Tuesday 18 November 2008

READ THIS - The New Economics

Two articles that detail how we are about to enter a new world of protectionism where governments will have to to act to protect nation states in a post - globalist and post-laissez fair capitalist economic model.

Note how the top article states that gold may be seized by governments to reduce inflationary pressures - and then note how Iran three days transformed its assets into gold.

Note also how the need for a new US currency is required - The Amero.

It appears my conspiracy theory is coming true.

Worse Than The
Great Depression?
By Stephen Lendman

It's a minority but growing view, including from 86-year old former
Goldman Sachs chairman, John Whitehead, at the November 12 Reuters Global
Finance Summit in New York. As disturbing evidence mounts, he said: "I think
it would be worse than the depression. We're talking about reducing the
credit of the United States of America, which is the backbone of the
economic system. I see nothing but large increases in the deficit, all of
which are serving to decrease the credit standing of America.

Before I go to sleep at night, I wonder if tomorrow is the day
Moody's and S & P will announce a downgrade of US government bonds.
Eventually (they'll) no longer be the triple-A credit that they've always
been. I've always been a positive person and optimistic, but I don't see a
solution here." Powerful words from a man who "want (s) to get people
thinking about this, and realize (we're on) a road to disaster."

A subject writer, precious metals analyst, and Safe Money Report
editor Larry Edelson also comments on. Most recently on November 13 in an
article titled: "The G-20's Secret Debt Solution." He's quite dire in saying
short-term fixes won't be discussed at its November 15 summit. A "far more
fundamental fix is being (secretly) discussed - the possible revaluation of
gold and the birth of an entirely new monetary system." It's a topic Edelson
has spent much time on previously.

Given the speed and severity of the current crisis, he believes
something big is planned and puts it this way: "If we can't print money fast
enough to fend off another deflationary Great Depression, then let's change
the value of the money." In other words, devalue it, but do it globally. "It
would be a strategy designed to ease the burden of ALL debts - by
simultaneously devaluing ALL currencies (or at least all that matter) and
re- inflating ALL asset prices."

Edelson thinks G-20 officials will discuss this seriously.
Essentially, the idea of "a new financial order that includes new monetary
units that (will help) wipe clean the world's debt ledgers." At best, it
will be a tough sell given that the US, by far, is the world's largest
debtor and the one most in need of help. The urgency for all others is that
if America sinks, it'll drag down all world economies with it, so it's
possible some kind of solution will be arranged. But it's not assured, nor
can it be ruled out that the summit will be stalemated as every nation has
its own concerns and its own constituency to serve.

Edelson believes that key US officials, including Fed chairman
Bernanke, Treasury secretary Paulson, and president-elect Obama back the
idea, and (most but not all) key world central bankers and politicians agree
that a new monetary system is needed.

Consider a historical precedent at a previous dire time - the Great
Depression. In April 1933, Roosevelt issued Executive Order (EO) 6102 that

....a "national emergency still continues to exist (and) by virtue
of the authority vested in me....(I) do hereby prohibit the hoarding of gold
coin, gold bullion, and gold certificates within the continental United
States by individuals, partnerships, associations and corporations...."

The EO required the delivery on or before May 1, 1933 "to a Federal
Reserve Bank or a branch or agency thereof" all such holdings other than
amounts used in industry, profession or art and other listed exceptions.
Failure to comply carried a fine up to $10,000 (adjusted for inflation today
would be 16 times or more that amount), up to 10 years in prison or both.
This EO is called the Gold Confiscation (act) of 1933. It's price at the
time was $20.67 an ounce. Shortly thereafter, it was raised to $35 an ounce
for an effective US dollar 41% devaluation.

What Edelson is suggesting is that world economies together will do
the same thing - "a simultaneous and universal currency devaluation" without
confiscating gold. They don't have to and instead can "raise the current
official central bank price from its booked ($42.22) value an ounce - to a
price that monitizes a large enough portion of the world's outstanding

If this happens, debts will be reduced to a fraction of re-inflated
asset prices "led higher by the gold price." Further, Edelson believes, in
place of the dollar as a reserve currency, "three new monetary units of
exchange (will emerge) with equal reserve status" - a new dollar, euro and
"a new pan-Asian currency" with the Chinese yuan likely surviving and linked
to a basket of the other three.

With devaluation, new currencies will be worth less than the old
ones by a considerable amount. For example, "10 new units of money (may then
equal) one old dollar or euro." They'll have new names as well, and new
"regulations and programs would be designed and implemented to ease the
transition to a new monetary system" - if it happens and it's by no means

But if it does, central banks and governments would run things along
with the IMF that's had contingency plans for such an eventuality since it
was established in 1944. According to Edelson, a new monetary system will
include the following:

(1) A new fixed-rate currency regime

Once the price of gold is increased and new currencies introduced,
"a new fixed exchange rate system" will be introduced. The floating one and
old currencies will be eliminated to reduce market volatility.

(2) New compensatory measures for savers

They'll be introduced as an inducement and to protect against
further devaluation. For example, a possible "one-time windfall tax- free
deposit could be issued directly to individual accounts or to
employer-sponsored pensions, to IRAs, or Social Security accounts."
Something like a tax rebate. At the same time, income taxes may be raised to
cover the cost or perhaps some kind of global sales tax instead.

(3) Additional programs to protect lenders and creditors

They'll get top priority over individuals but with a currency worth
far less than before. So programs will be needed (like tax help) to help
them offset the losses that will be considerable.

Can this work? Edelson thinks so as hard as the medicine would be to
swallow. Also, it's not a recipe for high growth rates or improved returns
on investments the way it was in the great bull market now ended.

Another issue is what gold price would be legislated to reflate
world economies. Who can say, but here are some possibilities Edelson sees,
and note the dramatic effect on the precious metal if he's right:

-- if 100% of public and private sector debt is monetized, "the
official government price of gold would have to be raised to about $53,000
per ounce;"

-- at 50% monitization, gold would be $26,500 an ounce;

-- at 20%, it would be $10,600 an ounce; and

-- at 10%, it would be $5300 an ounce.

The lowest figure isn't outlandish in light of historical precedent.
Gold hit $850 an ounce in 1980. In CPI inflation- adjusted terms, around
$2300 an ounce would equal it today. But if the government hadn't cooked the
CPI calculation to keep it low, the number would be about $6250 an ounce. So
if a devaluation occurs, perhaps even $10,600 might not seem unusual.

Edelson bases his numbers on US debt only because this country is
the world's largest debtor and at "the epicenter of the crisis." He won't be
surprised if "the G-20 monetize(s) at least 20% of the US debt markets." If
so, he sees gold at over $10,000 an ounce along with currency devaluations
"by a factor of at least 12 to 1, meaning it would take 12 new dollars or
euros to equal 1 old dollar or euro."

A gold standard isn't needed because central banks need only
monitize and reduce their debt burdens "via inflating asset prices in fiat
money terms." The obvious question is what to do if he's right. Think gold,
and in his judgment, make it "as much as 25% of your investable funds." He's
not alone recommending this, including others who believe America is
insolvent, will simply default on its debt, perhaps create a new currency as
Edelson believes, and do it sooner than most people imagine. Next year
perhaps because conditions are so dire and deteriorating fast.

Macro data keep confirmng it. The latest on November 13 with initial
unemployment claims at 516,000 or the highest since September 2001.
Continuing claims are at the highest level since 1983. For the week ending
November 1, the seasonally adjusted insured unemployment advance number was
3,897,000 or an increase of 65,000 from the preceding week.

Crucial to understand is that these figures are grossly understated
given the numbers of discouraged workers, part-time and occasional ones, and
other ways the government cooks the books to soften or otherwise alter all
types of "official" data. None of it, including GDP, inflation, and the rest
is reliable. For unemployment, a good rule of thumb is to double the
announced figures, so the Labor Department's reported 6.5% is, in fact,
around 13% and rising.

In addition, housing continues to deteriorate. Large builder Toll
Brothers president, Bob Toll, says "These are bad times if there ever were"
any. Along with declining prices and rising foreclosures, it shows in new
mortgage application figures - down 40% from a year earlier and no evident
leveling off signs.

Still more bad news on November 14 with the Commerce Department
reporting October retail sales plunging a record 2.8% after falling the
previous three months. Even excluding a 5.5% drop in auto purchases, they
fell a record 2.2% with lower gasoline prices accounting for much of the
drop. Nonetheless, numbers were down across the board, and August and
September figures were revised lower signaling a poor holiday shopping
season and very bleak Q 4 that's certain to continue into the new year.

Some observers believe that these and other data lie behind Paulson
abandoning his toxic asset purchase plan to give more to "nonbank financial
institutions, like insurers and speciality-finance companies" as well as to
"Shift Focus in (the) Credit Bailout to the Consumer," according to The New
York Times. Others see the Treasury in disarray and still others think the
original plan was a head fake, and all along Paulson had other things in
mind and will gradually unveil them. They'll offer little for beleaguered
households if anything at all.

Details on his newest plan are vague, but apparently consumers won't
directly benefit. Around $50 billion will be for a new loan facility to help
companies issuing credit cards, making student loans and financing car
purchases. It means maxed out households won't be able to borrow because
they're already overextended, and lenders will only do business with good
credit risks.

Nonetheless, this is the latest twist in what some critics call
making Treasury policy on the fly. First toxic asset purchases, then bank
recapitalizations and various other handouts, and now the vague outlines of
a new plan just announced. Tomorrow something else in the wake of the G-20
November 15 summit.

Its official 47-action items statement (drafted well in advance of
the meeting) was in the usual type political-speak. According to The New
York Times, "leaders of 20 countries agreed Saturday to work together to
revive their economies, but they put off thornier decisions about how to
overhaul financial regulations until next year (when it plans) its next
meeting for April 30, 101 days after (Obama) is sworn into office." Whatever
is finally agreed on, this much for certain is clear. Unchanged
Washington/Wall Street dominance is planned along with putting the IMF in
charge of global "neoliberalizing" with all its destructive fallout.

A Long-Term View on the Depression

It's from noted sociologist, social scientist and world-systems
analyst Immanuel Wallerstein, now a Senior Research Scholar at Yale where he
covers world-systems in three ways:

-- the historical development of the modern world-system;

-- the contemporary crisis of modern world-economy capitalism; and

-- structures and knowledge.

He's authored numerous books and writes regular commentaries on
major world and national topics. A recent October 15 one is titled "The
Depression: A Long-Term View."

It's started in his view. We're "at the beginning of a full-blown
worldwide depression with extensive unemployment almost everywhere. It may
take the form of a classic nominal deflation (or less likely) a runaway
inflation, which is simply another way in which values deflate." What caused
it, he asks? Derivatives? Subprime mortgages? Oil speculators? It's a "blame
game of no real importance."

Understanding it calls for far more revealing factors, such as
"medium-term cyclical swings (and) long-term structural trends." Over
several hundred years at least, he describes two major ones. "One is the
so-called Kondratieff cycles that historically" lasted 50 - 60 years. The
other is called "hegemonic cycles" that are much fewer in number but last
far longer.

America contended for hegemony as early as 1873, achieved it fully
in 1945, and has been declining since the 1970s. "George W. Bush's follies
have transformed a slow decline into a precipitate one. And as of now, we
are past any semblance of US hegemony. We have entered, as normally happens,
a multipolar world. The United States remains a strong power, perhaps still
the strongest, but it will continue to decline relative to other powers in
the decades to come." Nothing can change this.

Kondratieff cycles are timed differently. Its last B-phase ended in
1945, followed by "the strongest A-phase upturn in the history of the modern
world-system." It peaked around 1967 - 73, and headed down. "This B-phase
has gone on much longer than previous (ones) and we are still in it."

Its characteristics are as follows:

-- "profit rates from productive activities go down, especially in
those types of production that have been most profitable;"

-- it directs capitalists to financialization and speculation for
higher returns; and

-- "productive activities, in order not to become too unprofitable,
tend to move from core zones (like America) to (lower cost) parts of the

Speculative bubbles are profitable while inflating, but they always
burst. "If one asks why this Kondratieff B-phase has lasted so long, it is
because the powers that be (the Treasury, Fed, IMF, and western European and
Japanese collaborators) have intervened in the market regularly and
importantly" to shore it up at times of economic disruptions - 1987, the
1989 S & L crisis, 1997 Asian contagion, 1998 Long Term Capital Management
debacle, the 2001 - 2002 corporate scandal period, and more than ever today
with big unanswered questions whether this time it will work.

It doesn't matter because we've reached the limits of what can be
done - "as Henry Paulson and Ben Bernanke are learning to their chagrin and
probably amazement. This time, it will not be so easy, probably impossible,
to avert the worst."

In earlier depressions, innovations and quasi-monopolies helped
world economies recover. In the late 1930s, WW II played the major role.
Today things are different and "may interfere with this nice cyclical
pattern that has sustained the capitalist system for some 500 years."
They're new structural trends, according to Wallerstein. "The problem with
all structural equilibria of all systems, is that over time the curves tend
to move far from equilibrium (and it's) impossible to bring them back."

What happened this time? It's "because over 500 years the three
basic costs of capitalist production - personnel, inputs, and taxation -
have steadily risen as a percentage of possible sales price (so) today
(it's) impossible to obtain the large profits" that previously were the
"basis of significant capital accumulation." It's the result of capitalism
working so well that it finally "undermined the basis of future

At this point, the system "bifurcates." The immediate consequence is
high chaotic turbulence (now ongoing) and will continue....for perhaps
another 20 - 50 years. From the chaos "one of two alternate and very
different paths" will emerge.

The present system won't survive. A new one will replace it. It will
not be capitalism as we know it, but may be far worse or far better (more
democratic and egalitarian). Determining the outcome is "the major worldwide
political struggle of our times."

In the short-term, we're moving into a "protectionist world (forget
about so-called globalization)." Governments are getting more into
production - even in America and Britain. We're also moving more into
"populist government-led redistribution," either in a left-of- center social
democratic form or a far right authoritarian one. "And we are moving into
acute social conflict within states, as everyone competes over the smaller
pie. In the short-run, it is not, by and large, a pretty picture."

A Brief Summary of Nouriel Roubini's Latest Views

As of November 11, he says "the US will experience its most severe
recession since WW II, much worse and longer and deeper than even (in)
1974 - 75 and 1980 - 82." It'll last through 2009 and cause a "cumulative
GDP drop of over 4%." Unemployment will likely reach 9%. The US consumer is
debt burdened, saving less and faltering: "this will be the worst consumer
recession in decades."

A V-shaped recovery "is out the window." In prospect is either a U-
shaped 18 - 24 months recession or a worse multi-year L-shaped one similar
to what Japan experienced in the 1990s. Economist Michael Hudson sees an
L-shaped depression ahead, more severe than what Roubini forecasts who
doesn't rule out something worse than he imagines.

As a result, president-elect Obama "will inherit an economic and
financial mess worse than anything the US has faced in decades:" the worst
recession in 50 years;" the worst financial and banking crisis since the
1930s; a massive fiscal deficit; a huge current account one; "a financial
system that is in a severe crisis and where deleveraging is still occurring
at a very rapid pace," thus making the credit crunch worse; a household
sector in disarray with millions insolvent and forclosures rising; the risk
of serious deflation; a liquidity trap for the Fed as well; and "the risk of
a severe debt deflation as the real value of nominal liabilities will rise
given price deflation while the value of financial assets is still

Worse still, this is happening globally, even in mighty China that
could see its market peak 12% growth rate plunge to 6% for a "hard landing."
Emerging economies will be very hard hit, and advanced ones "will face
stag-deflation (stagnation/recession and deflation)."

In countries like the US, Japan and possibly others, interest rates
may reach zero with serious potential consequences if it happens.
"Zero-bound on interest rates implies the risk of a liquidity trap where
money and bonds become perfectly substitutable, where real interest rates
become high and rising thus further pushing down aggregate demand, and where
money fund returns cannot even cover their management costs."

Deflation also affects debt. At nominal values it will rise and thus
increase its real burden. As for monetary policy, no matter how aggressive
it gets, it will be "pushing on a string given the glut of global aggregate
supply relative to demand (plus) a very severe credit crunch."

With this in mind, projected 2009 earnings are "delusional" and will
have to be lowered sharply. As a result, view equity rallies as sucker rally
bear traps, and Roubini has a cartoon to explain them:

-- top graphic: broker saying "I've got a stock here that could
really EXCEL"....really excel someone asks?..another asks "EXCEL?"...still
another thinks "SELL," then everyone yells "SELL;"

-- bottom graphic: everyone yelling "SELL"....one voice saying "This
is madness! I can't take anymore, goodbye!" Good bye, someone asks? Buy? -
asks another, and then everyone yells BUY!!

Michel Chossudovsky, Ellen Brown and others explain what's really
going on. It's not pretty or what Wall Street wants investors to know. That
markets are heavily manipulated. Speculation drives them up and down, and
very visible (insider) hands profit hugely in either direction.

Chossodovsky: "With foreknowledge and inside information, a collapse
in market values constitutes a lucrative and money- spinning opportunity,
for a select category of powerful speculators who have the ability to
manipulate the market in the appropriate direction at the appropriate
price" - and he explains the various ways how.

Brown on the "Plunge Protection Team (PPT): it's "the group set up
under President Reagan to maintain market 'stability (profitable instability
also) by manipulating markets behind the scenes."

In other words, financial markets are rigged. "Free" ones don't
exist except in the mind's eye of the innocent. They represent no collective
wisdom other than the speculators who manipulate it for profit.

Brown: "In a rigged pseudo-capitalist economy, investors are easily
separated from their money because they expect the market to follow 'free
market principles' based on 'supply and demand.' They are seduced into 'pump
and dump schemes" and fleeced.

In today's market climate, trusting in Adam Smith's "invisible hand"
is a very hazardous exercise. Brown again: "The market today is indeed
controlled by an invisible hand, but it is not necessarily serving the
interests of small investors."

Paul Krugman on A Possible Depression

He doesn't expect one, but he's worried at a time when we're "well
into the realm of what (he calls) depression economics." He means "a state
of affairs like that of the 1930s in which the usual tools of economic
policy - above all, the Federal Reserve's ability to pump up the economy by
cutting interest rates - have lost all traction. When depression economics
prevails, the usual rules of economic policy no longer apply: virtue becomes
vice, caution is risky and prudence is folly."

He cites one piece of macro data, among many others, as an example -
new unemployment insurance claims (mentioned above) that are high, rising,
but not unusual in recessionary times. Standard policy is to cut the fed
funds rate, but today doing it is "meaningless." It's officially at 1%, but
it's "averaged less than 0.3 percent in recent days," so there's nothing
left to cut.

Krugman suggests a huge $600 billion stimulus package, but even that
could fall far short, especially if it causes as much destabilization as the
Paulson bailout schemes - designed to wreck the economy, not heal it, so
powerful interests can grow more powerful and do it with taxpayer dollars.

New Programs for Old Add Up to Same Old, Same Old

Shifting focus to bailing out consumers was covered above and
explained as a way to help companies, not households. It's more Bush
administration deception that will continue seamlessly under Obama, and just
look at his major Wall Street contributors for proof. He fully supports
aiding them at a time one observer calls the Treasury "privatized," and it's
no secret that it's being looted.

Then there's (supposed) mortgage aid for beleaguered homeowners that
falls way short of helping them. Quite the opposite in fact. The newly
announced plan is more old than new and only to keep under water owners from
deserting their properties and renting. The idea is for lower rates,
extended loan terms, lower payments, and adding unpaid balances to
principal. It's called negative amortization - when monthly payments are
less than the full interest amount due. The interest accrues and principal
balances increase, only putting off an eventual day of reckoning for a later
time when prices of homes will be lower and owners even less able to afford

In others words, the solution is worse than the problem. It will
sink owners more under water than at present, delay their defaulting for a
later time, turn owners into levered renters, drive them deeper into debt,
ensure continued foreclosures for many years to come, and end the dream of
home ownership for millions. It will also discourage millions more from
wanting one.

And there's more to this ugly plan. There's a catch. It focuses on
loans Fannie and Freddie own or guarantee. They dominate half the mortgage
market and have about 20% of delinquent loans, so far. Even FDIC chairman,
Sheila Bair, is critical saying the plan "falls short of what is needed to
achieve wide-scale modifications of distressed mortgages." She wants some
TARP money for "fixing the front-end problem: too many unaffordable home
loans," but what's needed is an entirely new plan.

One designed to work. With affordable monthly payments, principal
balances reduced, and lenders required to eat losses on deceptive loans they
never should have made in the first place. The proposed plan is designed to
fail, and it's typical of how Washington operates. It was announced by the
Federal Housing Finance Agency (FHFA), the same one that seized Fannie and
Freddie in September.

On November 13, FDIC officials unveiled their own plan that improves
on FHFA's but not enough. It's only for 1.5 million homeowners facing
foreclosure in 2009. Its cost is an estimated $24.4 billion, and even so
Henry Paulson opposes it because it taps a small portion of his TARP money.

Borrowers who've missed at least two monthly payments will be
eligible for a reduced amount - at no more than 31% of their monthly income
compared to the 28% of the pre-tax amount lenders once deemed affordable.

In exchange, mortgage companies will be guaranteed that if borrowers
fall behind on their payments and they lose money, Washington will cover
half of their loss in most cases. The plan's estimated cost is based on the
assumption that only one in three borrowers with modified payments will be
unable to make them. Currently, nearly half of borrowers under such plans
default, so it's doubtful FDIC's plan will work, especially with home prices
still falling and likely to bottom well below current values.

Nonetheless, leading congressional Democrats are supportive, and
Senate Banking Committee chairman, Chris Dodd, said he'll introduce
legislation to let bankruptcy courts modify mortgage loans. It's something
consumer advocates want badly and the banking industry strongly opposes. It
remains to be seen what kind of new law passes (if any), and despite
expressing support for one during his campaign, rest assured that Obama will
do nothing to harm his core constituency - his powerful Wall Street backers.

He'll likely let banks set their own terms for their own benefit to
the detriment of homeowners. The way it usually works in the end. Further,
arrangements announced, in place or planned can't stop foreclosures from
rising. Increasing unemployment will intensify the problem. Many borrowers
overstated their incomes and can't even handle reduced payments. Others were
speculators on second homes and don't qualify.

In addition, home prices keep falling with no end of it in sight.
Growing millions of owners are under water owing far more than their
properties are worth and assuring many will default and simply rent - for
less than they're now paying.

Further, securitizing mortgages complicates who owns them. Except
for Fannie and Freddie, they're not your local bank or S & L in most cases,
but foreign investors, hedge funds, and all sorts of other non-traditional
mortgage paper holders. Usually ones homeowners can't meet with
face-to-face, and if they could would be rebuffed. "Servicers" won't modify
loan terms because doing so lowers their value for investors and likely
would invite lawsuits.

It's another wrinkle in a complicated situation with homeowners at
the bottom of the food chain being squeezed, short of major government help
not forthcoming or likely in the new year. For them and most others, trouble
is baked in their cake that they're now being force-fed to eat.

In greater portions after the Office of the Comptroller of the
Currency refused to let lenders forgive large amounts of credit card debt.
As much as 40% for consumers who don't qualify for existing repayment plans.

A rare financial industry and Consumer Federation of America
alliance asked the Treasury Department for help on October 29 for very
logical reasons. Consumers need it as well as credit card lenders for a way
to mitigate growing losses - by assuming small in lieu of total ones and
getting extended write-off periods.

But consider how over-indebted individuals may react if they're
smart. Why pay anything when it's simpler to default and walk away. For
those strapped enough, it's what growing numbers are choosing and the reason
lenders like JP Morgan Chase, Citigroup, and Bank of America (already
reeling from bad mortgage debt) are concerned enough to seek relief.

Instead, they should be held accountable for their fraud. For
destroying savings, pensions, and for growing millions their homes and
futures. For charging usurious interest and late charges on credit card
balances. For gaming the system for decades but now out of their food
source. Instead of help, have them give back and make it on their own, or
step aside, be nationalized, and turn them into a public utility, on a level
playing field, to serve the greater good for everyone.

Their due reward for what Paul Craig Roberts calls "unregulated
banksters and Wall Street criminals, greedy CEOs, and a no-think economics
profession (for having) destroyed America's economy," and
now wanting to be saved from their own transgressions. Rebalance the
tax code instead, make it progressive, and soak the rich, not the poor. It
was the original idea in the first place at a time low income earners paid
nothing. Today they're overburdened, overtaxed, out of work, and out of hope
during the most serious disruption in our history.

They're not offered part of the latest bank handout that's little
more than naked theft on top of all of it earlier. This time with another
$140 billion windfall that was in a September 30 Treasury Department memo.
According to tax experts, it overstepped its authority by overturning
section 382 of a 1986 law curtailing the outlandish corporate gaming of the
tax system. It nets Wells Fargo $25 billion for its Wachovia takeover and
PNC bank $5.1 billion in acquiring National City. Future acquisitions will
enjoy similar benefits with taxpayers getting the bill.

This also helps big banks acquire smaller ones, concentrate more
power in their hands, and head them closer to near-monopoly control over the
entire financial system. A privatized Treasury indeed - with bipartisan
support and by the new president-elect.

His new Treasury secretary will maintain the status quo or even
sweeten it at a time when ordinary households are in deep distress with
little help in prospect beyond measures too inadequate to matter.

According to the New York and London-based CreditSights research
firm, it's $5 trillion and counting for fraudsters and bare crumbs for the
public. At a time economies are sinking into recession, unemployment and
poverty rising, and mayor Richard Daley of this writer's Chicago warning of
"huge" layoffs to come.

He compared now to the 1930s and said: "We never experienced
anything like this except (for those) people who came from the Depression.
When you have that many layoffs early (referring to the city's and what
corporate heads tell him) - and they're telling me this is only the
beginning of their layoffs - that is very frightening."

Daley warned that local governments could face bankruptcy at a time
Chicago-based Challenger, Grey & Christmas outplacement consultant reported
that US job cuts reached a five-year high in their latest numbers and are
rising across the board.

It's just as bad for Illinois (and other states) according to
Bloomberg. The state "is $4 billion behind in paying bills to its suppliers
of goods and services," Comptroller Dan Hynes said. "Vendors face a 12 week
delay in getting paid, and the wait may extend to 20 weeks" as conditions
deteriorate further. "The unprecedented backlog of bills might grow to $5
billion by March. To call this an imminent crisis is an understatement," and
it's affecting all state services. In other states as well across the

Even the mighty New York Times is hurting. It's fallen on hard times
and may be a metaphor for the country. In 2002, its stock price hit nearly
$53 a share and is now below $7.50 (as of November 14), down about 86%. It
also owes lenders around $400 million by next May, has a mere $46 million on
hand, and it needs all of it and more for operating expenses at a time one
observer suggests that the Grey Lady may need to change its slogan to "Less
News and Less Money To Print It."

Maybe none according to its publisher Arthur Sulzberger Jr. months
back at the Davos, Switzerland World Economic Forum. He said "I really don't
know whether we'll be printing The Times in five years, and you know what? I
don't care either" because the paper is emphasizing internet news and
doubled its online readership to 1.5 million.

Well and good but it hasn't enough online advertising to make up for
what it's losing in print, and given today's climate, it may run out of time
to make up the shortfall and stay viable. That may prove the epitaph for
growing numbers of venerable (and now vulnerable) American and global
companies at perhaps the most challenging time in their histories.

A Final Comment

How did it come to this in the first place? In a word: out-of-
control excess yields even greater payback, and the only cure for bubbles
(according to noted economist Kurt Richebacher) is to prevent them from

The ones now deflating are unprecedented in their size and severity.
No amount of policy making magic will easily fix them. America and world
economies face a long, painful period ahead, likely more than at any other
time in history with no clear idea what will emerge in the end. As one
observer puts it: "All we know is that nobody knows."

What's known in the shorter term is what Michel Chossudovsky
observes: "The financial crisis is deepening, with the risk of seriously
disrupting the system of international payments. (This time) is far more
serious than the Great Depression. All major sectors of the global economy
are affected (and TARP and related schemes are) not a 'solution' to the
crisis but the 'cause' of further collapse" - by design.

So what long-term lessons will be learned when the dust finally
settles? According to money manager and market strategist Jeremy Grantham:
"absolutely nothing" or put another way - those who don't heed the lessons
of the past are condemned to repeat them.

Policy makers won't change. "Free-market" fundamentalism won't be
tamed, and nothing in sight promises deliverance to a caring, progressive
new world. Before whatever comes out of this in the end, plenty of pain will
precede it, then past sins will repeat, and we'll go through the whole cycle
again - if we make it through this one.

Stephen Lendman is a Research Associate of the Centre for Research
on Globalization. He lives in Chicago and can be reached at


Iran converts some reserves to gold

The Associated PressPublished: November 15, 2008

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TEHRAN, Iran: Iranian newspapers are quoting Mojtaba Hashemi Samareh, a top advisor to President Mahmoud Ahmadinejad, as saying the country has converted its financial reserves into gold.

The papers did not specify how much of Iran's estimated $120 billion in reserves would actually be converted into gold.

The daily Jahan-e-Eghtesad, or Economy World, quoted Samareh on Saturday as saying the decision to buy gold was carried out on Ahmadinejad's order.

The decision comes after a dramatic fall in oil prices. About 80 percent of Iran's foreign revenue comes from oil exports.

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Topic: Rebroadcast of Rick Wiles’ historic November 2001 interview with the Russian economist who predicted the 9/11 attacks.

It is from:


Anonymous said...

Thanks for posting this Lee, very interesting, very informative and as usual, a different perspective to the usual.