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Wise Irishman Bluntly States the Problem with the Economy (VIDEO)

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US Fed lent $3.3tn to multinationals, billionaires and foreign banks

US central bank releases details of thousands of secret loans to global firms as well as foreign banks and American billionaires

Dominic Rushe
Guardian

The global credit crunch of 2008 ran deeper and wider than previously disclosed, forcing the US government to fund firms including General Electric and Toyota, along with banks and billionaire investors, according to documents released by the Federal Reserve.

Under pressure from politicians, the US central bank has released details of 21,000 transactions it made as the global economy faced meltdown.

As well as its well-publicised support of the banking system, the Fed's aid reached far beyond Wall Street, offering finance to the motorbike manufacturer Harley-Davidson, the industrial equipment maker Caterpillar, the telecoms company Verizon and even the computer billionaire Michael Dell as it struggled to keep the economy going. The lending reached $3.3tn (£2.1tn) at its peak.

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UK banks borrowed more than $1 trillion from US Federal Reserve

British banks borrowed more than $1 trillion (£640bn) from the Federal Reserve during the financial crisis, led by Barclays following its swoop on the US business of Lehman Brothers.

Dees Illustration

Richard Blackden and Harry Wilson
Telegraph

The disclosures came because the Dodd-Frank Wall Street Reform Act forced the Fed to reveal which banks and companies it lent money to in an effort to shore up the financial system from the end of December 2007 onwards.

It released the details of more than 21,000 individual transactions on its website on Wednesday, which showed that British banks represented more than a third - about $1.5 trillion - of the $3,300bn lent by the US authorities to prop up the financial sector.

Barclays borrowed $863bn from the Fed, with almost half coming in overnight loans through the Primary Dealer Credit Facility, a programme established by the central bank to help those banks that deal in US Treasuries.


Barclays has since repaid all its loans and said that much of its then borrowing was down to its purchase of Lehman’s US business.

Royal Bank of Scotland borrowed $446bn, Bank of Scotland $181bn, Abbey National $19bn and HSBC borrowed less than $10bn.

The figures for the banks represent the total amount they borrowed and not the total outstanding borrowing at any one point.

RBS said it no longer used any of the Fed scheme and had “significantly reduced” its borrowing from central banks.

The Fed said on Wednesday that the fact banks from across the world has tapped its emergency lending “reflected the severe market disruptions during the financial crisis and generally did not reflect participants’ financial weakness”.

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World At A Boil With War And Economic Crisis

Order Out of Chaos

Bob Chapman
International Forecaster

There is no question that the world is at a boil. Germany is drawing anger; N. Korea has attacked S. Korea; flaying about the FED’s Mr. Bernanke blames China for America’s sad economic and financial dilemma; five suits, class action and RICO, have been filed against JPMorgan Chase and HSBC for having manipulated silver prices and class actions are rumored to be in process for naked shorting, which has been rampant in the market for years, a felony hedge fund investigation of insider trading, which the SEC has absolutely refused to pursue. The US is still occupying Iraq and has a war raging in Afghanistan to protect the opium and marijuana crops, the largest in the world, which generate $300 billion in profits a year. Socialists, having recently relinquished power in the US House of Representatives are calling Republicans an axis of depression. The socialist, what they cannot control, they attempt to destroy. It reminds us of Italy’s communists.

The New Fed policy of QE2 is considered by US detractors to be a step too far. The Fed has entered the inner sanctum of realm of no return. If QE 2 and a hidden QE3 don’t work, then the monetary game is over. The Fed is in a desperate position and instead of letting depression take its course, the groundwork of which was caused by the Fed, Wall Street and banking, it is again rolling the dice intent on extending and buying time. If the Fed and its owners refuse to bite the bullet great inflation will ensue dependent on the size of QE2. If it were to stay at $600 billion inflation would increase. If the Fed is forced to increase the injection to more than $2 trillion there will be far more inflation. Unfortunately, we cannot depend on government statistics because government has a track record and propensity for masking the truth. There are those that believe that this is a monetary experiment and that it is not. What we are seeing has been tried in different forms for centuries, quite unsuccessfully. As a result, to thinking people, the Fed and Mr. Bernanke have lost most of their credibility, and that view is justified. Mr. Bernanke’s recent reference to “rebalancing the global economy” is just another effort to justify current monetary policy. What Mr. Bernanke is really advocating is a world balancing where countries with surpluses use those funds to assist those with deficits. He wants a global village where interests of individual countries must reflect the interests of the global economy as a whole. Of course, nowhere to be found is sovereignty in this planned redistribution of assets.


This is the same goop Treasury Secretary Mr. Geithner fed us at the G-20 meeting. The concept of lets all of us go bankrupt together, utopianism at its finest. Fortunately in both cases the concept of global rebalancing went over like a lead balloon. Any honest economist knows this is a rehash of flawed policy. When government and the Fed abandoned the gold reserve standard on august 15, 1971, they knew where this would all end up, but they did it anyway in their march toward a world financial order and world government. After that historic date there would be no return to sound money until the system was totally purged. We have heard the call for almost 40 years of the amalgamation of nations for the interest of all. Individual countries must sacrifice their interests for the entire global economy. this is why the Fed has deliberately accommodated monetary excesses since then.

We have written about this embarrassment of planned destruction for 45 years and until recently our thoughts were ignored. Thanks to talk radio and the Internet, that reaches the entire world, we are finding that more and more people are waking up to the truth. Since the 1980s we have had one fiscal and monetary crisis – one after another. Now that the world is beginning to discover what Europe and the US have been up to for years these internationalists now find themselves in deep trouble. Their real problem is too many people now know what they are up to.

China just injected $2.3 trillion into their economy to spur domestic demand and create jobs. The result has been funds flowing into the stock market, real estate and the general financial sector, which has created a misallocation of funds and leaping inflation. Bank set asides were just raised, but that has happened a little too late to escape some major damage. Chinese are traveling to Hong Kong from the mainland to shop because the cost of goods is 10% to 95% cheaper. The Chinese obviously went along with US ideas to inflate domestic demand by stimulating their economy, so that consumption and imports would rise. Thus, we see China is having some of the same problems the US is having.

Leaving china behind for a moment we have to deal with corporate fascist Keynesianism, which believe it or not is being called radicalism even in mainstream circles of economic and monetary management. They are finally realizing that the Fed has inflated markets worldwide. In addition, it has long been a government and Fed policy to manipulate securities markets worldwide and provide finance as well. The insider trading the Justice Department is pursing is an example, as well as the JPMorgan Chase/HSBC silver manipulation cases. As we said, next comes naked shorting and front running. Let’s hope somehow we can bring these sociopath criminals to justice and at least for a time have an honest system.

As a result the financial world has turned to gold, which is up 24% and silver up 65% this year.

Investors believe that the rescue of Ireland is a done deal – not so fast. The Irish are really irate at having to bail out the bondholders. As we said before this is all about the banks being bailed out by the taxpayer.

In the US aggregate household net worth is $12.2 trillion lower today than it was three years ago at its pre-depression peak, a horrible decline of 18.5%, all in order to bring about the conditions to implement world government. That is about $100,000 per household. That money is never coming back nor is what was once known as the American dream and way of life. Baby boomers see it coming and denial is grudgingly becoming acceptance. The ratio of household net worth to disposable personal income has gone from 639% to 472% and it is still plunging. The savings rate, out of fear has risen from minus 0.5% to 5.5%, but still has to double from here to help get the economy going again. At the same time the Fed and Treasury are telling Americans to take on more debt. Homeowners equity has collapsed below $7 trillion from $13.5 trillion, making the situation worse – employment is off 7.5 million and full-time jobs are off 10 million, the worst numbers in 11 years. Real unemployment is 22-5/8%.

If QE2 is terminated at $600 billion watch out, because the economy will head straight into a great dark pit. All the numbers we see are signaling a strong need for more than $600 billion.

Ireland’s government has collapsed as front page headlines in Dublin blare we were lied too. We saw the same thing come out of Greece and next is Portugal and then Spain. Debt is being restructured and it won’t last. Who wants to live in depression for 30 to 50 years, while bankers get richer and more powerful?

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28% Plunge In Our Standard Of Living (VIDEO)

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Obama's Coming Sell-Out to the Super Rich and What It Means for the Rest of Us

Anthony Freda Illustration

Michael Hudson
CounterPunch

Now that President Obama is almost celebrating his bipartisan willingness to renew the tax cuts for the super-rich enacted under George Bush ten years ago, it is time for Democrats to ask themselves how strongly they are willing to oppose an administration that looks like Bush-Cheney III. Is this what they expected by  Obama’s promise to rise above partisan politics – by ruling on behalf of Wall Street, now that it is the major campaign backer of both parties?

It is a reflection of how one-sided today’s class war has become that Warren Buffet has quipped that “his” side is winning without a real fight being waged. No gauntlet has been thrown down over the trial balloon that the president and his advisor David Axelrod have sent up over the past two weeks to extend the Bush tax cuts for the wealthiest 2 per cent for “just” two more years. For all practical purposes the euphemism “two years” means forever – at least, long enough to let the super-rich siphon off enough more money to bankroll enough more Republicans to be elected to make the tax cuts permanent.


Obama seems to be campaigning for his own defeat! Thanks largely to the $13 trillion Wall Street bailout – while keeping the debt overhead in place for America’s “bottom 98 per cent” – this happy 2 per cent of the population now receives an estimated three quarters (~75 per cent) of the returns to wealth (interest, dividends, rent and capital gains). This is nearly double what it received a generation ago. The rest of the population is being squeezed, and foreclosures are rising.

Baudelaire quipped that the devil wins at the point where he manages convince the world that he doesn’t exist. Today’s financial elites will win the class war at the point where voters believe it doesn’t exist – and believe that  Obama is trying to help them rather than shepherd them into debt peonage as the economy settles into debt deflation.

We are dealing with shameless demagogy. The financial End Time has arrived, but  Obama’s happy-talk pretends that “two years” will get us through the current debt-induced depression. The Republican plan is to make more Congressional and Senate gains in 2012 as Obama’s former supporters “vote with their backsides” and stay home, as they did earlier this month. So “two years” means forever in politician-talk. Why vote for a politician who promises “change” but is merely an exclamation mark for the Bush-Cheney policies from Afghanistan and Iraq to Wall Street’s Democratic Leadership Council on the party’s right wing? One of its leaders, after all, was  Obama’s Senate mentor, Joe Lieberman.

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Pessimism pervades as G20 leaders show sharp split

Jean H. Lee
Associated Press

SEOUL, South Korea — A strong sense of pessimism shrouded the start of an economic summit of rich and emerging economies Thursday, with President Barack Obama and fellow world leaders arriving in Seoul sharply divided over currency and trade policies.

The Group of 20 summit, held for the first time in Asia, has become the centerpiece of international efforts to revive the global economy and prevent future financial meltdowns.

Hopes had been high that the Group of 20 – encompassing rich nations such as Germany and the U.S. as well as growing giants such as China and Brazil – could be the world forum for hashing out an economic way forward from financial crisis.


But agreement appeared elusive as the summit began, divided between those such as United States that want to get China to allow its currency rise and those irate over U.S. Federal Reserve plans to pump $600 billion of new money into the sluggish American economy, effectively devaluing the dollar.

Obama told fellow leaders that the U.S. cannot remain a profligate consumer using borrowed money and needs other countries to pull their weight to fix the world economy.

"The most important thing that the United States can do for the world economy is to grow, because we continue to be the world's largest market and a huge engine for all other countries to grow," Obama said at a news conference.

Brazil's president, Luiz Inacio Lula da Silva, warned that such policies would "bankrupt" the world.

"If the rich countries are not consuming and want to grow its economy on exports, the world goes bankrupt because there would be no one to buy," he told reporters. "Everybody would like to sell."

Concerns about trade gaps, protectionism and a currency war threatened to overtake momentum for forming global solutions to the financial crisis created at last year's London summit.

So far, officials can't even agree on the agenda, much less a draft statement. Government ministers and senior G-20 officials have labored for days without success to come up with a substantive joint statement to be issued Friday, G-20 summit spokesman Kim Yoon-kyung said.

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Barack Obama: We Must Embrace Globalism And The Emerging One World Economy

The Economic Collapse

Although it received very little coverage in the mainstream media, Barack Obama made some comments about globalism during his speech in Mumbai, India that were very eye-opening.  As he was discussing the new realities of world trade in 2010, Obama warned against “those who see globalization as a threat” and he spoke of the “integrated world” in which we all now live.  But is merging the entire globe into a one world economy, a one world financial system and a one world labor market really the best thing for the American people?

For the past two decades, all U.S. presidents have been heralding the benefits of merging the American economy with the rest of the globe.  George Bush Sr., Bill Clinton, George W. Bush and Barack Obama have all steadfastly supported the emerging one world economy.  These presidents have each used different terms to describe this process such as “globalism”, “globalization”, “an integrated world”, “the global economy” and even “a New World Order”, but they have all meant the same thing.  All of these presidents have sought to integrate the United States even more deeply into the developing one world economic system.


Barack Obama showed very clearly how he feels about globalism when he made the following statement during his speech in Mumbai….

“This will keep America on its toes. America is going to have to compete. There is going to be a tug-of-war within the US between those who see globalization as a threat and those who accept we live in a open integrated world, which has challenges and opportunities.”

This is something that Barack Obama has obviously thought quite a bit about. In fact, during the same speech he warned that those supporting globalization will need to “guard against” those who would seek to put up barriers to the full integration of the economies of the world….

“If the American people feel that trade is just a one-way street where everybody is selling to the enormous US market but we can never sell what we make anywhere else, then the people of the US will start thinking that this is a bad deal for us and it could end up leading to a more protectionist instinct in both parties, not just among Democrats but also Republicans. So, that we have to guard against.”

But in this new “global economy”, aren’t jobs leaving the United States and heading to developing nations at a blinding pace?  Of course, but apparently we are just supposed to shut up and accept this new reality.  In fact, Obama says that persistently high unemployment is “a new normal” that we are all just going to have to get used to.

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Ireland's crisis flares as investors dump bonds

Shawn Pogatchnik
Associated Press

DUBLIN – Ireland's financial troubles loomed large Wednesday as investors — betting that the country soon could join Greece in seeking a bailout from the European Union — drove the interest rate on the country's 10-year borrowing to a new high.

The yield, or interest rate, on 10-year bonds rose above 8 percent for the first time since the launch of the euro, the European Union's common currency, 11 years ago.

Bond traders increasingly believe that Ireland soon will be forced to tap Europe's emergency fund for euro-zone nations facing a threat of bankruptcy. The 16 nations of the euro zone created that euro750 billion backstop in May as the EU and International Monetary Fund provided an emergency euro110 billion loan to Greece.


Another bailout would send more shock waves through the currency union, which has struggled to find ways to keep individual governments from overspending and threatening the currency's value.

Flaring financial tensions has driven the euro off recent 6-month highs of $1.428 versus the dollar. The euro was trading Wednesday at $1.3760, down from its opening of $1.3773.

The cost of funding Irish debt has risen steadily since September, when the government admitted its bailout of five banks would cost at least euro45 billion, equivalent to euro10,000 for every man, woman and child in Ireland. That gargantuan bill, in turn, has made the projected 2010 deficit rise to 32 percent of GDP, the highest in post-war Europe.

The yield on 10-year Irish notes rose steadily from 7.94 percent and passed 8.4 percent in afternoon trade. As the value of bonds fall, buyers demand ever-higher yields as compensation.

Traders accelerated their offloading of Irish bonds after London-based LCH.Clearnet Group announced Wednesday it would require clients who deal in Irish bonds to increase the percentage of cash deposited up front to 21 percent, compared to a usual deposit of less than 6 percent. The move came on top of decisions this month by the governments of Russia and Chile to stop buying Irish debt.

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China says G20 should monitor US Fed

Editor's Note: China wants the G20 to have the authority to "monitor" the Fed.  Since the Fed has battled an audit by our own Congress it's doubtful it will happen, but it will be interesting to see if they concede any ground to accommodate global monetary cooperation.

AFP

China's state media has issued a new broadside at the US Federal Reserve's move to prime the US economy, suggesting the Group of 20 should monitor policy shifts by the US central bank.

The Xinhua news agency said in a commentary the Fed was "risking the global recovery by following its own track for economic revival" by spending an extra $US600 billion ($A593.65 billion) buying Treasury bonds to stimulate the US economy.

The comments were published just days ahead of two key summits this week - the G20 meeting in Seoul and the Asia-Pacific Economic Co-operation forum in Yokohama, Japan - that are expected to focus on rebalancing global trade.

"There is an urgent need for the G20 ... to set up a new mechanism that effectively monitors the issuer of the international reserve currency, especially when it is not able to carry out responsible currency policies," Xinhua said.

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ATMs Crash Across the Country After "Bank Holiday" Warnings

Twitter aflame with reports of Wells Fargo, Chase and Bank of America customers being unable to withdraw cash

Paul Joseph Watson
Prison Planet

Following rumors of a “bank holiday” that could limit or prevent altogether cash withdrawals later this week, Twitter and other Internet forums were raging yesterday about numerous ATMs across the country that crashed in the early hours of Sunday morning, preventing customers from performing basic transactions.

It’s unknown whether the crashes were partly a result of a surge of people trying to withdraw their money in preparation for any feared bank shutdown, or if mere technical glitches were to blame. The fact that the problem affected numerous different banks in different parts of the U.S. would seem to indicate the former.

The Orange County Register reported that the problems were “part of a national outage” which prevented people from performing simple transactions such as cashing checks and withdrawing money.

“Computer issues” were blamed for similar issues in Phoenix Arizona, while in Birmingham Alabama, Wells Fargo customers’ online banking accounts and ATMs displayed incorrect balances.

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Volcker calls Fed plan an "illusion", won't boost economy

Kelly Olsen
Associated Press

SEOUL, South Korea — Former Federal Reserve Chairman Paul Volcker says the U.S. central bank's plan to buy hundreds of billions of dollars in government bonds probably won't do much to boost the economic recovery.

The Fed announced Wednesday that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds.

Volcker told a business audience in Seoul that the Fed's bond plan is obviously an attempt to spur the U.S. economy but "is not the kind of action that's likely to change the general picture that I've described as slow and labored recovery over a period of time."


The Fed's move has caused worries in South Korea and other emerging markets in Asia. Those governments fear that lower interest rates in the U.S. will further push investors to seek higher returns overseas and that this tide of money will drive up their currencies and destabilize their markets.

Volcker served as Fed chief from 1979 until 1987 under presidents Jimmy Carter and Ronald Reagan and is currently chairman of President Barack Obama's Economic Recovery Advisory Board. He also warned that the U.S. won't find its way out of the economic doldrums through over-stimulation.

"The thought that you can create a prosperous economy by inflating is an illusion, in my judgment," he told reporters after his speech. "And we should never forget that. I thought we'd learned that lesson and I hope we continue to learn that lesson."

The Fed faces a dilemma in balancing the aim of boosting the economy now while avoiding fears of a future jump in inflation due to the monetary stimulus, said Volcker, who as central bank chairman hiked interest rates aggressively to tame inflation.

"The influence of this kind of action on longer term interest rates, in particular, is ambiguous because the immediate impact of buying bonds ought to be to drive bond prices up and interest rates down," he said. "But if people get concerned about longer run inflationary impacts, the effects go in the other direction."

In theory, the Fed's action is expected to lower interest rates because bond prices and interest rates – also known as yields – move in opposite directions. The yield is the fixed amount of annual interest paid to the owner of the bond expressed as a percentage of the bond price, so the extra demand created by the Fed's purchases should push bond prices up and lower the yield.

But when investors fear inflation will be higher in the future they demand that bonds pay a higher interest rate to protect their investment from the value-eroding effects of inflation.

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