Servias Ministries Blog

WASHINGTON — Sen. Elizabeth Warren (D-Mass.) warned in a speech Tuesday that the problem of banks considered "too big to fail" has only gotten worse since the 2008 financial crisis, potentially sowing the seeds of a future crisis.

"Today, the four biggest banks are 30 percent larger than they were five years ago. And the five largest banks now hold more than half of the total banking assets in the country," Warren said in a keynote address at a conference on the future of financial reform put on by the Roosevelt Institute, a think tank. "Who would have thought five years ago, after we witnessed firsthand the dangers of an overly concentrated financial system, that the ‘too big to fail’ problem would only have gotten worse?"

See: http://www.huffingtonpost.com/2013/11/12/elizabeth-warren-too-big-to-fail_n_4260871.html?ir=Chicago

Unrighteousness grows worse everyday.  At some point, a banking crisis will again surface, but only bigger.  Man has no real solutions but to do the same thing over and over, expecting different results.

Besides the Federal Unfunded Liabilities, the individual states have their own challenges.  Let’s not forget the city unfunded liabilities as well.  How much more debt can the future generation absorb?  Who is going to be responsible for all the mounting debt in an economy that is not responding to the Fed’s $85 Billion per month stimulus?

State Budget Solutions 50 State Pension Table, Moody’s Plan List (all figures except Per Capita in thousands)

Note: this spreadsheet included pension plans listed in Moody’s Investors Service’s "Adjusted Pension Liability Medians for U.S. States," published June 27, 2013

See: http://www.statebudgetsolutions.org/publications/detail/promises-made-promises-broken-the-betrayal-of-pensioners-and-taxpayers#ixzz2jb9RWznD

The staggering debt levels in the U.S. economy can only be resolved by two options: Default or Hyperinflation.  Either way, I believe those who have positioned themselves with physical assets will weather the coming economic storm.  Both options will create economic pain.  I tend toward the hyperinflation option, based on the current and past attitudes of those in power.  Hyperinflation allows you to “legally” pay your debts off.  Those in power like to hide behind existing laws and use the law as their justification for their actions.  They use the “letter” of the law rather than the “intent” of the law to further their own agendas.  This is the classic case of self-interest at an extreme.

When there is a disconnect between authority and responsibility, problems arise.  Those in authority have no resulting responsibility for their actions.  Why?  The populace is not in one accord thus there is no unanimous voice to say “No” to the irresponsible decisions of the few.  The two party system is designed to divide the people, each group looking at the weaknesses of the other group as its justification for existence.

The largest bank in the United States will stop making student loans in a few weeks. (See:http://www.cnbc.com/id/101012270)  JP Morgan Chase has notified schools that it is exiting the student loan market in a few weeks.  This should tell you that this bubble is getting ready to burst.  With over $1 Trillion in student loans, American households are teetering on default if interest rates rise.  This is why the Fed cannot and will not taper their $85 Billion per month of money printing.  This continued money printing will serve as a basis of a greater inflationary period to come.  At some point, gold and silver prices will sustain upward moves to new levels.  Remember when gold was $275 per ounce and silver was $5 to $6?

The recent lack of resolving the debt ceiling tells us that the politicians have no stomach for doing the right thing.   Some now believe we don’t even need a debt ceiling.  Too bad we as individuals can’t have an unlimited checkbook to feed our egos.  Where am I gonna park my yacht?

What is the solution to our problem?  Unity among the people.  How can that be attained?  By everyone getting the revelation of Love.  Until then, we are destined for pain.

Why does China need U.S. Dollars to buy oil from these trading partners?  Because the current system overseers say so.  I wonder if the Chinese would like to see a different economic system?  How about those listed trading partners?

It looks like there may be a change in the petrodollar’s future coming soon.

This week continues to confirm my past comments about the state of the economy.  The rosy U.S.  unemployment numbers came out this week: “204,000 jobs were added”.  However, John Williams of www.shadowstats.com comments:

“With Washington awash in scandals, political turmoil and sinking approval ratings, the political timing could not have been better for this morning’s (November 8th) stronger-than-expected jobs report from the Bureau of Labor Statistics (BLS).  An unusual shift of favorable seasonal-adjustment factors—into the August, September and October reporting period—boosted the latest jobs numbers.  The jobs growth borrowed from other periods will be buried in the next benchmark revision or will be re-shifted in the months ahead, with the details never to surface in official reporting.  Separately, the October payroll survey counted furloughed government employees as employed, as the BLS previously had indicated.”

Let’s face it, the Bureau of Labor Statistics “cooked the books” and it appears they really don’t care if guys like John Williams knows about it.  Watcha gonna do about it?

Why misrepresent the employment numbers?  The only reason you would do this is to try to convince the overall market that things are better than they really are.  You want to promote an illusion to keep people passive about the current state of the economy.  John has been keeping close eyes on the real unemployment numbers, currently at 23.5%.  What does this tell you?  Nothing that the Federal Reserve Bank is doing has positively impacted the average American.  To the contrary, their zero interest rate policy is taking money aware from the middle-class savers and putting it into the pockets of the bankers and top 1%.  They have successfully inflated the stock market.  How?  Where else can money managers go to earn any type of return on investment?  The Fed is forcing all investors to put money in a riskier environment.  The result is that the stock market is making new highs.  Once the chickens come home to roost, the market will possibly take an epic dive.  At that time, people will suffer major losses.  Bonds are in the same shape.  Once interest rates finally go back up, the bondholders will suffer huge losses.  If the other countries begin to trade among themselves without the use of U.S. Dollars but agree on another currency for settlement, the value of the U.S. Dollar will plummet and prices will skyrocket.  Inflation will increase dramatically.

Stock losses, bond losses, dollar losses, and high inflation.  That is a pretty bleak picture.  Where would one go to try to offset major losses in these areas?  Physical assets.  Gold, silver, oil, natural gas, farmland.  You can see why there is such attention paid to the price of gold by the Federal Reserve’s agent banks trying to manipulate the price of gold downward.  It is the one global indicator of the health of the U.S. Dollar.  When it goes up dramatically, it signals big losses in the value of the Dollar.  Holders of the Dollar are then alerted that it is time to dump their Dollar holdings and move to a safer medium of value.  The Chinese are well aware of this issue.  This is why they continue to aggressively acquire gold before the bottom falls out below the Dollar.

The following chart provides us perspective:

If the Chinese fully trusted the future of the U.S. Dollar, they would not be in such a hurry to increase the gold reserves.  Actions speak louder than words!

The following article provides some ugly detail of how arrogant and entitled the banks have believed themselves to be:

http://m.rollingstone.com/politics/blogs/taibblog/chase-isnt-the-only-bank-in-trouble-20131105

The lawlessness is so widespread, the only real fix is to reset the entire economic system.  Let me see, who do you know that is big enough to do that?  Yep, Our Heavenly Father!

In the economics analysis arena, there is a quote that sums up the challenge of these times: “Things can stay irrational longer than the rational can remain solvent.”

The Federal Reserve is planning to test the largest banks against a severe economic event.  The following is their stated criteria for a “severe” event:

In the “severely adverse” scenario, the unemployment rate peaks at 11.25 percent, stocks fall nearly 50 percent and U.S. housing prices decline 25 percent while the euro area also sinks into recession. Developing economies in Asia also experience a “sharp slowdown,” the Fed said.

Let’s analyze their numbers that make up the severe scenario.  An official unemployment rate of 11.25% would probably equate to a true unemployment rate of 36.4% based on John Williams’ www.shadowstats.com current unemployment reporting of 23.3% unemployment versus the government’s 7.3% massaged number.  With this level of unemployment, healthcare, retail, pharmaceutical, automobile, and other industries would all be in a downward spiral.  Pension funds losing 50% of their stock portfolio value would surely curtail benefits.  Housing prices could easily decline past their 25% expectation, however mortgage debt remains high thus promoting another wave of defaults.

Interest rates have virtually no where to go but up.  This would be a reasonable scenario to consider since the Fed is out of ammunition to boost the economy.

If the Fed is considering this scenario, I suggest you and I should also plan for it.  It is what it is, no sense getting angry about what they have done.  Simply focus on your plan to deal with such a downturn as best you can.  Our Heavenly Father has a plan and those who hear will carry it out.

See: http://mobile.bloomberg.com/news/2013-11-01/fed-to-test-banks-against-interest-rate-rise-housing-collapse.html

An interesting comparison:

When you buy gold or silver, you effectively vote against the future of the Dollar.  When confidence is lost in a currency, gold & silver are acquired along with other international-oriented assets.  Oil & gas are also traded internationally.  Real estate is a tougher call unless it is farmland.  Food producing land is a good investment since we all must eat.  Adding new debt is not a great idea unless it is absolutely necessary.

When fear of hyper-inflation grips the population, the event feeds on itself and perpetuates further decline, ultimately to zero.  There are many examples in the past to draw from.  The Weimar Republic of Germany is one.  Go to http://en.wikipedia.org/wiki/Hyperinflation for 39 examples.  The result is always ugly.  The business demand goes down, not up.

The U.S. National Debt is going up, up, and away.  The global derivatives continue their growth into the stratosphere.  There are multiple complex problems that defy solutions, any one of which could be the Black Swan to cause the whole system to come crumbling down.  Politicians continue to kick the can down the road.  The latest government shutdown was not resolved, just postponed.  Don’t you think if they had a real solution, they would have implemented it?  China, Russia, and other BRICS countries are moving away from the dollar when they settle their net changes in trade.  The recent NSA scandal as well as the other scandals all point to an untrustworthy reserve currency.  Men’s egos will not let this mistrust go unpunished.

There have been multiple takedowns in gold.  If it was an ancient relic, why would those in power bother with multiple takedowns.  There are 93 ounces of “paper” gold traded against every physical ounce of gold held in a warehouse.  The current futures market cannot deliver its contracts if the players were to demand delivery of their contracts.  Instead, they would be settled with Dollars.

The masses are living in denial.  They have no clue how ugly it could get when the U.S. Dollar is no longer the reserve currency.  The standard of living will decline.  Food stamps have already prevented bread lines.  Recently in this state, there was a 24 hour glitch in the food stamp system and I saw grocery shoppers walk out without their food.  The problems continue to be masked from our eyes.  Government statistics are orchestrated to paint a rosy picture.

Bail-ins are coming.  What is a bail-in?  This is where a depositor is required to cover his or her percentage of losses of that bank.  When you deposit your money in a bank, you are an unsecured lender to that bank.  Your deposit is classified as a liability on that bank’s balance sheet.  Bondholders are secured lenders.  If a bank becomes insolvent, the secured bondholders are paid first.  Everyone is paid a percentage of the remaining assets.  In a major banking crisis, the FDIC does not have enough money to fund the insurance portion of your deposits.  The bail-in plan includes nationalizing retirement funds.  The International Monetary Fund is leading the charge on the “bail-in” method of dealing with the current banking crisis.  Depositors in Cyprus lost 83% of their deposits.  Is Cyprus the blueprint for future crises?  I think so.  This bail-in plan is being put into law in countries around the world.  With $10 Trillion in U.S. deposits, the FDIC has about $30 Billion to cover all loses.

The OTC Derivatives (http://en.wikipedia.org/wiki/Over-the-counter_(finance)) continues to be a source of major losses on bank balance sheets.  They are allowed to carry these assets at cost rather than market value.  Many of these derivative instruments contain substantial losses.  If a bank had to liquidate today, only then would it have to account for those losses.

Quantitative Easing continues without any tapering in sight.  For the last five years, interest rates have been suppressed.  If all was well, these two actions would not be necessary.  These lower rates were designed to help the banks recover from the losses contained in their derivatives position.  That has not happened.  Banks continue to bet with derivatives.

The main strength of the U.S. Dollar is the petrodollar, the international currency used for buying world oil.  If the Saudis were to allow payment in other currencies, the dollar would drop like a rock.  Gasoline in the U.S. would triple as a result.

What is the time frame for a major devaluation of the Dollar?  No one knows for sure.  Right now, 2016 appears to be the best guess, even though it could happen immediately.  Between now and then, the middle class will suffer heavy losses.  The U.S. consumer-based economy will begin to uncover the inherent losses on bank balance sheets.  The dominoes will begin to fall.

Can these events be delayed?  Only if Our Heavenly Father chooses to delay them.  HE can open blind eyes at any time.  If the populace were to suddenly take interest in the crumbling financial infrastructure, confidence would be lost immediately and the annihilation would begin.  Simplify your life and set aside time for Our Heavenly Father.  You will be glad you did.

Ms. Tavenner sidestepped the question about how many people have enrolled in Obamacare:

Her interview starts at 1:44:

Any IT Professional knows that you could run a Query against the database, and in less than 5 minutes, come up with the enrollment number… worst case.  This is not a technical issue in any way, shape, or form.  Let’s be open about the truth.  Our little census had an accurate, running total at all times.  Maybe they should have paid my little company the $634 Million to develop the site.  We could have done no worse.  After all, we use world class IBM Servers that are designed to handle huge volumes.

For website development cost verification, see: http://www.newsmax.com/Newsfront/obamacare-website-millions-glitches/2013/10/10/id/530382