Can the Underground Economy Take Down the NWO, its Banksters & Thieving Governments?

Wolf Richter who runs the website Testosteronepit.com had a fascinating article about how the Italians are wealthier than the Germans.

A “Politically Explosive” Secret: Italians Are Over Twice As Wealthy As Germans

Germany’s federal government only had a minuscule deficit in 2012. But high taxes and the citizens’ greater willingness to pay them—though cheating is a national sport—have over the years extracted a lot of wealth from the people and transferred it to the government. In Italy, people have been more adept at hanging on to their wealth.... 

It could stir up a firestorm in Germany. It’s not just jealousy. Strung-out German taxpayers would have to be bamboozled into bailing out the mountain of Italian government debt that the Italians, whose median wealth is twice that of Germans, refused to pay for. It won’t sit well. Not at all.

While it's true that the Germans have born the financial brunt when it comes to bailing their southern European EU neighbors, there's a much bigger question here.  Why are the Italians financially better off than the Germans?  Germany is indeed the powerhouse economy of Europe as well as one of its more financially solvent nations.  Conversely, Italy and the Italian economy are boiling to death in its cauldron of unsustainable debt.

What is absolutely certain is that high tax nations tend to spawn underground economies, especially in bad economic times when the folks perceive that government no longer offers them any value.  The proliferation of underground economies translates to cash and/or barter economies that are beyond the tax collectors reach.  Folks who make the decision to just opt out of the system typically refuse to pay taxes to thieving governments and they also tend to opt out of the traceable electronic banking system.

While the growth of underground economic activity does vary from nation to nation and region to region, they are getting noticed.  ChiefExecutive.net wrote about the rise of the underground economy in high tax California and also discussed other underground economies.

What California’s Growing Underground Economy Says About Sacramento

The underground or “black economy” generally refers to transactions that go unreported to evade taxation. Most people associate this with the illegal drug or sex industries but when government policies seek to reach further into private activities it often has the effect of driving activities that are normally above ground such as repair, services, and construction into cash or barter transactions.

Countries such as the U.S., Switzerland and Japan historically have had relatively small, nonreporting and/or illegal sectors, a typical estimate falling between 8 percent and 13 percent of GDP. Most European countries with higher taxes and regulation report underground economies of at least 20 percent of GDP with countries such as Italy and Greece having at least 30 percent of all economic activity going unreported.

Economic studies have shown that when people believe the taxes they are required to pay are reasonable and the political leaders tend to spend their tax dollars wisely, tax compliance rises, and when the reverse is true more economic activity is driven underground. California is showing signs that it is beginning to share one more characteristic with countries such as Greece and Italy: Its black economy is on the rise.

Last December, the LA Times reported that Sacramento officials are increasingly agitated by employers who pay their workers cash under the table to avoid payroll taxes, workers’ compensation insurance and other government mandates. This is in addition to smuggled cigarettes and counterfeit apparel. Officials believe that these underground activities are costing California about $7 billion annually in lost tax revenue.

It's been reported that that up to 50% of all Greek economic output is underground and the Italian underground economy is 2nd only to Greece, all of which means that the Italian underground economy is substantial and probably growing.

If the Italians are wealthier than the Germans, it's because they are keep their money earned in the underground economy.  The underground economy is a very good thing because it represents a phenomena that is literally terrorizing big spending governments by depriving them of revenues and the power to plunder.  USA Today has reported on the underground economy.

Tax evaders in Greece, Spain and Italy better beware

In Greece, tax officials fly helicopters over residential areas to spot swimming pools of the alleged poor. In Italy, inspectors raid elite ski resorts to catch the down-and-out in their Ferraris. In Spain, taxmen snoop about homes rented to sun-seeking vacationers — then visit the owners who neglected to report the income.

Evading taxes is almost a national pastime in European nations such as Greece, Spain and Italy, and for years their governments largely looked the other way.....

Greece, Spain, Italy, Portugal and other countries are raising taxes and clamping down on those who have found creative ways not to pay them. Many people admit they cheat, but the wealthy say they are being unfairly singled out to cover for government overspending — and people in the middle class, who have seen their household incomes crumble, are bitter about losing even more to taxes.

Governments are so desperate for money because they've over-spent, over-taxed and over-borrowed that they are attempting to frame the crisis in the context of class warfare since they no longer have the cash, tax revenues or debt proceeds to fund entitlements that were never affordable anyway.  That's precisely what the French socialists led by Francois Hollande did and they promptly raised taxes on the rich to 75%.  Well, the rich as well as businesses started fleeing France in droves, a situation that only made the dire economic situation even worse.

The delusion that taxing the rich will solve all problems is just that - a delusion.  The famous French actor Gérard Depardieu  who moved to tax friendlier Belgium was already paying 85% of everything he earned to the French government and that was before the Hollande 75% tax increase, here.

“I was born in 1948,” he wrote, “I started working aged 14, as a printer, as a warehouseman, then as an actor, and I’ve always paid my taxes.” Over 45 years, Depardieu said, he had paid 145 million euros in tax, and to this day employs 80 people. Last year he paid taxes amounting to 85 per cent of his income. “I am neither worthy of pity nor admirable, but I shall not be called 'pathetic’,” he concluded, saying that he was sending back his French passport.

The 'tax the rich' strategy is a fraudulent con and many of the tax absconders are just ordinary working stiffs attempting to survive and feed their families in an economy that has gone very bad for them.  Reuters detailed the plight of one working man, here.

Working informally, he pockets about 2,000 euros a month. His wife, a domestic helper, also works unofficially, earning 400 euros a month when she isn't busy taking care of their four- and six-year old children.

Sitting across from him at the cafe, his friend Marco flashes a conspiratorial smile when asked which side of the law he falls on.

He did want to be on the right side, he says with a sigh, but realised the economics were against him.

When taxation becomes so punitive that working class folks don't have enough left over to eat and provide necessities for their families after paying their taxes, there is zero incentive to continue to participate in the system of systematic plunder.  The rich who who are plundered at the rate that French actor Depardieu was plundered by the French government (85%) have the resources to pack up and move to tax friendlier abodes.

Governments do indeed understand capital flight and the underground economy, and they are prepared to declare war on ordinary folks who are just trying to make it in a world gone mad because survival in the NWO is verboten without government permission.  What is the government's weapon?  CASH - governments are restricting the use of cash with the goal of creating a 100% cashless, traceable and electronic fiat currency system.

The International War on Cash

The relentless war against cash payments waged by governments worldwide has perhaps gone furthest in Scandinavia. The ostensible reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, drug cartels and sundry other villains, real or imagined. But the actual aim of the recent flood of laws rendering cash transactions less convenient or limiting or even prohibiting them is to force the public at large to make payments through the financial system in order to prop up the unstable fractional-reserve banks and, more importantly, to expand the ability of governments to spy on and keep track of their citizens’ most private financial dealings.

Many nations have already passed laws that severely restrict cash transactions and the ultimate goal is clear - abolish cash as legal tender.  However, most nations still have legal tender laws so at best all governments can do presently is to restrict the use of cash in certainly transactions.

There can be no question that cash is king in the underground economy and, quite frankly, it's the only method of survival for the multitudes caught up in a nasty economy with nowhere to go.

It's probably also true that the underground economy is the only free market economy left on the planet.  As underground free market economies based on voluntarism proliferate they will indeed start to replace the statist planned economy in a most significant way.   Governments and bureaucrats determined to maintain their power and control will resort to anything, including murder and military dictatorship, to keep folks from engaging in voluntary commerce.

Beppe Grillo, Italian Populism, the Left, the Right and Who is right?

Nothing has quite fired up populist rage around the world like Italian commedian turned politician Beppe Grillo and his Five Star Movement, also known as Movimento 5 Stelle.   It's the equivalent of the "shot fired around the world" because it's gone media viral and, more importantly, directly threatens the cozy corrupt establishment.  Ordinary folks everywhere are cheering for Grillo. In the recent Italian elections, there was no clear winner although Grillo's Five Star Movement elevated itself to the largest political party in Italy.  The candidates included the former Italian prime minister, Berlesconi of the Bunga Bunga fame, who was forced from office amid sex scandals and allegations of wild orgies.  Berlesconi  represents the center right and Italy's deep culture of corruption.  Barsani, the leftist with links to hardcore Marxists, was the choice of statists and communists.  Monti, the engineer of fiscal austerity, is a technocrat who respresents bankster interests, performed the worst in the election with under 10%.

Italian politics really aren't that much difference than politics everywhere because folks really are spitting venomous fire at those they believe are responsible for job losses and economic misery.

Financial and political pundits are literally glued to Italy and Zerohedge.com is no exception.

Italian Economic Health Worst Since Mussolini

Italian debt jumped in 2012 to 127 percent of gross domestic product from 120.8 percent a year earlier. As Bloomberg notes, that's the most since 1924, when Mussolini won 64 percent of the popular vote in elections that opposition members said were marked by irregularities. While the only irregularities in the current election were the electorates dismissal of the status quo - as Monti’s policy mix prompted 25 percent of voters to back the anti-austerity stance of comedian-turned-politician Beppe Grillo’s Five Star Movement, which was the single most voted party in the country...

All Roads Lead To Rome

This contest will be decided by the mob; thumbs up or thumbs down. Even if you wish to believe in the far flung view that Bersani could form a new government; it will not survive as Grillo can block what he wants and on his own which makes no mention of Berlusconi who is not exactly Bersani’s ally either in spirit or political leaning. Odds on is that a new election will have to be called and that Grillo gathers even more votes as his political positions do not rest upon being a comedian but upon a new order for Italy. You may recall Ronald Regan in our own country, a former cowboy star and the positive affect that he had on America. Grillo may be the Ronald Regan of Italy and it means the worst of scenarios for Europe as the old guard is thrown out, the deceptors by design, and the people, the mob, has the run of the Coliseum once again.

Grillo refers to Berlusconi as “the psycho dwarf.” Grillo’s vision of Bersani is a “dead man walking.” In an interview that Grillo had with the New York Times over the weekend he said he would support neither side and that doing so “would be like Napoleon making a deal with Wellington.” He went on to say that, “We can change everything in the hands of respectable people, but the existing political class must be expelled immediately.”

What precisely is wrong with Italy?  Italy has the same spending/debt disease that is plaguing the rest of Europe as well as America.  But what is especially angering Italians is that austerity is being forcibly imposed on the people while the rich get bailouts and headlines like this only fuels discontent.

Italy To Bail Out Old, Broke and Crooked Bank 

Heard of too big to fail? How about too old, broke and crooked to fail?

Banca Monte dei Paschi di Siena SpA, a 540-year-old financial institution commonly called Europe's oldest bank, was the newest Continental house of finance to receive a government bailout, after the Italian Treasury granted the bank a €3.9 billion ($4.87 billion) credit lifeline Tuesday.

The Treasury loaned the money to Monte dei Paschi even though it is seen as basically insolvent by the markets -- the nominal amount of the rescue package exceeds the market capitalization of the bank -- and even though the institution's chairman, Alessandro Profumo, is under criminal indictment, accused of helping devise a tax evasion scheme....

Headlines like the above fire up resentment and anger.  As the people are forced to endure austerity, there is zero austerity for the wealthy and politically connected who clearly exert their political clout to avoid the austerity that is being forced on the working class.  It's a recipe for revolution and class warfare.

Because the dollar is still the world's reserve currency, America kind of gets a temporary stay of execution but the executioner's ax is destined to eventually fall on us.   There is no escape from political corruption, crony capitalism, unsustainable spending and mountains of debt with a limit of infinity.  It's just that some nations will fall faster than other nations.

There are two defining attributes of "Spend and Debt Gone Wild".  1.  Ratcheting up the debt to fund social services and entitlements and 2. Ratcheting up the debt and economic misery to fund the bailouts of banksters, bond holders and the rich.

The left is notorious for solving every problem with 'let's raise taxes and go after the rich'.  The French socialists attempted this by imposing a 75% tax on the rich but the tax was later declared unconstitutional by a French court.  Undeterred, the French socialists are now back with a proposed 66% tax.  Meanwhile, the rich are escaping from France in droves as they fear asset and income confiscation.  The French economy has hit the skids and unemployment is soaring.

What the left gets right:  some on the left are indeed aware that trillions of dollars have bailed out the rich and they acknowledge the injustice of bailing out banksters and the rich.

What the left gets wrong:  The left continues to cling to its insane delusion that if they only had control of all wealth and resources that their perfect communitarian society would become a reality. In fact, it's well documented that socialism/communism snuffed out 100 million lives in the 20th century alone, and mostly by starvation.  Moreover, progressives, Democrats and liberals are indeed responsible for snuffing out nearly 100 million lives in wars that it embraced and eagerly started.  Who got America into WW I, WW II, the Korean War, the Vietnam War and the Balkan Wars?  All progressive, liberal Democrats:  Wilson, Roosevelt, Truman, Lyndon Johnson and Clinton.

What the right gets right:  Nothing really.

What the right gets wrong:  Throughout the world, the right consistently and vigorously defends the status quo, the banksters, central banks, corporatism, crony capitalism, corporate bailouts and in America the Republican right has become the War Party with its overt advocacy of a historically Democrat styled muscular interventionist foreign policy.

While the right claims to defend free markets, limited government and liberty, it's record on all 3 is a big fail.  In fact, the so-called right in America and elsewhere is just as big government statist and warmongering as the left, a situation that keeps liberty activists and advocates for free markets, peace and civil liberties in a state of perpetual war against the Republican right and the Democrat left.

Nobody on the right ever said that the banksters or the rich should be subject to the discipline of free markets and suffer the consequences of stupid investment decisions.  Had it not been for the public bailing investors, bondholders and banks, the rich would have justifiably lost a lot of their wealth.  To elevate risk taking and gambling to the status of a government earned subsidy is the equivalent of bailing folks who gamble risk free at the central bank and Wall Street casinos.

Ultimately the spending, debt and statism will destroy the prosperity and liberty of the people and bring down western civilization because with very minor exceptions like Switzerland, western governments and its voters have indeed embraced the state as the Golden Calf and the cornucopia of plenty.

This will not end well.  In fact, it is guaranteed to end in a big pile of profound human misery, riots, civil unrest and the big thump of government tanks and swat teams crushing the people.

While I salute the Italians and the rise of Beppe Grillo for their courage to raise a truth that needed to be raised, the problem with Grillo is that while he can accurately diagnose the problem and the disease, he falls way short on solutions for the problem and a cure for the disease.  But heck, at least Grillo is halfway there in that he has exposed the massive corruption and political con game of governments bailing out the rich.

Spain, Italy and can Secessionist Movements hit the US?

Catalonia is getting a lot of international press lately because of its secessionist movement that is seriously contemplating secession from Spain. Catalonia is Spain's most prosperous region and includes 16% of Spain's population as well as a fifth of Spain's economy.  Like the rest of Spain, Catalonia is experiencing profound economic problems and Catalonians are sick and tired of sending their tax dollars to the central government in Madrid. Much has been written about the situation in Catalonia.

Catalan Leader Boldly Grasps a Separatist Lever New York Times

Spain risks break-up as Mariano Rajoy stirs Catalan fury The Telegraph

Secession crisis heaps pain on Spain Financial Times

The situation in Catalonia isn't the only secessionist movement brewing in Europe.  In Italy the Venetians are in a secessionist mood.

Venetian Protesters Demand Independence From Rome; Polls Show 70% Favor Independence

Its not just regions in Spain that are sick of centralized government. Take a look at Italy where Venetian protesters demand independence from Rome.

The rally, which was organized by the separatist Indipendenza Veneta party, drew large numbers of energetic protesters.

“The situation here is almost explosive, so today we have thousands of people who have gathered in front of the regional government and we’re going to present to them a resolution signed by thousands of participants to have a referendum for independence,” Chairman of the separatist Indipendenza Veneta Party, Lodovico Pizzati, told RT.

“The main reason is economic. We are in a situation worse than a colony because the tax rate in Italy is the highest the world and our services are extremely poor. We have 20 billion euros missing from our regional resources each year and that’s unbearable,” Pizzati said.

And while some question the region’s ability to stand alone, Pizzati says the goal is completely attainable.

In Italy, the Venetians aren't the only Italians considering secession; Sicily and Sardinia also have secessionist movements brewing because folks are sick of sending their tax  dollars to Rome. Then there's the Scotish secessionist movement.

Scotland's 'explosive' push to secede from the U.K.

Basically, these various secessionist movements are the result of crushing economic misery amid mountains of unsustainable debt.  It's a three-part drama that is unfolding:  1.  the collapse of the European cradle to the grave socialist entitlement model 2. failed statist Keynesian policies and 3.. forcing the people to endure austerity to bailout the banksters.  Even The Ecomonist was quite upfront in correctly labeling Spain's bailout as a bailout of Spanish banks.

The Spanish bail-out  Going to extra time, The €100 billion pledged to help Spain was meant to rescue the banks and calm the euro zone. Instead it has added to the drama

It's true that the banks who made bad loans are being bailed out and it's also true that transferring the cost of the bankster bailouts to the people is grossly unfair and unjust.  Nowhere was a European styled bankster bailout more hideously thieving than in the case of Ireland.  Ireland was an economically flourishing nation with low taxes and low debt, an unusual situation for a European nation.  But Ireland suffered a severe bout of Banksters Gone Wild and the Irish people were left paying for the hugely expensive mess.

The Withering Shamrock: How the Irish People Got Stiffed by the Irish Government

In Greece, the financial disaster is attributable to unsustainable borrowing to maintain an unsustainable socialist cradle to the grave entitlement state. The Greeks couldn’t live on the money of other Europeans forever and their day of reckoning arrived. In Iceland, a tiny nation of 300,000 fishermen and farmers magically churned themselves into high finance gurus who traded on money borrowed from Iceland’s banks that borrowed the money from foreign banks. The Icelanders did the only thing they could do; they allowed their banks to go bankrupt and started over by going back to fishing and farming....

But Ireland? Ireland is a real tragedy because the Irish people are paying for the financial sins of its corrupt government, banksters and bankrupt real estate developers. The Irish banks borrowed from foreign banks who lent mountains of money to Irish real estate developers. Irelands was praised by the media and financial pundits as an economic miracle – living proof that borrowed fiat money creates wealth and prosperity until one day it all ended. The great Celtic Tiger ceased to roar and lay mortally wounded in September, 2008.....

Aside from the fact that the Irish people are idiots for supporting a government that bails out the rich at their expense, the story of how it actually happened is even more horrifying. The gory story is succinctly laid out by Michael Lewis in his outstanding book Boomerang.

But what the Irish government did next was unthinkable. It voted to guarantee the debts of Irish banks which then became the debt of the Irish people. The Irish government told the public that it must save the Irish banks. Lewis makes a most astute observation and discloses that the bailout of the Irish banks was nothing more than a bailout of bondholders:

"....These private bondholders didn’t have any right to be made whole by the Irish government. The bondholders didn’t even expect to be made whole by the Irish government. Not long ago I spoke with a former senior Merrill Lynch bond trader who, on September 29, 2008, owned a pile of bonds in one of the Irish banks. He’d already tried to sell them back to the banks for 50 cents on the dollar-that is, he’d offered to take a huge loss, just to get out of them. On the morning of September 30 he awaked to find his bonds worth 100 cents on the dollars. The Irish government had guaranteed them! He couldn’t believe his luck.

But it gets worse as Lewis states:

"A political investigative blog called Guido Fawkes somehow obtained a list of the foreign bondholders: German banks, French banks, German investment funds, Goldman Sachs. (Yes, even the Irish did their bit for Goldman.)" Michael Lewis in Boomerang.

 And it gets worse as Credit Writedowns reported on 3/3/12 that Irish taxpayers are now even paying unsecured bank creditors."

Folks are certainly catching on to the stone cold reality that while austerity is forcibly being imposed on the poor, the pensioners and the middle class, there is zero austerity for the criminal bankster class who continue to have a license to plunder no matter where they are.

As the economic situation continues to worsen in the US, and it will, one has to ponder how many US states will start clamoring for a divorce from Fedzilla, the Bridezilla that consumed an entire nation.  It certainly isn't beyond the realm of possibility. Failed government at all levels creates a lot of desperate people who will resort to desperate measures for their own survival.  Most assuredly, trust in government won't be a component of their survival plans.

What Happens When Governments No Longer Have Money to Pay Entitlements and Pensions?

Greece is broke. Spain is broke. Portugal is broke. Italy is nearly broke. Bailout requests continue to mount. Many nations simply borrowed heavily to sustain an unsustainable socialist cradle to the grave paradise. Folks are protesting in the streets in big numbers. They are protesting cuts in entitlements. They are protesting cuts in public sector pensions.  They are protesting cuts in healthcare benefits.  They are protesting the lack of jobs.

Demand for Spanish Bonds Collapses; "No Money Left to Pay Services" says Treasury Minister; Massive Protests Over Austerity; Two-Year Yield soars 60 Basis Points

But they can protest all they want. At the end of the day, broke is still broke, bankrupt is still bankrupt and there literally is no money to pay promised benefits. As the debt mounts, more and more revenues are siphoned off just to service the gargantuan debt which in turn decreases the amount of money left over for entitlements.

In France, Francois Holland won an election by promising to tax the rich at a rate of 75%, a campaign promised that he kept.  It's widely believed that such a draconian measure will drive the wealthy out of France and to much friendlier tax abodes.  The panicked Spainards are considering similar measures.

Prepare for Spanish Implosion: Businesses Threaten to Leave Spain Over Tax Hikes; Finance Minister Proposes 56% Tax on Short-Term Financial Transactions

Americans tend to ignore what is happening across the pond because they really don't believe that what is happening in Europe and elsewhere could ever happen in America.  Of  course, Americans are living in a fantasy land but that won't last long and when reality finally hits America it will pack a wallop of a bite.

There are credible signs in America that our delusions will be short lived.  The US is sitting on unfunded liabilities (pensions, SS, Medicare, Medicaid and other entitlements) of over $100 trillion.  This didn't come from Alex Jones.  It came from the Dallas Federal Reserve!

According to our calculations at the Dallas Fed, that unfunded debt of Social Security and Medicare combined has now reached $104 trillion—trillion with a 'T'—in discounted present value. – Richard Fisher, February 10, 2010

There is also the issue of massively underfunded public sector pensions and retirement benefits at the state and municipal level.

Public Sector Pensions Underfunded by $4.6 Trillion - That's a Future Tax Folks

Here's what is really going to happen.  Sooner rather than later, nations and people will simply be forced to start living off what they actually produce and save instead of the debt fueled consumerist economy driven by fiat banksters.

Will it be painful?  Absolutely.  But the alternative of continuing to live the monetary lie will be far more painful as central banks just continue to inflate currencies to the point where folks will need a truckload of greenback just to buy a loaf of bread.

Governments steal from the people by devaluing currencies with inflation.  And yes, citizens are complicit in the schemes so long as they perceive a value for themselves (raking in their share of the plunder).

America has one huge advantage.  The dollar still maintains its lofty status as the world's reserve currency and it's also a petro-currency.  If oil ever starts trading in non-dollar currencies, the dollar is toast and America officially becomes just another failed banana boat republic.  Moreover, there is the issue of our mountain of unsustainable debt and the continued willingness of foreign nations to subsidize our outsized debt fueled fictitious lifestyles.  Many astute financial pundits believe and have documented the fact the foreign nations are quietly and not so quietly shedding Treasuries because they are very concerned about ever getting paid. The simple truth is that America is a Debt Man Walking.   Who is the largest purchaser of Treasuries?  The Federal Reserve!

The Federal Reserve has been the largest buyer of U.S debt in the last three years...here.

Economist Peter Schiff has been saying for years that America needs to get back to producing things, learning to save and living within our means.  He's right.  It's precisely how America became the wealthiest and greatest free nation to ever grace the planet.   America once had the most prosperous middle class in all of human history.

We simply blew it by allowing government, banksters, militarists and corporatists to concentrate wealth and power into the hands of a few.  The consequences have been devastating.

Pundits like using the term SHTF (shit its the fan).  When the SHTF what will really happen?  Commodities will become the new temporary currency, especially food, fuel and medicines.  Alternative paradigms of survival will emerge, notably in underground economies that will grow as government becomes powerless.  There are communities in Greece where they barter and use local currency (not the Euro).   Raw and absolute survival instincts will kick in and trump loyalty to the state.

Some folks have put forth the premise that America's failed system of governance and its fascist, crony capitalist economic system must fail if the people are ever going to have the opportunity to rise in liberty and restore their prosperity.  It's a valid premise.

100 years of Keynesian statist economic central planning has effectively obliterated all that once propelled western nations to liberty and prosperity.  The system can't be tweaked or even saved. All that's left is starting over and starting over can only work with sound money and minimal government power.