The whispers on Wall Street lately have been the feared “double-dip”.

There is a much louder chorus of people proclaiming that we are only looking at a “slow-down”. Of course they were the same people who were telling us as recently as April that we were in a “V-shaped” recovery.

 Generally speaking, Liz Ann Sonders agrees.

  “I’m amazed people still say it’s not a ‘V’-shaped recovery, which to means they’re simply not looking at the charts,” says Charles Schwab’s chief investment strategist…

 Ah, yes. The charts. I have several issues with people who say things like this.

The sacking of US commander General Stanley McChrystal, the commander of U.S. forces in Afghanistan, received an immense amount of media coverage last week. The narrative basically focused on the disrespectful ways McChrystal talked about the Obama Administration.

Unfortunately the news media never got around to asking what the Afghanistan people thought of McChrystal being sacked. It turns out that their take on the event wasn’t just different, it didn’t even resemble the story that the American media was selling us.

 Head of Press TV’s office in Kabul, Mohammad Ruhi, says US commander General Stanley McChrystal was sacked for acknowledging NATO’s connection with the executed leader of the Pakistan-based Jundallah terrorist group, Abdolmalek Rigi.

Whoa! That certainly changes things.

  The Republican’s filibuster of the “tax extenders” bill will have severe economic consequences.

  Moody’s is predicting the loss of 200,000 jobs. Nomura Securities says it will knock 0.4% off of the GDP.

  A good 2 million unemployed families will have their last financial lifeline cut by the second week of July. The suffering of these families is about to increase many fold.

 In midst of the outcry from the struggling working class, came this statement from Sen. Debbie Stabenow (D-Mich.):

 “It is very clear that the Republicans in the Senate want this economy to fail. They see that things are beginning to turn around…. In cynical political terms, it doesn’t serve them in terms of their election interests if things are beginning to turn around.”

 Now I like conspiracy theories more than most, maybe even too much, but I also recognize that describing a political opponent in 2-dimensional terms with evil intent is usually an indication of something missing from your theory.

  What is missing here is the concept of class interests.

  Senator Durbin stood in front of the Senate this morning and tried his best to whip up support for an unemployment extension bill during his nine minute speech.

  When his speech finished the Senate immediately went back to discussing what it considered more important: nominations and the border patrol.

 1.2 million people will lose their last financial lifeline just this month, and the Senate couldn’t find more than nine minutes of their time to address it.

  Yesterday the Senate was in session for 5.5 hours and it didn’t address the unemployment problem even once.

The 2011 fiscal year for 46 states begins in 10 days. In many cases it is a countdown to financial doom.

Despite what you may have heard from conservative sources, state and local government have been cutting and cutting. 231,000 state and local government jobs have vanished since August 2008 – 22,000 in just the past month. Most of those jobs were at the local level, such as police, firefighters, and school teachers.

The fat has already been trimmed. The muscle has been cut into. There is nothing left to cut but bone.

At least 19 states are getting the saws ready, because knives won’t cut bone.

According to Mark Zandi, the chief economist at Moody’s, states are facing a budget gap of $180 billion next year. The shortfall could lead to the destruction of 900,000 jobs at the state level, an employment source that is often thought of as an economic safety net.

Up to 300,000 of those laid off will be school teachers, and some estimate the total number of government workers to be let go in the 1-to-2 million range.

  When the Wall Street bankers ran up hundreds of billions of debt they could not pay back they convinced the American taxpayers (via the government) to bail them out, no questions asked.

  However, when the American taxpayer runs up a little debt, not only is there no bailout, there is no mercy either.

 It’s not a crime to owe money, and debtors’ prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts….

   “The law enforcement system has unwittingly become a tool of the debt collectors,” said Michael Kinkley, an attorney in Spokane, Wash., who has represented arrested debtors. “The debt collectors are abusing the system and intimidating people, and law enforcement is going along with it.”

 Frequently the bail is set at the exact same amount as the debt owed. While this makes it easy for judges, it is also a tacit admission that these are de facto debtor prisons.

 Many state constitutions bar imprisonment for debts, yet in many cases the judges in these states don’t seem to care. Some seem eager to side with the powerful against the weak.

  The financial news from Europe is getting increasingly distressing.

A new EU report warns that economic conditions in Portugal and Spain could “result in a high ‘snowball’ effect on the government debt.”

  French financial group AXA says “there is a fatal flaw in the system and no clear way out.” They are predicting the Eurozone to break in half or completely disintegrate in the next 18 months.

  Over 13% of Europe’s investors are betting on a Black Monday-style collapse in stock prices (think 1987).

   Discussion of the economic crisis in Europe has been largely confined to Greece and how it effects the Euro. All that changed this week.

   It all started with the Spanish banks at the start of the week.

 CajaMurcia, Caja Granada, Sa Nostra, and Caixa are joining together in a SIP (System of Integrated Protection), which will combine bank reserves and result in a firm worth €100 billion, according to Cotizalia.

  This comes after yesterday’s announcement that four banks, Cajastur, Caja de Ahorros del Mediterráneo, Caja Extremadura, and Caja Cantabria were merging under a similar agreement.

  All of this started with the weekend’s €530 million bailout of CajaSur, and is sure to continue as Spain tries to sure up its banking sector under IMF pressure.

 Sudden mergers of major banks, following a major bank bailout, is very suspicious. The markets noticed, and two days later the Spain’s central bank was forced to act.

“By allowing persistent declines in the money supply and in the price level, the Federal Reserve of the late 1920s and 1930s greatly destabilized the U.S. economy and the economies of many other nations as well.

 – Federal Reserve Governor, Ben Bernanke, 2004

  Ben Bernanke, Nobel Prize winner Milton Friedman, and most other economists out there agree that the reason the Great Depression was so deep and destructive was that the Federal Reserve failed to keep the money supply from shrinking. I’m a little more skeptical, but I agree that it would be impossible for an economy to grow without a growing supply of money in a debt-based monetary system.

  That’s why this news article should be extremely distressing.

 The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

  “It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

 As our political and financial leaders are using every tool at their disposal to jump-start the economy, there are fewer and fewer dollars in circulation. That’s not a prescription for a growing economy. It’s a prescription for economic disaster.

   Strikes and protests from Greece to Spain to Slovenia to Ireland to Romania have followed riots and bloodshed.

  The corporate media has reported this unrest with the following narrative:

 The Greek people are angry because their government pledged to make cuts in social spending…

 Fox News correctly observed that “Greece lived for years beyond its means, borrowing money and spilling red ink to finance excessive government spending, offer socialized health care and provide lavish wages for federal workers.”

 It’s a rather convenient spin: greedy, lazy, leftists workers that are getting their comeuppance. It’s the same narrative that the corporate media rolls out whenever social services are being cut anywhere in the world.

  It’s a convenient story because it is a complete story. Nothing more needs to be done. Good guys win. Bad guys lose. Roll the credits.

 Except that this isn’t the whole story by a long shot.

   While there is plenty of talk about the economic recovery, there is barely a whisper about what is just a few weeks ahead. It’s not any one thing. It’s a combination of three (and possibly four) different events that will deliver devastating body-blows to the economy.

  They are all being talked about, but no one that I’ve seen has put them all together.

That’s where I come in, the doom-and-gloomer, with the news that no one wants to think about, but you are better off knowing now rather than later.

  One of the most misused and abused terms in language today is “free market”.

The definition of a free market is business governed by supply and demand, and not restrained by government regulation or subsidy.

  This definition is often used in conjunction with environmental regulation and minimum wage laws, but almost never with trade between firms and corporations. Which is the problem, because without government protections this “free market” wouldn’t exist.