Acute Disorder

Law of unintended consequences

Archive for May, 2011

Things are spinning out of control

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from zerohedge…

Things Are Spinning Out of Control

The pretense of centralized control of history is wearing thin.

The single greatest conceit of the Status Quo in the U.S., China and Euroland is that systems and trends can be tightly controlled. That conceit is slowly being revealed as hubris, as all sorts of things are spinning out of the control of the centralized authorities and financial elites in each geopolitical power center.

Does anyone really think the people of Greece will stand idly by while the state treasures of their nation are transferred to the banks which foolishly lent billions to a visibly risky enterprise? The banks, of course, lent freely to insolvent governments throughout the European Union, confident in the backstop of the E.U. itself.

The analogy to subprime mortgages in the U.S. is near-perfect: banks lent freely to extremely risky borrowers, breezily confident that their worker-bees in the Federal Reserve, Fannie Mae and Freddie Mac, the Treasury and Congress would all toil feverishly to transfer the risk to the U.S. taxpayers, by whatever means were necessary.

Does anyone really think the uprisings against this transfer of national wealth to the “too big to fail” banks in Europe will fade as unemployment rises and the true costs of the transfer become apparent to all?

Does anyone really think there is no chance that the citizens of one of the nations lined up to be stripmined by the E.U. will openly rebel against the stripmining, throwing out their government until they find some politicians who are not spineless lackeys and factotums of the financial Status Quo?

Does anyone really think the banks are really that precious to the people they are stripmining? Just how awful would it be if all the big banks with exposure to sovereign debt in the E.U. went belly up and were declared insolvent? A handful of very wealthy managers would lose their jobs, a handful of very wealthy owners would lose their stake, and all the pension funds and mutual funds which bet on the infinite passivity of the citizenry and the infinite checkbook of the E.U. would lose, too.

It’s called Capitalistic risk and return, baby, and return can be negative. All the big players assumed the citizenry would quietly line up to have the clothing ripped from their backs and their flesh flayed to extract the pound of flesh “owed” the banks. But as the citizenry of Europe wake up to costs of the stripmining, which extends now to the taxpayers of Germany, Finland and beyond, they are withdrawing their support of the financial Status Quo.

Here is my plea: Ireland, Please Do the World a Favor and Default (November 29, 2010).

Things are spinning out of the control of the centralized mandarins in the E.U. They seem to have borrowed the Federal Reserve’s playbook to keep the stripmining proceeding as planned: lie, frequently (practice helps); obscure systemic risks by printing money; and issue a foul sewage of propaganda about how nicely the economy is “recovering” to mask the real game, which is diverting the national income stream to the banking cartel.

The levers of interest rates, credit and money supply do not control larger trends; the appearance of control is illusory. The E.U. and the Fed are both busily applying the duct tape of various monetary machinations to the overheating boilers of the global economy, and presenting their frantic improvisations as “finely tuned, guaranteed to work” policies. As things spin out of their control, reality is poking through their rice-paper facade of “normalcy” and control.

Here in the U.S., the Fed’s game plan of stripmining the nation to “save” the banking cartel is based on a cruel deceit I explained yesterday in The ‘Baseball’ Economy: The Fed Strikes Out (May 24, 2011): while the Fed maintains incentives for financial speculation and backstops any cartel losses in those speculations, it claims its policies are designed to “boost employment” in the real economy.

That is the world’s most dangerous joke: if you believe it, you die from extreme irony. What the Fed is actually doing is starving the real economy and thus precluding any gains in employment as it diverts the national income to fatten the insolvent banking cartel.

Does anyone seriously believe their scam can endure? As I described in Your Pick, Ben, But One Goes Off the Cliff (April 22, 2011), the Fed’s policies are setting up multiple double-binds. The Fed cannot finesse the unraveling of the entire financialization project.

There is currently a “great debate” over QE3, the next round of Fed “stimulus” (read stripmining). As things spin out of control, it no longer matters what the Fed does. That is, after all, their central conceit and the basis of their power: that the Fed actually controls anything. This quote, attributed to Napoleon Bonaparte, is increasingly relevant: “Do you know what amazes me more than anything else? The impotence of force to organize anything.”

The Fed claims it can force the real economy to “grow” by forcefeeding it credit. But all the Fed is really doing is fattening the banking cartel with guaranteed profits (borrow from the Fed for free and then deposit the funds at the Fed for interest) and enabling another speculative frenzy which generates fees and profits for the banking cartel while the U.S. taxpayers play bagholder.

The Fed has lost control of the reaction to QE3. There is no “surprise” in QE3, so the potential positive is lost. Whatever the limitations the Fed imposes on QE3, they will be recognized as limiting the “high” of the credit-cocaine injected by the Fed.

If the Fed chooses an open-ended, essentially infinite QE3, then it will be recognized by the market that the Fed has lost all control and the pretense of “growth” is truly threadbare. No matter what the Fed does with QE3, the results will be negative. If they try to finesse a limited QE3, the markets will recognize the policy is unable to force-feed more speculative bubbles. If the Fed unleashes the printing press, then inflation will wrench free of the last rotten ropes restraining it, and the market will recognize that the current stock and bond bubbles are so tenuous that only unlimited money printing can keep them inflated.

Simply put, things are spinning out of the Fed’s control. The Fed has been transferring the wealth of the nation to the banking cartel and the financial Power Elite for three long years, and the fraud at the heart of their claim to be “stimulating” the real economy is now in plain view.

Does anyone really believe Japan’s economy is under control? The tragedy at the out-of-control Daiichi Fukushima reactors might well be an analogy for the entire Japanese economy. Does anyone seriously believe Japan’s over-indebted experiment in endless quantitative easing will sustain a demographic sea change and yet another explosion of debt to support rebuilding and more “stimulus,” i.e. bailing out Japan’s insolvent banking cartel, which has been insolvent for 20 years?

As for China: inflation is now out of control. Party authorities are frantically pulling the same levers of monetary policy, but the wires connecting the levers to the real economy have snapped. All their efforts to “cool” rampant speculative bubble-blowing and rampant inflation are failing. Taking their cue from the U.S., they are desperately trying to mask their loss of control with doctored statistics, but the conceit cannot endure for much longer: rents are rising even as housing sales decline. Local governments are still borrowing and speculating wildly, in a last-ditch effort to prop up their own income streams, which are dependent on real estate speculation and land grabs from peasants.

Things are spinning out of control. Trends are beyond the feeble grasp of central financial authorities. Power is based not just on controlling events in the real world but on the perception of having some control over the real world. Once the central banks’ control over large-scale trends and systems is revealed as illusory, then the unraveling of the Status Quo’s powers will gain momentum.

Written by anubis

May 31st, 2011 at 1:04 am

Why I Won’t Support More Bailouts – Timo Soini

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Insolvency must be purged from Europe’s system and it must be done openly and honestly.

When I had the honor of leading the True Finn Party to electoral victory in April, we made a solemn promise to oppose the so-called bailouts of euro-zone member states. These bailouts are patently bad for Europe, bad for Finland and bad for the countries that have been forced to accept them. Europe is suffering from the economic gangrene of insolvency—both public and private. And unless we amputate that which cannot be saved, we risk poisoning the whole body.

The official wisdom is that Greece, Ireland and Portugal have been hit by a liquidity crisis, so they needed a momentary infusion of capital, after which everything would return to normal. But this official version is a lie, one that takes the ordinary people of Europe for idiots. They deserve better from politics and their leaders.

To understand the real nature and purpose of the bailouts, we first have to understand who really benefits from them. Let’s follow the money.

At the risk of being accused of populism, we’ll begin with the obvious: It is not the little guy that benefits. He is being milked and lied to in order to keep the insolvent system running. He is paid less and taxed more to provide the money needed to keep this Ponzi scheme going. Meanwhile, a kind of deadly symbiosis has developed between politicians and banks: Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever-more money back to our governments, keeping the scheme afloat.

In a true market economy, bad choices get penalized. Not here. When the inevitable failure of overindebted euro-zone countries came to light, a secret pact was made.

Instead of accepting losses on unsound investments—which would have led to the probable collapse and national bailout of some banks—it was decided to transfer the losses to taxpayers via loans, guarantees and opaque constructs such as the European Financial Stability Fund, Ireland’s NAMA and a lineup of special-purpose vehicles that make Enron look simple. Some politicians understood this; others just panicked and did as they were told.

The money did not go to help indebted economies. It flowed through the European Central Bank and recipient states to the coffers of big banks and investment funds.

Further contrary to the official wisdom, the recipient states did not want such “help,” not this way. The natural option for them was to admit insolvency and let failed private lenders, wherever they were based, eat their losses.

That was not to be. As former Finance Minister Brian Lenihan recently revealed, Ireland was forced to take the money. The same happened to Portuguese Prime Minister José Sócrates, although he may be less forthcoming than Mr. Lenihan about admitting it.

Why did the Brussels-Frankfurt extortion racket force these countries to accept the money along with “recovery” plans that would inevitably fail? Because they needed to please the tax-guzzling banks, which might otherwise refuse to turn up at the next Spanish, Belgian, Italian, or even French bond-auction.

Unfortunately for this financial and political cartel, their plan isn’t working. Already under this scheme, Greece, Ireland and Portugal are ruined. They will never be able to save and grow fast enough to pay back the debts with which Brussels has saddled them in the name of saving them.

And so, unpurged, the gangrene spreads. The Spanish property sector is much bigger and more uncharted than that of Ireland. It is not just the cajas that are in trouble. There are major Spanish banks where what lies beneath the surface of the balance sheet may be a zombie, just as happened in Ireland for a while. The clock is ticking, and the problem is not going away.

Setting up the European Stability Mechanism is no solution. It would institutionalize the system of wealth transfers from private citizens to compromised politicians and otherwise failed bankers, creating a huge moral hazard and destroying what remains of Europe’s competitive banking landscape.

Some defend the ESM, saying its use would always require unanimity. But the current mess with Portugal shows that the elite in Brussels will seek to enforce unanimity through pressure when it cannot be obtained by persuasion. Abolishing unanimity is only a matter of time. After that we have a full-fledged fiscal transfer union that is obviously in hock to Brussels’ anti-growth corporatism.

Fortunately, it is not too late to stop the rot. For the banks, we need honest, serious stress tests. Stop the current politically inspired farce. Instead, have parallel assessments done by regulators and independent groups including stakeholders and academics. Trust, but verify.

Insolvent banks and financial institutions must be shut down, purging insolvency from the system. We must restore the market principle of freedom to fail.

If some banks are recapitalized with taxpayer money, taxpayers should get ownership stakes in return, and the entire board should be kicked out. But before any such taxpayer participation can be contemplated, it is essential to first apply big haircuts to bondholders.

For sovereign debt, the freedom to fail is again key. Significant restructuring is needed for genuine recovery. Yes, markets will punish defaulting states, but they are also quick to forgive. Current plans are destroying the real economies of Europe through elevated taxes and transfers of wealth from ordinary families to the coffers of insolvent states and banks. A restructuring that left a country’s debt burden at a manageable level and encouraged a return to growth-oriented policies could lead to a swift return to international debt markets.

This is not just about economics. People feel betrayed. In Ireland, the incoming parties to the new government promised to hold senior bondholders responsible, but under pressure, they succumbed, leaving their voters with a sense of democratic disenfranchisement. The elites in Brussels have said that Finland must honor its commitments to its European partners, but Brussels is silent on whether national politicians should honor their commitments to their own voters. In a democracy, where we govern under the consent of the people, power is on loan. We do what we promise, even if it costs a dinner in Brussels, a “negative” media profile, or a seat in the cabinet.

When in Europe’s long night of 1939-45, war came to Finland with the winter blizzards, my mother was one of eight siblings being raised on a small farm in central Finland where my grandparents eked out a frugal living. My two young uncles rushed to the front and were both wounded in action during Finland’s chapter of Europe’s most terrible bloodshed. I was raised to know that genocidal war must never again be visited on our continent and I came to understand the values and principles that originally motivated the establishment of what became the European Union.

This Europe, this vision, was one that offered the people of Finland and all of Europe the gift of peace founded on democracy, freedom, justice and subsidiarity. This is a Europe worth having, so it is with great distress that I see this project being put in jeopardy by a political elite who would sacrifice the interests of Europe’s ordinary people in order to protect certain corporate interests.

Europe may still recover from this potentially terminal disease and decline. Insolvency must be purged from the system and it must be done openly and honestly. That path is not easy, but it is always the right path—for Finland, and for Europe.

Mr. Soini is the chairman of the True Finns Party in Finland.

Written by anubis

May 12th, 2011 at 7:19 am

Posted in Epochal Collapse

Circus Clowns And Sideshow Freaks

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from zerohedge

Submitted by Brandon Smith from Alt Market

Circus Clowns And Sideshow Freaks

In my worst nightmares, when the lights are swallowed by the smog of some nefarious gloom and the air itself becomes a stale sarcophagus into which I am entombed, and the grim hands of putrefied fate sink their wretched grip into the thick of my neck and all seems irrevocably lost, I merely recall that soon I will awaken to the horror of a terminal America infested by career criminals and certifiable morons, and suddenly, my off color dreams don’t seem so bad. Ultimately, there is nothing worse to me than a public majority that takes everything they hear from the mouths of political warlocks at face value. Even the fear of death is truly a pittance compared to the threat of being enveloped by a stampeding herd of frightened, stupid, human cattle.

Is this melodramatic? Not at all. When a man is aware, and by aware I mean honest with himself, he inevitably suffers the pain of being certain while the rest of the world enjoys the bliss of false assumptions. We live in a culture that inflicts great punishment on those who know, and lavishes enticing but short lived rewards on those who ignore. In such a place as this, meaning disappears, and countries die.

The first century satirist, Decimus Juvenalis, grief-stricken by the destruction of the Roman Republic at the hands of a succession of emperors and tyrants, wrote: “The people that once bestowed commands, consulships, legions, and all else, now meddle no more and long eagerly for just two things — bread and circuses.” At that time, the autocratic rulers of the empire were highly visible. Even celebrities. They played the hollow Roman Senate like a pipe organ and created elaborate events, moments of pageantry in the otherwise terrifyingly bleak lives of the citizenry, and of course, the people were thoroughly distracted while their economy, their government, and their land crumbled around them.

Today, our autocratic rulers in the form of a corporate oligarchy keep rather hidden from the prying eyes of the commoners, but they wield the same power as the emperors of old, with the same obvious results. America is ripping apart at the seams. Our currency has been destroyed. Our treasury is indebted beyond the point of any return. The cost of our daily survival is quickly rising beyond any average person’s means to pay. And, our political system is a never ending parade of googly-eyed muppets singing and dancing to the tune of the false left/right paradigm. Yet, where has our attention been lately…?

Apparently our impending doom is not as entertaining as the Osama Bin Laden Show, which has been written and choreographed like a bad Tom Clancy novel, or a contrived episode of ‘24’ (Jack Bauer finally shoots Bin Laden square in the head with his hawk-like vision and badass marksmanship while Osama in typical TV land fashion uses a woman as a human shield. Sorry to spoil the ending for you if you haven’t seen the final episode yet). Or how about the battle of “wits” (I say this knowing full well the irony) between Barack Obama and Donald Trump, two soulless rock-em’ sock-em’ robots in a fake duel for fake polls, fake votes, and a fake presidency. Let’s not forget about the “Royal Wedding”, the eagerly awaited international event that featured a throng of throwbacks from the Dark Ages prancing around in Nutcracker outfits and partying to the tune of millions in British taxpayer dollars.

Do any of these things really matter? Not in the slightest. How long must we endure this hokey carnival ride before we finally start focusing on legitimately important issues? That’s really up to us…

Day after day, we allow ourselves to be conned, befuddled, and frightened by a cast of clowns and freaks. Why do we do this? How can we stop the madness? First, we have to understand how the propaganda works, before we can diffuse it. Let’s examine some of the tactics of disinformation being used today, as well as the purpose behind some of America’s most prominent distractions.

“The Boogeyman Is Under Your Bed…”

A collapsing dollar, state funding on the brink, a still irradiated Japan, gasoline price spikes, and, the only thing that has lately been able draw people outside of their television and microwave fajita saturated cocoons is the orchestrated hoax of Osama Bin Laden’s death. No independently corroborated physical evidence? No independently corroborated video? Body dumped at sea in less than a day without independent verification of the identity (apparently to avoid his rising from the grave as the invincible Zombie Bin Laden)? No problem! We fully believe every word the Obama Administration says without question! Lets go do keg stands on the White House lawn, yeehaw!

A boogeyman is a very powerful tool for corrupt governments. In fact, every despotic regime in history has concocted one fantasy villain after another in order to maintain their psychological stranglehold on the populace. Killing one only means a replacement is soon to be introduced. While many Americans are intelligent enough to at least express some concerns about the obviously deceitful manner in which the Bin Laden death has been handled and promoted, there is still a significant swath of the population that has invested themselves so completely in the Bin Laden myth that they will support the official story without question.

Sadly, villains often become the drivers of history. Most events on the human timeline are merely reactionary movements of states and peoples to counter a dangerous antagonist, whether actual or fabricated. Very rarely do people act in concert to change the shape of their society or their surroundings without a symbolic devil to spur them on. This is not to say that there are not real ghouls to be dealt with in every generation, but problems surface when we become ADDICTED to the idea of villains. We become so lethargic when it comes to putting in the effort of determining our own destinies that soon we start to need monsters to inspire us to take action in life. We welcome governments to conjure enemies for us because it makes us feel as though we have purpose again. As though we are a “team”. Just look at the deluded lemmings that roamed D.C. enthralled at the unconfirmed and unsupported claim of Bin Laden’s death. A civilization caught in this circle of pure reaction usually devolves into something utterly pathetic; a people without principles feeding on each other for comfort.

Interestingly, the fermentation of amoral or destructive behavior is found most often in power structures, like governments and corporate institutions, where the desire for overt control can be satisfied. It is at the top of the pyramid that we find the bottom of the barrel in terms of humanity. So, it is not strange at all to consider the fact that elitists seek to create monsters out of thin air, like the “axis of evil”, terrorists, lone gunman, homegrown extremists, barter networkers, or Amish dairy farmers. They know that people seek out dragons to slay and so provide proxies and facsimiles. If they didn’t, the masses may turn their attentions towards a real threat, like the elites themselves.

Again, this is common sense and a consistent tactic, one which has been admitted to openly by establishment authorities for decades. The true boogeymen are not under your bed, they are not your next door neighbors who participate in activist groups, they are not right wing extremists, they are not even men in caves in Afghanistan or Pakistan. The only monsters worth so much attention and dedication are those that are closest to us. To find them, we have only to follow where all our money goes, where all our votes are misspent, and where all our decisions are made without our consent.

“If You Didn’t Vote, You Have No Right To Complain…”

Perhaps the most effective scam of all time is the construction of the false left/right paradigm. Anyone who does not understand this fundamental fallacy of our political system will never be able to understand the bigger picture of how our government works or why or “elected” officials do the things they do. If you cannot accept the fact that both major parties are essentially the same, supporting the same primary legislation and differing only in rhetoric, then you will probably attribute the constant failings of our leadership to “greed” or “stupidity”. This is simply not the case.

When Obama went back on his election year promises to end the wars in Iraq and Afghanistan and pull troops out (there are still thousands of troops and private contractors in Iraq too, for those that bought the second pullout lie), for instance, or when he decided to support the Patriot Acts after criticizing them, this was not because he has a bad memory, or even because he wanted to win your vote. He made promises and then nixed them because that’s HIS JOB; to perpetuate the false idea that the Democratic Party is anti-war, and different from the Republican Party.

When Bush Jr. ran on a platform of limited government and conservatism, then tripled the size of the Federal Government, it was not because he is an idiot man-child. It is because it was his job to pretend as if he cared about traditional conservative values, while instituting socialist globalist programs under our noses.

When a hypocrite and a bottom feeder like Donald Trump, a confessed liberal on taxes, health care, and trade, a man who stooped to using eminent domain in an effort to steal an elderly woman’s home so he could pour a limousine parking lot on top of it, is suddenly presented as the new hope of the Republican Party and limited government, I think its time to pack up our preconceptions about there being any such thing as a two party system.

In the end, most political leaders are more like circus clowns, meant to amuse us. They bumble about the center ring spraying seltzer water at each other and cracking each other’s skulls with rubber mallets, but who really cares which clown wins this slapstick contest? They may make us feel as though we have a choice, and thus a voice, in our government, but at bottom, it is the ringmaster that decides the course of the show. The clowns are a sidenote. Not voting for either of them seems to be only the option left, or, voting with one’s conscience for a candidate that’s not an establishment favorite (aka Ron Paul).

“War Is Necessary To Perpetuate Freedom…”

War leads to many things, but rarely does it ever lead to people being more readily free. WWI (a fabricated war) led to the implosion of Germany and the subsequent rise of National Socialism (a banker fabricated political movement) which led to WWII, which then destroyed most of Europe making way for the construction of the EU (a banker fabricated supranational union), basically a more subversive and insidious form of socialism with even greater control and unaccountability. Most wars are planned like cross country vacations; you may deviate here and there, but eventually you’ll find yourself at the destination mapped out for you before hand. The vitriol brewing in the Middle East today is no exception.

Wars not only break down and then centralize sovereign systems, they also rally the masses to support governments they otherwise might oppose. Wars create fear, not to mention the thrill of tribal victory. Wars collectivize societies, dissuade and shame individualism, and bring everyone under a single banner and a single philosophy. Where I might be applauded today as a writer for speaking out against the nonsensical involvement of the U.S. and the EU in an internal civil war in Libya, I may be attacked tomorrow if a terrorist bombing occurs in Libya’s name. Where I might point out that only a year ago and despite his disturbingly violent nature Gaddafi was the globalist go-to man for the African Union, and supported widely by the UN for purchasing African Union memberships for poorer nations with Libyan oil money, others might say that I am undermining U.S. solidarity in the “war on terror” by being factual. Wars have the ability to turn the common man into a mini-tyrant, not to mention a censor for the establishment.

In the end, if you want to distract the public away from the horrifying strife of economic collapse or even hyperinflation, the only conceivable avenue is war. Nearly every engineered financial disaster in modern history has been followed by an engineered conflict to muffle the cries for new management. In America’s case, these wars are always preempted with calls for the “spread of democracy”, making the target country more than a target, but a monster (as discussed earlier) and making us the knight in shining armor off to rescue the poor helpless villagers of the planet. We play out the myth then find that we have again only furthered the aims of globalists, and weakened ourselves in the process.

The Show Must Go On

The world that we experience through what is often termed the “mainstream” is, quite simply, an illusion. The life many live is not real, but an elaborate production. A rented life. A life they do not own.

Is this not the stuff of “conspiracy”…? That is the wrong question. Is this the stuff of fact? THAT is what we should be asking ourselves.

It is time for the American people to stop fooling around with what is “probable”, or “more likely”. Occum’s Razor (the misinterpreted version of the principle) has never been applicable in terms of human systems, and especially not those dominated by a handful of men, as most usually are. The “simplest explanation” for a social situation is rarely the correct one, and is completely up for interpretation. I would replace the word “simplest” with the word “practical”. What I deem as practical (the influence of elite minorities over the flow of historical events) may be considered outlandish by others because their perception is skewed by their lack of knowledge. Perception changes with knowledge. Practical explanation changes with awareness. The underlying truth, after all is said and done, is constant. The truth does not change, we change.

Propagandists have always understood this condition, and the science of manipulating perception with diversion, bias, and fear, is ever present today. Whether it’s a faux attack on an Al-Qaeda compound containing a Bin Laden body we’ll never see first hand, a sham of an election with marionette candidates, or a war in Libya that is never officially categorized as a war, you will be lied to by government, and these lies, whether you accept it or not, will eventually hurt you, or someone you care about. Recognizing the distraction is the first step in dismantling disinformation. Knowing what we are facing is the key to undoing the damage done.

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”

From ‘Propaganda’ by Edward Bernays (named one of Life Magazine’s 100 most influential people of the 20th Century).

 

Written by anubis

May 4th, 2011 at 4:47 pm

Posted in Epochal Collapse