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Posts Tagged ‘economy’

Markets could be derailed again, warns Soros

Posted by Admin on April 24, 2010

Markets could be derailed again, warns Soros

APR 14, 2010 07:11 EDT

CLIMATE-COPENHAGEN/Railway porter-turned-billionaire financier George Soros delivered a stark warning last night that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.

The man who ‘broke’ the Bank of England (and who is still able to earn a cool $3.3 bln in a year) said the same strategy of borrowing and spending that had got us out of the Asian crisis could shunt us towards another crisis unless tough lessons are learned.

Soros, who worked as a porter to pay for his studies at the London School of Economics after emigrating from Hungary, warned us to heed the lesson that modern economics had got it wrong and that markets are not inherently stable.

“The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods,” he told a meeting hosted by The Economist at the City of London’s modern and impressive Haberdashers’ Hall.

“Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.

“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.”

One crumb of comfort could be the 10-year period between the 1998 Asian crisis and the 2008 credit crisis. If the pattern is repeated, it should at least mean we have another 8 years to go before the next crash…

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Goldman Sachs FRAUD Charges Filed By SEC Over Subprime Mortgage Securities

Posted by Admin on April 21, 2010

Huffington Post

Goldman Sucks

Goldman Sucks

April 16, 2010

http://www.huffingtonpost.com/2010/04/16/sec-goldman-sachs-charged_n_540377.html

The government has accused Goldman Sachs of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering.

The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its executives. The agency alleges Goldman failed to disclose that one of its clients helped create — and then bet against — subprime mortgage securities that Goldman sold to investors. In essence, Goldman is accused of pushing a mortgage investment that was secretly devised to fail.

Investors in the mortgage securities are alleged to have lost more than $1 billion, the SEC noted.

The SEC claims Goldman Sachs and one of its top officers misled investors by not disclosing that hedge fund manager John Paulson, who made billions betting against the housing market, selected the assets that went into a complex security called “Abacaus.”

Paulson & Co. is one of the world’s largest hedge funds, and paid Goldman roughly $15 million for structuring these deals in 2007.

“The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” finance expert Sylvain R. Raynes told the New York Times about such deals. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”

Goldman Sachs shares fell more than 10 percent after the SEC announcement.

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Financial Crisis: The Next Big Bank Bailout is on the Way

Posted by Admin on March 24, 2010

Financial Crisis: The Next Big Bank Bailout is on the Way

by Mike Whitney

//
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Global Research, March 17, 2010

Information Clearing House – 2010-03-16

Housing is on the rocks and prices are headed lower. That’s not the consensus view, but it’s a reasonably safe assumption. Master illusionist Ben Bernanke managed to engineer a modest 7-month uptick in sales, but the fairydust will wear off later this month when the Fed stops purchasing mortgage-backed securities and long-term interest rates begin to creep higher. The objective of Bernanke’s $1.25 trillion program, which is called quantitative easing, was to transfer the banks “unsellable” MBS onto the Fed’s balance sheet. Having achieved that goal, Bernanke will now have to unload those same toxic assets onto Freddie and Fannie. (as soon as the public is no longer paying attention)

Bernanke’s cash giveaway has helped to buoy stock prices and stabilize housing, but market fundamentals are still weak. There’s just too much inventory and too few buyers. Now that the Fed is withdrawing its support, matters will only get worse.

Of course, that hasn’t stopped the folks at Bloomberg from cheerleading the nascent housing turnaround. Here’s a clip from Monday’s column:

“The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006. Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth, according to forecasts by Dean Maki, chief U.S. economist for Barclays Capital in New York…“The underlying trend is turning positive,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York.”

Just for the record; there has been no “increases in jobs”. It’s baloney. Unemployment is flat at 9.7 percent with underemployment checking-in at 16.8 percent. There’s no chance of housing rebound until payrolls increase. Jobless people don’t buy houses.

Also, while it is true that the federal homebuyer tax credit did cause a spike in home purchases; it’s impact has been short-lived and sales are returning to normal. It’s generally believed that “cash for clunker-type” programs merely move demand forward and have no meaningful long-term effect.

So, it’s likely that housing prices–particularly on the higher end–will continue to fall until they return to their historic trend. (probably 10 to 15% lower) That means more trouble for the banks which are already using all kinds of accounting flim-flam (“mark-to-fiction”) to conceal the wretched condition of their balance sheets. Despite the surge in stock prices, the banks are drowning in the losses from their non performing loans and toxic assets. And, guess what; they still face another $1 trillion in Option ARMs and Alt-As that will reset by 2012. it’s all bad.

The Fed has signaled that it’s done all it can to help the banks. Now it’s Treasury’s turn. Bernanke will keep the Fed funds rate at zero for the foreseeable future, but he is not going to expand the Fed’s balance sheet anymore. Geithner understands this and is working frantically to put together the next bailout that will reduce mortgage-principal for underwater homeowners. But it’s a thorny problem because many of the borrowers have second liens which could amount to as much as $477 billion. That means that if the Treasury’s mortgage-principal reduction plan is enacted; it could wipe out the banks. Here’s an excerpt from an article in the Financial Times which explains it all:

“A group of investors in mortgage-backed bonds dubbed the Mortgage Investors Coalition (MIC) recently submitted to Congress a plan to overhaul the refinancing of underwater borrowers by writing down the principal balances of both first and second mortgages. The confederation of insurers, asset managers and hedge funds hope to break a logjam between Washington DC and the four megabanks with the most exposure to writedowns on second lien mortgages, including home equity lines of credit.

The private sector initiative coincides with House Financial Services Committee Chairman Barney Frank’s open letter dated 4 March to the CEOs of the banks in question – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo – urging them to start forgiving principal on the second lien loans they hold.

But the banks are unlikely to take action until they get new accounting guidance from regulators that would ease the impact of such significant principal reductions on their capitalization ratios.”

(Ed.–“Accounting guidance”? Either the banks are holding out for a bigger bailout or they’re looking for looser accounting standards to conceal their losses from their shareholders. Either way, it’s clear that they’re trying to hammer out the best deal possible for themselves regardless of the cost to the taxpayer.)

Financial Times again: “The four banks in question collectively own more than USD 400bn of the USD 1trn in second lien mortgages outstanding. BofA holds USD 149bn, Citi holds USD 54bn, JP Morgan holds USD 101bn and Wells Fargo holds USD 115bn, according to fourth quarter 2009 10Q filings with the Securities & Exchange Commission.

As proposed, the MIC’s plan entails haircuts to the first and second lien loans to reduce underwater borrowers’ loan to value ratios to 96.5% of current real estate market prices, according to two sources close.

For the program to work, HAMP would place principal balance forgiveness first in the modification waterfall. The associated second lien would take a principal balance reduction but remain intact through the process – ultimately to be re-subordinated to the first lien, the sources close said.

A systemic program to modify second lien mortgages called 2MP does exist but Treasury has stalled on implementation because the banks that hold them can’t afford it, six buyside investors said. The sources all said implementation of the program, called 2MP, would result in “catastrophic” losses for the nation’s four largest banks, which collectively hold more than USD 400bn of the USD 1trn in second lien mortgages outstanding.” (“Mortgage investors push for banks to write down second liens”, Allison Pyburn, Financial Times)

Hold on a minute! Didn’t Geithner just run bank “stress tests” last year to prove that the banks could withstand losses on second liens?

Yes, he did. And the banks passed with flying colors. So, why are the banks whining now about the potential for “catastrophic” losses if the plan goes forward? Either they were lying then or they’re lying now; which is it?

Of course they were lying. Just like that sniveling sycophant Geithner is lying.

According to the Times the banks hold $400 billion in second lien mortgages. But –as Mike Konczal points out–the stress tests projected maximum losses at just “$68 billion. In other words, Geithner rigged the tests so the banks would pass. Now the banks want it both ways: They want people to think that they are solvent enough to pass a basic stress test, but they want to be given another huge chunk of public money to cover their second liens. They want it all, and Geithner’s trying to give it to them. Wanker.

And don’t believe the gibberish from Treasury that “they have no plan for mortgage principal reductions”. According to the Times:

“Treasury continues to tell investors that any day now they will be out with a final program and they will be signed up”….“The party line continues to be they are a week away, two weeks away,” the hedge fund source said. ”

So, it’s not a question of “if” there will be another bank bailout, but “how big” that bailout will be. The banks clearly expect the taxpayer to foot the entire bill regardless of who was responsible for the losses.

So, let’s summarize:

1–Bank bailout #1–$700 billion TARP which allowed the banks to continue operations after the repo and secondary markets froze-over from the putrid loans the banks were peddling.

2–Bank bailout #2–$1.25 trillion Quantitative Easing program which transferred banks toxic assets onto Fed’s balance sheet (soon to be dumped on Fannie and Freddie) while rewarding the perpetrators of the biggest financial crackup in history.

3–Bank bailout #3–$1 trillion to cover all mortgage cramdowns, second liens, as well as any future liabilities including gym fees, energy drinks, double-tall nonfat mocha’s, parking meters etc. ad infinitum.

And as far as the banks taking “haircuts”? Forget about it! Banks don’t take “haircuts”. It looks bad on their quarterly reports and cuts into their bonuses. Taxpayers take haircuts, not banksters. Besides, that’s what Geithner gets paid for–to make sure bigshot tycoons don’t have to pay for their mistakes or bother with the niggling details of fleecing the little people.

The next big bailout is on the way. Prepare to get reamed! Mike Whitney is a frequent contributor to Global Research. Global Research Articles by Mike Whitney

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Debt Dynamite Dominoes: The Coming Financial Catastrophe

Posted by Admin on March 4, 2010

Debt Dynamite Dominoes: The Coming Financial Catastrophe
Assessing the Illusion of Recovery
Global Research, February 22, 2010
– 2010-02-21

Understanding the Nature of the Global Economic Crisis

The people have been lulled into a false sense of safety under the ruse of a perceived “economic recovery.” Unfortunately, what the majority of people think does not make it so, especially when the people making the key decisions think and act to the contrary. The sovereign debt crises that have been unfolding in the past couple years and more recently in Greece, are canaries in the coal mine for the rest of Western “civilization.” The crisis threatens to spread to Spain, Portugal and Ireland; like dominoes, one country after another will collapse into a debt and currency crisis, all the way to America.

In October 2008, the mainstream media and politicians of the Western world were warning of an impending depression if actions were not taken to quickly prevent this. The problem was that this crisis had been a long-time coming, and what’s worse, is that the actions governments took did not address any of the core, systemic issues and problems with the global economy; they merely set out to save the banking industry from collapse. To do this, governments around the world implemented massive “stimulus” and “bailout” packages, plunging their countries deeper into debt to save the banks from themselves, while charging it to people of the world.

Then an uproar of stock market speculation followed, as money was pumped into the stocks, but not the real economy. This recovery has been nothing but a complete and utter illusion, and within the next two years, the illusion will likely come to a complete collapse.

The governments gave the banks a blank check, charged it to the public, and now it’s time to pay; through drastic tax increases, social spending cuts, privatization of state industries and services, dismantling of any protective tariffs and trade regulations, and raising interest rates. The effect that this will have is to rapidly accelerate, both in the speed and volume, the unemployment rate, globally. The stock market would crash to record lows, where governments would be forced to freeze them altogether.

When the crisis is over, the middle classes of the western world will have been liquidated of their economic, political and social status. The global economy will have gone through the greatest consolidation of industry and banking in world history leading to a system in which only a few corporations and banks control the global economy and its resources; governments will have lost that right. The people of the western world will be treated by the financial oligarchs as they have treated the ‘global South’ and in particular, Africa; they will remove our social structures and foundations so that we become entirely subservient to their dominance over the economic and political structures of our society.

This is where we stand today, and is the road on which we travel.

The western world has been plundered into poverty, a process long underway, but with the unfolding of the crisis, will be rapidly accelerated. As our societies collapse in on themselves, the governments will protect the banks and multinationals. When the people go out into the streets, as they invariably do and will, the government will not come to their aid, but will come with police and military forces to crush the protests and oppress the people. The social foundations will collapse with the economy, and the state will clamp down to prevent the people from constructing a new one.

The road to recovery is far from here. When the crisis has come to an end, the world we know will have changed dramatically. No one ever grows up in the world they were born into; everything is always changing. Now is no exception. The only difference is, that we are about to go through the most rapid changes the world has seen thus far.

Assessing the Illusion of Recovery

In August of 2009, I wrote an article, Entering the Greatest Depression in History, in which I analyzed how there is a deep systemic crisis in the Capitalist system in which we have gone through merely one burst bubble thus far, the housing bubble, but there remains a great many others.

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Associated Press spins more Climategate lies

Posted by Admin on February 22, 2010

Associated Press spins more Climategate lies

by John O’Sullivan on February 20, 2010

8 comments

Over at tree-hugging apologist mouthpiece, Media Matters they’re getting their panties in a bunch over a Fox News story. It seems Fox was biased for a “stale retread” over Climategate data rapist, Professor Phil Jones’ shocking admission that there’s been no statistically significant global warming for 15 years. How outrageous of Fox, I hear you scoff. But try and see it from Media Matters’ point of view–little green journos all now go into apoplectic spasm at every mention of unpleasant and unarguable climate facts.

So, thanks to the prompting by Media Manglers, I’ll now prove that the Associated Press (AP) is complicit in perpetrating further Climategate hype and lies. Thereby, our readers may judge for themselves how deeply the green-loving press has sunk themselves into the greatest scandal in science.

First, keep in mind that Fox News is the only American TV news broadcaster that has reported the Climategate story from Day One. Media Matters tries to spin the lie that the AP has been reporting on this epoch-changing event in a ‘just-the-facts fashion.’ But, as we shall see, in AP’s case ‘just the facts’ means doling out hype and lies supportive of the global warming hysteria.

Astonishingly, it is the leaked Climategate emails themselves that expose the complicitness of the Associated Press in the Climategate scandal. Keen eyes at that excellent skeptic blog, Watts Up With That (WUWT), first uncovered the facts exposing media conspiracy in reporting Climategate. Blogger, Anthony Watts, found that AP had a ‘man on the inside’ of information from the University of East Anglia’s Climatic Research Unit three months before the leaked emails surfaced.

It is those leaked emails that expose AP reporter, Seth Borenstein as a Climategate collaborator. So it came as no surprise to bloggers when AP ran the following in a ‘just-the-facts fashion’ on December 12, 2009 after the Climategate story broke:

“E-mails stolen from climate scientists show they stonewalled skeptics and discussed hiding data — but the messages don’t support claims that the science of global warming was faked, according to an exhaustive review by The Associated Press.” source

And whom did AP put in charge of their “exhaustive review”? Yes, you guessed it, Seth Borenstein.

Borenstein has long been known among climate commentators as an avid green sympathiser. As a sample of Borenstein’s affiliations look no further than the leaked email dated Jul 23, 2009 when Seth ‘just-the-facts’ Borenstein emailed his Climategate chums, Kevin Trenberth, Gavin Schmidt and Michael ‘Hockey Stick’ Mann, three months before Climategate:

“It’s Seth again. Attached is a paper in JGR today that
Marc Morano is hyping wildly. It’s in a legit journal. Whatchya think?
Seth
Seth Borenstein, Associated Press Science Writer
sborenstein@xxxxxxxxx.xxx”

Michael Mann’s reply:

“hi Seth, you always seem to catch me at airports. only got a
few minutes. took a cursory look at the paper, and it has all
the worry signs of extremely bad science and scholarship.”

Thus speaketh Michael ‘bad science’ Mann always available for a buddy like Seth. Whatchya think of that? To quantify how far AP journalism has fallen off it’s integrity perch just take a look here at their own code of conduct

Laughably, AP claims that:

“we avoid behavior or activities that create a conflict of interest and compromise our ability to report the news fairly and accurately, uninfluenced by any person or action.”

So if readers are troubled by AP’s “exhaustive review” you can phone or write and ask in a just-the-facts fashion at the following address:

The Associated Press, 1100 13th St. NW, Suite 700,
Washington, DC
20005-4076
Tel: 202-641-9454

Possibly related posts:

  1. Climategate: AP asks believers to give the all clear
  2. Climategate inquiry under way
  3. BBC to investigate itself on climate change bias
  4. Biased reporting on Climategate? Say it ain’t so!
  5. The corrupted nature of Nature

Tagged as: AP, Media Matters, Michael Mann, Seth Borenstein

John O’Sullivan is a British writer, retired academic and legal advocate who has ten years’ of experience litigating against government corruption in the U.S. federal and state courts.

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IPCC biofuel blending – science ignored, or made up?

Posted by Admin on February 22, 2010

IPCC biofuel blending – science ignored, or made up?

by Graham on February 21, 2010

The list of unsupported and unscientific claims in the IPCC Climate Change Report 2007 grows ever longer.

Five senior scientists have written to the head of IPCC, Dr R K Pachauri, to highlight “serious and dangerous deficiencies” in the notes on biofuels in the recently released IPCC AR4 Mitigation book [1]. The IPCC Synthesis Report is expected to be approved by national delegations this month.

They highlight that no proof has been given, even when requested from the relevant Author, of the claim in the SPM (Summary for Policy Makers) that biofuel blending, as a policy, measure or instrument, had been “environmentally effective…in at least a number of national cases.”

They are now calling for the full basis for this claim in the SPM to be revealed, or for the claim to be withdrawn.

If they knew then what we know now, they wouldn’t have bothered.

This is how it appeared:

https://i2.wp.com/www.climategate.com/wp-content/uploads/biopact_ipcc_synthesis_biofuels.jpg
Possibly related posts:

  1. Save yourself! Andrew Weaver looks for a way out
  2. Climate pressure group, the WWF, writes IPCC “science”
  3. Former lead author of IPCC report says, “Oops”
  4. Two U.S. Congressmen go after EPA on reliance on UN’s climate panel
  5. Glaciergate: Another scientist rats on the IPCC’s fraudulent ways

Tagged as: biofuels, IPCC, UN

Grahams makes his home in the UK.

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Dismantling America’s Financial-Military Empire

Posted by Admin on February 18, 2010

De-Dollarization:

Dismantling America’s Financial-Military Empire


The Yekaterinburg Turning Point

By Prof. Michael Hudson

Global Research,

June 13, 2009

The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.

Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).

The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.

Yet the meeting has elicited only a collective yawn from the US and even European press despite its agenda is to replace the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry,1 suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.

What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.
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Are Major Countries Preparing to Financially Dismantle the United States and its Empire?

Posted by Admin on February 18, 2010

Are Major Countries Preparing to Financially Dismantle the United States and its Empire?

By Richard Clark (about the author)

For OpEdNews: Richard Clark – Writer

Here are the main points of an important answer to that question by economist and former Wall Street honcho, Michael Hudson:

The six-nation Shanghai Cooperation Organization (SCO) is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It was joined recently by Brazil, for trade discussions among the BRIC nations (Brazil, Russia, India and China), all of which seek a multi-polar world.

If it’s not a move to make US hegemony obsolete, then what’s the purpose of this new organization? US diplomats may well wonder. After all, this is exactly what a multi-polar world means: no hegemony by any one country. Another clue as to what’s about to happen: in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia.

It seems that the US has inadvertently driven Russia, China and their neighbors to find common ground by developing an alternative to the dollar as a dominant or reserve currency, and hence an end to the US ability to run balance-of-payments deficits ad infinitum.

Mr. Medvedev called for China, Russia and India to “build an increasingly multi-polar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate — in exchange for paper money of questionable long-term worth!

“The artificially maintained unipolar system,” Mr. Medvedev says, is based on “one big center of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.” At the root of the global financial crisis, he concluded, is simply that the United States manufactures too little and spends too much. Especially upsetting to Russia is U.S. military spending, such as the stepped-up US military aid to Georgia, the NATO missile shield in Eastern Europe and, to all the other BRIC and SCO members as well, the huge US military and commercial buildup in the oil-rich Middle East and Central Asia.

The main worry of all these countries is America’s ability to print unlimited amounts of dollars. Overspending by US consumers on imports (way in excess of US exports), US buy-outs of foreign companies and real estate, and the many billions of dollars that the Pentagon spends abroad . . all end up in foreign central banks. These central banks then face a hard choice: either recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

So, when China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives. “Free markets,” US-style, has maneuvered many countries into a system that forces them to accept dollars without limit. But now they want out.

Central banks now hold $4 trillion of U.S. bonds in their international reserves and these huge loans to the U.S. have financed most of the US Government’s domestic budget deficits for over three decades! Consider that about half of US Government discretionary spending is for military operations including the operation of more than 750 foreign military bases as well as increasingly expensive operations in the oil-producing and oil-transporting countries.

The international financial system is organized in a way that finances the Pentagon, along with US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold. Therefore, the main political issue confronting the world’s central banks is this: How to avoid adding yet more dollars to their reserves and thereby financing ever more US deficit spending including military spending on their borders.

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Why the Central Bankers Are Meeting In Secret

Posted by Admin on February 14, 2010

Why the Central Bankers Are Meeting In Secret

Many of the world’s central bankers are meeting in Sydney today, at a secret location, to coordinate their drive to force draconian austerity measures on nations, in order to prop up their failed monetary system.

That’s why they are meeting in secret—if the people understood that the central bankers are working out how many people they’ll need to kill to save the banking system, the people might object to them being here.

Consider the chronology of how the world got to this point:

  • In July 2007, after a decade of warnings by American physical economist Lyndon LaRouche that the world financial system would disintegrate, the U.S. sub-prime crisis triggered the global financial collapse (Bear Sterns), which by September 2008 turned into a full-blown meltdown of the $1.4 quadrillion global derivatives bubble (Lehman Brothers, AIG).
  • In August 2007, LaRouche proposed the Homeowners and Bank Protection Act: to keep people in their homes; to preserve the functionality of the banking system by putting it into bankruptcy protection, to write off their unpayable derivatives and bad debts; and to return the system to Glass-Steagall regulations.
  • LaRouche’s solution was rejected, and instead in October 2008, the very central banks which created the crisis, led by the U.S. Federal Reserve, the Bank of England, and the European Central Bank, dictated a $24 trillion global bail-out of the system by national governments. In Australia, Kevin Rudd implemented the bank guarantee, stimulus spending and the first homebuyers grant, and the Future Fund was put at the disposal of the banks to prop them up.
  • By July 2009, it was obvious the bail-out had transferred the bankruptcy of the banking system onto the governments which were propping it up. LaRouche forecast that by October the bankruptcy of national governments would trigger the final meltdown.
  • In October 2009, Dubai defaulted on debts of US$59 billion; it was bailed out by Abu Dhabi, but 13 other default risks quickly emerged, including the PIGS in Europe—Portugal, Ireland, Greece and Spain—Great Britain, and the biggest danger of all, the U.S.
  • 2010: on 17th January, Sunday Telegraph economics writer Ambrose Evans-Pritchard revealed advanced plans by the European Central Bank (ECB) to enforce draconian austerity measures on the PIGS, dictating massive cuts to wages, pensions and social services so those nations avoided debt default to save the euro. The ECB intoned sovereignty is a “largely obsolete concept” as it declared it would impose a “permanent limitation” on the PIGS. The chief economist of the IMF, Olivier Blanchard, has since called for the PIGS to impose wage cuts to save the euro. Vicious austerity is on the agenda in other places too: In Australia, Kevin Rudd is blaming the deficit on old people living too long, and in the U.S., Barack Obama is slashing Medicare for the elderly to rein in the U.S. deficit.

The world’s central bankers meeting in Sydney are unaccountable powerbrokers, disguised as “independent”, who have replaced accountable governments as managers of the economy, and globalised the financial system under private control. Through them, the financier oligarchs in the City of London, and its satellites in Wall Street, Amsterdam and Zürich etc., are in charge of the financial system—not elected governments.

Just like in the 1930s, the austerity measures planned by the central bankers cannot be implemented through democratic means, because people tend to object to being killed. To save their system in the Great Depression, the leading central bankers in the Bank of England and the Bank for International Settlements, backed the rise of Hitler and Europe’s other fascist régimes to impose their austerity program.

What is Sydney’s secret central bank gathering planning to do this time?

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AIG-Gate: The World’s Greatest Insurance Heist

Posted by Admin on February 13, 2010

AIG-Gate: The World’s Greatest Insurance Heist
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Global Research, February 6, 2010
Web of Debt – 2010-02-05

Rumor has it that Timothy Geithner is on his way out as Treasury Secretary, due to his involvement in the AIG scandal that is now unraveling in hearings before the House Oversight and Reform Committee. Bob Chapman writes in The International Forecaster:

Each day brings more revelations of efforts of the NY Fed and Goldman Sachs to hide the details of the criminal conspiracy of the AIG bailout. . . . This is a real crisis on the scale of Watergate. Corruption at its finest.

But unlike the perpetrators of the Watergate scandal, who wound up looking at jail time, Geithner evidently has a golden parachute waiting at Goldman Sachs, not coincidentally the largest recipient of the AIG bailout. At least that is the rumor sparked by an article by Caroline Baum on Bloomberg News, titled “Goldman Parachute Awaits Geithner to Ease Fall.” Hank Paulson, Geithner’s predecessor, was CEO of Goldman Sachs before coming to the Treasury. Geithner, who has come up through the ranks of government, could be walking through the revolving door in the other direction.

Geithner has been under the House microscope for the decision of the New York Fed, made while he headed it, to buy out about $30 billion in credit default swaps (over-the-counter derivative insurance contracts) that AIG sold on toxic debt securities. The chief recipients of this payout were Goldman Sachs, Merrill Lynch, Societe Generale and Deutsche Bank. Goldman got $13 billion, roughly equivalent to its bonus pool for the first 9 months of 2009. Critics are calling the New York Fed’s decision a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been put through bankruptcy proceedings in the ordinary way. In a Bloomberg article provocatively titled “Secret Banking Cabal Emerges from AIG Shadows,” David Reilly writes:

[T]he New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve. This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

The beneficiaries of the New York Fed’s largesse got paid in full although they had agreed to take much less. In a November 2009 article titled “It’s Time to Fire Tim Geithner,” Dylan Ratigan wrote:

[L]ast November . . . New York Federal Reserve Governor Tim Geithner decided to deliver 100 cents on the dollar, in secret no less, to pay off the counter parties to the world’s largest (and still un-investigated) insurance fraud — AIG. This full payoff with taxpayer dollars was carried out by Geithner after AIG’s bank customers, such as Goldman Sachs, Deutsche Bank and Societe Generale, had already previously agreed to taking as little as 40 cents on the dollar. Even after the GM autoworkers, bondholders and vendors all received a government-enforced haircut on their contracts, he still had the audacity to claim the “sanctity of contracts” in the dealings with these companies like AIG.

Geithner testified that the Fed’s hands were tied and that the bank could not “selectively default on contractual obligations without courting collapse.” But if it was all on the up and up, why all the secrecy? The contention that the Fed had no choice is also belied by a recent holding in the Lehman Brothers bankruptcy, in which New York Bankruptcy Judge James Peck set aside the same type of investment contracts that Secretaries Paulson and Geithner repeatedly swore under oath had to be paid in full in the case of AIG. The judge declared that clauses in those contracts subordinating other claims to the holders’ claims were null and void in bankruptcy.

“And notice,” comments bank analyst Chris Whalen, “that the world has not ended when the holders of [derivative] contracts are treated like everyone else.” He calls the AIG bailout “a hideous political contrivance that ranks with the great acts of political corruption and thievery in the history of the United States.”

If you tell a lie big enough and keep repeating it, said Joseph Goebbels, people will eventually come to believe it. The bailout of Wall Street initiated in September 2008 was premised on the dire prediction that if major counterparties in the massive edifice of derivative contracts were allowed to fall, the whole interlocking house of cards would collapse and take the economy with it. A hijacked Congress dutifully protected the derivatives game with taxpayer money while the real economy proceeded to collapse, the financial sector choosing to put their money into this protected form of speculative betting rather than into the more mundane and risky business of making loans to struggling businesses and homeowners. In the end, $170 billion of federal funds went to AIG and the banks feeding at its trough. Meanwhile, a survey of state finances by the Center on Budget and Policy Priorities think tank found that state governments face a collective $168 billion budget shortfall for fiscal 2010. If the money used to bail out AIG and the banks had been used to bail out the states instead, the states would not be facing insolvency today.

There is no law against gambling, but there is a law against fraud. In Watergate, a special prosecutor was appointed to bring criminal charges; but times seem to have changed.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com, www.ellenbrown.com, and www.public-banking.com.

Ellen Brown is a frequent contributor to Global Research. Global Research Articles by Ellen Brown

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Europe Faces Financial “Tsunami”

Posted by Admin on February 9, 2010

Europe Faces Financial “Tsunami” and Will Become Ungovernable

February 6, 2010 (LPAC)—City of London mouthpiece Ambrose Evans-Pritchard quoted one Julian Callow from Barclay’s Capital as calling for the European Union to invoke treaty powers under Article 122, which has already been done in Greece, to “halt the contagion…. If not contained, this could result in a ‘Lehman-style tsunami’ spreading across much of the EU.” The bankers’ dictatorship being imposed on Greece, Portugal, and Spain threatens to make those countries ungovernable.

In Greece, a two-day strike by tax and customs officers, and ongoing farmers road blockades, threaten to create a fuel shortage. Public workers union leader Argyris Sakellaropoulos said, “We have already made sacrifices, and will accept no more cuts.” Next Wednesday, Feb. 10, the public sector unions will stage a one-day strike. The nation’s largest trade union federation, GSEE, has called for a general strike on Feb. 24.

Now the people are preparing for action in Spain and Portugal.

In reaction to budget cuts, an increase in the retirement age, and wage freezes announced by the Spanish government, the unions yesterday threatened massive protests, according to the EU Observer.

Portugal appears to be ready to explode. After the opposition introduced a bill in the Portuguese Parliament to increase funding in the regions—something the government said it will block—rumors flew around that Prime Minister Jose Socrates announced he would resign, sending credit default swaps on Portuguese debt swaps surging 28% to 222. Portugal’s debt is expected to go from 76% to 85% of GDP by the end of the year. Socrates’ center left government is a minority government. While defending the government’s austerity policies, Portuguese Finance Minister Teixeira dos Santos declared that Greece and Portugal are victims of the “animal spirits” of the financial markets. The government expects pay off some of the debt by selling national assets and will push through privatizations that they expect to yield EU960 million.

Business Week reports that the moves have drawn sharp criticism from the public sector trade unions, which are traditionally the country’s most vocal and militant protesters. The United Front of civil service unions described the cuts as “scandalous,” and warned that strikes were likely. The country still has an active Communist Party and the Left Bloc, who are opposing the cuts in Parliament. The latter received 10% of the vote in the last election, and has 16 members in Parliament.

Portugal is a country of 10 million, with 10% unemployment.

http://www.larouchepac.com/node/13429

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