Showing posts with label CENTRAL BANK. Show all posts
Showing posts with label CENTRAL BANK. Show all posts
Tuesday, May 3, 2011
Sunday, May 1, 2011
Tuesday, March 29, 2011
Thursday, February 3, 2011
Saturday, December 18, 2010
Ron Paul: End the Fed by Allowing Competing Currencies (VIDEO)
Youtube - RonPaulRevolution
Will Ron Paul use his new position as Chairman of the Domestic Monetary Policy Subcommittee to deliver the coup de grâce to an embattled Federal Reserve by auditing its gold reserves and pushing for the legalization of competing currencies?
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Will Ron Paul use his new position as Chairman of the Domestic Monetary Policy Subcommittee to deliver the coup de grâce to an embattled Federal Reserve by auditing its gold reserves and pushing for the legalization of competing currencies?
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Tuesday, October 19, 2010
From Global Depression to Global Governance
The role of the corporate elites' secretive global think tanks
Andrew Gavin Marshall
Global Research
The following is the text of Andrew Gavin Marshall's presentation at the book launch of The Global Economic Crisis: The Great Depression of the XXI Century
", Michel Chossudovsky and Andrew Gavin Marshall (Editors). September 29, 2010, Montreal, Canada.
We now stand at the edge of the global financial abyss of a ‘Great Global Debt Depression,’ where nations, mired in extreme debt, are beginning to implement ‘fiscal austerity’ measures to reduce their deficits, which will ultimately result in systematic global social genocide, as the middle classes vanish and the social foundations upon which our nations rest are swept away. How did we get here? Who brought us here? Where is this road leading? These are questions I will briefly attempt to answer.
At the heart of the global political economy is the central banking system. Central banks are responsible for printing a nation’s currency and setting interest rates, thus determining the value of the currency. This should no doubt be the prerogative of a national government, however, central banks are of a particularly deceptive nature, in which while being imbued with governmental authority, they are in fact privately owned by the world’s major global banks, and are thus profit-seeking institutions. How do central banks make a profit? The answer is simple: how do all banks make a profit? Interest on debt. Loans are made, interest rates are set, and profits are made. It is a system of debt, imperial economics at its finest.
In the United States, President Woodrow Wilson signed the Federal Reserve Act in 1913, creating the Federal Reserve System, with the Board located in Washington, appointed by the President, but where true power rested in the 12 regional banks, most notably among them, the Federal Reserve Bank of New York. The regional Fed banks were private banks, owned in shares by the major banks in each region, which elected the board members to represent them, and who would then share power with the Federal Reserve Board in Washington.
In the early 1920s, the Council on Foreign Relations was formed in the United States as the premier foreign policy think tank, dominated by powerful banking interests. In 1930, the Bank for International Settlements (BIS) was created to manage German reparations payments, but it also had another role, which was much less known, but much more significant. It was to act as a “coordinator of the operations of central banks around the world.” Essentially, it is the central bank for the world’s central banks, whose operations are kept ‘strictly confidential.’ As historian Carroll Quigley wrote:
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations."
In 1954, the Bilderberg Group was formed as a secretive global think tank, comprising intellectual, financial, corporate, political, military and media elites from Western Europe and North America, with prominent bankers such as David Rockefeller, as well as European royalty, such as the Dutch royal family, who are the largest shareholders in Royal Dutch Shell, whose CEO attends every meeting. This group of roughly 130 elites meets every year in secret to discuss and debate global affairs, and to set general goals and undertake broad agendas at various meetings. The group was initially formed to promote European integration. The 1956 meeting discussed European integration and a common currency. In fact, the current Chairman of the Bilderberg Group told European media last year that the euro was debated at the Bilderberg Group.
In 1973, David Rockefeller, Chairman and CEO of Chase Manhattan Bank, Chairman of the Council on Foreign Relations and a member of the Steering Committee of the Blderberg Group, formed the Trilateral Commission with CFR academic Zbigniew Brzezinski. That same year, the oil price shocks created a wealth of oil money, which was discussed at that years Bilderberg meeting 5 months prior to the oil shocks, and the money was funneled through western banks, which loaned it to ‘third world’ nations desperately in need of loans to finance industrialization.
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Andrew Gavin Marshall
Global Research
The following is the text of Andrew Gavin Marshall's presentation at the book launch of The Global Economic Crisis: The Great Depression of the XXI Century
", Michel Chossudovsky and Andrew Gavin Marshall (Editors). September 29, 2010, Montreal, Canada.We now stand at the edge of the global financial abyss of a ‘Great Global Debt Depression,’ where nations, mired in extreme debt, are beginning to implement ‘fiscal austerity’ measures to reduce their deficits, which will ultimately result in systematic global social genocide, as the middle classes vanish and the social foundations upon which our nations rest are swept away. How did we get here? Who brought us here? Where is this road leading? These are questions I will briefly attempt to answer.
At the heart of the global political economy is the central banking system. Central banks are responsible for printing a nation’s currency and setting interest rates, thus determining the value of the currency. This should no doubt be the prerogative of a national government, however, central banks are of a particularly deceptive nature, in which while being imbued with governmental authority, they are in fact privately owned by the world’s major global banks, and are thus profit-seeking institutions. How do central banks make a profit? The answer is simple: how do all banks make a profit? Interest on debt. Loans are made, interest rates are set, and profits are made. It is a system of debt, imperial economics at its finest.
In the United States, President Woodrow Wilson signed the Federal Reserve Act in 1913, creating the Federal Reserve System, with the Board located in Washington, appointed by the President, but where true power rested in the 12 regional banks, most notably among them, the Federal Reserve Bank of New York. The regional Fed banks were private banks, owned in shares by the major banks in each region, which elected the board members to represent them, and who would then share power with the Federal Reserve Board in Washington.
In the early 1920s, the Council on Foreign Relations was formed in the United States as the premier foreign policy think tank, dominated by powerful banking interests. In 1930, the Bank for International Settlements (BIS) was created to manage German reparations payments, but it also had another role, which was much less known, but much more significant. It was to act as a “coordinator of the operations of central banks around the world.” Essentially, it is the central bank for the world’s central banks, whose operations are kept ‘strictly confidential.’ As historian Carroll Quigley wrote:
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations."
In 1954, the Bilderberg Group was formed as a secretive global think tank, comprising intellectual, financial, corporate, political, military and media elites from Western Europe and North America, with prominent bankers such as David Rockefeller, as well as European royalty, such as the Dutch royal family, who are the largest shareholders in Royal Dutch Shell, whose CEO attends every meeting. This group of roughly 130 elites meets every year in secret to discuss and debate global affairs, and to set general goals and undertake broad agendas at various meetings. The group was initially formed to promote European integration. The 1956 meeting discussed European integration and a common currency. In fact, the current Chairman of the Bilderberg Group told European media last year that the euro was debated at the Bilderberg Group.
In 1973, David Rockefeller, Chairman and CEO of Chase Manhattan Bank, Chairman of the Council on Foreign Relations and a member of the Steering Committee of the Blderberg Group, formed the Trilateral Commission with CFR academic Zbigniew Brzezinski. That same year, the oil price shocks created a wealth of oil money, which was discussed at that years Bilderberg meeting 5 months prior to the oil shocks, and the money was funneled through western banks, which loaned it to ‘third world’ nations desperately in need of loans to finance industrialization.
Read Full Article
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Thursday, October 14, 2010
World Financial System Not Sustainable
The financial system the world has evolved on the Bank of England model is not sustainable. It creates nearly all money as debt. Such money only exists as long as someone is willing and able to pay interest on it. It disappears, wholly or partially, in recurring financial crises. Such a system requires that new debt must be created faster than principal and interest payments fall due on old debt.
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| No sovereign government should ever, under any circumstances, give over democratic control of its money. Photo: Zack McCarthy. | |
A sustainable financial system would enable the real economy to be maintained decade after decade and century after century at its full employment potential without recurring inflation and recession. By this standard, a financial system that creates money only through the creation of debt is inherently unsustainable.
When a bank makes a loan, the principal amount of the loan is added to the borrower’s bank balance. The borrower, however, has promised to repay the loan plus interest even though the loan has created only the amount of money required to repay the principal-but not the amount of the interest.
Therefore unless indebtedness continually grows it is impossible for all loans to be repaid as they come due. Furthermore, during the life of a loan some of the money will be saved and re-lent by individual bond purchasers, by savings banks, insurance companies etc. These loans do not create new money, but they do create debt.
While we use only one mechanism – bank loans – to create money, we use several mechanisms to create debt, thus making it inevitable that debt will grow faster than the money with which to pay it. Recurring cycles of inflation, recession, and depression are a nearly inevitable consequence.
If, in the attempt to arrest the price inflation resulting from an excessive rate of debt formation, the monetary authorities raise the rate of interest, the result is likely to be a financial panic. This in turn may result in a sharp cutback in borrowing.
Monetary authorities respond to bail out the system by increasing bank reserves. Governments may also respond by increasing the public debt- risking both inflation and growing government deficits.
FOUR COMMON SENSE RULES
Governments got into this mess by violating four common sense rules regarding their fiscal and monetary policies. These rules are:
1. No sovereign government should ever, under any circumstances, give over democratic control of its money supply to bankers.
2. No sovereign government should ever, under any circumstances, borrow any money from any private bank.
3. No national, provincial, or local government should borrow foreign money to increase purchases abroad when there is excessive domestic unemployment.
4. Governments, like businesses, should distinguish between “capital” and “current” expenditures, and when it is prudent to do so, finance capital improvements with money the government has created for itself.
A few words about the first two of these rules…
1. There is persistent pressure from central bankers and academic economists to free central banks from the obligation to consider the effects of their actions upon employment and output levels so that they can concentrate on price stability.
This is a very bad idea indeed. Dominated by bankers and economists, central banks are entirely too prone to give exclusive attention to creditor interests to the exclusion of worker interests. Amending central bank charters to give them independence from democratic oversight, or to set up “price stability” as their only goal would complete their subjection to banker interests. Canada’s own Mackenzie King said it all, “Without Government creation of money, talk of sovereignty and democracy is futile.”
2. Anyone who understands that banks create the money they lend can see that it makes no sense for a sovereign government, which can create money at near zero cost, to borrow money at high cost from a private bank.
The fact that most governments do borrow from private banks is one of the greatest errors of our times. If a government needs money created to pay for public spending it should create the money itself through its own bank; or spend the money debt and interest free as the United States did during the Revolution and again during the Civil War. If a government does not wish to “monetize” its deficits during periods of unusual need such as wartime, it should either make up the deficit with higher taxes or borrow only from the non-bank public-which cannot create the money it lends to the government….
When the Bank of Canada encourages the Canadian government, provinces, and municipalities to borrow in New York and Tokyo, it is a betrayal of Canada. Where should they borrow when new money is needed for government spending? They should borrow at the government owned Bank of Canada, paying near zero interest rates-just sufficient to cover the Bank’s running expenses.
—
John H. Hotson was professor emeritus of economics University of Waterloo and executive director of the Committee on Monetary and Economic Reform (COMER), a Canadian based network of economists working for economic and monetary reform. This article is based on a series he published in the October 1994, November 1994, and January 1995 issues of Economic Reform, the COMER newsletter, Comer Publications, 3284 Yonge St., Suite 500, Toronto, Ontario, M4N 3M7, fax (416) 486-4674. He gave the PCDForum permission to use this material only five days before his untimely death on January 21, 1996 following heart surgery.
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Wednesday, October 13, 2010
Alex Jones: Total Economic Implosion and Bondage by Design
Infowars.com
October 13, 2010
October 13, 2010
The global elite have engineered a total economic collapse.
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Sunday, October 10, 2010
The Neoliberal Experiment and Europe's anti-Austerity Strikes: Governments must Lower Wages or Suffer Financial Blackmail
By Michael Hudson | |
Global Research, September 30, 2010 | |
 While Labor Unions celebrate Anti-Austerity Day in Europe, the European Neoliberals raise the ante:Most of the press has described Wednesday's European-wide labor demonstrations and strikes across in terms of the familiar exercise by transport workers irritating travelers with work slowdowns, and large throngs letting off steam by setting fires. But the story goes much deeper than merely a reaction against unemployment and economic recession conditions. At issue are proposals to drastically change the laws and structures of how European society will function for the next generation. If the anti-labor forces succeed, they will break up Europe, destroy the internal market, and render that continent a backwater. This is how serious the financial coup d'etat has become. And it is going to get much worse - quickly. As John Monks, head of the European Trade Union Confederation, put it: "This is the start of the fight, not the end." Spain has received most of the attention, thanks to its ten-million strong turnout (reportedly half the entire labor force). Holding its first general strike since 2002, Spanish labor protested against its socialist government using the bank crisis (stemming from bad real estate loans and negative mortgage equity, not high labor costs) as an opportunity to change the laws to enable companies and government bodies to fire workers at will, and to scale back their pensions and public social spending in order to pay the banks more. Portugal is doing the same, and it looks like Ireland will follow suit - all this in the countries whose banks have been the most irresponsible lenders. The bankers are demanding that they rebuild their loan reserves at labor's expense, just as in President Obama's program here in the United States but without the sanctimonious pretenses. The problem is Europe-wide and indeed centered in the European Union capital in Brussels. This is why the major protests were staged there. On the same day that the strikers demonstrated, the neoliberal European Commission (EC) outlined a full-fledged war against labor. Fifty to a hundred thousand workers gathered to protest the proposed transformation of social rules by the most anti-labor campaign since the 1930s - even more extreme than the Third World austerity plans imposed by the IMF and World Bank in times past. The neoliberals are fully in control of the bureaucracy, and they are reviving Margaret Thatcher's slogan, TINA: There Is No Alternative. But there is, of course. In the small Baltic economies, pro-labor parties have made it clear that the alternative to government shrinkage is to simply repeal the debts, withdraw from the Euro and break the banks. It is either the banks or labor - and Europe has just realized that this is truly a fight to the economic death. And the first test will come this Saturday, when Latvia holds its national parliamentary elections. The EC is using the mortgage banking crisis - and the needless prohibition against central banks monetizing the government budget deficit - as an opportunity to fine governments and even drive them bankrupt if they do not agree roll back public-sector salaries. Governments are told to borrow at interest from the banks, rather than raising revenue by taxing them as they have done for half-a century following the end of World War II. And if governments are unable to raise the money to pay the interest, they must close down their social programs. And if this close-down shrinks the economy - and hence, government tax revenues - even more, then the government must shut down even more social spending. From Brussels to Latvia, neoliberal planners have expressed the hope is that lower public salaries will spread to the private sector as well. The aim is to shrink their economies to roll back wage levels by 30 percent or more - depression-style levels - in the belief that this will "leave more surplus" available to pay in debt service. Governments are to tax labor - not finance, insurance or real estate (FIRE), but to impose new employment and sales taxes while cutting back public pensions and public spending. Europe is to be turned into a banana republic. This requires dictatorship, and the European Central Bank (ECB) has assumed this power from elected government. It is "independent" of political control - celebrated as the "hallmark of democracy" by today's new financial oligarchy. But as Plato's dialogues explained it, what is oligarchy but the political stage following democracy. We can now await the new power elite making itself hereditary - by abolishing estate taxes, for starters - and turning itself into an outright aristocracy. "Join the fight against labor, or we will destroy you," the EC is telling governments. One can therefore forget the economics of Adam Smith, John Stuart Mill and the Progressive Era, forget Keynes and forget the early 20th-century social democratic traditions. Europe is entering an era either of totalitarian neoliberal rule. This was inevitable since the Chilean dress rehearsal after 1973. After all, one cannot have "free markets" neoliberal style without totalitarian control. This is what Wednesday's strikes and demonstrations were about, after all. Europe's class war is back in business - with a vengeance! This is economic suicide, but the EU is sticking to its demand that Euro-zone governments keep their budget deficits below 3% of GDP - and their total debt below 60% of GDP. They must not raise taxes on the wealthy, but only on labor and what it buys (via sales taxes). Yet at the same time they must slash wages and pensions, cut back public spending and employment, and shrink the economy. When an economic problem is as economically destructive as this, it can only be imposed by economic blackmail. On Wednesday the EU passed a law to fine governments up to 0.2% of GDP for not "fixing" their budget deficits by imposing fiscal austerity. Nations that borrow to engage in countercyclical "Keynesian-style" spending that raises their public debt level 60% of GDP will have to reduce the excess by 5% each year - or else suffer harsh punishment. And unlike central banks elsewhere in the world, Europe's central bank is forbidden from monetizing public-sector governments. These governments must borrow from banks, letting these institutions create their own interest-bearing debt on their own keyboards rather than having their own central bank do it without the cost. The financial privatization and monopoly in credit creation that governments have relinquished to banks is now being made to pay off - at the price of breaking up Europe. The unelected members of the European Central Bank (ECB, independent from democratic politics, not from control by its commercial bank members) has taken over planning power from elected government. Beholden to its constituency, the financial sector, the ECB has had little trouble in convincing the EU commission to back the new oligarchic power grab. It threatens to fine euro-area states up to 0.1% of their GDP for failure to obey its neoliberal recommendations - ostensibly to "correct" these imbalances. But the reality, of course, is that every neoliberal "cure" only makes matters worse. Rather than seeing rising wage levels and living standards as a precondition for higher labor productivity, the EU commission will "monitor" labor costs on the assumption that rising wages impair competitiveness rather than raise it. The broad spectrum of neoliberal junk economics is being brought to bear. If members of the euro cannot depreciate their currencies, then they must fight labor - but not tax real estate, finance or other rentier sectors, not regulate monopolies, and not provide public services that can be privatized at much higher costs. Privatization is not deemed to impair competitiveness - only rising wages, regardless of productivity considerations. This economically destructive policy has been tested above all in the Baltics, using countries such as Latvia as guinea pigs to see how far labor can be depressed before it reacts politically. Latvia gave free reign to neoliberal policies by imposing flat taxes of 51% on employees, while real estate is taxed at only 1%. Public-sector wages have been reduced by 30%. Labor of working age (20 to 35 year-olds) are emigrating in droves. Lifespans are shortening. Disease rates are rising. The internal market is shrinking, and so is Europe's population - as it did in the 1930s, when the "population problem" was a plunge in fertility and birth rates (above all in France). That is what happens in economic depressions. Iceland's looting by its bankers came first, but the big news was Greece. When that nation entered its current fiscal crisis, European Union officials recommended that it emulate Latvia, which stands as the poster child for neoliberal economic devastation. The basic theory is that inasmuch as members of the euro cannot devalue their currency, they must resort to "internal devaluation": slashing wages, pensions and social spending. So while Europe enters recession it is following precisely the opposite of Keynesian policy. It is reducing wages, ostensibly to "free" more income available to pay the enormous debts that Europeans have taken on to buy their homes, to pay for schooling (hitherto provided freely in many countries such as Latvia's Stockholm School of Economics), transportation and other public services that have been privatized (at sharply, drastically increased rates - which the privatizers justify by pointing to the enormously bloated financial fees they had to pay their bankers and underwriters to buy the infrastructure being sold off by governments that the neoliberals blocked from taxing the wealthy). The result is economic shrinkage. Europe is creating economic suicide - and demographic and fiscal suicide too. Every attempt to "solve" the problem of this shrinkage, neoliberal style, only makes things worse. Latvia's public-sector workers have seen their wages cut by 30 percent over the past year, and its central bankers have told me that they are seeking further cuts, in the hope that this will lower wages in the private sector as well. What these cuts are doing, hardly by surprise, is spurring emigration - and also is destroying the real estate market, leading to defaults, foreclosures and a flight of debtors from the country. The emigration is headed by younger workers seeking employment in the shrinking economy. Indeed, Latvia's working conditions also happen to be Europe's most neoliberalized, that is, dangerous, unpleasant and almost neofeudal. For starters in yesterday's Action Day, there was the usual stoppage of transportation and an accompanying honk concert in Latvia's capital city of Riga for 10 minutes at 1 PM to let the public know that something was indeed happening. What is happening most importantly is the national parliamentary elections this Saturday (October 2), where the leading coalition, Harmony Center, is pledged to enact an alternative tax system and economic policy to the neoliberal policies that have reduced labor's wages and workplace standards so sharply - along with public infrastructure - over the past decade. Altogether about 10,000 Latvians attended protest meetings, from the capital in Riga to smaller cities as part of the "Journey into the Crisis." Six independent trade unions and the Harmony Center organized a protest meeting in Riga's Esplanade Park that drew 700 to 800 demonstrators, relatively large for so small a city. Another union protest saw about half that number gather at the Cabinet of Ministers where Latvia's austerity program has been planned and carried out. To highlight the economic issue, a bus tour drove journalists to the victims - schools and hospitals that had been closed down, government buildings whose employees had seen their salaries slashed and the workforce downsized. Crowds were reported to gather, re-igniting the anger expressed early last year in the cold of mid-January when Latvians had demonstrated to protest the start of these cuts. These demonstrations seem to have gained voter sympathy for the more militant unions, headed by the hundred individual unions belonging to the Independent Trade Union Association. The other union group - the Free Trade Unions (LBAS) lost face by acquiescing in June 2009 to the government's proposed 10% pension cuts (and indeed, 70% for working pensioners). Latvia's constitutional court was sufficiently independent to overrule these drastic cuts last December. And if the government does indeed change this Saturday, the conflict between the Neoliberal Revolution and the past few centuries of classical progressive reform will be made clear. The Neoliberal Revolution seeks to achieve in Europe what has been achieved in the United States since 1979, when real wages stopped rising. The aim is to double the relative share of wealth enjoyed by the richest 1%. This involves reduce the population to poverty, breaking union power, and destroying the internal market as a precondition for blaming all this on "Mr. Market," presumably inexorable forces beyond politics, purely "objective" rather than a political power grab. It is not really "the market" that is promoting this destructive economic austerity, of course. Latvia's Harmony Center shows that there is a much easier way to cut the cost of labor in half than by reducing its wages: Simply shift the tax burden off labor onto real estate and monopolies (especially privatized infrastructure). This will leave less of the economic surplus to be capitalized into bank loans, lowering the price of housing accordingly (the major factor in labor's cost of living), as well as the price of public services (by having owners take their returns as a return on equity rather than factoring interest charges into their cost of doing business). The tax deductibility of interest will be repealed - there is nothing intrinsically "market dictated" by this fiscal subsidy for debt leveraging. No doubt many post-Soviet economies will find themselves obliged to withdraw from the euro area rather than see a flight of labor and capital. They remain the most extreme example of the Neoliberal Experiment to see how far a population can have its living standards slashed before it rebels. | |
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Wednesday, September 15, 2010
Real IRA Targets Banks and Bankers
Henry McDonald
The Guardian
September 15, 2010
The Guardian
September 15, 2010
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| “We have a track record of attacking high-profile economic targets and financial institutions such as the City of London.” Photo of the Bank of England by Denis Barber. | |
Banks and bankers are now potential targets for the Real IRA, leaders of the dissident republican terror group have warned in an exclusive interview with the Guardian. Despite having only 100 activists they also said that targets in England remained a high priority.
In an attempt to tap into the intense hostility towards the banks on both sides of the Irish border they branded bankers as “criminals” and said: “We have a track record of attacking high-profile economic targets and financial institutions such as the City of London. The role of bankers and the institutions they serve in financing Britain’s colonial and capitalist system has not gone unnoticed.
“Let’s not forget that the bankers are the next-door neighbours of the politicians. Most people can see the picture: the bankers grease the politicians’ palms, the politicians bail out the bankers with public funds, the bankers pay themselves fat bonuses and loan the money back to the public with interest. It’s essentially a crime spree that benefits a social elite at the expense of many millions of victims.”
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Thursday, September 9, 2010
Too Big To Fail Global Banks Will Collapse Between Now and First Quarter 2011
Matthias Chang
Global Research
September 9, 2010
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Global Research
September 9, 2010
Readers of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.
Quantitative Easing (QE I) spearheaded by the Chairman of Federal Reserve, Ben Bernanke delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.
That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke “the recent pace of growth is less vigorous than we expected” has all but vindicated my analysis. He warned that the outlook is uncertain and the economy “remains vulnerable to unexpected developments”.
Obviously, Bernanke’s words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.
Why?
Let me be plain and blunt. The “unexpected developments” Bernanke referred to is the collapse of the global banks. This is FED speak and to those in the loop, this is the dire warning.
So many renowned economists have misdiagnosed the objective and consequences of quantitative easing. Central bankers’ scribes and the global mass media hoodwinked the people by saying that QE will enable the banks to lend monies to cash-starved companies and jump start the economy. The low interest rate regime would encourage all and sundry to borrow, consume and invest.
This was the fairy tale.
Then, there were some economists who were worried that as a result of the FED’s printing press (electronic or otherwise) working overtime, hyper-inflation would set in soon after.
But nothing happened. The multiplier effect of fractional reserve banking did not take off. Bank lending in fact stalled.
Why?
What happened?
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Claims of Recovery But Results Nowhere To Be Found
The American public is alarmed at what they see going on. Most of them do not understand what has been done to them. The propaganda fed to them daily has them completely confused and that is understandable. They know the financial sector has been bailed out and they somehow have to pay the bill. They have been deceived and few of them want to admit it. They have been told their economy is in recovery, but improvement is nowhere to be found. Government tells them inflation is 1.6% when they know it’s certainly higher than that and has been for some time. The only beacon of light, if they can discover it, is the truth of talk radio and the Internet. Through these methods of communication the truth can be found and it is reaching all around the world.
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| Between now and the end of February gold and silver should do very well. | |
The American and European banking sectors are generally insolvent and have been so now for a few years. Almost every day there are bank mergers you never hear about and more than 110 banks have gone under so far this year. Thousands of bank branches have disappeared and many unceremoniously have had name changes. The key to banking today is to carry two sets of books. One for the good assets and the other for the bad assets, as sanctioned by the Bank for International Settlements, the BIS, the governments in the US and Europe and the FASB. Most assets are marked to model, which means the bank determines their value arbitrarily, because no visible market exists for the assets. The bookkeeping is a travesty. The idea is to not let the public know how difficult and irreparable the situation really is. It is admitted that 829 banks are on a problem list, but that is just the tip of the iceberg. Failures should accelerate during the coming year. This loss of trust in the system is going to take its toll. Confidence will continue to wane as more and more pressure is brought up to bear versus dollar, which in turn will force gold higher, as it continues to reassert itself as the world’s only real currency. In the end it will spell failure for dollar denominated assets. That will finally bring recognition that the system has failed. This will bring great pressure on the banking system and some major banks will fail. This is why only enough cash should be kept in banks for three months expenses, or six months for businesses and in your safe at home along with your gold and silver coins and weapons, you should have $5,000 in small bills, for emergencies.
It is important to remember that this is part of a plan to nationalize the American banking system, so that it fits into the new National Socialist structure – the corporatist structure that members of the Council on Foreign Relations, the Trilateralists and the Bilderbergs have planned for us. This national banking system is to be the key to future World Government, or a New World Order.
As that effort moves forward the Fed is just short of two years of zero interest rates, a policy that they cannot easily change. If they raise rates at this juncture or stop increasing money and credit the bottom will fall out of the economy. These are the only methods they have of keeping the system alive. The Fed struggles to keep the ship afloat knowing this may be the last time this Band-Aid solution will work. The bubbles that were created, like in real estate, is in its fifth year of decline. Next will be bonds, the stock market and with them insurance companies and retirement plans. Looking at the scene objectively everything the Fed has thus far done has been a failure. A good part of the public is aware of all this and they seethe with anger. Just consider all the unemployed over 40, who will never have a job again and if they do become employed the wage will be ½ to 1/3 of what they once earned. We get letters every day describing the plight of the average American.
Bailing out the financial system hasn’t worked. The loans and special deals have only covered up the crimes these corporations were involved in and allowed them to escape bankruptcy, which they so richly deserve. There is no other way to describe what has transpired in the financial community than welfare for the mega rich. What is worse is that they go right on looting the public as if nothing has happened.
That brings us to the antithesis, which is gold.
We are sure you all remember the supposed swap of 349 tons of gold between commercial banks and the BIS, the Bank for International Settlements. Commercial banks usually work through central banks that represent them at the BIS; thus, this was an unusual procedure, only discovered when someone picked up a footnote in the BIS statement. Making the event more sinister was that there were no BIS official announcement and that the BIS refused to name the banks involved. This is similar to the Fed refusing to divulge to whom they lent $12.8 trillion. We believe these swaps terminate in January, so we anxiously wait to see what the conclusion will be. Will the gold be redeemed or will it become the property of the BIS, or will the swap terms be extended? We guess the real question is were those who did the swap gold bullion banks? Was the public sale of gold by the IMF a factor? Remember the IMF swore they would never dump gold on the open market, but yet they did just that. Adding to the mystery is that the BIS have seldom used gold swaps in recent years. Due to the secrecy involved we tilt toward a billion-bank bailout. In addition we saw fully qualified buyers rejected and gold sold into the market by the IMF. There can be only one reason for that and that is gold price suppression. As it has turned out every time the IMF sells the Russians go into the market and buy it. We also remember a similar episode in the late 1990s when Gordon Brown, the British Treasury Secretary, sold off half of England’s gold at about $275.00 an ounce to bail out London bullion banks.
For those who have an interest in gold they should be paying close attention to gold and silver shares. As of late they have been moving up strongly. Some eight to 20 percent depending on which indicator you watch. The tenor of the market has changed decidedly over the past several months. We could well be experiencing a renewal of share influence. Up until our government decided to manipulate gold and silver, bullion, share prices always led bullion.
We believe this renewal is being led by several factors. The triumph of gold as the only world currency as witnessed over the past 16 months; the use of massive amounts of money and credit in QE1, and now at the beginnings of QE2, which will have equally bad results; trillions of dollars being stolen by those in and around government; the realization that gold and silver production have fallen; the lack of affect of massive naked net shorts in the bullion pits and the LBMA and Comex and the multitude of naked shorts in the shares, all of which have failed to deter higher prices. Higher inflation is on the way, thus $1,600 gold looks very probable this year and $3,000 next year.
Historically September sees higher gold prices 81% of the time. Between now and the end of February gold and silver should do very well. Silver is poised to soon break out to $25.00 or higher. We are also about to see a parting of the ways in gold and silver versus commodities, just like we began to see between the US dollar and gold. In the future gold and silver will be assisted by a major fall in confidence in the Federal Reserve, which is already underway. Their failure to produce a recovery with $2.5 trillion that they injected into the system, along with the administration, has not sat well in the business world. Now the Fed is beginning another $2.5 trillion rescue, which may end up being $5 trillion. Monetary expansion and monetization means higher inflation, which means higher gold and silver prices. As you see in this issue the administration is going to mark mortgages to the market and rewrite new loans. That will add to more monetary expansion. In fact it may be part of the QE2. Word is that this program could put $50 billion into consumer’s hands to spend, which the taxpayer would be on the hook for. We also estimate, even with the programs, 40% to 50% would go into foreclosures.
Rumors reach us that Bank of America was in serious trouble in July and had the Fed not poured in funds the bank would have failed. We described earlier in the year why BofA had such problems; it had been a dumping ground for the Fed. It now looks like the bank may be dismembered with the biggest and best pieces going to JPM and GS.
We are also getting disturbing reports that some kind of secret rules regarding gold and silver bullion. It seems that naked shorting has become a major problem. It may be the only way they can neutralize the problem; and that is to seize bullion accounts to cover their shorts. We are sure holders will be compensated, but they’ll lose their positions and have to buy them back somehow. We just saw the Swiss government and the banking community rollover for imperial America, so it is conceivable that they would pull something like this. Forewarned is forearmed. That is why we always recommend taking physical delivery if possible. All banks and governments are no longer to be trusted.
Second quarter GDP was 1.6%, we had predicted 1.5% months ago. As we forecast the third and fourth quarters will be dreadful, probably between minus 1 and plus 1. The quantitative easy is not coming fast enough; banks finally trying to lend to small and medium businesses, which create 70% of the jobs has had only moderate success and the new US government mark-to-market bailout of mortgage holders won’t affect the market until next year. Adjusting payments by bringing loans down will push $50 billion into the economy will only create more debt and still 40% to 50% of homeowners will fall into foreclosure. Without jobs there can be no solution.
Worse yet, corporate earnings for 2011 should be flat.
Unemployment still is going nowhere although recent numbers on the face were not all that bad. Of the 67,000 in job growth 10,000 was the result of the end of a construction strike. A figure government loves to hide is those forced into part-time employment by an additional 331,000, which certainly keeps the figure close to 10 million. In case you didn’t notice all the gains were part-timers – hours worked were flat. Manufacturing lost 27,000 jobs. In April the diffusion index was 68 and in August it was 53. Probably the most important figure of all U6 rose in August to 16.7% from 16.5% in July, as real unemployment after taking out the birth/death ratio rose again to 21-3/8%. This news should keep wage increases flat to slightly higher.
Retail was all over the place in distortion. There were jobless benefits that were released to those that had previously been cut off, and there were 17 states implementing tax holidays that added 2% to overall sales.
The Conference Index fell to 24.9 in August from 26.4 in July. We won’t quote the ISM manufacturing Index because we do not believe it. It was statistically impossible for it to be where it was reported to be. All employment increases were in the private service sectors in health and education, which was statistically impossible as well. We find no confusion, just more lies. The economy is slowing and it’s as simple as that. Productivity was dismal at a minus 1.8%; normal is plus 2.5%. This will negatively affect profit margins as labor costs grow 1.1% and that will force up prices and inflation. As far as GDP growth is concerned we are back to the last quarter of 2008 and the first quarter of 2009 officially. Who knows what the real numbers are. The momentum is gone and if it is to be regained QE2 had best come fast and furious. The loss of traction is now close to where it was when Lehman was destroyed, but 20% to 40% higher than other unfortunate events took place. The difference is the slowdown has been stealth and there has been no panic and no negative events. Such an event would bring the economy down to some of the worst levels in the last dozen years.
After seeing new home sales on an adjusted seasonal basis we suspect they are not correct. The unadjusted numbers fell 7% and that is hard to reconcile. We see no shift in direction. The coming mortgage giveaway will only delay the inevitable for a year or two. It is certainly no solution. Coming in September it amounts to cheap political pandering at the expense of all American taxpayers.
Business sees what we see and it does what it has to do to stay alive. You might call it a state of neutrality as business again dries up and more small and medium-sized businesses fall by the wayside. Owners are sick and tired of more regulations and taxes and idiotic car and appliance programs that do not work. They just steal future sales. The passing of the healthcare reform with onerous rules, additional taxes and confusion haven’t helped. The disagreements over the extension of the Bush tax cut renewals don’t help, especially with the President vowing to kill them. Then how dumb can rewriting underwater loans be? It’s just another temporary solution to aid the financial sector. Most small businesses will pay the fine and opt out of health care for employees completely, leaving valued employees at the mercy of the government and socialized medicine, as 25% of doctors, dentists and other professionals either retire or leave the country. We saw the same thing happen in England in the 1950s. Why would businesses expand and hire under these woeful circumstances? They know real growth is zero.
We know tariffs on goods and services would turn everything around, but our House and Senate have been purchased by the New World Order crowd that want America and Europe on their knees financially and economically so the public will be forced to accept a corporate fascist world government. Free trade, globalization, offshoring and outsourcing have been in full swing for 20 years and the damage done to the American economy has been incalculable. The only way the system can be saved before it crashes is for the system to be purged. The financial sector and others have to be allowed to go into bankruptcy and if they are not eventually chaos and revolution will ensue. Yes, we know that financial sector controls the government, so won’t voluntarily allow that to happen. That is why the November election is so important. All the incumbents have to be swept from Congress. Even removing half of these purchased criminals would give us a chance to heal the system. Without that there is little hope of a positive solution. At least you have been forewarned and at least you can protect what assets you have left by being invested in gold and silver related assets. It is all a sad commentary on our country and its citizens.
In addition, we found it illuminating that Sir Alan Greenspan, an Illuminist, is working with the Paulson Group advising them on monetary matters, money supply and gold prices. This is the same elitist who got us into this mess in the first place, at the direction of his controllers. Quantitative easing one and now quantitative easing 2 should cause inflation to surge and in that process gold and silver will surge as well. That has to be a reason why Greenspan is selling his services. That is to make sure Paulson understands the relationship created by the Fed, which is the creation of massive amounts of money and credit, overall monetary policy, inflation and hyperinflation and the prices of gold and silver.
The bottom line is the Illuminists, the Fed and Greenspan are advocating purchasing gold. The Fed as we have said so often has no other alternative but to reflate. This is the final stamp of approval on designating gold the only real world currency, which we have strongly forecasted for the past 16 months. They realize they have lost control of the dollar, finances and the economy. Gold is reassuming its rightful place as the only world currency.
Obama to Ask Congress to Pass $100 Billion Research Tax Credit
Obama to Propose Tax Write-Off for Capital Investments allowing businesses to deduct from their taxes through 2011 the full value of qualified capital investments.
U.S. to Deploy Broader Mortgage Aid – mortgage balances for homeowners that owe more than their homes are worth.
Officials say between 500,000 and 1.5 million so-called underwater loans could be modified through the program, the first initiative to target homeowners who are current on their mortgage payments but are at risk of default because they have no equity in their homes.
Obama to Link Tax Plan, Hiring With the job market stuck in neutral, the Obama administration is moving toward using the revenue from expiring tax cuts for the wealthy to finance about $35 billion of tax cuts for small businesses and workers, administration and congressional officials said Friday.
William C. Dunkelberg, chief economist for the National Federation of Independent Business, said small business doesn’t need another tax cut and that allowing the money to stay in the hands of consumers including by extending all the Bush tax cuts is what will ultimately help the economy recover.
“History shows that letting Washington have the money and spend it is very ineffective,” he said. “If you give a small biz guy $20,000, he’ll say, ‘I could buy a new delivery truck, but I have nobody to deliver to.’ ”
A combative President Barack Obama rolled out a long-term jobs program Monday that will exceed $50 billion to rebuild roads, railways and runways, and coupled it with a blunt campaign-season assault on Republicans for causing Americans’ hard economic times.
GOP leaders instantly assailed Obama’s proposal, and many Democrats will likely be reluctant to approve additional spending and higher federal deficits just weeks before elections that will determine control of Congress. That left the plan with low odds of becoming law this year.
It appears that Obama’s latest Stimulus scheme is a political gambit that tries to get Republicans to vote against small business tax cuts. But there have already been several small biz tax cuts that have produced zilch. The plan will have little to no effect on the economy in coming months because businesses still see the record tax hike that will appear in four short months.
The BLS increased Birth/Death Model jobs to 115k vs. 98k last August. This is ludicrous and has been the prime ruse that the BLS has exploited to overstate job growth for years.
Another dubious fact in NFP is the 19k job gain in construction. 10k workers returned from strike. Part time workers for economic reasons soared by 331k. Working one hour per week counts as employment according to the BLS…Full-time employment tanked 254k per the Household Survey. According to the BLS, 331,000 Americans were forced to downgrade their employment status to part-time or some chunk of them would have lost their jobs.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 331,000 over the month to 8.9 million. [This is a sign of econ weakness.]
If the ISM and Chicago PMI are so great and its employment component was so great why did August manufacturing jobs decline 27k vs. the expected gain of 10K? And why did stocks rally on negative manufacturing employment, when it rallied on ISM employment strength?
John Williams: The ability to play monthly games with seasonals, the nature of assumptions in the handling of hard data and revisions to same, and a 95% confidence interval of +/- 129,000 jobs around the reported payroll number change, provide significant reporting leeway should someone choose to target payroll reporting in the context say of consensus expectations tied to the financial markets, or of related media hype that could impact public political perceptions.
Please understand what John Williams is saying. Statistically, the confidence or accuracy of the employment report is 95% according to the BLS. This means any variance within +/-129k jobs is within the statistical margin of error.
Protection of money market investors at risk Investors in loss-making money market funds are less likely to be bailed out by fund sponsors in the future, increasing the risks of a run on the $5,000bn (£3,247bn, €3,896bn) sector, according to Moody’s, the ratings agency.
Justin Meadows, chief executive of the MyTreasury trading platform: “To be perfectly frank, neither the funds or their parents are prepared to wear the risk [of implicit guarantees] any more.”
One senior industry figure concurred, saying: “The bills are becoming bigger and bigger. $2.9bn is a big cheque and you wonder how long people are going to go on like this. “But the role that money market funds play in financing the economy is substantial. We are the ones that swallow all the short-term paper.” http://www.ft.com/cms…
Banks Bought Bonds Amid Debt Crisis Even as Europe’s sovereign debt crisis intensified early this year, banks continued to load up on debt from Greece and other countries with the most acute fiscal problems, according to a report released Sunday that also suggested that the European Central Bank inadvertently encouraged institutions to increase their risk.
Fury Over Public Pensions Sparks Lawsuits – Several state and local retirement funds have balked at disclosing the pensions of individual government workers, triggering lawsuits that claim taxpayers have the right to such information.
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