[evgeny]

Even experienced banker friends tell me that they think the worst of the US banking troubles are over and that things are slowly getting back to normal. What is lacking in their rosy optimism is the realization of the scale of the ongoing deterioration in credit markets globally, centered in the American asset-backed securities market, and especially in the market for CDO’s—Collateralized Debt Obligations and CMO’s—Collateralized Mortgage Obligations. By now every serious reader has heard the term “It’s a crisis in Sub-Prime US home mortgage debt.” What almost no one I know understands is that the Sub-Prime problem is but the tip of a colossal iceberg that is in a slow meltdown. I offer one recent example to illustrate my point that the “Financial Tsunami” is only beginning.

http://www.kondratieffwinter.com/kw_financial_tsunami_1.html

Read COC 3.1.3: A link and a short quote or summary only please- eastbay

[evgeny]

The Dollar's Scary Decline

by Jeffrey E. Garten

The gridlock in Washington is more than just a political problem. Jeffrey E. Garten on the dollar’s coming decline—and the terrible ripple effects ahead.

Most analyses of the president's State-of-the-Union speech Wednesday night have dwelled on its potential impact on his electoral fortunes in 2010 and 2012 in the face of widespread angst in the country and political gridlock in Washington. But among the longer-term consequences of our political meltdown is something that could overshadow the fate of the stimulus, financial reforms, the wars in Iraq and Afghanistan, and the next presidential election itself: the slow but inexorable decline of the U.S. dollar. For over 60 years, the greenback has been the world's key currency, underwriting a good deal of American prosperity and influence in the world. Over the next decade, it will decisively lose its exalted status.

The dollar will be depreciating for a number of reasons. Foremost is our soaring budget deficit, well over $1 trillion annually; our ballooning national debt, which increased last year by a third to reach $7.6 trillion; and the inability of the political system to deal with the problem, which will only get much worse as 75 million baby boomers become eligible for Social Security and Medicare. On Wednesday night the president talked of freezing some domestic spending, but given how dramatically budget outlays have expanded these past few years, his initiative was at best symbolic. Mr. Obama said he would create a presidential commission to examine policy alternatives, but the recommendations will not bind the Congress. A day before, Congress refused to create a commission with teeth, the Republicans saying it was a stalking horse for higher taxes, the Democrats saying that the commission would aim to cut social programs.

The problem with a continuation of this farce, which has been going on in some form for years, is that our debt repayments will eventually be debilitating, causing us later this decade to borrow nearly a trillion dollars a year just to pay interest. We could of course throw ourselves into severe austerity to honor our debts, slashing spending and raising taxes to levels as yet not even being discussed by our politicians. But a politically easier way would be to devalue the dollar—perhaps by allowing more inflation—so we can pay our creditors in currency that is less valuable than it was when the debt contract was made. It is hard to believe there is any other outcome for our gutless political system than to choose the second way out.

Another reason why Washington will push the dollar south is that a weaker greenback will stimulate sales abroad by making them cheaper in world markets. In his Wednesday night address, the president pledged to double exports over the next five years, a massively ambitious goal. Unfortunately, the U.S. has little choice but to try, because the big surges in consumer demand are no longer in America but in countries like China, India and Brazil.

Beyond what the U.S. will do to depreciate the currency, some of our biggest creditors will also be looking to reduce their holdings of dollars—dumping them on markets and further eroding their value—because they will not want to hold a deteriorating asset. China, the single largest lender, has already been vocal about its concerns, but so has Pimco, America's largest fund specializing in bonds. The problem is that we need these lenders not only to keep up their lending but to vastly expand it.

Why does all this matter? A permanently weaker dollar means that military commitments and foreign assistance will become much more expensive in real terms. Everything we import from abroad—from oil, to food, to autos—will have a higher price tag, as foreign suppliers demand more dollars to compensate for its decline vis-a-vis their currencies. Since imports are so woven into the fabric of our economy, that, in turn, could unleash serious inflation. On the other hand, we could see a massive wave of foreign acquisitions in the U.S. as foreign companies, some government owned, will be able to purchase American companies and real estate at bargain basement prices.

You can debate all you want about the advantages and disadvantages of a declining dollar. But the question is no longer whether it will happen but rather when, and how. Thus, it pays to prepare. A change from a dollar-centric world to something else could create financial instability everywhere. To prevent that from happening, the U.S. should be working on designing a new rule-based global monetary system, in which the dollar plays a strong role alongside the euro and eventually the Chinese RMB, plus a new currency issued by the International Monetary Fund. Many American companies will do well to expand their operations overseas, where their earnings in foreign currencies can make them stronger and more profitable. Investors will need to diversify their assets internationally to a much greater extent than most have.

I'd much prefer to be predicting a strong dollar, one befitting a great nation on the rise. Right now, however, that seems like a hallucination.

Jeffrey E. Garten is the Juan Trippe professor of international trade and finance at the Yale School of Management.

[TreeFarmer]

The article linked in the first post is two years old.

TF

[evgeny]

The article linked in the first post is two years old.

TF

so what?
you need to read all three parts.
It will give you idea, why world run from one financial crisis to another.

part 1 - http://www.kondratieffwinter.com/kw_financial_tsunami_1.html

part 2 - http://www.kondratieffwinter.com/kw_financial_tsunami_2.html

part 3 - http://www.kondratieffwinter.com/kw_financial_tsunami_3.html

[evgeny]

"Banking was conceived in iniquity and was born in sin.
The Bankers own the earth. Take it away from them,
but leave them the power to create deposits,
and with the flick of the pen they will
create enough deposits to buy it back again.
However, take it away from them, and
all the great fortunes like mine
will disappear and they ought to disappear, for
this would be a happier and better world to live in.
But, if you wish to remain the slaves of Bankers
and pay the cost of your own slavery,
let them continue to create deposits."
:

Sir Josiah Stamp
(1880-1941) President of the Bank of England in the 1920's, the second richest man in Britain


Money As Debt (1 of 5)
http://www.youtube.com/watch?v=vVkFb26u9g8

Money As Debt (2 of 5)
http://www.youtube.com/watch?v=sanOXoWl0kc&feature=related

Money As Debt (3 of 5)
http://www.youtube.com/watch?v=kTv1fo6sKmo&feature=related

Money As Debt (4 of 5)
http://www.youtube.com/watch?v=3qicabStQkc&feature=related

Money As Debt (5 of 5)
http://www.youtube.com/watch?v=7kpSbkaD4tM&feature=related


"I am a most unhappy man. I have unwittingly ruined my country.
A great industrial nation is controlled by its system of credit.
Our system of credit is concentrated. The growth of the nation,
therefore, and all our activities are in the hands of a few men.
We have come to be one of the worst ruled, one of the most completely
controlled and dominated governments in the civilized world.
No longer a government by free opinion, no longer a government by
conviction and the vote of the majority, but a government by
the opinion and duress of a small group of dominant men."

Woodrow Wilson
(1856-1924) 28th US President
Attributed. In reference to signing the Federal Reserve Act in 1913. Most likely a compilation of 2 quotes from his book The New Freedom, 1916. "

The inevitable collapse of the dollar
http://www.youtube.com/watch?v=4n3g5lUgkWk&feature=fvw

The Truth About The Economy: Total Collapse
http://www.youtube.com/watch?v=cziN3gt-hic&NR=1

[evgeny]

We need a new capitalism to take on China
If the West isn’t to slide into irrelevance, governments must be much more active in taking control of the economy

http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article7014090.ece


We in the West have a choice. Either we concede the argument that China, in the 5,000 years of recorded human history, has been a much more successful and durable culture than America or Western Europe and is now reclaiming its natural position of global leadership. Or we stop denying the rivalry between the Chinese and Western models and start thinking seriously about how Western capitalism can be reformed to have a better chance of winning.

I think this phrase is irrefutable evidence that China is more durable (at least 15 times more durable) than the culture of America. And from here it follows that the more successful. America is already falling apart, and lived a total nothing. I agree, she lit a robust design, but not for long)


Modernized Chinese model of authoritarian against democracy, wins at this stage, preventing concentration of power in one hand, supporting the competition of ideas (as opposed to the democratic dogma), the responsibility that is blurred in a democracy, economic competition, which crushed a democracy lobbyists mega-corporations.

[eXpat]

Spain, Portugal and Greece are in the red. Dubai won´t pay its debts and other countries like Ireland are in dire situation.The bubble of hope of recovery is busting. I wonder what this people will discuss here, maybe the new trends in bunkers??
Secret summit of top bankers

THE world's top central bankers began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets.

Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet tomorrow at a secret location, the Herald Sun reports.

Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with high-level security believed to have been invoked by law enforcement agencies.

Speculation that the chairman of the US Federal Reserve, Dr Ben Bernanke, would make an appearance could not be confirmed last night.

The event will be dominated by Asian delegations and is expected to include governors of the Peoples Bank of China, the Bank of Japan and the Reserve Bank of India.
The arrival of the high-powered gathering coincided with a fresh meltdown on world sharemarkets, sparked by renewed concerns about global growth and sovereign debt.

Fears countries including Greece, Portugal, Spain and Dubai could default on debt repayments combined with disappointing US jobs data to spook investors.

http://www.news.com.au/business/secret-summit-of-top-bankers/story-e6frfm1i-1225827289543

[evgeny]

What hidden members G7 meeting in Canada

So was "mysterious" meeting of finance ministers and heads of central banks seven largest world economies in Canada. "Mysterious" - because they have no one to himself, as is usually done before, was not invited, refused to have actually negotiated the transition to the format of G20, and, like all thought it was at this meeting, they talked about an exit strategy from the crisis.

And now let us speculate. Wanted the participants in the meeting to give peace a real grounds for optimism? Yes, of course: because they are responsible to the world's financial elite for the stability of the system that this most elite of the suit, and therefore that they should formally perform their duties. If they had reasonable grounds to believe that all may end well, would they keep silent about this before the world community? Would drive frank blizzard, as Geithner? Hardly ...

The very fact of secret negotiations in such a situation, says about her is stronger than all the other factors. Optimism would not have to hide, obscure sense of pessimism. Why? It is very simple: the crisis means that someone has to pay old debts. Who made the very same global elite, which instructed the participants discussed a meeting to figure out how to save the situation. And if you can not be saved - then at whose expense to pay debts.

That is why the meeting was secret! On it, in silence and in secret from us, discussed how to make sure that we have paid their debts! And we do not need to know about these arrangements until until all the schemes are finally folded and implemented so that we could not wriggle out of nowhere.

Of course, guarantees that this will, no. This is - another reason to keep the lid: if they know - can break all the combinations. This leaves some chance for optimism (to us, for the peoples of those countries that are part of G7, and those that are not included), but realize it can be used only if very carefully monitor the actions of the world's financial elite and always catch it hand in trying to jump out of the crisis at the expense of others. And here I wish we have, ie the whole of mankind, the success, though I warn you (now in its tenth year): People, be vigilant!

[pablonite]

What hidden members G7 meeting in Canada

We all need to catch up with reality because there really is no such thing as sovereignty, free speech or any resemblance of a constitution or bill of rights when our political and business leaders meet in private with their international ilk. The buildaburgers, trilaterals, think tanks, G7 to 20 to whatever, they have more in common with each other than with the population.

These people should by any reasonable interpretation of constitutional law be arrested the moment they step into a private room with each other, instead they hijack our military and media to insulate themselves. They are miles from getting to parade down main street and things are moving rather quickly. There has been a big shift to the use of private security forces protecting the elite, acknowledgments of assassination lists, economic engineering...the G20 and UN type fronts are just the primary mouth pieces of the new world order. Everything has long been decided before these shows go on but they announce the prearrangement as an 11th hour "deal". It's getting rather transparent to most since the agenda is rather well documented now, thus making it totally predictable.

[evgeny]

A Country of Serfs

By PAUL CRAIG ROBERTS

The media has headlined good economic news: fourth quarter GDP growth of 5.7 percent ("the recession is over"), Jan. retail sales up, productivity up in 4th quarter, the dollar is gaining strength. Is any of it true? What does it mean?

The 5.7 percent growth figure is a guesstimate made in advance of the release of the U.S. trade deficit statistic. It assumed that the U.S. trade deficit would show an improvement. When the trade deficit was released a few days later, it showed a deterioration, knocking the 5.7 percent growth figure down to 4.6 percent. Much of the remaining GDP growth consists of inventory accumulation.

More than a fourth of the reported gain in Jan. retail sales is due to higher gasoline and food prices. Questionable seasonal adjustments account for the rest.

Productivity was up, because labor costs fell 4.4 percent in the fourth quarter, the fourth successive decline. Initial claims for jobless benefits rose. Productivity increases that do not translate into wage gains cannot drive the consumer economy.

Housing is still under pressure, and commercial real estate is about to become a big problem.

The dollar’s gains are not due to inherent strengths. The dollar is gaining because government deficits in Greece and other EU countries are causing the dollar carry trade to unwind. America’s low interest rates made it profitable for investors and speculators to borrow dollars and use them to buy overseas bonds paying higher interest, such as Greek, Spanish and Portuguese bonds denominated in euros. The deficit troubles in these countries have caused investors and speculators to sell the bonds and convert the euros back into dollars in order to pay off their dollar loans. This unwinding temporarily raises the demand for dollars and boosts the dollar’s exchange value.

The problems of the American economy are too great to be reached by traditional policies. Large numbers of middle class American jobs have been moved offshore: manufacturing, industrial and professional service jobs. When the jobs are moved offshore, consumer incomes and U.S. GDP go with them. So many jobs have been moved abroad that there has been no growth in U.S. real incomes in the 21st century, except for the incomes of the super rich who collect multi-million dollar bonuses for moving U.S. jobs offshore.

Without growth in consumer incomes, the economy can go nowhere. Washington policymakers substituted debt growth for income growth. Instead of growing richer, consumers grew more indebted. Federal Reserve chairman Alan Greenspan accomplished this with his low interest rate policy, which drove up housing prices, producing home equity that consumers could tap and spend by refinancing their homes.

Unable to maintain their accustomed living standards with income alone, Americans spent their equity in their homes and ran up credit card debts, maxing out credit cards in anticipation that rising asset prices would cover the debts. When the bubble burst, the debts strangled consumer demand, and the economy died.

As I write about the economic hardships created for Americans by Wall Street and corporate greed and by indifferent and bribed political representatives, I get many letters from former middle class families who are being driven into penury. Here is one recently arrived:

"Thank you for your continued truthful commentary on the 'New Economy.' My husband and I could be it's poster children. Nine years ago when we married, we were both working good paying, secure jobs in the semiconductor manufacturing sector. Our combined income topped $100,000 a year. We were living the dream. Then the nightmare began. I lost my job in the great tech bubble of 2003, and decided to leave the labor force to care for our infant son. Fine, we tightened the belt. Then we started getting squeezed. Expenses rose, we downsized, yet my husband's job stagnated. After several years of no pay raises, he finally lost his job a year and a half ago. But he didn't just lose a job, he lost a career. The semiconductor industry is virtually gone here in Arizona. Three months later, my husband, with a technical degree and 20-plus years of solid work experience, received one job offer for an entry level corrections officer. He had to take it, at an almost 40 percent reduction in pay. Bankruptcy followed when our savings were depleted. We lost our house, a car, and any assets we had left. His salary last year, less than $40,000, to support a family of four. A year and a half later, we are still struggling to get by. I can't find a job that would cover the cost of daycare. We are stuck. Every jump in gas and food prices hits us hard. Without help from my family, we wouldn't have made it. So, I could tell you just how that 'New Economy' has worked for us, but I'd really rather not use that kind of language."

Policymakers who are banking on stimulus programs are thinking in terms of an economy that no longer exists. Post-war U.S. recessions and recoveries followed Federal Reserve policy. When the economy heated up and inflation became a problem, the Federal Reserve would raise interest rates and reduce the growth of money and credit. Sales would fall. Inventories would build up. Companies would lay off workers.

Inflation cooled, and unemployment became the problem. Then the Federal Reserve would reverse course. Interest rates would fall, and money and credit would expand. As the jobs were still there, the work force would be called back, and the process would continue.

It is a different situation today. Layoffs result from the jobs being moved offshore and from corporations replacing their domestic work forces with foreigners brought in on H-1B, L-1 and other work visas. The U.S. labor force is being separated from the incomes associated with the goods and services that it consumes. With the rise of offshoring, layoffs are not only due to restrictive monetary policy and inventory buildup. They are also the result of the substitution of cheaper foreign labor for U.S. labor by American corporations. Americans cannot be called back to work to jobs that have been moved abroad. In the New Economy, layoffs can continue despite low interest rates and government stimulus programs.

To the extent that monetary and fiscal policy can stimulate U.S. consumer demand, much of the demand flows to the goods and services that are produced offshore for U.S. markets. China, for example, benefits from the stimulation of U.S. consumer demand. The rise in China’s GDP is financed by a rise in the U.S. public debt burden.

Another barrier to the success of stimulus programs is the high debt levels of Americans. The banks are being criticized for a failure to lend, but much of the problem is that there are no consumers to whom to lend. Most Americans already have more debt than they can handle.

Hapless Americans, unrepresented and betrayed, are in store for a greater crisis to come. President Bush’s war deficits were financed by America’s trade deficit. China, Japan, and OPEC, with whom the U.S. runs trade deficits, used their trade surpluses to purchase U.S. Treasury debt, thus financing the U.S. government budget deficit.

The problem now is that the U.S. budget deficits have suddenly grown immensely from wars, bankster bailouts, jobs stimulus programs, and lower tax revenues as a result of the serious recession. Budget deficits are now three times the size of the trade deficit. Thus, the surpluses of China, Japan, and OPEC are insufficient to take the newly issued U.S. government debt off the market.

If the Treasury’s bonds can’t be sold to investors, pension funds, banks, and foreign governments, the Federal Reserve will have to purchase them by creating new money. When the rest of the world realizes the inflationary implications, the US dollar will lose its reserve currency role. When that happens Americans will experience a large economic shock as their living standards take another big hit.

America is on its way to becoming a country of serfs ruled by oligarchs.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press.


While the Soviet Union existed as a competing ideological system, capitalism had to hide his real face, goverment invest in various social programs to be attractive to the people. And now capitalism again shows his bestial nature.


West 30 years ago began to preach Postindustrial industry. What does this mean? It was assumed that the West will sit in an office in Washington or London, and move the papers on his desk, as well as play in the financial market. A real goods should have been riveting numerous cheap slaves from Asia. To implement the idea postindustrii real production had been transferred to China, Korea and so on. Asia produces, West consumes. This division of "labor". But the Chinese learned quickly and began to undermine the rest of the West the actual production (eg, cars), which further accelerated the polarization of the "real production - papers". And so the crisis, the papers burst, and the actual production of all in China. What we have at the moment? Goods in China and configured for these products poreblenie in the West. China has realized this and began to pace to create a domestic consumption. And if domestic consumption will be able to consume all goods produced, the West for China would not be necessary. And besides, in China hands the huge U.S. debt ... How will it all end?

[Homesteader]

A Country of Serfs

By PAUL CRAIG ROBERTS

The media has headlined good economic news: fourth quarter GDP growth of 5.7 percent ("the recession is over"), Jan. retail sales up, productivity up in 4th quarter, the dollar is gaining strength. Is any of it true? What does it mean?

The 5.7 percent growth figure is a guesstimate made in advance of the release of the U.S. trade deficit statistic. It assumed that the U.S. trade deficit would show an improvement. When the trade deficit was released a few days later, it showed a deterioration, knocking the 5.7 percent growth figure down to 4.6 percent. Much of the remaining GDP growth consists of inventory accumulation.

More than a fourth of the reported gain in Jan. retail sales is due to higher gasoline and food prices. Questionable seasonal adjustments account for the rest.

Productivity was up, because labor costs fell 4.4 percent in the fourth quarter, the fourth successive decline. Initial claims for jobless benefits rose. Productivity increases that do not translate into wage gains cannot drive the consumer economy.

Housing is still under pressure, and commercial real estate is about to become a big problem.

The dollar’s gains are not due to inherent strengths. The dollar is gaining because government deficits in Greece and other EU countries are causing the dollar carry trade to unwind. America’s low interest rates made it profitable for investors and speculators to borrow dollars and use them to buy overseas bonds paying higher interest, such as Greek, Spanish and Portuguese bonds denominated in euros. The deficit troubles in these countries have caused investors and speculators to sell the bonds and convert the euros back into dollars in order to pay off their dollar loans. This unwinding temporarily raises the demand for dollars and boosts the dollar’s exchange value.

The problems of the American economy are too great to be reached by traditional policies. Large numbers of middle class American jobs have been moved offshore: manufacturing, industrial and professional service jobs. When the jobs are moved offshore, consumer incomes and U.S. GDP go with them. So many jobs have been moved abroad that there has been no growth in U.S. real incomes in the 21st century, except for the incomes of the super rich who collect multi-million dollar bonuses for moving U.S. jobs offshore.

Without growth in consumer incomes, the economy can go nowhere. Washington policymakers substituted debt growth for income growth. Instead of growing richer, consumers grew more indebted. Federal Reserve chairman Alan Greenspan accomplished this with his low interest rate policy, which drove up housing prices, producing home equity that consumers could tap and spend by refinancing their homes.

Unable to maintain their accustomed living standards with income alone, Americans spent their equity in their homes and ran up credit card debts, maxing out credit cards in anticipation that rising asset prices would cover the debts. When the bubble burst, the debts strangled consumer demand, and the economy died.

As I write about the economic hardships created for Americans by Wall Street and corporate greed and by indifferent and bribed political representatives, I get many letters from former middle class families who are being driven into penury. Here is one recently arrived:

"Thank you for your continued truthful commentary on the 'New Economy.' My husband and I could be it's poster children. Nine years ago when we married, we were both working good paying, secure jobs in the semiconductor manufacturing sector. Our combined income topped $100,000 a year. We were living the dream. Then the nightmare began. I lost my job in the great tech bubble of 2003, and decided to leave the labor force to care for our infant son. Fine, we tightened the belt. Then we started getting squeezed. Expenses rose, we downsized, yet my husband's job stagnated. After several years of no pay raises, he finally lost his job a year and a half ago. But he didn't just lose a job, he lost a career. The semiconductor industry is virtually gone here in Arizona. Three months later, my husband, with a technical degree and 20-plus years of solid work experience, received one job offer for an entry level corrections officer. He had to take it, at an almost 40 percent reduction in pay. Bankruptcy followed when our savings were depleted. We lost our house, a car, and any assets we had left. His salary last year, less than $40,000, to support a family of four. A year and a half later, we are still struggling to get by. I can't find a job that would cover the cost of daycare. We are stuck. Every jump in gas and food prices hits us hard. Without help from my family, we wouldn't have made it. So, I could tell you just how that 'New Economy' has worked for us, but I'd really rather not use that kind of language."

Policymakers who are banking on stimulus programs are thinking in terms of an economy that no longer exists. Post-war U.S. recessions and recoveries followed Federal Reserve policy. When the economy heated up and inflation became a problem, the Federal Reserve would raise interest rates and reduce the growth of money and credit. Sales would fall. Inventories would build up. Companies would lay off workers.

Inflation cooled, and unemployment became the problem. Then the Federal Reserve would reverse course. Interest rates would fall, and money and credit would expand. As the jobs were still there, the work force would be called back, and the process would continue.

It is a different situation today. Layoffs result from the jobs being moved offshore and from corporations replacing their domestic work forces with foreigners brought in on H-1B, L-1 and other work visas. The U.S. labor force is being separated from the incomes associated with the goods and services that it consumes. With the rise of offshoring, layoffs are not only due to restrictive monetary policy and inventory buildup. They are also the result of the substitution of cheaper foreign labor for U.S. labor by American corporations. Americans cannot be called back to work to jobs that have been moved abroad. In the New Economy, layoffs can continue despite low interest rates and government stimulus programs.

To the extent that monetary and fiscal policy can stimulate U.S. consumer demand, much of the demand flows to the goods and services that are produced offshore for U.S. markets. China, for example, benefits from the stimulation of U.S. consumer demand. The rise in China’s GDP is financed by a rise in the U.S. public debt burden.

Another barrier to the success of stimulus programs is the high debt levels of Americans. The banks are being criticized for a failure to lend, but much of the problem is that there are no consumers to whom to lend. Most Americans already have more debt than they can handle.

Hapless Americans, unrepresented and betrayed, are in store for a greater crisis to come. President Bush’s war deficits were financed by America’s trade deficit. China, Japan, and OPEC, with whom the U.S. runs trade deficits, used their trade surpluses to purchase U.S. Treasury debt, thus financing the U.S. government budget deficit.

The problem now is that the U.S. budget deficits have suddenly grown immensely from wars, bankster bailouts, jobs stimulus programs, and lower tax revenues as a result of the serious recession. Budget deficits are now three times the size of the trade deficit. Thus, the surpluses of China, Japan, and OPEC are insufficient to take the newly issued U.S. government debt off the market.

If the Treasury’s bonds can’t be sold to investors, pension funds, banks, and foreign governments, the Federal Reserve will have to purchase them by creating new money. When the rest of the world realizes the inflationary implications, the US dollar will lose its reserve currency role. When that happens Americans will experience a large economic shock as their living standards take another big hit.

America is on its way to becoming a country of serfs ruled by oligarchs.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press.

IMO everybody should re-read this post.

[evgeny]

The words of George Bernard Shaw: "I do not like the history, because this science is useless, people do not draw any conclusions from it ...».
Americans do not read Bernard Shaw, Americans do not know their history, and this factor allows to deaf government rules the blind society, without fear of taking even the most venal, stupid and inhumane decision.

[evgeny]

Greek virus is ready to blow up Europe

Attempts by the Greek authorities to reduce budget expenditures in order to rescue the economy and at the request of the EU led to the expected result. Greece swept the general strike has already led to the collapse of the transport system and social infrastructure of Athens and much of the rest of the country. This is the first general strike since the beginning of the current government in October 2009.

Not begun to carry out their duties educators, medical, banking officials and media representatives. During this day the strikers joined by representatives of the private sector, which suggests worsening of the strike movement. A strike organized by an influential association of trade unions GSEE, which has expressed support, moreover, government officials and union ADEDY.

Today in Athens, began a protest, which escalated into riots. The demonstrators threw stones and bottles at the Greek Parliament building, the police responded with tear gas.

Recall, the Greek economy is on the brink of default after the disclosure of data on the real budget deficit, which reached 12,7% of GDP and public debt of about € 300 billion. The situation is exacerbated by the fact that the Greek authorities for a long time concealed from the international financial organizations and their own populations present situation in the country's economy. With the advent of real figures in January this year, the international rating agency Moody's announced that the Greek economy is "slow death". Some time ago, the EU finance ministers gave Greece 30 days of working out measures to resolve the current crisis.

At the same time began a general strike indicates that the Greek authorities are no longer able to control the situation, and not only in economy but also in the socio-political sphere.

[evgeny]

For ten years, the Greek government to conceal the true scale of public debt with the help of suspicious transactions in American banks.

"This will be a real scandal, if confirmed fact that the banks that have brought us to the brink and helped Greece to falsify statistics," - commented Angela Merkel (Angela Merkel) information on the cooperation of the Greek authorities with investment bank Goldman Sachs.

And the scandal erupted. The European Commission has already launched an investigation to determine whether laws were Greeks currency transactions in overseas banks. It is known that due to complex financial instruments developed in New York's Wall Street, billions of euros disappeared from the statistics of public debt of Greece.

The Greek government, most likely, not even in breach of European laws. After all, during the creation of the euro area, no one anticipated that member countries could go to the machinations of such magnitude.

According to the established rules, the budget deficit and external debt of the euro area member states can not exceed 3 and 60 per cent of GDP. Despite the fact that Greece has in recent decades did not meet these criteria, in 2001, her exceptionally allowed to enter the euro, but must, within two years to fix state finances. From Athens, in fact, demanded one - stop borrowing. As it turns out, live within our means in Greece failed. "Politicians tend to defer a decision on the issues then, and bankers and offer them the option, from which they can not refuse" - says Professor Gikas Hadurvelis (Gikas Hardouvelis), in the last official of the National Bank of Greece.

In 2001, Goldman Sachs gave the Greek government loan for 2.8 billion euros. Because the money was paid under the so-called currency swap - the simultaneous buying and selling the same currency at a different rate, the statistics of the debt they are not listed. A sell and buy Greece is nothing as bonds, that is, their debts.

In most foreign currency transaction there is nothing illegal.

We must only note that borrow money in such a transaction is much more expensive than taking a loan. Fee for an operation 2001, Greece had to pay 20 years. Later, the term extended till 2037.

The Government has subsequently repeatedly resorted to such financial transactions to download the budget money and hide from Brussels new debts. One of the biggest currency swap was negotiated in 2005 between Goldman Sachs and National Bank of Greece. A few years later was created a legal entity Tiltos, on which were written off debts under the Greek swap. The amount owed for the operation is estimated at approximately 5 billion euros. It is interesting that the company itself under the statute deals with investments in the UK.

For the secret loans Greece has managed to lay even own the road and airports. As a result, transactions are often created new entities that are written off a loan.

Perhaps the Greeks knew that sooner or later, the secret mechanisms for obtaining loans will bring their country into bankruptcy. One can only wonder how short-sighted was the Greek policy for the sake of short-term interests to sacrifice the future of their state.

"If the government wants to cheat, no one can stop him" - says a former employee of the International Monetary Fund Harry Shinazi (Garry Schinasi). Stop the officials could only severe crisis monetary and financial system of Greece, which struck not only by the country's economy, but also throughout the common market of the EU.

[evgeny]

Actually, the total debt is quite a bit worse than the "official" national debt.

If US corporations hid much of their debt using "unfunded" "off-budget" accounting methods like the federal government does, the CFO & others would go to prison.

If US government had to use the "Generally Accepted Accounting Practices (GAAP) they require US corporations to do, we would see that US actual federal liabilities are 800% of US GDP.

The figures below are from the U.S. Debt Clock (their sources):

http://www.usdebtclock.org/

in millions:

$12,463,401 National Debt - (source U.S. Treasury)
$14,196,143 Social Security - (Federal Reserve)
$18,782,450 Prescription Drug liability - (Federal Reserve)
$74,693,004 Medicare Liability - (Federal Reserve)

$120,134,998 - Total federal liabilities

$14,297,758 - U.S. GDP (Congressional Budget Office)

800% -- Total Federal Liabilities as a percentage of GDP

[evgeny]

Latvia and the PIGS
Down on the Euro Animal Farm, some animals are more equal than others,
finds by Eric Walberg

But the storm clouds now gathering are not just over Greece; the entire western world is still very much in fiscal crisis. The investment bank Societe Generale recently published a frightening estimate of the real liabilities of Western governments, including off balance sheet debts. In every case the numbers, including unfunded pension fund liabilities, dwarf the official debt position. Greece is by far the worst because of what Otmar Issing, the German former chief economist of the European Central Bank, described as “one of the most luxurious pension systems in the world”. Its total net liabilities are 800 per cent of GDP — eight times the official position. For the US, it is 550, the UK 400, Germany 400, France 550, Italy 350 and Spain 250. In other words, the entire western world is insolvent and each country is facing its own day of reckoning — starting, appropriately enough, in Greece, the home of Western civilisation.

https://sites.google.com/site/weeklyahr ... d-the-pigs


Now we have a full opportunity to observe the basic lack of a democratic system of government.
Democracy in a more or less pure form works well only in good times, in times of crisis, democracy does not allow the government to make unpopular decisions, or decisions, as presented to the unpopular. Moreover, crises can in the wake of popular discontent to climb to the top of all sorts populists, are often not very competent. The country receives leapfrog elections-elections, demonstrations and strikes by trade unions, which lead not only to change the government, but further plunge into economic chaos. Urging citizens to tighten belts, a politician in a democratic Europe, at least provides a serious problem with the rating, as a maximum - sign a death sentence as a politician.

[evgeny]

Ruble and the Yuan: together against the dollar

The Chinese government has offered Russia to trade yuan on stock exchanges in Russia, and the ruble - on the trading floors of the China. A detailed proposal to be discussed at the end of April. Interested and MICEX, which has already been discussing the project with Chinese colleagues. According to experts, if the parties agree, it will be little steps along the road to replace the dollar as a reserve currency.

The idea to organize in Russian and Chinese stock exchanges trade in national currencies sounded Tuesday at a meeting with members of the Russia-China Business Council from the mouth of the Deputy Minister of Commerce Gao Huchen.

[evgeny]

Post-Apocalyptic zombie finance
By Spengler

By 2014, International Monetary Fund official John Lipsky remarked March 21, the debt-to-gross domestic product (GDP) ratio of the Group of Seven countries will reach 100%, and the governments of the industrial world will carry the highest debt burden since shortly after the end of World War II.

http://www.atimes.com/atimes/Global_Eco ... 3Dj04.html

My advice to the Chinese, Indians, Persians, Argentines, Brazilians, and everyone who shows good economic growth - to arm the army. The mentality of Western European civilization is such that when it becomes nothing to eat, they will begin to rivet tanks and planes to bomb a competitor to the Stone Age, and at their expense to raise its economy. Methods for containment successful early because of the greed of businesses have gone to ashes. So for another five years and a maximum of ten, you will see again fangs Europeans, now hidden behind well-fed belly.

[evgeny]

LAROUCHE IN RHODES:
A Four-Power Agreement Can
Create a New World Credit System

Lyndon LaRouche gave this address to the Seventh Annual Session of the World Public Forum Dialogue of Civilizations (Oct. 8-12, 2009), on the Island of Rhodes in Greece, on Oct. 10. His remarks are followed by a brief dialogue with the audience.

In view of the brevity of time, I shall confine my remarks to a certain aspect of the problem. On the 25th of July of the year 2007, I delivered a forecast by way of an international webcast, which I conducted at that time. At that point, on that date, I said we were then on the verge of a general crisis of the financial system of the United States. I said it would break out in a matter of days, and it did: Then, what became known as the mortgage crisis—but it was more than a mortgage crisis, it was the beginning of a process which has continued up to the present day, of a general breakdown of the U.S. economy in its present form. It's a crisis which threatens the entire world. Because if the United States, with its vast debt, collapses, if the debt of the United States, for example, to China, collapses in value to nearly zero, which it can do, this would set forth a chain-reaction throughout the world system, which would be a crisis comparable to what Europe experienced during the 14th Century. This is the most serious.

http://www.larouchepub.com/lar/2009/364 ... hodes.html

[evgeny]

Bankrupt Empire
by Doug Bandow

http://nationalinterest.org/Article.aspx?id=23256

Another article with a sober outlook on future developments of the United States. There is only one point - America doesn't have a significant lead time, and no prospects of becoming a "normal country" by the fact that once on the necks of the satellites will weaken the hand grip "military power" of the United States, immediately happy former lackeys will kick out transnational corporations controlled by U.S. . Only lazy will deny this pleasure "kick master of yesterday's". As a result, the budget will decrease with surprising speed, approximately as in the USSR in the early 90s.

To be, or not to be, that is not the question, when is a question?

A bowl of popcorn ready, just waiting for show to begin