of town. The other is a full-time job at a dry cleaning store. Her third job, then, is going to school, where she is enrolled in several AP and honors classes, but missed 18 days. After a previous warning, a judge decided that a night in jail would teach her a lesson. He didn't see why people were kicking up such a fuss. "A little stay in the jail for one night is not a death sentence," the judge told the same local news channel. But then thousands of people around the world read the headline variations on "honors student goes to jail" and began expressing their support , with their voices and their wallets, signing a petition and contributing to a fund for Tran. At last, the judge in the case agreed to dismiss the contempt charges he had leveled at Tran. News sources reported that with paperwork, she can have her record expunged. But none of these reprieves happened until Tran had already spent the night in jail. Tran is an "honors student" with an obviously compelling story. But the question lingers: Is jail the answer for a kid under 18, even those who don't have her excuse for offenses like truancy, or worse? Our incarceration system, after all, designed for adults, has deep, perhaps unfixable defects: Why send those we deem too young for a college campus into a cell?