Now that BP's "top kill" solution has failed and oil continues to pour into the Gulf of Mexico at a nightmarish pace, many people are wondering how bad things are ultimately going to get. The truth is that the United States has never experienced an oil spill of this magnitude, and environmentalists are telling us that we are literally witnessing the final hours of the cherished ecosystems along the Gulf Coast. Now, BP managing director Robert Dudley has come right out and admitted that it is possible that the oil flow from the leak will not completely stop until sometime in August. If this leak does not stop until August, then life in the Gulf of Mexico and along the Gulf Coast will never be the same again during our lifetimes. It is hard to even try to describe how much of a national tragedy this is. The Gulf of Mexico oil spill is now far, far, far worse than Hurricane Katrina in terms of the lasting damage that it will cause.
It is hard to even put into words how horrific this disaster is. But the more one looks into this oil leak, the worse it gets. In fact, there are a number of things that have recently come out about this leak that are beyond alarming. The following are 10 of the most disturbing facts that have recently come out about the Gulf of Mexico oil spill....
#1) Transocean, the firm hired by BP to operate the Deepwater Horizon offshore drilling rig, has just announced that it will distribute $1 billion in dividends to shareholders even as oil continues to pour into the Gulf of Mexico.
#2) Not only that, but Transocean also says it will make a $270 million profit on the insurance policy for the rig.
#3) A dire report prepared for Russian President Medvedev by Russia’s Ministry of Natural Resources is warning that the dispersal agent being used by BP in the Gulf of Mexico is about to cause the worst environmental catastrophe in all of human history.
#4) In fact, a large number of fishermen have already reported becoming seriously ill - and many of them believe that the chemicals that BP is using in the Gulf are to blame.
#5) Matt Simmons, an energy adviser to former president George W. Bush, recently went on national television and claimed that "there's another leak, much bigger, 5 to 6 miles away" from the leaking riser and blowout preventer which everyone has been watching on the underwater cameras.
#6) Prominent oceanographers are pointing the finger at the Obama administration of failing to conduct an adequate scientific analysis of the damage from the Gulf of Mexico oil spill and of allowing BP to purposely deceive the public about the spill's true scope.
#7) Scientists are now telling us that the first oil from the Gulf of Mexico spill has entered an ocean current that could take it over to Florida and up the east coast of the United States.
#8) One oil industry expert is saying that oil could pour into the Gulf of Mexico for up to 9000 days if the leak is not sealed.
#9) Local shrimpers in Louisiana are estimating that it will be seven years before they can set to sea again.
#10) In a very sick twist, some Internet gambling websites are now placing odds on what species will be first to become extinct as a result of all the oil flowing from BP's ruptured well in the Gulf of Mexico.
Monday, May 31, 2010
Saturday, May 29, 2010
Bilderberg: The Open Conspiracy
Now that the agenda for global government and a centralized world economic system is public and out in the open, the importance of the Bilderberg Group’s annual conference rests on grooming political candidates. The lion’s share of Bilderberg’s 2010 agenda has already been announced by its members weeks before – it will revolve around a potential military strike on Iran as well as the future collapse of the euro.
Trilateral Commission members, who routinely also attend Bilderberg’s annual confab, have let slip that a war on Iran is being seriously debated, while the elite continue to exploit the fallout from the economic crisis to push for centralized financial regulation.
The consequences of a military strike on Iran will cause a split between Bilderberg luminaries, just as it did before the invasion of Iraq at the 2002 meeting.
During the recent Trilateral Commission meeting in Dublin Ireland, which routinely discusses an almost identical roster of topics to subsequent Bilderberg gatherings, chief advisor to the Russian leadership Mikhail Slobodovsici unwittingly told a We Are Change member he mistook for a colleague, “We are deciding the future of the world….We need a world government,” he said, but, referring to Iran, said “we need to get rid of them.”
The continued push to pose as the saviors while offering global governance as the solution to the economic crisis was also re-affirmed in a recent speech by IMF chief and BIlderberg member Dominique Strauss-Kahn, when he told an audience of elitists in Zurich that the globalists need to see the ‘crisis as an opportunity’ to push for “a new global currency issued by a global central bank”.
Our sources close to Bilderberg emphasize the fissure that exists within globalist circles. Younger elitists and the nouveau riche are concerned that the global economy is being sunk too quickly and too soon, and that the consequences will be so drastic in the long term that even the wealth and influence of insiders will be threatened.
These divisions in the context of geopolitics was also addressed recently by Trilateral Commission co-founder and prominent Bilderberger Zbigniew Brzezinski, who in addition revealed that a “global political awakening,” in combination with infighting amongst the elite, was threatening to derail the move towards a one world government.
The fact that globalists are also debating the timeline as to if and when the euro single currency will collapse, and whether it will be followed by the U.S. dollar has also been publicly discussed in recent weeks.
Former Bank of England policy maker David Blanchflower recently told Bloomberg News that the euro region could break up as a result of the debt crisis in Greece which threatens to spread to other countries on the continent.
As veteran Bilderberg sleuth Jim Tucker points out in his latest article, the corporate media has already been preconditioning the public to accept Bilderberg’s agenda for weeks.
“Bilderberg-controlled news outlets in Europe and the Western Hemisphere are conditioning the public to accept two of the super-secret elite’s major goals in advance of its meeting June 4-7 in Sitges, Spain: a U.S. attack on Iran and a financial bailout of Greece and other European Union (EU) countries,” writes Tucker.
With the agenda for global government now past the point of secrecy and out in the open, the Bilderberg group’s primary role is to groom political candidates for future high-power positions within the new world order hierarchy.
The most interesting aspect to come out of this year’s conference in Sitges Spain is the question of who will be attending. While David Cameron’s new coalition government in the United Kingdom has opposed the expansion of Bilderberg’s
European project in rhetoric, they have been busy appointing pro-Euro politicians to influential posts. The possible attendance of Cameron and his new sidekick Nick Clegg will be interesting to watch, as will the question of whether any members of the ousted UK Labour Party are invited. With leadership elections imminent after the resignation of dutiful Bilderberg servant Gordon Brown, Bilderberg will be keen to vet potential future Prime Ministers such as David Milliband.
Friday, May 14, 2010
Special Preview: The Global Economic Crisis, The Great Depression of the XXI Century
The following text is the Preface of The Global Economic Crisis. The Great Depression of the XXI Century, Michel Chossudovsky and Andrew Gavin Marshall (Editors), Montreal, Global Research, 2010, which is to be launched in late May.
Each of the authors in this timely collection digs beneath the gilded surface to reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impacts on people's lives.
The complex causes as well as the devastating consequences of the economic crisis are carefully scrutinized with contributions from Ellen Brown, Tom Burghardt, Michel Chossudovsky, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, Andrew Gavin Marshall, James Petras, Peter Phillips, Peter Dale Scott, Bill Van Auken, Claudia von Werlhof and Mike Whitney.
Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.
The Global Economic Crisis. The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
PREFACE
In all major regions of the world, the economic recession is deep-seated, resulting in mass unemployment, the collapse of state social programs and the impoverishment of millions of people. The economic crisis is accompanied by a worldwide process of militarization, a "war without borders" led by the United States of America and its NATO allies. The conduct of the Pentagon’s "long war" is intimately related to the restructuring of the global economy.
We are not dealing with a narrowly defined economic crisis or recession. The global financial architecture sustains strategic and national security objectives. In turn, the U.S.-NATO military agenda serves to endorse a powerful business elite which relentlessly overshadows and undermines the functions of civilian government.
This book takes the reader through the corridors of the Federal Reserve and the Council on Foreign Relations, behind closed doors at the Bank for International Settlements, into the plush corporate boardrooms on Wall Street where far-reaching financial transactions are routinely undertaken from computer terminals linked up to major stock markets, at the touch of a mouse button.
Each of the authors in this collection digs beneath the gilded surface to reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impacts on people’s lives. Our analysis focuses on the role of powerful economic and political actors in an environment wrought by corruption, financial manipulation and fraud.
Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.
The meltdown of financial markets in 2008-2009 was the result of institutionalized fraud and financial manipulation. The "bank bailouts" were implemented on the instructions of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an insurmountable public debt.
With the worldwide deterioration of living standards and plummeting consumer spending, the entire structure of international commodity trade is potentially in jeopardy. The payments system of money transactions is in disarray. Following the collapse of employment, the payment of wages is disrupted, which in turn triggers a downfall in expenditures on necessary consumer goods and services. This dramatic plunge in purchasing power backfires on the productive system, resulting in a string of layoffs, plant closures and bankruptcies. Exacerbated by the freeze on credit, the decline in consumer demand contributes to the demobilization of human and material resources.
This process of economic decline is cumulative. All categories of the labor force are affected. Payments of wages are no longer implemented, credit is disrupted and capital investments are at a standstill. Meanwhile, in Western countries, the "social safety net" inherited from the welfare state, which protects the unemployed during an economic downturn, is also in jeopardy.
The Myth of Economic Recovery
The existence of a "Great Depression" on the scale of the 1930s, while often acknowledged, is overshadowed by an unbending consensus: "The economy is on the road to recovery".
While there is talk of an economic renewal, Wall Street commentators have persistently and intentionally overlooked the fact that the financial meltdown is not simply composed of one bubble – the housing real estate bubble – which has already burst. In fact, the crisis has many bubbles, all of which dwarf the housing bubble burst of 2008.
Although there is no fundamental disagreement among mainstream analysts on the occurrence of an economic recovery, there is heated debate as to when it will occur, whether in the next quarter, or in the third quarter of next year, etc. Already in early 2010, the "recovery" of the U.S. economy had been predicted and confirmed through a carefully worded barrage of media disinformation. Meanwhile, the social plight of increased unemployment in America has been scrupulously camouflaged. Economists view bankruptcy as a microeconomic phenomenon.
The media reports on bankruptcies, while revealing local-level realities affecting one or more factories, fail to provide an overall picture of what is happening at the national and international levels. When all these simultaneous plant closures in towns and cities across the land are added together, a very different picture emerges: entire sectors of a national economy are closing down.
Public opinion continues to be misled as to the causes and consequences of the economic crisis, not to mention the policy solutions. People are led to believe that the economy has a logic of its own which depends on the free interplay of market forces, and that powerful financial actors, who pull the strings in the corporate boardrooms, could not, under any circumstances, have willfully influenced the course of economic events.
The relentless and fraudulent appropriation of wealth is upheld as an integral part of "the American dream", as a means to spreading the benefits of economic growth. As conveyed by Michael Hudson, the myth becomes entrenched that "without wealth at the top, there would be nothing to trickle down." Such flawed logic of the business cycle overshadows an understanding of the structural and historical origins of the global economic crisis.
Financial Fraud
Media disinformation largely serves the interests of a handful of global banks and institutional speculators which use their command over financial and commodity markets to amass vast amounts of money wealth. The corridors of the state are controlled by the corporate establishment including the speculators. Meanwhile, the "bank bailouts", presented to the public as a requisite for economic recovery, have facilitated and legitimized a further process of appropriation of wealth.
Vast amounts of money wealth are acquired through market manipulation. Often referred to as "deregulation", the financial apparatus has developed sophisticated instruments of outright manipulation and deceit. With inside information and foreknowledge, major financial actors, using the instruments of speculative trade, have the ability to fiddle and rig market movements to their advantage, precipitate the collapse of a competitor and wreck havoc in the economies of developing countries. These tools of manipulation have become an integral part of the financial architecture; they are embedded in the system.
The Failure of Mainstream Economics
The economics profession, particularly in the universities, rarely addresses the actual "real world" functioning of markets. Theoretical constructs centered on mathematical models serve to represent an abstract, fictional world in which individuals are equal. There is no theoretical distinction between workers, consumers or corporations, all of which are referred to as "individual traders". No single individual has the power or ability to influence the market, nor can there be any conflict between workers and capitalists within this abstract world.
By failing to examine the interplay of powerful economic actors in the "real life" economy, the processes of market rigging, financial manipulation and fraud are overlooked. The concentration and centralization of economic decision-making, the role of the financial elites, the economic thinks tanks, the corporate boardrooms: none of these issues are examined in the universities’ economics programs. The theoretical construct is dysfunctional; it cannot be used to provide an understanding of the economic crisis.
Economic science is an ideological construct which serves to camouflage and justify the New World Order. A set of dogmatic postulates serves to uphold free market capitalism by denying the existence of social inequality and the profit-driven nature of the system is denied. The role of powerful economic actors and how these actors are able to influence the workings of financial and commodity markets is not a matter of concern for the discipline’s theoreticians. The powers of market manipulation which serve to appropriate vast amounts of money wealth are rarely addressed. And when they are acknowledged, they are considered to belong to the realm of sociology or political science.
This means that the policy and institutional framework behind this global economic system, which has been shaped in the course of the last thirty years, is rarely analyzed by mainstream economists. It follows that economics as a discipline, with some exceptions, has not provided the analysis required to comprehend the economic crisis. In fact, its main free market postulates deny the existence of a crisis. The focus of neoclassical economics is on equilibrium, disequilibrium and "market correction" or "adjustment" through the market mechanism, as a means to putting the economy back "onto the path of self-sustained growth".
Poverty and Social Inequality
The global political economy is a system that enriches the very few at the expense of the vast majority. The global economic crisis has contributed to widening social inequalities both within and between countries. Under global capitalism, mounting poverty is not the result of a scarcity or a lack of human and material resources. Quite the opposite holds true: the economic depression is marked by a process of disengagement of human resources and physical capital. People’s lives are destroyed. The economic crisis is deep-seated.
The structures of social inequality have, quite deliberately, been reinforced, leading not only to a generalized process of impoverishment but also to the demise of the middle and upper middle income groups.
Middle class consumerism, on which this unruly model of capitalist development is based, is also threatened. Bankruptcies have hit several of the most vibrant sectors of the consumer economy. The middle classes in the West have, for several decades, been subjected to the erosion of their material wealth. While the middle class exists in theory, it is a class built and sustained by household debt.
The wealthy rather than the middle class are rapidly becoming the consuming class, leading to the relentless growth of the luxury goods economy. Moreover, with the drying up of the middle class markets for manufactured goods, a central and decisive shift in the structure of economic growth has occurred. With the demise of the civilian economy, the development of America’s war economy, supported by a whopping near-trillion dollar defense budget, has reached new heights. As stock markets tumble and the recession unfolds, the advanced weapons industries, the military and national security contractors and the up-and-coming mercenary companies (among others) have experienced a thriving and booming growth of their various activities.
War and the Economic Crisis
War is inextricably linked to the impoverishment of people at home and around the world. Militarization and the economic crisis are intimately related. The provision of essential goods and services to meet basic human needs has been replaced by a profit-driven "killing machine" in support of America’s "Global War on Terror". The poor are made to fight the poor. Yet war enriches the upper class, which controls industry, the military, oil and banking. In a war economy, death is good for business, poverty is good for society, and power is good for politics. Western nations, particularly the United States, spend hundreds of billions of dollars a year to murder innocent people in far-away impoverished nations, while the people at home suffer the disparities of poverty, class, gender and racial divides.
An outright "economic war" resulting in unemployment, poverty and disease is carried out through the free market. People’s lives are in a freefall and their purchasing power is destroyed. In a very real sense, the last twenty years of global "free market" economy have resulted, through poverty and social destitution, in the lives of millions of people.
Rather than addressing an impending social catastrophe, Western governments, which serve the interests of the economic elites, have installed a "Big Brother" police state, with a mandate to confront and repress all forms of opposition and social dissent.
The economic and social crisis has by no means reached its climax and entire countries, including Greece and Iceland, are at risk. One need only look at the escalation of the Middle East Central Asian war and the U.S.-NATO threats to China, Russia and Iran to witness how war and the economy are intimately related.
Our Analysis in this Book
The contributors to this book reveal the intricacies of global banking and its insidious relationship to the military industrial complex and the oil conglomerates. The book presents an inter- disciplinary and multi-faceted approach, while also conveying an understanding of the historical and institutional dimensions. The complex relations of the economic crisis to war, empire and worldwide poverty are highlighted. This crisis has a truly global reach and repercussions that reverberate throughout all nations, across all societies.
In Part I, the overall causes of the global economic crisis as well as the failures of mainstream economics are laid out. Michel Chossudovsky focuses on the history of financial deregulation and speculation. Tanya Cariina Hsu analyzes the role of the American Empire and its relationship to the economic crisis. John Bellamy Foster and Fred Magdoff undertake a comprehensive review of the political economy of the crisis, explaining the central role of monetary policy. James Petras and Claudia von Werlhof provide a detailed review and critique of neoliberalism, focusing on the economic, political and social repercussions of the "free market" reforms. Shamus Cooke examines the central role of debt, both public and private.
Part II, which includes chapters by Michel Chossudovsky and Peter Phillips, analyzes the rising tide of poverty and social inequality resulting from the Great Depression.
With contributions by Michel Chossudovsky, Peter Dale Scott, Michael Hudson, Bill Van Auken, Tom Burghardt and Andrew Gavin Marshall, Part III examines the relationship between the economic crisis, National Security, the U.S.-NATO led war and world government. In this context, as conveyed by Peter Dale Scott, the economic crisis creates social conditions which favor the instatement of martial law.
The focus in Part IV is on the global monetary system, its evolution and its changing role. Andrew Gavin Marshall examines the history of central banking as well as various initiatives to create regional and global currency systems. Ellen Brown focuses on the creation of a global central bank and global currency through the Bank for International Settlements (BIS). Richard C. Cook examines the debt-based monetary system as a system of control and provides a framework for democratizing the monetary system.
Part V focuses on the working of the Shadow Banking System, which triggered the 2008 meltdown of financial markets. The chapters by Mike Whitney and Ellen Brown describe in detail how Wall Street’s Ponzi scheme was used to manipulate the market and transfer billions of dollars into the pockets of the banksters.
We are indebted to the authors for their carefully documented research, incisive analysis, and, foremost, for their unbending commitment to the truth: Tom Burghardt, Ellen Brown, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, James Petras, Peter Phillips, Peter Dale Scott, Mike Whitney, Bill Van Auken and Claudia von Werlhof, have provided, with utmost clarity, an understanding of the diverse and complex economic, social and political processes which are affecting the lives of millions of people around the world.
We owe a debt of gratitude to Maja Romano of Global Research Publishers, who relentlessly oversaw and coordinated the editing and production of this book, including the creative front page concept. We wish to thank Andréa Joseph for the careful typesetting of the manuscript and front page graphics. We also extend our thanks and appreciation to Isabelle Goulet, Julie Lévesque and Drew McKevitt for their support in the revision and copyediting of the manuscript.
LAUNCH DATE: MAY 25TH 2010
The Global Economic Crisis
The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
Montreal, Global Research Publishers. Centre for Research on Globalization (CRG), 2010. ISBN 978-0-9737147-3-9 (416 pages)
To Order Online:
http://www.globalresearch.ca/index.php?ontext=va&aid=18851
Each of the authors in this timely collection digs beneath the gilded surface to reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impacts on people's lives.
The complex causes as well as the devastating consequences of the economic crisis are carefully scrutinized with contributions from Ellen Brown, Tom Burghardt, Michel Chossudovsky, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, Andrew Gavin Marshall, James Petras, Peter Phillips, Peter Dale Scott, Bill Van Auken, Claudia von Werlhof and Mike Whitney.
Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.
The Global Economic Crisis. The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
PREFACE
In all major regions of the world, the economic recession is deep-seated, resulting in mass unemployment, the collapse of state social programs and the impoverishment of millions of people. The economic crisis is accompanied by a worldwide process of militarization, a "war without borders" led by the United States of America and its NATO allies. The conduct of the Pentagon’s "long war" is intimately related to the restructuring of the global economy.
We are not dealing with a narrowly defined economic crisis or recession. The global financial architecture sustains strategic and national security objectives. In turn, the U.S.-NATO military agenda serves to endorse a powerful business elite which relentlessly overshadows and undermines the functions of civilian government.
This book takes the reader through the corridors of the Federal Reserve and the Council on Foreign Relations, behind closed doors at the Bank for International Settlements, into the plush corporate boardrooms on Wall Street where far-reaching financial transactions are routinely undertaken from computer terminals linked up to major stock markets, at the touch of a mouse button.
Each of the authors in this collection digs beneath the gilded surface to reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impacts on people’s lives. Our analysis focuses on the role of powerful economic and political actors in an environment wrought by corruption, financial manipulation and fraud.
Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.
The meltdown of financial markets in 2008-2009 was the result of institutionalized fraud and financial manipulation. The "bank bailouts" were implemented on the instructions of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an insurmountable public debt.
With the worldwide deterioration of living standards and plummeting consumer spending, the entire structure of international commodity trade is potentially in jeopardy. The payments system of money transactions is in disarray. Following the collapse of employment, the payment of wages is disrupted, which in turn triggers a downfall in expenditures on necessary consumer goods and services. This dramatic plunge in purchasing power backfires on the productive system, resulting in a string of layoffs, plant closures and bankruptcies. Exacerbated by the freeze on credit, the decline in consumer demand contributes to the demobilization of human and material resources.
This process of economic decline is cumulative. All categories of the labor force are affected. Payments of wages are no longer implemented, credit is disrupted and capital investments are at a standstill. Meanwhile, in Western countries, the "social safety net" inherited from the welfare state, which protects the unemployed during an economic downturn, is also in jeopardy.
The Myth of Economic Recovery
The existence of a "Great Depression" on the scale of the 1930s, while often acknowledged, is overshadowed by an unbending consensus: "The economy is on the road to recovery".
While there is talk of an economic renewal, Wall Street commentators have persistently and intentionally overlooked the fact that the financial meltdown is not simply composed of one bubble – the housing real estate bubble – which has already burst. In fact, the crisis has many bubbles, all of which dwarf the housing bubble burst of 2008.
Although there is no fundamental disagreement among mainstream analysts on the occurrence of an economic recovery, there is heated debate as to when it will occur, whether in the next quarter, or in the third quarter of next year, etc. Already in early 2010, the "recovery" of the U.S. economy had been predicted and confirmed through a carefully worded barrage of media disinformation. Meanwhile, the social plight of increased unemployment in America has been scrupulously camouflaged. Economists view bankruptcy as a microeconomic phenomenon.
The media reports on bankruptcies, while revealing local-level realities affecting one or more factories, fail to provide an overall picture of what is happening at the national and international levels. When all these simultaneous plant closures in towns and cities across the land are added together, a very different picture emerges: entire sectors of a national economy are closing down.
Public opinion continues to be misled as to the causes and consequences of the economic crisis, not to mention the policy solutions. People are led to believe that the economy has a logic of its own which depends on the free interplay of market forces, and that powerful financial actors, who pull the strings in the corporate boardrooms, could not, under any circumstances, have willfully influenced the course of economic events.
The relentless and fraudulent appropriation of wealth is upheld as an integral part of "the American dream", as a means to spreading the benefits of economic growth. As conveyed by Michael Hudson, the myth becomes entrenched that "without wealth at the top, there would be nothing to trickle down." Such flawed logic of the business cycle overshadows an understanding of the structural and historical origins of the global economic crisis.
Financial Fraud
Media disinformation largely serves the interests of a handful of global banks and institutional speculators which use their command over financial and commodity markets to amass vast amounts of money wealth. The corridors of the state are controlled by the corporate establishment including the speculators. Meanwhile, the "bank bailouts", presented to the public as a requisite for economic recovery, have facilitated and legitimized a further process of appropriation of wealth.
Vast amounts of money wealth are acquired through market manipulation. Often referred to as "deregulation", the financial apparatus has developed sophisticated instruments of outright manipulation and deceit. With inside information and foreknowledge, major financial actors, using the instruments of speculative trade, have the ability to fiddle and rig market movements to their advantage, precipitate the collapse of a competitor and wreck havoc in the economies of developing countries. These tools of manipulation have become an integral part of the financial architecture; they are embedded in the system.
The Failure of Mainstream Economics
The economics profession, particularly in the universities, rarely addresses the actual "real world" functioning of markets. Theoretical constructs centered on mathematical models serve to represent an abstract, fictional world in which individuals are equal. There is no theoretical distinction between workers, consumers or corporations, all of which are referred to as "individual traders". No single individual has the power or ability to influence the market, nor can there be any conflict between workers and capitalists within this abstract world.
By failing to examine the interplay of powerful economic actors in the "real life" economy, the processes of market rigging, financial manipulation and fraud are overlooked. The concentration and centralization of economic decision-making, the role of the financial elites, the economic thinks tanks, the corporate boardrooms: none of these issues are examined in the universities’ economics programs. The theoretical construct is dysfunctional; it cannot be used to provide an understanding of the economic crisis.
Economic science is an ideological construct which serves to camouflage and justify the New World Order. A set of dogmatic postulates serves to uphold free market capitalism by denying the existence of social inequality and the profit-driven nature of the system is denied. The role of powerful economic actors and how these actors are able to influence the workings of financial and commodity markets is not a matter of concern for the discipline’s theoreticians. The powers of market manipulation which serve to appropriate vast amounts of money wealth are rarely addressed. And when they are acknowledged, they are considered to belong to the realm of sociology or political science.
This means that the policy and institutional framework behind this global economic system, which has been shaped in the course of the last thirty years, is rarely analyzed by mainstream economists. It follows that economics as a discipline, with some exceptions, has not provided the analysis required to comprehend the economic crisis. In fact, its main free market postulates deny the existence of a crisis. The focus of neoclassical economics is on equilibrium, disequilibrium and "market correction" or "adjustment" through the market mechanism, as a means to putting the economy back "onto the path of self-sustained growth".
Poverty and Social Inequality
The global political economy is a system that enriches the very few at the expense of the vast majority. The global economic crisis has contributed to widening social inequalities both within and between countries. Under global capitalism, mounting poverty is not the result of a scarcity or a lack of human and material resources. Quite the opposite holds true: the economic depression is marked by a process of disengagement of human resources and physical capital. People’s lives are destroyed. The economic crisis is deep-seated.
The structures of social inequality have, quite deliberately, been reinforced, leading not only to a generalized process of impoverishment but also to the demise of the middle and upper middle income groups.
Middle class consumerism, on which this unruly model of capitalist development is based, is also threatened. Bankruptcies have hit several of the most vibrant sectors of the consumer economy. The middle classes in the West have, for several decades, been subjected to the erosion of their material wealth. While the middle class exists in theory, it is a class built and sustained by household debt.
The wealthy rather than the middle class are rapidly becoming the consuming class, leading to the relentless growth of the luxury goods economy. Moreover, with the drying up of the middle class markets for manufactured goods, a central and decisive shift in the structure of economic growth has occurred. With the demise of the civilian economy, the development of America’s war economy, supported by a whopping near-trillion dollar defense budget, has reached new heights. As stock markets tumble and the recession unfolds, the advanced weapons industries, the military and national security contractors and the up-and-coming mercenary companies (among others) have experienced a thriving and booming growth of their various activities.
War and the Economic Crisis
War is inextricably linked to the impoverishment of people at home and around the world. Militarization and the economic crisis are intimately related. The provision of essential goods and services to meet basic human needs has been replaced by a profit-driven "killing machine" in support of America’s "Global War on Terror". The poor are made to fight the poor. Yet war enriches the upper class, which controls industry, the military, oil and banking. In a war economy, death is good for business, poverty is good for society, and power is good for politics. Western nations, particularly the United States, spend hundreds of billions of dollars a year to murder innocent people in far-away impoverished nations, while the people at home suffer the disparities of poverty, class, gender and racial divides.
An outright "economic war" resulting in unemployment, poverty and disease is carried out through the free market. People’s lives are in a freefall and their purchasing power is destroyed. In a very real sense, the last twenty years of global "free market" economy have resulted, through poverty and social destitution, in the lives of millions of people.
Rather than addressing an impending social catastrophe, Western governments, which serve the interests of the economic elites, have installed a "Big Brother" police state, with a mandate to confront and repress all forms of opposition and social dissent.
The economic and social crisis has by no means reached its climax and entire countries, including Greece and Iceland, are at risk. One need only look at the escalation of the Middle East Central Asian war and the U.S.-NATO threats to China, Russia and Iran to witness how war and the economy are intimately related.
Our Analysis in this Book
The contributors to this book reveal the intricacies of global banking and its insidious relationship to the military industrial complex and the oil conglomerates. The book presents an inter- disciplinary and multi-faceted approach, while also conveying an understanding of the historical and institutional dimensions. The complex relations of the economic crisis to war, empire and worldwide poverty are highlighted. This crisis has a truly global reach and repercussions that reverberate throughout all nations, across all societies.
In Part I, the overall causes of the global economic crisis as well as the failures of mainstream economics are laid out. Michel Chossudovsky focuses on the history of financial deregulation and speculation. Tanya Cariina Hsu analyzes the role of the American Empire and its relationship to the economic crisis. John Bellamy Foster and Fred Magdoff undertake a comprehensive review of the political economy of the crisis, explaining the central role of monetary policy. James Petras and Claudia von Werlhof provide a detailed review and critique of neoliberalism, focusing on the economic, political and social repercussions of the "free market" reforms. Shamus Cooke examines the central role of debt, both public and private.
Part II, which includes chapters by Michel Chossudovsky and Peter Phillips, analyzes the rising tide of poverty and social inequality resulting from the Great Depression.
With contributions by Michel Chossudovsky, Peter Dale Scott, Michael Hudson, Bill Van Auken, Tom Burghardt and Andrew Gavin Marshall, Part III examines the relationship between the economic crisis, National Security, the U.S.-NATO led war and world government. In this context, as conveyed by Peter Dale Scott, the economic crisis creates social conditions which favor the instatement of martial law.
The focus in Part IV is on the global monetary system, its evolution and its changing role. Andrew Gavin Marshall examines the history of central banking as well as various initiatives to create regional and global currency systems. Ellen Brown focuses on the creation of a global central bank and global currency through the Bank for International Settlements (BIS). Richard C. Cook examines the debt-based monetary system as a system of control and provides a framework for democratizing the monetary system.
Part V focuses on the working of the Shadow Banking System, which triggered the 2008 meltdown of financial markets. The chapters by Mike Whitney and Ellen Brown describe in detail how Wall Street’s Ponzi scheme was used to manipulate the market and transfer billions of dollars into the pockets of the banksters.
We are indebted to the authors for their carefully documented research, incisive analysis, and, foremost, for their unbending commitment to the truth: Tom Burghardt, Ellen Brown, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, James Petras, Peter Phillips, Peter Dale Scott, Mike Whitney, Bill Van Auken and Claudia von Werlhof, have provided, with utmost clarity, an understanding of the diverse and complex economic, social and political processes which are affecting the lives of millions of people around the world.
We owe a debt of gratitude to Maja Romano of Global Research Publishers, who relentlessly oversaw and coordinated the editing and production of this book, including the creative front page concept. We wish to thank Andréa Joseph for the careful typesetting of the manuscript and front page graphics. We also extend our thanks and appreciation to Isabelle Goulet, Julie Lévesque and Drew McKevitt for their support in the revision and copyediting of the manuscript.
LAUNCH DATE: MAY 25TH 2010
The Global Economic Crisis
The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
Montreal, Global Research Publishers. Centre for Research on Globalization (CRG), 2010. ISBN 978-0-9737147-3-9 (416 pages)
To Order Online:
http://www.globalresearch.ca/index.php?ontext=va&aid=18851
Thursday, May 13, 2010
Europe and America Morally and Financially Bankrupt
Bob Chapman
The International Forecaster
May 13, 2010
Greece has its immediate financing. Now the question is can they follow the prescription? In all likelihood the answer is no. the bond markets are reflecting that via a lack of confidence. In fact, some bond markets are falling apart and there is no end in sight. We have bond rating firms lowering ratings, as the rating services themselves are under serious fire and we do not believe they will be around long. The big question is why did it take two years and 10 months to react?
Greece is the poster child of Europe’s failed system called socialism.
There are 19 nations with serious sovereign debt problems and there is really no way back for them. They may as well all default, because the austerity programs they’d have to follow and at the same time to satisfy creditors, not only is impossible but it signals years of stunted growth and perhaps in many cases the possibility of revolution. Greece certainly fills that bill. We see the eurozone rules may soon be changed, so that eurozone participants can assist one another. That means in time they will all collapse together. As many as five members could need assistance of the 16 in the zone. Our guess is permanent bailouts will go forward and the ECB rules will be changed to allow the ECB to function like the Fed. Greece and many others are trapped and they will burden the healthy nations and neutralize them. This approach is the ECB nuclear option. It will destroy the zone eventually. This will destroy the euro and end the option of the euro becoming the world reserve currency. The zone would have adopted the same approach as the US and UK in destroying their currencies. How can you have a union with one interest rate, where the ECB controls the monetary policy, but cannot control the budget deficits, borrowing and spending activities of its members?
The Keynesian dictum of borrowing and spending has led the eurozone into a black hole. What will emerge from that black hole will be something similar to the Federal Reserve. The psychology behind all this is a move to make the US dollar again preeminent as a world reserve currency. In the meantime the day of reckoning is shoved forward, a diversion from these economic policies are failed terrorist bomb plantings in NYC and the destruction of offshore oil platforms. As we said in an earlier issue Greece is the poster child – the goat. Greece has done no more or less than the other 18 insolvent countries and many more. One asked, how can the dollar be a strong currency, when they themselves are broke. They talk of fiscal stability and reform, such as higher taxes and the reduction of entitlement programs, but you will see little of that and lots of bait and switch tactics. We are also seeing in US Treasury auctions not only massive offerings, but also a new crop of direct bidders accounting for 13% of sales vs. 1%. The indirects, or foreign central banks, have fallen from 37% to 23%. In our mind there is no question that the directs are really the Fed. That means to us that the US was behind the forced downgrading of Greek and other debt. That was to bolster the position of the dollar and lower the value of the euro and other currencies, making their exports far more competitive and profitable.
Thus here we have a calculated lowering of the euro and other currencies, a stronger dollar to attract more funds to US bond auctions. We also have rating agencies assisting in the operation. Incidentally, Moody’s received a Wells notice in March and never announced it. We are sure we will find out soon that Warren Buffett has sold his Moody’s position. While this transpired the Greeks experienced another rating fall and at the US auction the indirects took 28% of the offering. The directs were there but as usual and as usual it was a secret as to who they were. Again, the direct bidders are the Fed. That is called quantitative easing and that is very inflationary.
As of this past weekend we find we have another all-inclusive ECB bailout package for those who haven’t asked for it yet, but will need it. This is the European version of quantitative easing. This method of saving the international banking system is to essentially nationalize it. The bottom line is this stopgap measure will eventually cause the dollar more harm than good. Once investors realize what the US and European nations have done to gain time they will be horrified and the ensuing fallout will be devastating for the dollar.
Europe’s response has been atypical. Take from the industrious and give to those who cannot or won’t run their economies effectively. This is what socialism is all about including public guarantees against loss for mega transnational conglomerates. Europe’s elitists and America’s as well are morally and financially bankrupt. Goldman and others are being called onto the carpet with the rating firms. All of the players knew $1 trillion isn’t going to do the job. They are again buying time and creating more inflation. Debt may have been backstopped by economic growth by bailouts, but cannot be present in a mode of austerity. The magicians are again creating illusions. The alchemists will be wrong again as they have always been throughout history.
You say who is going to be buying Greek bonds and other bonds? European central banks of course. More quantitative easing. This is significant. It surely is because it reveals that both the European and US financial systems are irretrievably bankrupt. Don’t forget that the dreams of socialism and fascism are being shown to be giant losers. This past week ushers in another phase of the ongoing collapse – another interlude – that stretches out the time horizon, but it won’t affect the ultimate outcome.
These are pretensions that will go unfulfilled. You saw the Greeks in the streets; do they look like people who are about to submit to austerity indefinitely? We hardly think so. We see the same reaction from the rest of the basket cases. Of this $1 trillion European bailout, EU countries will pay $700 billion that they do not have. The British have refused to participate and the US will via the IMF will be about $65 billion. There is no guarantee that these funds won’t be used up within a year. Then it’s another TARP type of bailout, or the whole EU goes under. Even though Europe and the US will have hyperinflation as a result the end result is going to be massive insolvency. This situation is far more serious than the credit crisis of the past 20 months. As a result the euro is headed for $1.20 and perhaps lower. German President Mrs. Merkle was not re-elected in a majority and pays for what Germans regard as a sellout. As a result of these forced payments to bail out erstwhile fellow EU members we could well see rioting in countries forced to pay for the losers. Europe could experience chaos from two different points of view.
European elitists are willing to throw money at Europe’s problems, but not one idea about how to fix the problems of these nations, no necessary restructuring. Just doing the same old socialist thing. Something for nothing, and it has now been discovered someone actually has to pay for. If you stop for a minute and look at this picture it is ludicrous that EU nations that are near bankruptcy are bailing out other EU countries like themselves. The question is what will the euro eventually be worth? The euro, the eurozone and the EU are history. It is now just a question of when it is over. Sovereign debt is unserviceable and is to be serviced by more unserviceable debt. That dear reader is truly desperation.
The top 7 nations that are owed money by Portugal, Ireland, Italy, Greece and Spain aggregate almost $300 billion. There are a total of 22 nations owed money by just these five nations. The major debtors are France $911 billion; Germany $703 billion; England $416 billion; Holland $244 billion; the USA $186 billion; Spain $150 billion and Japan $122 billion. This is what interconnectivity brings you in a socialist-fascist international.
Greece is the poster child of Europe’s failed system called socialism. Greece is just the beginning of the financial and economic collapse of Europe. Perhaps with minor exceptions we have 27 morally and fiscally bankrupt governments, aided and abetted by central banks and financial institutions. Prosperity cannot be created out of government debt. The only people who gain are the bankers and the financial centers from such shortsighted debt accumulation. Again, there is little or no planning for sound investing to offset such debt. It is called living for today and the heck with tomorrow. Thus, the debt is being misallocated in frivolous ways. It is called malinvestment. History shows it manifests itself in failure and insolvency. No country has ever spent itself out of debt in a fiat money system. As a result of this degenerative system the only safe money is gold, as has been the case for centuries. It is the only true totally liquid investment that protects one from the vicissitudes of fiat money. The stage has already been set for the second phase of gold domination. Gold is the antithesis of the fraud known as fiat money and debt. There is no logic or morality that allows central banks to create money at will. How can people tolerate such a system Is it any wonder that gold has gained against every currency for the past seven years. In the end only one currency will survive and that is gold. The flight from currency has begun in ernst. This in part is what Europe’s problem is all about. We are the victims of a vast fraud in which government promised a social welfare system they simply couldn’t deliver. This will happen in America and has already happened in Europe. Those in power behind the scenes know the system is imploding and they are helpless to stop it. Very shortly Greece’s problems will fade into the background as major countries bite the dust. If you own bonds of any kind or stocks, with the exception of gold and silver shares, sell them now and move to gold and silver related assets. All these debt obligations are unpayable and are a fraud. If you have assets we implore you to switch them to gold and silver related assets, because soon the window of opportunity will be closed. Please do not allow yourself to be financially destroyed.
Last week the Dow fell 5.7%; S&P 6.4%; the Russell 2000 8.9% and the Nasdaq 100 7.6%. Banks fell 7.2%; broker/dealers 7.3%; cyclicals 9.2%; transports 8%; consumers 4.6%; utilities 4.1%; high tech 7.5%; semis 7.8%; Internets 7.8% and biotechs 12.6%. Gold bullion surged $29.00; the HUI fell 2.6% and USDX, the dollar index rose 3.2% to 84.45.
Two-year T-bill yields fell 14 bps to 0.74%; the 10-year notes fell 23 bps to 3.42% and the 10-year German bunds fell 22 bps to 2.79%.
The Freddie Mac 30-year fixed rate mortgage fell 6 bps to 5%; the 15’s fell 3 bps to 4.36% and one-year ARMs fell 18 bps to 4.07%. The 30-year jumbos fell 4 bps to 5.78%.
Fed credit fell $1.5 billion to $2.311 trillion. Fed foreign holdings of Treasury and Agency debt rose $4.9 billion to $3.075 trillion. Custody holdings for foreign central banks have increased $106 billion year-to-date and year-on-year 15.5%, or $410 billion.
M2, narrow money supply, rose $20 billion to $8.470 trillion. YTD it is off 1.5%, or $42 billion.
Total money market fund assets fell $19 billion to $2.853 trillion. YTD they have fallen $440 billion and YOY $934 billion, or 24.7%.
Total commercial paper outstanding rose $32.9 billion to $1.102 trillion. CP has declined $61 billion, or 16% annualized, and YTD and down $314 billion or 22%, YOY.
On Friday we were told that 290,000 jobs were created in April. 66,000 jobs were new census workers, making $25.00 an hour and 188,000 created by the birth/death ratio, or out of thin air. In reality the economy only added 36,000 jobs. U3 rose from 9.7% to 9.9%. U6 was 17.1%. If you take out the birth/death ratio real unemployment is 22.4%.
“Friday’s release of April’s Jobs numbers were falsely optimistic. The data was deceitful, okay even a lie. Non-farm payroll jobs were reported to have increased by 299,000, which is nonsense. Of that, 188,000 were made up, fictitious make believe, guesstimate phantom jobs called the CES Birth / Death adjustment. Another 66,000 were temporary government census jobs. Then another 26,000 jobs were temporary jobs with Temp Services. So the number was bogus. Pure hogwash. The admitted Unemployment rate rose to 9.9 percent from 9.7 percent. Unemployment remains a serious problem in the U.S. The net zero real jobs growth In April comes in 150,000 short of what is needed to keep pace with population growth.”
Goldman Sachs Group Inc., the bank facing a fraud lawsuit from the U.S. Securities and Exchange Commission, is expecting further litigation related to sales of collateralized debt obligations.
“We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced against us with respect to offering of CDOs,” the New York- based firm said in a quarterly filing with the SEC today.
Goldman Sachs, which makes more money from trading than any other Wall Street firm, also disclosed that its traders generated $100 million or more on 35 days during the first quarter and lost money on no days. The firm set a record when it made $100 million or more on 46 days in the second quarter.
Governments will only bring about an end to the credit crisis through the blood, sweat and tears of cutting the amount of public debt, “Black Swan” author Nassim Taleb said.
The crisis came from debt and you don’t escape it with more debt, Taleb said in an interview on Bloomberg Radio’s “Bloomberg Surveillance” today. We’re in a situation where we had a patient who we discovered had cancer a year and a half ago and all we’ve been giving the patient is painkillers. The tumor is getting worse because we are transforming private debt into public debt and public debt is not manageable.
Taleb, a professor at New York University who also advises Universa Investments LP, a $6 billion fund that bets on extreme market moves, said the financial system faces risk from increased complexity, and President Barack Obama should work with U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben S. Bernanke to cut debt.
My fear is if we don’t stop them now they’re going to create hyperinflation, Taleb said. Nobody has confidence in a guy like Bernanke.
Taleb is a professor of risk engineering at NYU and an advisor to Santa Monica, California-based Universa, which was opened in 2007 by Mark Spitznagel, Taleb’s former trading partner. Rare and unforeseen events are known in finance as ‘black swans, after Taleb’s 2007 book, ‘‘The Black Swan: The Impact of the Highly Improbable.
If I were a politician I’d say you need blood, sweat and tears, Taleb said. The first thing you need to do, Obama, is to transform debt to equity. I don’t understand why your great, great grandchildren should have to pay for it. That’s immoral.
The cost of protecting U.S. municipal bonds rose by the most this year as investors bought insurance on U.S. state obligations after global stocks tumbled and Europe’s debt crisis worsened.
Five-year contracts on the Markit MCDX index, tied to 50 municipal issuers, increased by 31 percent last week to 1.64 percentage points, the biggest jump since early December. California five-year credit default swaps gained 40 percent, the most since December 2008. The price of the swaps reached $273,000 to protect $10 million of bonds, according to data compiled by Bloomberg.
“The ultimate cause is a deepening of investor risk aversion, but that deep risk aversion was really brought on originally by concerns over European sovereign credit quality,” said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.
Ten-year U.S. Treasury yields had the biggest two-week drop since December 2008 as concern that European leaders will be unable to contain Greece’s debt crisis drove investors to the safety of federal government debt. Global stocks slid for a fourth day yesterday, erasing 2010 gains for U.S. benchmark indexes, and the bonds of debt-laden nations tumbled.
Investors are shedding risk in favor of Treasuries, Peter Hayes, head of municipal bonds at New York-based BlackRock Inc., the world’s largest asset manager, said in an e-mail. In municipal debt, investors got ahead of themselves as there was some evidence that tax receipts were turning higher. We are seeing this abate and as a result some are realizing that fiscal problems will not be solved just yet.
April Revenue
Revenue in California, the biggest issuer of municipal debt, trailed Governor Arnold Schwarzenegger’s forecast by $3.6 billion in April, the state controller said last week. In New Jersey, April income-tax payments were 25 percent below budget projections, preliminary reports showed last week.
California Treasurer Bill Lockyer has said he is concerned that speculative trading of credit default swaps, the buying and selling of the insurance contracts by investors who don’t own the securities, may boost borrowing costs. He said that may occur if the transactions create an unjustifiably negative perception of California’s risk of default.
“It’s hard to escape the conclusion that this whole market is really a way for a bunch of rich people who have no stake in California trying to get richer by gambling with taxpayers’ interest,” said Tom Dresslar, a spokesman for Lockyer. “The prices of California credit default swaps have nothing to do with the credit quality of our bonds.”
Lockyer has asked Bank of America Merrill Lynch, Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, all underwriters of California bonds, whether they help investors bet against the state with credit default swaps. He has urged Congress to include in pending financial-overhaul legislation a requirement that an investor buying a credit default swap hold a position on that security.
Goldman Sachs Group Inc.’s traders made money every single day of the first quarter, a feat the firm has never accomplished before.
Daily trading net revenue was $25 million or higher in all of the first quarter’s 63 trading days, New York-based Goldman Sachs reported in a filing with the U.S. Securities and Exchange Commission today. The firm reaped more than $100 million on 35 of the days, or more than half the time.
Goldman Sachs, which is facing a fraud lawsuit from the SEC related to the sale of a mortgage-linked security in 2007, generated $9.74 billion in trading revenue in the first quarter, exceeding all of its Wall Street competitors. Trading accounted for 76 percent of first-quarter revenue. The lack of trading losses could add to the perception that Goldman Sachs has an unfair advantage in the markets, said one shareholder.
“It will reinforce the heads we win, tails you lose mentality that people think actually exists and promotes the concept of an unfair advantage,” said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which oversees about $2 billion in assets including Goldman Sachs shares. “It’s too politically charged not to, how is that possible that they only make money?”
Record Earnings
The bank, which reported record earnings last year, is contesting the SEC’s lawsuit and the firm’s executives were interrogated at a Senate subcommittee hearing last month. Goldman Sachs, which maintains that it did nothing wrong, is also being investigated by federal prosecutors, said people familiar with the matter.
“This is the first time we have reported zero trading loss days in a quarter,” Samuel Robinson, a Goldman Sachs spokesman, said in an e-mail. “We believe it shows the strength of our customer franchise and risk management.”
Ciocca echoed that view, saying he thinks the performance proves the strength of the firm’s risk-management models and its ability to make money even in markets with low volatility. “The statistical probability of going through what we did would never favor them making money every day,” Ciocca said. “It actually speaks very well of their capability to manage through different types of markets.”
Reaching Out Ciocca said he’s had first-hand experience of Goldman Sachs’s efforts to reach out to clients in the wake of the SEC lawsuit to answer questions about the matter. He said representatives from Goldman Sachs’s asset-management division contacted his firm during the last week of April even though they hadn’t been in touch for a year before that.
“It was tactical, it was appropriate, it wasn’t patronizing, it was very sincere,” Ciocca said.
In its SEC filing today, Goldman Sachs said it is expecting further litigation related to sales of collateralized debt obligations.
“We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced against us with respect to offering of CDOs,” the bank said. The company also laid out in the filing a worst-case scenario of what could happen if the firm doesn’t resolve the SEC case and can’t obtain appropriate waivers from relevant regulators.
http://www.infowars.com/europe-and-america-morally-and-financially-bankrupt/
The International Forecaster
May 13, 2010
Greece has its immediate financing. Now the question is can they follow the prescription? In all likelihood the answer is no. the bond markets are reflecting that via a lack of confidence. In fact, some bond markets are falling apart and there is no end in sight. We have bond rating firms lowering ratings, as the rating services themselves are under serious fire and we do not believe they will be around long. The big question is why did it take two years and 10 months to react?
Greece is the poster child of Europe’s failed system called socialism.
There are 19 nations with serious sovereign debt problems and there is really no way back for them. They may as well all default, because the austerity programs they’d have to follow and at the same time to satisfy creditors, not only is impossible but it signals years of stunted growth and perhaps in many cases the possibility of revolution. Greece certainly fills that bill. We see the eurozone rules may soon be changed, so that eurozone participants can assist one another. That means in time they will all collapse together. As many as five members could need assistance of the 16 in the zone. Our guess is permanent bailouts will go forward and the ECB rules will be changed to allow the ECB to function like the Fed. Greece and many others are trapped and they will burden the healthy nations and neutralize them. This approach is the ECB nuclear option. It will destroy the zone eventually. This will destroy the euro and end the option of the euro becoming the world reserve currency. The zone would have adopted the same approach as the US and UK in destroying their currencies. How can you have a union with one interest rate, where the ECB controls the monetary policy, but cannot control the budget deficits, borrowing and spending activities of its members?
The Keynesian dictum of borrowing and spending has led the eurozone into a black hole. What will emerge from that black hole will be something similar to the Federal Reserve. The psychology behind all this is a move to make the US dollar again preeminent as a world reserve currency. In the meantime the day of reckoning is shoved forward, a diversion from these economic policies are failed terrorist bomb plantings in NYC and the destruction of offshore oil platforms. As we said in an earlier issue Greece is the poster child – the goat. Greece has done no more or less than the other 18 insolvent countries and many more. One asked, how can the dollar be a strong currency, when they themselves are broke. They talk of fiscal stability and reform, such as higher taxes and the reduction of entitlement programs, but you will see little of that and lots of bait and switch tactics. We are also seeing in US Treasury auctions not only massive offerings, but also a new crop of direct bidders accounting for 13% of sales vs. 1%. The indirects, or foreign central banks, have fallen from 37% to 23%. In our mind there is no question that the directs are really the Fed. That means to us that the US was behind the forced downgrading of Greek and other debt. That was to bolster the position of the dollar and lower the value of the euro and other currencies, making their exports far more competitive and profitable.
Thus here we have a calculated lowering of the euro and other currencies, a stronger dollar to attract more funds to US bond auctions. We also have rating agencies assisting in the operation. Incidentally, Moody’s received a Wells notice in March and never announced it. We are sure we will find out soon that Warren Buffett has sold his Moody’s position. While this transpired the Greeks experienced another rating fall and at the US auction the indirects took 28% of the offering. The directs were there but as usual and as usual it was a secret as to who they were. Again, the direct bidders are the Fed. That is called quantitative easing and that is very inflationary.
As of this past weekend we find we have another all-inclusive ECB bailout package for those who haven’t asked for it yet, but will need it. This is the European version of quantitative easing. This method of saving the international banking system is to essentially nationalize it. The bottom line is this stopgap measure will eventually cause the dollar more harm than good. Once investors realize what the US and European nations have done to gain time they will be horrified and the ensuing fallout will be devastating for the dollar.
Europe’s response has been atypical. Take from the industrious and give to those who cannot or won’t run their economies effectively. This is what socialism is all about including public guarantees against loss for mega transnational conglomerates. Europe’s elitists and America’s as well are morally and financially bankrupt. Goldman and others are being called onto the carpet with the rating firms. All of the players knew $1 trillion isn’t going to do the job. They are again buying time and creating more inflation. Debt may have been backstopped by economic growth by bailouts, but cannot be present in a mode of austerity. The magicians are again creating illusions. The alchemists will be wrong again as they have always been throughout history.
You say who is going to be buying Greek bonds and other bonds? European central banks of course. More quantitative easing. This is significant. It surely is because it reveals that both the European and US financial systems are irretrievably bankrupt. Don’t forget that the dreams of socialism and fascism are being shown to be giant losers. This past week ushers in another phase of the ongoing collapse – another interlude – that stretches out the time horizon, but it won’t affect the ultimate outcome.
These are pretensions that will go unfulfilled. You saw the Greeks in the streets; do they look like people who are about to submit to austerity indefinitely? We hardly think so. We see the same reaction from the rest of the basket cases. Of this $1 trillion European bailout, EU countries will pay $700 billion that they do not have. The British have refused to participate and the US will via the IMF will be about $65 billion. There is no guarantee that these funds won’t be used up within a year. Then it’s another TARP type of bailout, or the whole EU goes under. Even though Europe and the US will have hyperinflation as a result the end result is going to be massive insolvency. This situation is far more serious than the credit crisis of the past 20 months. As a result the euro is headed for $1.20 and perhaps lower. German President Mrs. Merkle was not re-elected in a majority and pays for what Germans regard as a sellout. As a result of these forced payments to bail out erstwhile fellow EU members we could well see rioting in countries forced to pay for the losers. Europe could experience chaos from two different points of view.
European elitists are willing to throw money at Europe’s problems, but not one idea about how to fix the problems of these nations, no necessary restructuring. Just doing the same old socialist thing. Something for nothing, and it has now been discovered someone actually has to pay for. If you stop for a minute and look at this picture it is ludicrous that EU nations that are near bankruptcy are bailing out other EU countries like themselves. The question is what will the euro eventually be worth? The euro, the eurozone and the EU are history. It is now just a question of when it is over. Sovereign debt is unserviceable and is to be serviced by more unserviceable debt. That dear reader is truly desperation.
The top 7 nations that are owed money by Portugal, Ireland, Italy, Greece and Spain aggregate almost $300 billion. There are a total of 22 nations owed money by just these five nations. The major debtors are France $911 billion; Germany $703 billion; England $416 billion; Holland $244 billion; the USA $186 billion; Spain $150 billion and Japan $122 billion. This is what interconnectivity brings you in a socialist-fascist international.
Greece is the poster child of Europe’s failed system called socialism. Greece is just the beginning of the financial and economic collapse of Europe. Perhaps with minor exceptions we have 27 morally and fiscally bankrupt governments, aided and abetted by central banks and financial institutions. Prosperity cannot be created out of government debt. The only people who gain are the bankers and the financial centers from such shortsighted debt accumulation. Again, there is little or no planning for sound investing to offset such debt. It is called living for today and the heck with tomorrow. Thus, the debt is being misallocated in frivolous ways. It is called malinvestment. History shows it manifests itself in failure and insolvency. No country has ever spent itself out of debt in a fiat money system. As a result of this degenerative system the only safe money is gold, as has been the case for centuries. It is the only true totally liquid investment that protects one from the vicissitudes of fiat money. The stage has already been set for the second phase of gold domination. Gold is the antithesis of the fraud known as fiat money and debt. There is no logic or morality that allows central banks to create money at will. How can people tolerate such a system Is it any wonder that gold has gained against every currency for the past seven years. In the end only one currency will survive and that is gold. The flight from currency has begun in ernst. This in part is what Europe’s problem is all about. We are the victims of a vast fraud in which government promised a social welfare system they simply couldn’t deliver. This will happen in America and has already happened in Europe. Those in power behind the scenes know the system is imploding and they are helpless to stop it. Very shortly Greece’s problems will fade into the background as major countries bite the dust. If you own bonds of any kind or stocks, with the exception of gold and silver shares, sell them now and move to gold and silver related assets. All these debt obligations are unpayable and are a fraud. If you have assets we implore you to switch them to gold and silver related assets, because soon the window of opportunity will be closed. Please do not allow yourself to be financially destroyed.
Last week the Dow fell 5.7%; S&P 6.4%; the Russell 2000 8.9% and the Nasdaq 100 7.6%. Banks fell 7.2%; broker/dealers 7.3%; cyclicals 9.2%; transports 8%; consumers 4.6%; utilities 4.1%; high tech 7.5%; semis 7.8%; Internets 7.8% and biotechs 12.6%. Gold bullion surged $29.00; the HUI fell 2.6% and USDX, the dollar index rose 3.2% to 84.45.
Two-year T-bill yields fell 14 bps to 0.74%; the 10-year notes fell 23 bps to 3.42% and the 10-year German bunds fell 22 bps to 2.79%.
The Freddie Mac 30-year fixed rate mortgage fell 6 bps to 5%; the 15’s fell 3 bps to 4.36% and one-year ARMs fell 18 bps to 4.07%. The 30-year jumbos fell 4 bps to 5.78%.
Fed credit fell $1.5 billion to $2.311 trillion. Fed foreign holdings of Treasury and Agency debt rose $4.9 billion to $3.075 trillion. Custody holdings for foreign central banks have increased $106 billion year-to-date and year-on-year 15.5%, or $410 billion.
M2, narrow money supply, rose $20 billion to $8.470 trillion. YTD it is off 1.5%, or $42 billion.
Total money market fund assets fell $19 billion to $2.853 trillion. YTD they have fallen $440 billion and YOY $934 billion, or 24.7%.
Total commercial paper outstanding rose $32.9 billion to $1.102 trillion. CP has declined $61 billion, or 16% annualized, and YTD and down $314 billion or 22%, YOY.
On Friday we were told that 290,000 jobs were created in April. 66,000 jobs were new census workers, making $25.00 an hour and 188,000 created by the birth/death ratio, or out of thin air. In reality the economy only added 36,000 jobs. U3 rose from 9.7% to 9.9%. U6 was 17.1%. If you take out the birth/death ratio real unemployment is 22.4%.
“Friday’s release of April’s Jobs numbers were falsely optimistic. The data was deceitful, okay even a lie. Non-farm payroll jobs were reported to have increased by 299,000, which is nonsense. Of that, 188,000 were made up, fictitious make believe, guesstimate phantom jobs called the CES Birth / Death adjustment. Another 66,000 were temporary government census jobs. Then another 26,000 jobs were temporary jobs with Temp Services. So the number was bogus. Pure hogwash. The admitted Unemployment rate rose to 9.9 percent from 9.7 percent. Unemployment remains a serious problem in the U.S. The net zero real jobs growth In April comes in 150,000 short of what is needed to keep pace with population growth.”
Goldman Sachs Group Inc., the bank facing a fraud lawsuit from the U.S. Securities and Exchange Commission, is expecting further litigation related to sales of collateralized debt obligations.
“We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced against us with respect to offering of CDOs,” the New York- based firm said in a quarterly filing with the SEC today.
Goldman Sachs, which makes more money from trading than any other Wall Street firm, also disclosed that its traders generated $100 million or more on 35 days during the first quarter and lost money on no days. The firm set a record when it made $100 million or more on 46 days in the second quarter.
Governments will only bring about an end to the credit crisis through the blood, sweat and tears of cutting the amount of public debt, “Black Swan” author Nassim Taleb said.
The crisis came from debt and you don’t escape it with more debt, Taleb said in an interview on Bloomberg Radio’s “Bloomberg Surveillance” today. We’re in a situation where we had a patient who we discovered had cancer a year and a half ago and all we’ve been giving the patient is painkillers. The tumor is getting worse because we are transforming private debt into public debt and public debt is not manageable.
Taleb, a professor at New York University who also advises Universa Investments LP, a $6 billion fund that bets on extreme market moves, said the financial system faces risk from increased complexity, and President Barack Obama should work with U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben S. Bernanke to cut debt.
My fear is if we don’t stop them now they’re going to create hyperinflation, Taleb said. Nobody has confidence in a guy like Bernanke.
Taleb is a professor of risk engineering at NYU and an advisor to Santa Monica, California-based Universa, which was opened in 2007 by Mark Spitznagel, Taleb’s former trading partner. Rare and unforeseen events are known in finance as ‘black swans, after Taleb’s 2007 book, ‘‘The Black Swan: The Impact of the Highly Improbable.
If I were a politician I’d say you need blood, sweat and tears, Taleb said. The first thing you need to do, Obama, is to transform debt to equity. I don’t understand why your great, great grandchildren should have to pay for it. That’s immoral.
The cost of protecting U.S. municipal bonds rose by the most this year as investors bought insurance on U.S. state obligations after global stocks tumbled and Europe’s debt crisis worsened.
Five-year contracts on the Markit MCDX index, tied to 50 municipal issuers, increased by 31 percent last week to 1.64 percentage points, the biggest jump since early December. California five-year credit default swaps gained 40 percent, the most since December 2008. The price of the swaps reached $273,000 to protect $10 million of bonds, according to data compiled by Bloomberg.
“The ultimate cause is a deepening of investor risk aversion, but that deep risk aversion was really brought on originally by concerns over European sovereign credit quality,” said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.
Ten-year U.S. Treasury yields had the biggest two-week drop since December 2008 as concern that European leaders will be unable to contain Greece’s debt crisis drove investors to the safety of federal government debt. Global stocks slid for a fourth day yesterday, erasing 2010 gains for U.S. benchmark indexes, and the bonds of debt-laden nations tumbled.
Investors are shedding risk in favor of Treasuries, Peter Hayes, head of municipal bonds at New York-based BlackRock Inc., the world’s largest asset manager, said in an e-mail. In municipal debt, investors got ahead of themselves as there was some evidence that tax receipts were turning higher. We are seeing this abate and as a result some are realizing that fiscal problems will not be solved just yet.
April Revenue
Revenue in California, the biggest issuer of municipal debt, trailed Governor Arnold Schwarzenegger’s forecast by $3.6 billion in April, the state controller said last week. In New Jersey, April income-tax payments were 25 percent below budget projections, preliminary reports showed last week.
California Treasurer Bill Lockyer has said he is concerned that speculative trading of credit default swaps, the buying and selling of the insurance contracts by investors who don’t own the securities, may boost borrowing costs. He said that may occur if the transactions create an unjustifiably negative perception of California’s risk of default.
“It’s hard to escape the conclusion that this whole market is really a way for a bunch of rich people who have no stake in California trying to get richer by gambling with taxpayers’ interest,” said Tom Dresslar, a spokesman for Lockyer. “The prices of California credit default swaps have nothing to do with the credit quality of our bonds.”
Lockyer has asked Bank of America Merrill Lynch, Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, all underwriters of California bonds, whether they help investors bet against the state with credit default swaps. He has urged Congress to include in pending financial-overhaul legislation a requirement that an investor buying a credit default swap hold a position on that security.
Goldman Sachs Group Inc.’s traders made money every single day of the first quarter, a feat the firm has never accomplished before.
Daily trading net revenue was $25 million or higher in all of the first quarter’s 63 trading days, New York-based Goldman Sachs reported in a filing with the U.S. Securities and Exchange Commission today. The firm reaped more than $100 million on 35 of the days, or more than half the time.
Goldman Sachs, which is facing a fraud lawsuit from the SEC related to the sale of a mortgage-linked security in 2007, generated $9.74 billion in trading revenue in the first quarter, exceeding all of its Wall Street competitors. Trading accounted for 76 percent of first-quarter revenue. The lack of trading losses could add to the perception that Goldman Sachs has an unfair advantage in the markets, said one shareholder.
“It will reinforce the heads we win, tails you lose mentality that people think actually exists and promotes the concept of an unfair advantage,” said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which oversees about $2 billion in assets including Goldman Sachs shares. “It’s too politically charged not to, how is that possible that they only make money?”
Record Earnings
The bank, which reported record earnings last year, is contesting the SEC’s lawsuit and the firm’s executives were interrogated at a Senate subcommittee hearing last month. Goldman Sachs, which maintains that it did nothing wrong, is also being investigated by federal prosecutors, said people familiar with the matter.
“This is the first time we have reported zero trading loss days in a quarter,” Samuel Robinson, a Goldman Sachs spokesman, said in an e-mail. “We believe it shows the strength of our customer franchise and risk management.”
Ciocca echoed that view, saying he thinks the performance proves the strength of the firm’s risk-management models and its ability to make money even in markets with low volatility. “The statistical probability of going through what we did would never favor them making money every day,” Ciocca said. “It actually speaks very well of their capability to manage through different types of markets.”
Reaching Out Ciocca said he’s had first-hand experience of Goldman Sachs’s efforts to reach out to clients in the wake of the SEC lawsuit to answer questions about the matter. He said representatives from Goldman Sachs’s asset-management division contacted his firm during the last week of April even though they hadn’t been in touch for a year before that.
“It was tactical, it was appropriate, it wasn’t patronizing, it was very sincere,” Ciocca said.
In its SEC filing today, Goldman Sachs said it is expecting further litigation related to sales of collateralized debt obligations.
“We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced against us with respect to offering of CDOs,” the bank said. The company also laid out in the filing a worst-case scenario of what could happen if the firm doesn’t resolve the SEC case and can’t obtain appropriate waivers from relevant regulators.
http://www.infowars.com/europe-and-america-morally-and-financially-bankrupt/
Wednesday, May 5, 2010
Bailout Bill Would Require Banks to Track and Report Personal Checking Accounts to Feds
Capitol Confidential
Big Government
April 30, 2010
It’s amazing to watch the civil libertarians hide when Democrats propose the most sweeping intrusions of privacy in generations. In addition to the litany of bad policies contained in the Dodd Financial Reform bill is this nugget on pages 1039-1040. In short, it extends government reach to every deposit account of every citizen.
Required Acct MonitoringSubtitle G of the Dodd discussion draft bill requires that records be maintained and reported “for each branch, automated teller machine at which deposits are accepted, and other deposit taking service facility with respect to any financial institution, the financial institution shall maintain a record of the number and dollar amounts of deposit accounts of customers.”
What’s worse, banks will be required to submit these records to the new super regulatory agency called the Consumer Financial Protection Agency (page 1041). The CFPA will be allowed to use this information for any purpose “as permitted by law” under CFPA rules—rules set by CFPA themselves.
So, lets get this straight—the law requires banks to snoop on its customers MOST PERSONAL INFORMATION and submit it to another government agency so it can be used any way the CFPA see’s fit.
Must submit to CFPASo, if the CFPA Czar see’s fit, information about your deposit account activity could be shared with the IRS, immigration officials, state officials, or any other entity that the Administration and their various Czar’s think beneficial.
But CFPA will impact your life even before they give away your personal data. Remember that part of the excuse for including this authority is to make policy recommendations. So, be careful not to run your credit limit too high above the amount of money you are depositing in the bank or the CFPA will know you can’t pay your bills and make the appropriate “policy recommendations”.
This is exactly why conservatives have fought so hard against things like national ID cards—if the government is authorized to collect and utilize data, there is no way to prevent the government as a whole or certain individuals within the government from using the information against the citizens.
But passage of the CFPA will settle the whole ID card thing once and for all. There will be no need for them because if you have a bank account, you already have a number and the CFPA will have it.
The breadth of sweeping new powers given to the federal government by these three pages is astonishing. Yet we have heard nary a peep about this provision.
After capitulation and surrender, Republicans will have a chance to amend the legislation when it comes to the floor of the Senate and protect the private details of your banking account.
But if they don’t, smile the next time you go to the ATM because Big Brother will be watching.
Bailout Bill Would Require Banks to Track and Report Personal Checking Accounts to Feds
Big Government
April 30, 2010
It’s amazing to watch the civil libertarians hide when Democrats propose the most sweeping intrusions of privacy in generations. In addition to the litany of bad policies contained in the Dodd Financial Reform bill is this nugget on pages 1039-1040. In short, it extends government reach to every deposit account of every citizen.
Required Acct MonitoringSubtitle G of the Dodd discussion draft bill requires that records be maintained and reported “for each branch, automated teller machine at which deposits are accepted, and other deposit taking service facility with respect to any financial institution, the financial institution shall maintain a record of the number and dollar amounts of deposit accounts of customers.”
What’s worse, banks will be required to submit these records to the new super regulatory agency called the Consumer Financial Protection Agency (page 1041). The CFPA will be allowed to use this information for any purpose “as permitted by law” under CFPA rules—rules set by CFPA themselves.
So, lets get this straight—the law requires banks to snoop on its customers MOST PERSONAL INFORMATION and submit it to another government agency so it can be used any way the CFPA see’s fit.
Must submit to CFPASo, if the CFPA Czar see’s fit, information about your deposit account activity could be shared with the IRS, immigration officials, state officials, or any other entity that the Administration and their various Czar’s think beneficial.
But CFPA will impact your life even before they give away your personal data. Remember that part of the excuse for including this authority is to make policy recommendations. So, be careful not to run your credit limit too high above the amount of money you are depositing in the bank or the CFPA will know you can’t pay your bills and make the appropriate “policy recommendations”.
This is exactly why conservatives have fought so hard against things like national ID cards—if the government is authorized to collect and utilize data, there is no way to prevent the government as a whole or certain individuals within the government from using the information against the citizens.
But passage of the CFPA will settle the whole ID card thing once and for all. There will be no need for them because if you have a bank account, you already have a number and the CFPA will have it.
The breadth of sweeping new powers given to the federal government by these three pages is astonishing. Yet we have heard nary a peep about this provision.
After capitulation and surrender, Republicans will have a chance to amend the legislation when it comes to the floor of the Senate and protect the private details of your banking account.
But if they don’t, smile the next time you go to the ATM because Big Brother will be watching.
Bailout Bill Would Require Banks to Track and Report Personal Checking Accounts to Feds
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