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by Al Martin

When Will Global Collapse Occur?

(6-19-12) When the band-aid box is empty…

      The Greek elections this past weekend have not roiled markets anywhere near as much as people thought because the Greeks want to retain the Euro, but don’t want the austerity package that goes along with it. So the pro-bailout factions have been ensconced into power in Greece. German Chancellor Andrea Merkel essentially guaranteed the outcome of the Greek elections when she issued a statement Sunday morning which was widely carried in the Greek press saying that Germany would agree to a softening of austerity conditions providing that the Greek people ensconce a pro-bailout or pro-austerity government which effectively they’ve done. Then as soon as the election results were known, we see that Merkel immediately back-pedaled on her comments and said that Greece will have to maintain the debt repayment schedule that the Germans have set for them.

      By Monday morning this week, Greece was already old news – at least that’s how the markets reacted. Immediately the Spanish, Italian, and Portuguese situations came back into focus. Their timing of this tells you that the march to global collapse is accelerating. The results of the Greek elections don’t buy markets any time, as they previously had done in the past.

      It all comes down to the same battle of political expedience vs. fiscal prudence. All governments that are standing for election this year, including the US government, are pushing their central banks to do more. The central banks are resisting under the argument that we have already stretched our balance sheets more than they have ever been stretched in history so eventually we run out of ammunition. Therefore they say we have to use the monetary ammunition we have left judiciously.

      Also governments are so divided internally and so paralyzed. The US is a prime example of this, since they have effectively ceded economic policy control to their central banks’ monetary authority. The Obama Regime as well as the German, French and British regimes are telling their central banks that they the government can no longer act and they can pass no measures to enact any fiscal stimulus which is in their domain to acts. You the central banks do not have that authority to enact fiscal stimulus. Your purview is monetary stimulus.

      So what’s the difference? Fiscal stimulus is done by a reduction in tax levy, which requires legislative action. Central banks cannot dictate tax policy, but they can enact monetary policy, since they have the ability to reduce interest rates in supplication of funds to increase market liquidity.

      In the United States, thanks to Bush I and Bush II we are finding out that the politics of divisiveness are expensive.

      Thanks to Bush I and Bush II, we have 90% of the debt that exists today. This was done to be divisive and continuously fight wars that half of the nation doesn’t support -- and the other half does even though it’s their money that’s being spent, i.e., Working Class Republicans -- as an extension of a sublime economic policy in order to concentrate wealth and power which war expenditures effectively do.

      Then that creates a “tab” or deficit as an accrual of national debt that someone down the line has to grapple with. In this case it’s the Obama Regime that has to grapple with the mess that it has inherited.

      Of course the game continues under the Obama Regime, but it continues differently. The American people have been consistently told by Wealthy Republicans – make sure you have opposing parties in the White House and in Congress in order to ensure gridlock and stalemate and that way nothing will ever get done.

      Then if nothing can get done, they say don’t worry government can’t pass any budgets and therefore can’t spend any money – which of course is a lie. Why? Because a government can and does spend money without a budget.

      That’s the lie that Republican media consistently sells to the American people, and it’s a prescription for gridlock. The Republicans then say – gridlock is good because it will prevent excess spending by Democrats. And it allows us – Republican regimes – to continue to fight wars everywhere that aren’t particularly popular. These are wars in which only 1-2% of the population actually benefit from them. Of course that part is deleted by the Bill O’Reillys and Sean Hannitys of the world.

      The downside of gridlock is that you can’t get anything done. That’s what the Obama Regime is finding out. The downside of not having a budget—which the Obama Regime has never had – is that you can’t institute any fiscal measures to correct a declining situation. You can’t come up with any fiscally stimulative economic measures because the Republicans will have consistently blocked every effort the Obama regime has made to stimulate the nation’s economy.

      The obvious and old-fashioned way to do it would be a reduction in tax levy. The problem is that it has to be paid for – thanks to Bush I and Bush II. In the pre-Bush era, the US government had the luxury of being able to deficit-finance tax reduction, knowing that the economic pickup and the pickup in tax receipts would pay for it. But there’s a lag time. You have to deficit-finance that first. The luxury of that lag time is now gone – thanks to the $40 trillion in national debt that Bush I and Bush II accrued. You can’t deficit-finance anything anymore.

      Today every spending bill has to be either revenue-neutral or supposedly future revenue-neutral, which is the Republican buzz-phrase for increasing spending and increasing deficits now and promising to pay for them in the future – which never happens.

      Working Class Republicans have to understand the only way the United States has any shot at getting anything done that is helpful is to have the Obama Regime re-ensconced into power with absolute Democratic majorities in Congress. It is the only way that anything fiscally useful can be accomplished.

      You can’t roll over the Bush tax cuts for everyone. You’ve got to enforce some sort of a limit and that’s what the Democrats have tried to do. The Democrats have said – we will roll over the Bush tax cuts for everyone earning less than $500,000 a year. And of course the Republicans are up in arms about that and they have blocked every initiative.

      The Republicans have tried to roll over Bush tax cuts – but only for those earning $500,000 or more, and have those earning less than $500,000 a year pay for it. It just isn’t being touted that way but that’s what Republicans are effectively doing.

      The problem continues to be Working Class Republicans who say – we want to Bush tax cuts rolled over for those earning $500,000 a year, this while they’re sitting in their beat-out trailers and beat-out pickup trucks, having lost their pension and health care under Bush II.

      Working Class Republicans cling to this fantasy that they too could be Wealthy Republican insiders – only if they work a little harder. Or look for that little fish or dove symbol that tells you it’s a Christian Republican deal and then they find out it’s really a symbol for a Christian Republican scam. They’re just divorced from reality.

      Of all political factions in the United States, it is the Working Class Republicans that are the problem. Why? Because they perpetuate the Republican myth that you’ve got to have two parties in the White House and Congress to ensure stalemate

      The Working Class Republicans at some point have to be taught or have to come to realize that it is they who are paying more for it than any other group on a proportional basis.

      Now governments are ceding their responsibility for the governance of fiscal policy to central banks. Thy will also have to proffer legislation, allowing central banks the legal authority to set tax policy and to undertake other fiscal measures because monetary policy alone can only do so much. This is the clarion call of all central banks. This is what ECB chief Mario Draghi is telling the European governments and this is what Fed chief Ben Bernanke is saying every time he’s up on the Hill.

      The smarter thing to do -- which means it won’t be done -- is for government to effectively tell The People the truth. Government is now hamstrung. It can do nothing useful and no longer serves any useful function other than a caretaker role or administration role, but it can no longer proffer any fiscally useful legislation.

      Therefore that power should rightfully be transferred to the central banks whose independence from the seated regimes is guaranteed. Neither the President, nor the Congress nor the Supreme Court can over-ride the decision of the central bank. The only way that can be changed is if the president said that the central bank was acting in a fashion contrary to national security.

      The problem is that the central banks are being forced to use up the band aids in their band aid box marked “monetary stimulus”. Now they’re being forced to use up those band aids too quickly and not judiciously because governments no longer have the ability to do anything useful in terms of fiscal policy.

      Anyone in the markets knows that every day on this planet we are simply lurching from economic crisis to economic crisis because there are no solutions being offered by anyone. And since there are no solutions we will keep lurching from crisis to crisis, and each crisis will grow progressively bigger until they get beyond the ability of central banks to manage them.

      And that’s when global collapse comes…

    * AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," ( provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin, which also publishes a bimonthly newsletter called "Whistleblower Gazette."

Al Martin's new website "Insider Intelligence" ( will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.


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