Wednesday, December 16, 2009
Officials and Experts Warn of Crash-Induced Unrest


Numerous high-level officials and experts warn that the economic crisis could lead to unrest world-wide - even in developed countries:

* Today, Moody's warned that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world, that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics, that a fiscal crisis remains a possibility for a leading economy, and that 2010 would be a “tumultuous year for sovereign debt issuers”.

* The U.S. Army War College warned in 2008 November warned in a monograph [click on Policypointers’ pdf link to see the report] titled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development” of crash-induced unrest:

The military must be prepared, the document warned, for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” “An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,” it went on. “Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance,” the document read.

* Director of National Intelligence Dennis C. Blair said:

"The global economic crisis ... already looms as the most serious one in decades, if not in centuries ... Economic crises increase the risk of regime-threatening instability if they are prolonged for a one- or two-year period," said Blair. "And instability can loosen the fragile hold that many developing countries have on law and order, which can spill out in dangerous ways into the international community."***

"Statistical modeling shows that economic crises increase the risk of regime-threatening instability if they persist over a one-to-two-year period."***

“The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism.”

Blair made it clear that - while unrest was currently only happening in Europe - he was worried this could happen within the United States.

[See also this].

* Former national security director Zbigniew Brzezinski warned "there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots."

* The chairman of the Joint Chiefs of Staff warned the the financial crisis is the highest national security concern for the U.S., and warned that the fallout from the crisis could lead to of "greater instability".

Others warning of crash-induced unrest include:

* The head of the World Trade Organization

* The head of the International Monetary Fund (and see this)

* The head of the World Bank

* Senator Christopher Dodd

* Congressman Ron Paul (radio interview on March 6, 2009)

* Britian's MI5 security agency

* Leading economic historian Niall Ferguson

* Leading economist Marc Faber and billionaire investor Jim Rogers

* Leading economist Nouriel Roubini

* Leading economist John Williams

* Top trend researcher Gerald Calente

* European think tank Leap2020

http://www.washingtonsblog.com/2009/12/ ... crash.html

Hat tip to guanosphere

Moody's Warns of 'Social Unrest'
Written by The Daily Bell
Saturday, 19 December 2009 15:55


Britain and other countries with fast-rising government debts must steel themselves for a year in which "social and political cohesiveness" is tested, Moody's warned. In a somber report on the outlook for next year, the credit rating agency raised the prospect that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world. It said that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics. Signaling that a fiscal crisis remains a possibility for a leading economy, it said that 2010 would be a "tumultuous year for sovereign debt issuers". - Telegraph

Dominant Social Theme: Civil society will end, unfortunately.

Free-Market Analysis: We know we will read over the next months and even years, especially if economic problems get worse, of dire predictions about people being herded into prison camps and other containment facilities because society itself is facing a breakdown.

The stories will focus on the lack of basic amenities such as food, water and shelter and deal with formerly middle class people who are on the edge of starvation now.

What will be the truth to all this? Probably, if the economy turns very ugly, there will be increased attempts in America to control firearms and threaten people with incarceration and other authoritarian consequences. There would certainly be increased attempts in Britain to control an increasingly restive population similarly, and in whatever manner possible. The same efforts would be made throughout the West.

In third world countries, ubiquitous government chaos will make the most Draconian measures hard to implement over a long period of time. We would imagine if things get very bad that regime change will continue at a rapid rate. But from our point of view, some of the fear-mongering now taking place may be something of a promotion, the potential ongoing cultivation of a dominant social theme. A promotion one could speculate is aimed at citizens of the West, intended to cow people and to polarize the conversation about what is really going on.

And what is that? What is going on - thanks to the education on the Internet - is the eventual unraveling (it seems to us) of most if not all of the dominant social themes of the power elite. These memes that were intended to frighten people and make it easier for them to hand over control and wealth to authoritarian instrumentalities created by that same elite. If you can coerce people to voluntarily submit this is far preferable to forcing them.

Yes ... history would seem to present certain conclusions when it comes to how populations are kept under control by whatever ruling elite happens to be in charge. These conclusions have to do with the unsettling perception that there are never as many ruling elite as there are people the ruling elite proposes to control. And because this is so, brute force is not a winning recipe for staying in power long. You may stay in power, of course, but your children and extended family are ever at increasing risk as your rule continues.

No, the best - indeed the only - way to create generational control is to use the rule of "law" and create a buy-in of the populace itself. If the law is seen as applying to everyone, if the state is perceived as just, then those at the top can rule with relative impunity. This is because the amounts of money and power available to those at the top render the law relatively moot. In fact, the policing agencies of the state will in one sense or another work directly for them.

The trick, then, is to create a state where the people "buy into" whatever cultural and judicial system is erected. In fact, there are three main pillars to this sort of control: government itself, media and religion. If people believe in their system of government and its fairness, if the mainstream media confirms the belief system and if the spiritual elements of a society support the furniture as well, then the overall society is apt to be controlled, passive and obedient. Why shouldn't it be?

What is happening today to the world's generational power elite - a handful of families and wealthy individuals from our perspective - is that the stool is toppling. This happened in the past, during the era of the Gutenberg press. Today, in similar fashion, the Internet, like a swarm of carpenter ants, every day weakens the stool.

The West generally does not associate religion with the powers-that-be anymore. Thus it could not be said that those who rule at the behest of the power elite are supported by any spiritual force, as were the Kings of old, chosen by God. The credibility of the mainstream media itself, a critical leg of the stool, has virtually been seriously compromised (for an increasing amount of the Western intelligentsia) by alternative - mostly electronic - sources of information. Thus it is that people are receiving incredibly mixed messages about their basic, core beliefs, which makes them uncomfortable - and even less trusting.

Finally there is government and the accoutrements of power including military and policing power. But this is the fist in the velvet glove. Without the other two legs of the stool, the governmental leg has no underlying justification if it begins to use force, especially massive force.

Again, the power elite of any society survives by clever manipulation of the law, it seems to us. So long as society at large believes in these laws, the power elite is safe to rule, and even to use force. But if people don't believe their underlying mythos anymore, if they don't believe what they are being told and what their educational and religious establishments are telling them, then the ruling class that has created and promoted these themes is in trouble.

This is what is going on now, we believe. That is in fact the purpose of the Bell, to document and report on the ebb and flow of these themes and their success or degeneration in a time of informational challenges. We believe thanks to the Internet, that this is a very special time. So many of the West's dominant social themes are under attack. Everything from central banking, to the war on terror, to peak oil and even the legitimacy of the democratic state as it is currently constituted is under some level of assault. There are many that might put this down to coincidence, bad economic times, etc.

It seems to us that it is obvious the Internet is having an impact on the elite's dominant social themes. And thus we write with some certainty that while increased authoritarianism may be in the future or even near future for Western societies, this is not what the power elite ought to be worried about - and perhaps at a fundamental level it is not. In the near term, societies probably can be controlled by force, for a little while anyway, if it comes to that. But if you have generational wealth and power and control beyond the imaginings of many mortals you are not likely concerned with the near term. In fact, near term authoritarianism probably weakens the long-term potency of your control.

Conclusion: There is only one solution, in our estimation, to the current dilemma faced by the power elite. They will likely have to take a step back - or at least consider one seriously - just as they did when the Gutenberg press started to bite. If and when they do, in our estimation, much would change. In this event, we would anticipate more, not less freedom throughout the West, more not less prosperity and even the return of a kind of private silver and gold standard that would give the power of money back to citizens. Such a scenario may seem unthinkable now, but no one really knows what the future holds. One can only speculate based on ongoing trends - of the kind we have presented above and will continue to offer.

http://www.rightsidenews.com/2009121978 ... nrest.html

Hat tip to guanosphere

Ron Paul Warns of Social Unrest and Martial Law
February 3rd, 2010

http://www.youtube.com/watch?v=fqWtiAtS ... r_embedded

Britain has an election coming - probably in early May.

Until then it will take a really severe incident for anything 'bad' to happen here, as our political leaders want to be re-elected.

After the election then there may well be problems, when whoever wins announces its financial plans for the coming year(s). What seems certain is that there will be higher taxes and lower govt. spending.

Whether people take to the streets I cannot say. I think that most people understand the situation - but I suspect that our nation's finances are far worse then is being admitted and the remedies will be deeply unpopular - especially if the bankers are still receiving fat pay cheques and bonuses.

But punitive actions against bankers will see them take revenge against ordinary people, such as by increased banking fees, fewer loans offered, etc.

We're screwed!

Simon

Yep, Simon, and sadly you Brits aren't the only ones!

Where I live in the States, things are much better (at least for now) than they are in other parts. We have so much land that home values will never sky rocket like they did in California and Florida.

We have weaned our way from so much dependence on one business - awl bidness - in Texan that is!

We have a booming Medical Center and lots of new companies coming to town. Yes, we did survive Enron - barely - and have yet to really come to grips with the proposed budget cuts at Nasa.

But as a nation - we're screwed, too!

Well Bluebonnet,

It seems that things are worse than I thought - in an 'almost end of the week' political discussion prog. on the TVthis evening it was pointed out that Britain's borrowings as a proportion of GDP are the same as Greece.

For Greece the EU has stepped in and is trying to impose austerity etc measures that are probably going to result in a general strike.

We still have our own currency, so the situation is a little different, but we are still in deep sh*t and one of the TV pundits said that things are so bad that we may yet have a second financial crisis *before* the election.

I am blaming our Prime Minister, because whilst he is not wholly culpable right from when he was just the Chancellor of the Exchequer (ie: solely in charge of the nation's finances) he has done some many things to impoverish this nation and its people.

I feel sure that he has been working for others / following an agenda which is to our detriment.

Simon

Can you imagine the consequences on our social structure here in the US if social security stops sending out benefit checks?

Next in Line for a Bailout: Social Security
Sponsored by
by Allan Sloan
Thursday, February 4, 2010provided byFortuneonCNNMoney.com

Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.

A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.

Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout.

More from CNNMoney.com:

• Obama's Budget: Impact on Your Taxes

• Stimulus: Secret Sequel in the Budget

• Bang for the Buck. Finally.

No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.

The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).

This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.

Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn't provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.

Social Security hasn't been cash-negative since the early 1980s, when it came so close to running out of money that it was making plans to stop sending out benefit checks. That led to the famous Greenspan Commission report, which recommended trimming benefits and raising taxes, which Congress did. Those actions produced hefty cash surpluses, which until this year have helped finance the rest of the government.

But even then, it was clear the surpluses would be temporary. Now, years earlier than projected, Social Security is adding to the government's borrowing needs, even though the program still shows a surplus on paper.

If you go to the aforementioned pages in the CBO update and consult the tables on them, you see that the budget office projects smaller cash deficits (about $19 billion annually) for fiscal 2011 and 2012. Then the program approaches break-even for a while before the deficits resume.

Social Security currently provides more than half the income for a majority of retirees. Given the declines in stock prices and home values that have whacked millions of people, the program seems likely to become more important in the future as a source of retirement income, rather than less important.

It would have been a lot simpler to fix the system years ago, when we could have used Social Security's cash surpluses to buy non-Treasury securities, such as government-backed mortgage bonds or high-grade corporates that would have helped cover future cash shortfalls. Now it's too late.

Even though an economic recovery might produce some small, fleeting cash surpluses, Social Security's days of being flush are over.

To be sure -- three of the most dangerous words in journalism -- the current Social Security cash deficits aren't all that big, given that Social Security is a $700 billion program this year, and that the government expects to borrow about $1.5 trillion in fiscal 2010 to cover its other obligations, about the same as it borrowed in fiscal 2009.

But this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.

http://finance.yahoo.com/focus-retireme ... dytoretire

Simon - on my word! The same as GREECE!!!!

Sadly, I think all the little chickies are coming home to roost. At least you are hearing it on MSM - we don't even have that, YET.

I think the whole financial house of cards will come crashing down, whether it will be slowly like letting air out of a balloon or all at once (like popping one) remains to be seen.

In the end, the bankers and their various henchmen will simply walk away from the whole mess and leave us little folks to our fate.

But I'm not going down without a fight and I am prepared to live on my own for a while. Then... I don't know whether I will bug out to parts unknown or what. Frankly, the or what is what scares me to death and keeps me from thinking that far down the road.

How many times have we heard, read, discussed the unraveling of our communities when there is less police protection, fewer firefighters, no garbage or trash pickup? How many other towns, cities, then states will or already have done the same as Colorado Springs?

Facing Budget Gap, Colorado City Shuts Off Lights

by Jeff Brady

Like many cities across the nation, Colorado Springs, Colo., is trying to close a big budget gap. The town is shutting off lights and slashing budgets for parks, police and firefighters, but that hasn't stopped voters from tightening the purse strings even more.

Most cities depend on sales taxes for revenue, and Americans just aren't spending like they were a few years back. Across the country, cities will have to fill budget gaps totaling up to $83 billion through 2012, according to the National League of Cities.

As a cost-saving measure, Colorado Springs is turning off streetlights. Flipping the switch on about 1/3 of the city's 24,512 streetlights is expected to save $1.245 million in electricity. But that's just a down payment on a $28 million budget gap for 2010.

Perhaps the most noticeable change for Colorado Springs' 400,000 residents will be in parks, where budgets have been slashed by nearly 75 percent.

"We've taken all the trash cans out. We're not going to be doing any litter collections in the parks," says Larry Small, vice mayor for Colorado Springs. "We're hoping the citizens will pack it out themselves."

All the restrooms have been closed. There'll be very little watering, and crews will mow just once a month instead of weekly.

The city even trimmed its police and fire budgets and is auctioning three of its police helicopters on the Internet. Still, that's not enough.

"We did have a transit system," Small says. "That's gone almost completely now."

The city sold nine buses and will use the proceeds to pay operating costs this year. On Jan. 1, 2010, buses stopped running on evenings and weekends.

Resident Don Miller is leaving. "My lease is up in November, so I'm going to get away from here," he says. "I don't drive — I ride the bus, and there's no bus service on Saturdays and Sundays."

In this politically conservative city, most people on the street say the city just needs to spend its money more wisely.

"Seems like the city ... is overpaying its workers," Shirlee Kelley says. "I think the salaries have to come down to be more even with what the private sector is paying."

Small argues that wages are comparable to other municipalities. But that doesn't satisfy critics, who don't like the cuts the city is choosing to make.

"The government is using its typical tactic of making highly publicized cuts in order to make people feel the pain to some extent," says Douglas Bruce, a small government activist and author of Colorado's Taxpayer Bill of Rights.

If that's truly the strategy, it's not working. In November, Colorado Springs voters approved an initiative sponsored by Bruce that keeps the city from raising property taxes — whittling away city finances even more.

Colorado Springs is now considering wholesale changes to the way it operates. City leaders are thinking about selling the local utilities and a hospital. (I wonder if the hospital to be sold would continue as a hospital, or be used for another purpose, cutting back on health care for the community.) That could raise an estimated $1.3 billion. Small says the money could be put in a trust for the city and provide $50 million a year in much-needed revenue to pay for basic services.

http://www.npr.org/templates/story/stor ... t=3&f=1001