World Oil Prices: Who Really Sets World Oil Prices?

I watched the CBS News show “60 Minutes” Sunday night, and saw the piece on world oil prices done by Steve Croft. I realize that their format doesn’t allow for a detailed, in-depth investigation of any topic, but this seemed to be a broad-brushed finger pointing session.

Have you ever watched a skilled magician do his act? He will divert your attention with activity in one hand, and do the “magic” with the other hand. That’s what this segment reminded me of.

Croft and his gaggle of “experts” led viewers to believe that the commodity speculators were entirely to blame for the spike in oil prices in 2008, and also responsible for its collapse in the last quarter of 2008.

But is Croft telling the truth?

Maybe. But only partially, in my opinion.

World oil prices are set on two criteria, or two particular oil products; West Texas Intermediate Crude (Sweet Crude), and North Sea (Brent Crude). Those prices are set in New York and in London, not by the oil producing nations of OPEC.

West Texas Sweet comes from the oldest major producing fields on the planet. North Sea Brent comes from the most difficult and highest cost oil field on the planet. So, world oil prices are set based upon the two places on earth where the production cost is highest.

There are places where oil is plentiful and easy to produce. It’s almost like sticking a pipe into the sand and oil comes out. The production costs for those kinds of oil fields is much lower than in the North Sea, so those oil fields are much more profitable.

But do you ever hear anyone telling you that? No. What you hear on all the news shows and from government jabberers is that OPEC has the rest of the world in its clutches.

Next point to challenge is the blaming of the speculators. In any transaction, there is a buyer and a seller. Both parties are making their best effort to profit from the transaction. When someone buys a future contract on a commodity like oil, they are betting that either the price will rise or that the price will fall before a certain future date. Buyer and seller are both gambling, and one will be right.

So who are the speculators? I don’t know. But the major commodity exchanges are in New York and London. There are speculators buying and selling in every single commodity, from bacon to frozen orange concentrate to crude oil. Curious that no one is crying about speculation in the other commodity markets.

My business is as a Claims Consultant and a Risk Manager. It seems to me that commodities futures contracts are very similar to buying insurance to protect against certain losses. Skilled insurers make a profit, and unskilled insurers lose money. No different here in the oil business.

Remember also that during the same time period, the US Treasury and Federal Reserve flooded the world with trillions of new dollars, causing inflation everywhere. You did notice that prices for nearly everything escalated in 2008, didn’t you?

Finally, in an oil-related story, Georgia state government regulators recently assessed fines against about a dozen gas stations that allegedly did “price gouging” during the run-up on oil prices in 2008. That must mean that property rights in the State of Georgia don’t mean anything. A merchant who spends HIS OWN MONEY to buy a product should be free to sell that product to whomever he chooses for whatever price buyer and seller can agree to. No one forced any buyer to buy gas from these stations at any price. The sellers offered their product and willing buyers bought it. However, seems that some of those buyers like Fascism more than Capitalism, since they called the State bullies and complained. I hope that the stations marked for punishment are fighting back in the courts.

Liberty or Utilitarianism: Mutually Exclusive Ethical Systems

I read an essay by the late Murray Rothbard recently, taken from his book “Egalitarianism as a Revolt Against Nature.” In the essay, he focuses on the reasons that people choose to be Libertarians, and the reasons others choose Utilitarianism. (note that he wrote “Libertarians,” not “liberty.” One can love liberty without becoming a Libertarian.)

I admit that I did not have a clear understanding of the definition of the word “utilitarianism.” So, I looked it up in a few dictionaries. To my utter shock, I discovered the philosophical underpinning of our US Federal Government.

Webster’s Dictionary defines “utilitarianism” thus:

“1. The doctrine that the greatest happiness of the greatest number should be the end and aim of all social and political institutions. –Jeremy Bentham.
2. The doctrine that virtue is founded in utility, or that virtue is defined and enforced by its tendency to promote the highest happiness of the universe. –John Stuart Mill.
3. The doctrine that utility is the sole standard of morality, so that the rectitude of an action is determined by its usefulness.”

A few thoughts have percolated through my gray matter in this regard:

A. Every person has a worldview. It is a compilation of experience and education. It is the filter…the rose-colored glasses, so to speak…through which we evaluate our world and the cosmos. Many people go through their entire lives unaware of their own world view, but it’s always there. It may change as life passes, or it can remain calcified for a lifetime.

Your worldview will either draw you to, or repel you from, certain things. But your worldview is the yardstick with which you measure all things. So, in this context, a person that believed strongly in individual rights, natural law and property rights would be repelled by strong government. Conversely, a person who believed in the efficacy of government would be drawn to Utilitarianism.

Capitalism, and the US Constitution, were built on absolutes, an iron stake driven into frozen earth. Utilitarianism is as fluid as water, seeking its own level, and taking the shape of its container. Capitalism has inviolable principles, and the Constitution strictly limited the scope of the Federal Government. Utilitarianism goes along to get along, and forsakes absolutes.

Utilitarianism is an existentialist manifestation of “situational ethics.” If one promotes the greatest good for the greatest number, one must also accept that the “greatest good” will change from issue to issue. So Utilitarianism can’t stand absolutes.

B. Utilitarians are kindred spirits with Socialists. Socialism is a kind of political midpoint on the journey from Capitalism to Communism. The USA began with a Capitalist worldview combined with fierce protection of individual property rights. Utilitarian politicians have, over time, eroded those property rights with laws supposedly promoting the greatest good for the greatest number. Naturally, those laws would require ever-creeping governmental control over property rights. Socialists can tolerate Capitalism so long as the government has primary control over the economy, citizens and their property rights. So, Socialists are all Utilitarians, but not all Utilitarians are necessarily Socialists.

C. Nature abhors a vacuum. As Capitalist/Constitutional absolutes have been forsaken, Utilitarian doctrine has rushed into the void. We now have a Federal Government filled with people that believe that utility is the sole standard of morality, so that the rectitude of an action is determined by its usefulness. That is the very reason why Congress could vote in favor a multi-billion dollar bailout of the financial markets when the bailout is clearly unconstitutional.

Finally, in the tragedy and comedy which is the US Federal Government, they prove, once again, that they cannot even make Utilitarianism work correctly. They turn it on its head, and the greatest number become the sheep, sheared to bring the greatest good to a small special interest who are generous with their campaign contributions.

Hailstorms: What if the Roofing and Siding Don’t Match?

Hailstorms can happen anywhere that thunderstorms occur. Thunderstorms have the potential to produce hail the size of a BB or the size of a grapefruit. Severe hailstorms can cause more damage than tornadoes, simply because the area of a hailstorm can be much greater than that of a tornado. Hail can damage everything it strikes, whereas a tornado can flatten one dwelling while the house next door doesn’t lose a shingle.

We are just around the corner from Spring, when hailstorms begin to pop up with regularity. You can be ready by following the strategy in this article.

Nearly every time there is a big hailstorm that causes widespread damage to cars, homes and businesses, the issue of “matching” rears its ugly head. But there is a way that you can solve the “matching” disputes between you and your insurance company and get paid all you are entitled to collect.

Typically, when a hailstorm occurs, it strikes property at an angle. So, while one side of your roof might get pounded, the opposite side may have no damage at all. The hailstones might hit one slope of the roof really hard, while just skipping across the other slope. The same is true with exterior siding.

So, your insurance company adjuster may inspect your damage, and replace the damaged roofing or siding. But, that might cause an additional problem:

What if the new roofing or siding doesn’t match the old roofing or siding? Many times this occurs when the old material has been discontinued by the manufacturer. The new material might be of a different color or different dimension than the old material. For example, you might have 4” lap vinyl siding, but the manufacturer now produces 4” lap siding with a slightly different color or texture. It does not match.

You, the policyholder, now have an additional loss, which is the value of your home. If the siding or roofing doesn’t match, it diminishes the value of the home. But this part of the loss is indirect damage. The policy states that it only pays for direct damage to property. Many times, adjusters and insurers will rely on a strict interpretation of the policy wording, and state that they do not owe you any additional funds simply because of a matching problem.

However, there is a clause in the Homeowners policy that deals with indirect damage, and can be brought into a “matching” dispute to solve the problem

That clause is found in the Section I – Conditions – D. Loss to a Pair or Set. It says:

In case of loss to a pair or set we may elect to:

1. Repair or replace any part to restore the pair or set to its value before the loss; or

2. Pay the difference between actual cash value of the property before and after the loss.

Not only does this clause cover the direct loss of an item that is a part of a pair or set, but also covers the indirect loss sustained because of the diminished value of the remaining item(s) of the pair or set.

Your adjuster might disagree with this interpretation. He may tell you that this clause only pertains to personal property, such as when a person has one crystal candlestick stolen from a pair, or two plates from a rare set of 12 get broken.

But look carefully in your policy. NOWHERE in the policy does it say that the clause only applies to personal property.

For example, let’s use hail damage to siding. Two sides of the house sustain damage to 12” white aluminum siding with a textured finish. The manufacturer ceased making this siding and now only makes 8” aluminum siding without texture. It clearly does not match. The adjuster wrote an estimate to replace only the damaged siding for $10,000. But replacing all four sides of siding would cost $20,000. We are assuming a replacement cost policy, no depreciation applied.

The insured gets an appraisal of his dwelling, and finds that the dwelling’s pre-loss value was $100,000. After the storm, the dwelling appraises at $95,000. So you can see here that the “set” value of the undamaged siding decreased the home value by $5,000.

To be equitable to the insured, the insurance company should pay the $20,000 to replace all four sides of the home. That settlement process might take a little longer if you have to get an appraisal to prove the diminished value, but you’ll be properly compensated for your loss.

Finally, you the policyholder have legal precedent on your side. On October 12, 2000 in a Minnesota District Court, a judge ruled against American Family Mutual Insurance Company and ordered it to pay claims where there were matching disputes after a hailstorm. (see Min. Stat. {72A.201, Subd. 5-8 (1998)}).

1-22-11 update:

Apparently, American Family decided that they were not going to be pushed around by a court. So they notified all their policyholders that matching siding and roofing was not covered, and they now will sell an endorsement that affords coverage.

Home Siding Roofing Endorsement

Russ Longcore

Could Government Own Most Businesses Already?

Government entities own trillions of dollars in securities, and the evidence is hidden in plain sight.

I saw a nondescript article posted in the online version of the Atlanta Journal Constitution today. Its headline read, “Georgia Teacher’s Fund to Lose $525 Million.” The article explained how the Georgia State Health Benefit Plan, which covers 690,000 state employees, school teachers, retirees and dependents, was changing its rules and rates to lower the reserves by $525 million. That one move would alleviate some of the state’s severe budget shortfall.

$525 Milliion? That means that the Fund must have much more money in its reserves. Reserves are the net asset amounts over and above obligations. The remaining net asset reserve in the Fund is $137 million!

And folks, that is just one fund operated by the State of Georgia. And those assets are not held in cash in some bank vault. They are invested in American securities, possible foreign securities.

How many other villages, townships, counties, cities, and states own investment funds? How much money is actually controlled by government at all levels?

I just saw a Youtube video recently by a man named Walter Burien, about the various government Comprehensive Annual Financial Reports. There are over 85,000 federal and regional government institutions – school districts, townships, cities, counties, water and power districts – and they own 70% of the stock market. Most of the assets and income are off-statement and off-budget. He exposes the corruption and deception done by the governments in conjunction with the media.

It’s almost as if the government is keeping two sets of books. They wouldn’t do that, would they?

Here’s a link to view the video:
http://www.brasschecktv.com/page/512.html

Cut and paste the URL link above into your browser and watch the video.

Friends, you must take time and view this video. I was shocked when I watched this. How could the various governmental bodies accrue this kind of wealth? Further, if they have that much wealth, why are we still paying taxes?

This should be the story of the century, but it gets no press coverage.

Let Tax Freedom Fix The Economy

President-elect Barack Obama is making the same noises about the economy that George Bush made. He believes that the way to fix the economy is that we should all spend our way out of recession. He believes that the Federal Government must do something to bring the economy back from recession.

The Congress of the United States has already committed to overspend their income this year by over $500 Billion dollars. Now, it is seriously considering adding hundreds of billions of dollars more to their profligate spending.

Obama is proposing a tax break of about $300 Billion, and a total package of about $800 Billion.

But does this make any sense?

You know from past experience that Congress will add much more spending to any bill that passes a vote. Look at what Congress did recently in the $700 Billion bailout of the financial companies. They added on another $150 Billion in pork-barrel spending to the total amount. Much of this extra $150 Billion was, in essence, extortion money. Congressmen would exchange their vote on the bailout for a small concession to be added to the main bill.

If you think that Congress won’t do the same in this stimulus package, you are naïve. However, even if they did not add more, it’s still $800 Billion in new spending, and they already know that they don’t have that amount in the Treasury. They’re just going to print up the money and flood the economy with worthless money. That will eventually cause inflation.

How about a solution to the problem that will actually help the entire economy from top to bottom, and does not cost the American taxpayers or the Congress ONE DOLLAR to administer? How about a solution that helps every American worker, from the minimum wage kid flipping burgers to the most wealthy individuals?

The solution is to abolish the income tax.

IRS Statistics of Income Bulletin, Fall 2008, states that the total amount of income tax collected in 2006 (the most recent year reported) was $1,023,920,000,000. That is a little over one trillion dollars. But with the recession, income tax revenue has plummeted.

Congress is already beginning negotiations to give tax breaks of $300 Billion, and more stimulus checks sent from the Treasury, for that total of $800 Billion. If Congress simply abolished the income tax, no processing costs for the stimulus would occur. No checks would have to be written. No tax breaks would have to be calculated by taxpayers. The Treasury would incur no costs whatsoever in collecting income taxes and then issuing stimulus checks. The Internal Revenue Service could be dissolved, further saving billions from its operating budget.

In addition, vast amounts of tax preparation time, already required by individuals and businesses, would vanish. The employers of America would no longer be required to act as the collections agent for the IRS by withholding income taxes.

Can you imagine what a lift to the American people it would be for the income tax to be repealed? Obama would instantly become the most popular president in the last 100 years.

So, the solution is simply this: Instead of collecting the tax and then giving back some of it to American taxpayers, stop collecting it altogether. The numbers just about balance out, and liberty and freedom get one in the Win column.

The 2009 Declaration of Independence

By Thomas Jefferson and Russell D. Longcore

I recently began contemplating the imminent collapse of the US Federal Government. In light of the insane, unconstitutional spending of the Congress and Presidents (Bush and Obama will spend the same ways), the recession/depression that the nation is presently experiencing, and the simultaneous devaluation and inflation of the nation’s currency, collapse is the only consequence that makes sense.

Ask the Soviet Union. Oh…excuse me…they’re gone! The USSR collapsed in 1991, and the Soviet states once again became sovereign nations.

So, what will individuals and states do? Will they preemptively forsake the Union, or wait to react once the Federal Government collapses? Common sense should dictate the serious debate of secession prior to collapse. However, I do remember that the legislatures of the States are filled with politicians. Reaction seems more likely than forward planning.

I took the original Declaration of Independence, written by Thomas Jefferson, and added wording to customize it for the present day. Please read it carefully and contemplate its meaning and its ramifications. My new version still needs more work, but it is a place to start.

**********************

When, in the course of human events, it becomes necessary for a people to dissolve the political and governmental institutions under which they have governed themselves, and institute new government deriving its just powers from the consent of the governed, the separate and equal station to which the laws of nature and of nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the institution of the new form of government.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty and the pursuit of happiness. To secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their liberty, safety and happiness.

Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.

Such has been the patient sufferance of these free citizens and sovereign states; and such is now the necessity which constrains them to alter their former systems of government. The history of the present United States Federal Government is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute tyranny over these free citizens and sovereign states. To prove this, let facts be submitted to a candid world.

In 1861, the United States declared war upon the Confederate States of America, a confederation of sovereign states that lawfully seceded from the Union and formed a government to provide new guards for their future security. The CSA was defeated in that war by the armies of the United States and the Union was unlawfully maintained:

The US Federal Government has enacted unconstitutional laws and authorized unconstitutional spending and the creation and funding of unconstitutional Federal agencies. It has erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat out their substance. It has imposed taxes on us without our consent:

The US Federal Government has borrowed so many trillions of dollars that the amount can never be repaid:

The US Federal Government created the Central Intelligence Agency, the Federal Bureau of Investigation, the National Security Agency and the Homeland Security Administration, which are unconstitutional usurpations of the powers of the people and the states guaranteed in the 10th Amendment:

The US Federal Government created the Transportation Security Administration, which is a clear violation of the 10th Amendment to the US Constitution. The actions of the TSA violate the 4th Amendment, which protects citizens from illegal search and seizure without warrant based upon probable cause:

The US Federal Government created the Internal Revenue Service to enforce the gigantic Federal Income Tax Code, violating Article I of the Constitution:

The US Federal Government has violated Article I, Section 8 of the Constitution in which Congress may raise and support an army, but no appropriation to that use shall be more than two years. The US Federal Government has established hundreds of military bases on American soil, quartering large bodies of armed troops among us: Additionally, it has established over one hundred military bases in other sovereign nations around the world:

The US Federal Government is at this time retaining large armies of domestic and foreign mercenaries to complete the works of death, desolation and tyranny, already begun with circumstances of cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the lawful government of a civilized nation:

The US Federal Government has deprived certain individuals of the benefits of trial by jury by transporting certain individuals beyond seas to be jailed and tortured for pretended offenses, violating the principle of Habeas Corpus and the 5th Amendment of the Constitution:

The US Federal Government has enacted laws infringing upon the right of the people to keep and bear arms, an overt violation of the 2nd Amendment to the Constitution:

The US Federal Government, through enacting the Patriot Act of 2001, has violated the 4th Amendment’s strictures on privacy and protection against illegal search and seizure. It has violated the 5th Amendment guarantees that no person shall be deprived of life, liberty or property without due process of law:

The US Federal Government, through enacting the Patriot Act of 2001, has violated the 6th Amendment guarantees that in criminal prosecutions, the accused shall the right to a speedy and public trial, be informed of the nature and cause of the accusation, and be confronted by the witnesses against him:

The National Security and Homeland Security Presidential Directive, signed on May 9, 2007, places all governmental power in the hands of the President and effectively abolishes the checks and balances in the Constitution:

The US Federal Government established the Federal Reserve, a consortium of private banks, to manage and manipulate the currency of the United States. This violates Article I, Section 8 of the Constitution which provides Congress authority to coin money and regulate its value. The Federal Reserve is unconstitutional:

The Federal Reserve has created massive inflation since its inception in 1913 by issuing paper money that has no underlying value in gold and silver. Because of the attempts of the Federal Reserve to manipulate the American economy, it created an abnormal cycle of boom and recession:

In 2008, the US Federal Government approved trillion-dollar financial bailouts to financial institutions and private companies, a clear violation of Article I, Section 8 and the 10th Amendment of the Constitution:

The US Federal Government has prosecuted unlawful and unconstitutional wars, including wars in Korea, Vietnam, Grenada, Panama, Bosnia, Kuwait, Iraq and Afghanistan, violating Article I, Section 8, which grants the power to declare war only to Congress:
The US Federal Government created the Social Security Administration in 1935, a clear violation of the Article I, Section 8, and the 10th Amendment:

The US Federal Government, though its Judicial Branch, has altered legislation and created law, in violation of Article III of the Constitution:

The US Federal Government has obligated the United States to membership in the United Nations, and combined with other nations to subject us to a jurisdiction foreign to our Constitution, and superior by treaty to our laws; giving its assent to their acts of pretended legislation:

The US Federal Government has been unable or unwilling to secure the borders of the United States of America, and to effectively control and regulate immigration. It has obstructed the laws for naturalization of foreigners, refusing to pass others to encourage their migration hither, and altered the conditions of lawful immigration of foreign persons:

The US Federal Government has altered fundamentally the forms of our government guaranteed to the free citizens and states by the Constitution of the united States of America.

In every stage of these oppressions we have petitioned for redress in the most humble terms: our repeated petitions have been answered only by repeated injury. An institution of government, whose character is thus marked by every act which may define tyranny, is unfit to be the designated and chosen government of a free people.

Nor have we been wanting in attention to the Legislative, Executive and Judicial Branches of the United States Federal Government. We have warned them from time to time of attempts by their actions to extend an unwarrantable jurisdiction over us. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common citizenship to disavow these usurpations, which would inevitably interrupt the quiet enjoyment of our citizenship and liberty. They have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our separation, and hold them, as we hold the rest of mankind, enemies in war, in peace friends.

We, therefore, the free citizens of the several, sovereign and united States of America, appealing to the Supreme Judge of the world for the rectitude of our intentions, do solemnly publish and declare, that these States are, and of right ought to be free and independent states; that they are absolved from all allegiance to the presently established United States Federal Government, and that all political connection between them and the United States Federal Government, is and ought to be totally dissolved; and that as free and independent States, they have full power to levy war, conclude peace, contract alliances, establish commerce, and to do all other acts and things which independent States may of right do. The free citizens of the several, sovereign states reject and absolve themselves from any and all bonds between themselves and any other sovereign state under the Constitution of the United States. Those free citizens and their representatives in the sovereign States do now and should immediately cease collecting and forwarding all Federal taxes, tariffs or fees of any and every kind to the United States Federal Government.

And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor.

End.

Russell D. Longcore is one of those rare individuals who found the perfect career and loves every minute of his work. Russell has an insurance claims practice in Atlanta, Georgia, USA. In his career, he has handled claims as simple as a water leak in a home, and as complicated as multi-million dollar commercial property and liability losses. Russell has a breadth of knowledge and wisdom about insurance, money and life, and writes widely about those issues in publications, newspapers, magazines and blogs. He is married to “his redhead” Julie, and has three wonderful children, and three even more wonderful grandchildren.

Russell can be reached at:

Abigail Morgan Austin Publishing Company
1750 Powder Springs Road, Suite 190
Marietta, Georgia 30064
678-234-2923
Nationwide toll free voice and fax 877-688-5879
Email: russlongcore@gmail.com
Website: http://www.insurance-claim-secrets.com
Blog: https://russlongcore.wordpress.com

US Collapse: Russian Professor Predicts US Disintegration By June 2010

Recently I posted an article entitled “Could The United States Federal Government Collapse?” Well, it seems that a distinguished Russian thinker believes it will collapse soon.

Prof. Igor Panarin, 50, is a former KGB analyst, and is Dean of the Russian Foreign Ministry’s academy for future diplomats. He regularly appears in the media as an expert on U.S.-Russia relations.

He based his predictions on demographic, economic and financial data that he says will trigger a political and societal crisis in the US. He believes that soon, wealthier states will stop sending funds to the Federal Government and secede from the Union. He also predicts that these events will trigger a civil war. He forecasts that the US states will band together along ethnic lines and that foreign nations will wield significant influence in these new confederacies.

His prediction is that California will be the key state in a “California Republic,” comprised of mainly states west of the Rocky Mountains. Texas will be the key state in “The Texas Republic,” which looks like a recreation of the Confederate States of America. He thinks that the states of the Atlantic Seaboard will become another confederation, and the remaining states in the center of the US will become the Central North American Republic. He also believes that Hawaii and Alaska will go independent.

Panarin also ascribes foreign influence to each republic. He predicts European influence in the Atlantic, Mexican influence in the Texas Republic, Canadian influence in the Central North, and Chinese/Japanese influence in California and Hawaii, and Russian influence in Alaska.

I like his notion of the various Confederacies, although I think one of his grouping is inaccurate. For example, he groups Kentucky, Tennessee, Virginia, North and South Carolina in the Atlantic Republic. These are states of the old South, and were part of the Confederacy of the 1860s. They have a history of independence and free thought. I believe these three states would ally with the Texas Republic.

I also believe that there could be a fracturing within the Atlantic Republic. Because of the Free State Movement in New Hampshire, I believe that a Maritime Republic could consist of New Hampshire, Vermont, and Maine.

When Panarin predicts civil war resulting from secession, I sadly agree. The US Federal Government will not accept secession from any states, individually or en masse. So, Washington will likely rush troops to the seceding states to try to prevent the inevitable. The fighting may be short-lived, but will likely be intense.

But, an unknown and unpredictable x-factor exists: Would US military personnel make war upon their fellow citizens?

If 1861 is any indication of the future, then I would say that soldiers would fight their own neighbors. But today is not 1861. It’s a coin toss in 2009.

Panarin give his predictions, and the future of America, about a 50/50 shot. Whether you believe the possibility of his predictions or not, you should begin to prepare for a major societal disruption. If the predictions are wrong, you’ve spent some money on preparations that you can consume over time. However, if the predictions are correct, you could be saving your own life.

Banks And Bailouts: A Simple Explanation of the 2008 Bailouts

I’ve spoken to lots of people in the recent months about the banks and investment companies, and the massive bailout they are receiving from you and me through the Congress of the United States. I have yet to find even one person who can explain the reasons for the bank and brokerage failures.

So, I’m writing this article as a simplified explanation of the reasons for the banking collapse and the bailouts.

First, let me say that my perception of most Americans is that they do not care much about the bailout. I feel that the biggest reason is that Congress simply authorized the printing of $700 billion paper dollars, and that did not affect Americans directly. If they would have been required to write checks to the Treasury to cover this amount, the bailout would not have occurred.

But, here is why the banks failed.

One of the biggest causes is the Community Reinvestment Act of 1977. That Carter Administration legislation forced banks and mortgage lenders to lend money to low-income borrowers despite their lack of credit worthiness. The government promoted “affordable housing,” and accused the lenders of “redlining”, which was refusing to lend to those in non-white low-income areas. The law had teeth, and banks who did not comply could lose their charter to operate a bank. So, bad loans were written to meet government quotas.

Pseudo-government bodies like Freddie Mac and Fannie Mae subsidized mortgages for people who would not have qualified for traditional mortgages.

So, gigantic amounts of money began chasing a limited supply of housing. When demand is greater than supply, prices rise. In that housing and lending climate, home values increased every year. With cheap, easy money, consumers looked at housing as a low-risk way to make money. And, people believed that housing prices would continue to appreciate each year. That created phantom house value that could be borrowed, using the home as collateral for the refinance or second mortgage.

Meanwhile, builders sprang into action and created a boom in new housing to meet the demand.

Banks and lenders created Structured Investment Vehicles (SIV) by gathering mortgages into large packages and selling them to unwitting investors. The banks and lenders earned big closing fees on the first mortgages. Then they sold the mortgage-backed securities and took another fee while getting the mortgages off their books. The mortgage-backed securities were sold to pension funds, big investors, money market funds and other banks all over the world.

Everything worked great as long as people paid their mortgages on time, housing values continued to increase, and demand for housing exceeded supply. But, the default rate began to climb as those un-creditworthy borrowers began to fall behind, and foreclosures skyrocketed. At the same time, the supply of homes exceeded demand, forcing home values to drop. Then, even creditworthy borrowers got caught in Adjustable Rate Mortgage resets that sometimes doubled their payments, forcing them into foreclosure.

The SIVs that were secured by mortgages were now in desperate trouble because the underlying mortgages were defaulting. The mortgages were the assets of the SIV, and they were vanishing. The financial institutions who held the SIVs now had investments that were losing money, and there was no market to re-sell the SIVs to anyone else.

The financial institutions were screwed. The borrowers were screwed. The housing industry was screwed.

Big financial companies began to post huge losses in 2008, and market value and share prices went into free-fall. The financial institutions cried to the politicians, and the politicians did what they always do…blame the wrong parties, and certainly not themselves. But they also did not fix any of the underlying causes of the debacle.

They just threw money at the problem. Your money.

It will take many years for housing and banking to recover. The only thing that would accelerate the recovery is to return to the failed policies that destroyed the markets. Housing values must regain sanity, and lending practices must become traditionally conservative again.