Greece, Deadbeat Nation or Courageous Peoples

It is very important that EVERYBODY pay attention to what is transpiring in Greece. Keep in mind, that the MSM is spinning the hell out of this story because MSM is owned by those who have imposed the draconian measures on the Greek people. Greece has, true to its history of being the birthplace of democracy, stood up and said enough to the out of control bankers and their need to feed their greed at any cost.

It is important to understand that this situation didn’t just unfold in the last few months. Instead it has been the very premeditative raping of the wealth of the Greek people. A little perspective and truth must be understood.

Today Greece owes its creditors €323 billion ($366 billion), some 175 percent of the country’s gross domestic product. How did it end up owing so much money?

“We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there,” Joseph Stiglitz, former chief economist of the World Bank and a Nobel Prize winner in economics, wrote in the Guardian newspaper . “It has gone to pay out private-sector creditors – including German and French banks.” Sound familiar? Remember the 2008 bailout of US banks? Remember what QE was supposed to accomplish?

A recent CorpWatch report – The EuroZone Profiteers –  can help shed further light on this matter. While it’s true that corrupt Greek politicians borrowed billions for shaky government schemes from these banks, there was a very good reason that the financiers made these rash loans: they were under pressure from European Union bureaucrats to compete in a global marketplace with U.K. and U.S. banks.

Take the German banks. While Anglo-American banking is dominated by many branches of a few major banks, Germany had some 4,000 unique institutions in 1990 that made up a three-pillar system of savings banks, co-operative banks, and private banks. These banks lived modestly on miniscule profits of one percent in comparison to Britain’s four mega-banks, which boasted returns as high as 30 percent on equity. Under pressure from Brussels, the German government agreed to push some of the bigger banks to become more “market oriented” by withdrawing state guarantees known as “anstaltslast” and “gewährträgerhaftung” to back them up in times of failure.

Likewise Prime Minister Jacques Chirac began a process of privatizing French banks in the late 1980s to “shoulder its responsibilities to the business community.” (The banks that had been nationalized over time by General Charles de Gaulle in 1945 and by President Pierre Mauroy in 1982) Like the Germans, the French banks enjoyed state protection, and thus were easily able to raise money to lend out.

The European Union was firmly behind this since they wanted European entities to compete on a global stage. “Sometimes it is said that competition is not to the benefit of all: It can favor larger firms, but hurt smaller businesses. I do not share this view,” Mario Monti, the European competition commissioner, said in October 1997. “Naturally, competition will reward greater efficiency. It will put pressure on less-performing companies and on sectors already suffering from structural problems.”

But French banks knew that they could not make billions by competing in Germany, nor were German banks expecting to vanquish the French. They looked instead to a simpler and easier market to loan out the plentiful supply of cash they had – the poorer, mostly southern European states that had agreed to take part in the launch of a common currency called the Euro in 1999.

The logic was clear: In the mid-1990s, national interest rates in Greece and Spain, for example, hovered around 14 percent, and at a similar level in Ireland during the 1992–1993 currency crisis. So borrowers in these countries were eager to welcome the northern bankers with seemingly unlimited supplies of cheap cash at interest rates as low as one to four percent.

Take the case of Georg Funke, who ran Depfa, a German public mortgage bank. Depfa helped Athens get a star credit rating, raised €265 million for the Greek government railway, helped Portugal borrow €200 million to build up a water supplier, and gave €90 million to Spain to construct a privately operated road in Galicia. For a while, the middle class in Greece like the middle classes in Spain and Ireland, benefited from the infrastructure spending stimulus. When Depfa nearly collapsed in 2008, Funke was fired.

Or take the case of Georges Pauget, the CEO of Crédit Agricole in France, who bought up Emporiki Bank of Greece for €3.1 billion in cash in 2006. Over the next six years, Emporiki lost money year after year, blowing money on one foolish venture after another, until finally, Crédit Agricole sold it for €1 – not €1 billion or even €1 million – but a single euro to Alpha Bank in October 2012. Crédit Agricole’s cumulative loss? €5.3 billion.

Money poured in from other banks like Dexia of Belgium. Via Kommunalkredit, Dexia loaned €25 million to Yiannis Kazakos, the mayor of Zografou, a suburb of Athens, to buy land to build a shopping mall. It made similar loans to other Greek municipal authorities including Acharnon, Melisia, Metamorfosis, Nea Ionia, Serres, and Volos.

“The tsunami of cheap credit that rolled across the planet between 2002 and 2007 … wasn’t just money, it was temptation,” financial writer Michael Lewis wrote in Vanity Fair. “Entire countries were told, “The lights are out, you can do whatever you want to do, and no one will ever know.”

Bloomberg took a look at statistics from the Bank for International Settlements, and worked out that German banks loaned out a staggering $704 billion to Greece, Ireland, Italy, Portugal, and Spain before December 2009. Two of Germany’s largest private banks—Commerzbank and Deutsche Bank—loaned $201 billion to Greece, Ireland, Italy, Portugal, and Spain, according to numbers compiled by BusinessInsider. And BNP Paribas and Crédit Agricole of France loaned $477 billion to Greece, Ireland, Italy, Portugal, and Spain.

There is a very good parallel to this situation of cheap and easy money in the recent sub-prime mortgage crisis in the U.S.

In a recent book, A Dream Foreclosed: Black America and the Fight for a Place to Call Home, author Laura Gottesdiener explains that 30 years ago, African Americans were unable to borrow money to buy houses because of a practice called redlining—where banks drew fictitious red lines around neighborhoods they would not lend to even if the borrowers had good credit and good jobs. Today, redlining is illegal, but the reverse has happened. In the 1990s, poor people around the U.S. were offered 100 percent loans to buy houses at low rates with virtually no collateral.

“The mortgage market for white Americans was flush. There was no more money to be made from issuing mortgages to white Americans. The banks needed new consumers,” Gottesdiener told Corporate Crime Reporter magazine. “So, they moved into the minority market. But they weren’t selling the conventional loans. They were selling these incredibly exploitative predatory loans.” We know how the sub-prime crisis ended in 2008 – and it almost brought down the global economy.

What happened after the creation of the Euro was very similar. The Greek government is in debt today to Germany and France not just because they borrowed money for unwise projects, but also because the bankers pushed them to take money that they would never have been able to approved under normal circumstances. But as Stiglitz has noted, these German and French banks have now been rescued. An ATTAC Austria study showed that 77 percent of the €207 billion provided for the so-called “Greek bail-out” went to the financial sector and not to the people. It is time to investigate the bankers who created the EuroZone crisis and hold them accountable.

But the bankers are not the only ones. There must be repercussions for the European Union bureaucrats and politicians who promoted the idea that free-market competition in financial services would benefit everyone. And not least of all, there should be a serious debate on how to reverse many of the policies that were used to create the European single market in financial services.

Now, let’s map the mafia story to international finance in four stages.

Stage 1: The first and foremost reason that Greece got into trouble was the “Great Financial Crisis” of 2008 that was the brainchild of Wall Street and international bankers. If you remember, banks came up with an awesome idea of giving subprime mortgages to anyone who can fog a mirror. They then packaged up all these ticking financial bombs and sold them as “mortgage-backed securities” for a huge profit to various financial entities in countries around the world.

A big enabler of this criminal activity was another branch of the banking system, the group of rating agencies – S&P, Fitch and Moody’s – who gave stellar ratings to these destined-to-fail financial products. Unscrupulous politicians such as Tony Blair joined Goldman Sachs and peddled these dangerous securities to pension funds and municipalities and countries around Europe. Banks and Wall Street gurus made hundreds of billions of dollars in this scheme. But this was just Stage 1 of their enormous scam. There was much more profit to be made in the next three stages!

Stage 2 is when the financial time bombs exploded. Commercial and investment banks around the world started collapsing in a matter of weeks. Governments at local and regional level saw their investments and assets evaporate. Chaos everywhere!

Vultures like Goldman Sachs and other big banks profited enormously in three ways: one, they could buy other banks such as Lehman brothers and Washington Mutual for pennies on the dollar. Second, more heinously, Goldman Sachs and insiders such as John Paulson (who recently donated $400 million to Harvard) had made bets that these securities would blow up. Paulson made billions, and the media celebrated his acumen. (For an analogy, imagine the terrorists betting on 9/11 and profiting from it.) Third, to scrub salt in the wound, the big banks demanded a bailout from the very citizens whose lives the bankers had ruined! Bankers have chutzpah. In the U.S., they got hundreds of billions of dollars from the taxpayers and trillions from the Federal Reserve Bank which is nothing but a front group for the bankers. In Greece, the domestic banks got more than $30 billion of bailout from the Greek people. Let that sink in for a moment – the supposedly irresponsible Greek government had to bail out the hardcore capitalist bankers.

Stage 3 is when the banks force the government to accept massive debts. For a biology metaphor, consider a virus or a bacteria. All of them have unique strategies to weaken the immune system of the host. One of the proven techniques used by the parasitic international bankers is to downgrade the bonds of a country. And that’s exactly what the bankers did, starting at the end of 2009. This immediately makes the interest rates (“yields”) on the bonds go up, making it more and more expensive for the country to borrow money or even just roll over the existing bonds. From 2009 to mid 2010, the yields on 10-year Greek bonds almost tripled! This cruel financial assault brought the Greek government to its knees, and the banksters won their first debt deal of a whopping 110 billion Euros.

The banks also control the politics of nations. In 2011, when the Greek prime minister refused to accept a second massive bailout, the banks forced him out of the office and immediately replaced him with the Vice President of ECB (European Central Bank)! No elections needed. Screw democracy. And what would this new guy do? Sign on the dotted line of every paperwork that the bankers bring in. (By the way, the very next day, the exact same thing happened in Italy where the Prime Minister resigned, only to be replaced by a banker/economist puppet. Ten days later, Spain had a premature election where a “technocrat” banker puppet won the election). The puppet masters had the best month ever in November 2011.

Few months later, in 2012, the exact bond market manipulation was used when the banksters turned up the Greek bonds’ yields to 50%!!! This financial terrorism immediately had the desired effect: The Greek parliament agreed to a second massive bailout, even larger than the first one. Now, here is another fact that most people don’t understand. The loans are not just simple loans like you would get from a credit card or a bank. These loans come with very special strings attached that demand privatization of a country’s assets. If you have seen Godfather III, you would remember Hyman Roth, the investor who was carving up Cuba among his friends. Replace Hyman Roth with Goldman Sachs or IMF (International Monetary Fund) or ECB, and you get the picture.

Stage 4: Now, the rape and humiliation of a nation begin. For the debt that was forced upon them, Greece had to sell many of its profitable assets to oligarchs and international corporations. And privatizations are ruthless, involving everything and anything that is profitable. In Greece, privatization included water, electricity, post offices, airport services, national banks, telecommunication, port authorities (which is huge in a country that is a world leader in shipping) etc.

In addition to that, the banker tyrants also get to dictate every single line item in the government’s budget. Want to cut military spending? NO! Want to raise tax on the oligarchs or big corporations? NO! Such micro-management is non-existent in any other creditor-debtor relationship.

So what happens after privatization and despotism under bankers? Of course, the government’s revenue goes down and the debt increases further. How do you “fix” that? Of course, cut spending! Lay off public workers, cut minimum wage, cut pensions (same as our social security), cut public services, and raise taxes on things that would affect the 99% but not the 1%. For example, pension has been cut in half and sales tax increase to more than 20%. All these measures have resulted in Greece going through a financial calamity that is worse than the Great Depression of the U.S. in the 1930s.

Of course, the ever-manipulative bankers demand immediate privatization of all media which means that the country now gets photogenic TV anchors who spew propaganda every day and tell the people that crooked and greedy banksters are saviors; and slavery under austerity is so much better than the alternative. If every Greek person had known the truth about austerity, they wouldn’t have fallen for this. Same goes for Spain, Italy, Portugal, Ireland and other countries going through austerity. The sad aspect of all this is that these are not unique strategies. Since World War II, these predatory practices have been used countless times by the IMF and the World Bank in Latin America, Asia, and Africa.

So, the wonderful people of Greece rose up like Zeus and said NO (“OXI” in Greece) to the greedy puppet masters, unpatriotic oligarchs, parasitic bankers and corrupt politicians. By saying NO, they said YES to freedom, independence, self-government, and democracy.

It is time the rest of us realize what now the people of Iceland and Greece have recognized. We must all stand together and say OXI-NO! If we don’t, then we will watch as Spain, Portugal, Italy, France fall into the same despair and horrible situation the Greeks now find themselves. Soon after that it is going to be us!

We have been focused on this issue for years, and unfortunately everything we said would happen, has happened, even beyond what we envisioned could happen. WakeTFU, Stand Up, and don’t fall for any more raping of people for banker’s greed.

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How Big is the Economic Bomb? Big, Very Big

In the after math of the 2008 crisis, and after “We the People” bailed out the “Too Big to Fail Banks” to the tune of over $14 Trillion dollars, our CONgress vowed they would never let that happen again. Yet since 2008, this very same CONgress has blocked every effort to regulate the banks and audit the FED. The result of the 2008 crisis has had our economy stagnated for the last seven years and the very same people that caused the last economic crisis have created a $278 TRILLION dollar derivatives time bomb that could go off at any moment.

According to Michael Snyder, when this absolutely colossal bubble does implode, we are going to be faced with the worst economic crash in the history of the United States.  It is dangerously bad, as you will see below, those banks have actually gotten far larger since then.  So now we really can’t afford for them to fail.  The six banks that we are talking about are JPMorgan Chase, Citibank, Goldman Sachs, Bank of America, Morgan Stanley and Wells Fargo.  When you add up all of their exposure to derivatives, it comes to a grand total of more than 278 trillion dollars!  But when you add up all of the assets of all six banks combined, it only comes to a grand total of about 9.8 trillion dollars.

In other words, these “too big to fail” banks have exposure to derivatives that is more than 28 times greater than their total assets!  To put this in perspective, it is like you having $100,000 in assets and owing more than $2.8 million dollars! Do you think you could get away with that? This is complete and utter insanity, and yet nobody seems too alarmed about it.  For the moment, those banks are still making lots of money and funding the campaigns of our most prominent politicians.  Right now there is no incentive for them to stop their incredibly reckless gambling so they are just going to keep on doing it.

So precisely what are “derivatives”?  Well, they can be immensely complicated, but on a very basic level, a “derivative” is not an investment in anything.  When you buy a stock, you are purchasing an ownership interest in a company.  When you buy a bond, you are purchasing the debt of a company.  But a derivative is quite different.  In essence, most derivatives are simply bets about what will or will not happen in the future.  The big banks have transformed Wall Street into the biggest casino in the history of the planet, and when things are running smoothly they usually make a whole lot of money, and just like in 2008, things can go very wrong very fast.

Today, the “too big to fail” banks are being even more reckless than they were just prior to the financial crash of 2008. As long as they keep winning, everyone is going to be okay.  But when the time comes that their bets start going against them, it is going to be a nightmare for all of us.  Our entire economic system is based on the flow of credit, and those banks are at the very heart of that system. In fact, the five largest banks account for approximately 42 percent of all loans in the United States, and the six largest banks account for approximately 67 percent of all assets in our financial system. So that is why they are called “too big to fail”.  We simply cannot afford for them to go out of business.

Our politicians promised that something would be done about this.  But instead, the four largest banks in the country have gotten nearly 40 percent larger since the last time around.  The following numbers come from an article in the Los Angeles Times

JPMorgan Chase

Total Assets: $2,573,126,000,000 (about 2.6 trillion dollars)

Total Exposure To Derivatives: $63,600,246,000,000 (more than 63 trillion dollars)

Citibank

Total Assets: $1,842,530,000,000 (more than 1.8 trillion dollars)

Total Exposure To Derivatives: $59,951,603,000,000 (more than 59 trillion dollars)

Goldman Sachs

Total Assets: $856,301,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $57,312,558,000,000 (more than 57 trillion dollars)

Bank Of America

Total Assets: $2,106,796,000,000 (a little bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $54,224,084,000,000 (more than 54 trillion dollars)

Morgan Stanley

Total Assets: $801,382,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $38,546,879,000,000 (more than 38 trillion dollars)

Wells Fargo

Total Assets: $1,687,155,000,000 (about 1.7 trillion dollars)

Total Exposure To Derivatives: $5,302,422,000,000 (more than 5 trillion dollars)

A majority of these derivatives are focused in the energy and financial sectors, and what we are seeing now is great volatility in both of these sectors. Demand for oil has been grossly miscalculated and when the OPEC nations decided to continue to produce at the same levels after the demand declined, you saw what happened to oil prices at the pump. This is further complicated by the cost of recovering oil from fracking in the US. This bomb is about to go BOOM!

Further complicating the picture is the moves being made by the BRICS and the newly developed AIIB. The Asian Infrastructure Investment Bank (AIIB) is an international financial institution that was proposed by the government of China. The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia region. AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB), which are regarded as dominated by developed countries like the United States. The United Nations has addressed the launch of AIIB as “scaling up financing for sustainable development” for the concern of Global Economic Governance. Chinese Premier Li Keqiang affirms AIIB cooperative stance. As of April 2, 2015, almost all Asian countries and most major countries outside Asia had joined the AIIB, except the US, Japan (which dominated the Asian Development Bank, formed in 1966) and Canada. North Korea’s and Taiwan’s applications were rejected. This is a serious threat to the US dollar as the international trade currency and increases the exposure of the big banks in a way that is not yet completely discernible, other than if AIIB has its way, the dollar is in for a big devaluation. Already the AIIB has proposed an alternative to the dollar, called the SDR, which would be asset based something like the following manner.

SDR

And finally, Greece sits on the edge of collapsing the Euro. This will occur if Greece finds some or all of its debt to the ECB and IMF are odious. Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

Today Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures.

According to Greek Reporter, Konstantopoulou has said that the newly established “Debt Truth Committee,” will investigate how much of the debt is “illegal” with a view to writing it off. Proving that this is more than just a populist stunt, during a vote that took place early yesterday, out of the 300 Greek MPs, 156 voted in favor of establishing the public debt auditing committee. “The committee will examine how Greece entered into the bailout agreements with its international lenders, as well as any other matters related to the memoranda’ implementation,” SYRIZA Parliamentary Secretary Christos Mantas had explained earlier. “We are fulfilling our commitment and the social demand to explore the causes and responsibilities of an unprecedented crisis that devastated the vast majority of society,” Mantas added. If the Greek “Debt Truth Committee” indeed persists with determining how much of its debt is legal and enforceable, and ultimately decides to rescind some (or all) of it, the only question is how long until other countries around the world, all of which are burdened with massive, untenable debt loads across the government, financial and household sectors, decide it is time to do the same and declare a fresh start.

So given these current situations, it is very easy to see just how crazy these “Big Banks” are, and how they are going to come crashing down, given their current exposures. There isn’t enough money in existence to “bail them out” and the impacts on the world’s economy will be felt for decades. It really isn’t a matter of if this current economic situation is going to come crashing down, it is only a matter of when, and “when” looks real big and up close right now.

Further Updates from the Currency War Front

Well, folks, it’s official – mark November 22, 2010 in your calendars.  With yesterday’s $8.3 billion POMO monetization, the Fed’s official holdings of US Treasury securities now amount to $891.3 billion, which is higher than the second largest holder of US debt: China, which as of September 30 held $884 billion, and Japan, with $864 billion.  The Fed is now buying about $30 billion per week, or about $120 billion per month, for the foreseeable future and beyond, it would mean that China would need to buy a comparable amount to be in the standing. It won’t. In other words, the Ponzi operation is now complete, and the Fed’s monetization of US debt has made it not only the largest holder of such debt, but made external funding checks and balances in the guise of indirect auction bidding, irrelevant. China is now not the one having the most to lose on a DV01 basis on that day when the inevitable surge in interest rates finally happens. That honor is now strictly reserved for America’s taxpayers.

In addition, Tuesday China and Russia sent a loud message to the FED.

Source: Asia One – Su Qiang and Li Xiaokun

St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.  Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities. The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

“That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries,” he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.  The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communique. Details of the documents have yet to be released.

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a “fair and reasonable new order” in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.  Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

In related news on the situation in the EU comes the grim but expected news that the Spanish 3-month bill auction failed.  The debt agency sold only €3.26bn of the €4-5bn that was offered, at average yield of 1.743% vs 0.951% prior. What people must understand is that is nearly double the interest rate.  This debt service is the back breaker to the economy.  Tensions are surely going to start boiling over on the Emerald Isle.  If Greece was a big bomb to the EU and ECB stability, and Ireland was Greece’s big brother, then the Spanish economy is their bigger brother Bubba.  These three countries WILL require further bailouts and quite frankly more than the ECB can handle.  The death of the EU is like watching a shot buffalo go down in a Sam Peckinpah movie.

Finally, back in the US, in addition to the impacts of QE2, the mortgage situation as related to the big banks is far from going away.  To put things in clear perspective, the banks bundled, and sold to investors, junk paper consisting of bundled questionable mortgages.  In most cases, those same banks kept the seconds on those mortgages.  However, now the investors do have recourse.  These bundled packages required the banks to “buy back” any equity that was in default or foreclosure.  The bottom line to this is that the top five banks, between the bad second mortgages and the default clauses on the crap they dumped on investors, are on the hook for nearly $400 Billion, which is more than the equity value of those top five banks.

In view of the fact the currency wars have unquestionably erupted, these elements represent the perfect storm.  As a side, the “fear” index on Wall Street today was the highest recorded since 1987.  These events are moving along the worst case scenario lines.  Watch very carefully.

Here Comes the Currency Wars! Is It What Kicks Off the Final Crash?

Regardless of all of the happy talk, I have continued to insist that firstly, this is the second great depression.  It is definitely global and extended. Secondly, we haven’t seen the bottom yet and I believe we will be dealing with this economic crisis for at least another 5-10 years.  I have contended that the real numbers and facts that count have NOT improved and to say the recovery has begun and more outrageous to say that it started in June of last year is mind-boggling.

There is no more vulnerable area to precipitating the “second leg” down than a global currency war.  The impacts of such wars are never anything good for struggling economies.  It seems that is exactly what is beginning to happen.  Consider this from Peter Simpson in Beijing for VOAnews.com

http://www.voanews.com/english/news/China-Warns-US-Yuan-Bill-Could-Damage-Ties-104071274.html

China Thursday expressed its anger at legislation in the United States aimed at punishing Beijing for not letting its currency rise in value and failing to address trade imbalances.  Foreign Ministry spokeswoman Jiang Yu says the United States should avoid steps that could damage relations. She says her government opposes what she says is Congress using the currency issue to launch protectionist measures against China.

On Wednesday, the U.S. House of Representatives passed legislation that would allow Washington to treat what the bill describes as fundamentally undervalued currencies as an illegal export subsidy.  Jiang says the bill would harm commercial relations between China and the U.S., and says it could affect the economies of both countries, and the world.

The bill is primarily aimed at China. The U.S. and other countries say it keeps its currency, the yuan, artificially low to give its exports an unfair advantage. Many U.S. politicians, businesses and labor groups say this has contributed to the United States’ massive trade deficit with China. Congress says the deficit causes jobs losses in the U.S.  The bill would allow the U.S. to set tariffs to offset China’s price advantages.

It must be passed by the Senate and signed by President Barack Obama to become law, and neither is certain. But the latest move has rattled China.  State media quoted the Commerce Ministry as saying the bill contravenes World Trade Organization rules.  Jiang, the Foreign Ministry spokeswoman, would not say if Beijing will seek to retaliate.  But Beijing is not alone in its opposition to the bill.


The American Chamber of Commerce in China on Thursday said the bill would not achieve its objectives and would not create significant U.S. job growth.  Chairman John Watkins Jr. says the group opposes the bill because it will make the trade deficit worse, and will likely shift some China production to other low-cost countries.

“We believe that it will actually reduce exports and thereby good jobs,” Watkins says. “I think it will add further tension to the U.S.-China relationship. We think that Congress would be better focused and better advised coming up with a response to deal with China’s web of indigenous innovation policies, weak intellectual property protection, and tightening market access for foreign firms here.”  Any vote on the bill in the U.S. Senate will not come until after congressional elections on November 2.

If this was the only issue, it may be manageable, but the focus is just not on the US and China, although these countries are 1 and 2 respectfully economically.  There is a great concern on how the EU is going to manage its joint austerity programs.

Russian President Dmitri Medvedev has urged the European Union to stabilize its common currency, saying a stable euro is important for EU trade partners, including Russia. Mr. Medvedev told reporters in Germany Saturday that Russia is not indifferent to the fate of the European single currency, because it keeps part of its foreign currency reserves in euros.

The Russian president arrived in Germany Friday to discuss global and bilateral issues with German Chancellor Angela Merkel.   After speaking with the German leader, Mr. Medvedev expressed confidence that a package of EU measures put in place to help stabilize the euro will work.  Later this month, leaders from top 20 economies will meet in Canada to discuss ways of stabilizing the world economy and financial system.

This comes at the same time as we are seeing the working classes of the EU countries most affected take to the streets en masse.  Workers across Europe took part in coordinated actions to protest government austerity measures, shutting down much transport in Spain and filling the streets of Brussels with tens of thousands of marchers.

Spain’s first general strike in eight years left few buses running in Madrid and about half of underground trains out of service, Reuters said. The government said an agreement with unions guaranteed minimum service. Sky News reported that Iberia, Spain’s largest airline, expected only a third of its scheduled flights to take place.  Unions claimed that more than half of the Spanish work force, or about 10 million people, were on strike, Reuters reported, though the government downplayed any problems.  “So far the strike is taking place with normality and without incidents,” said Celestino Corbacho, the Spanish labor minister, The New York Times reported. “Citizens are fulfilling both their right to strike and work.”

The day of labor action across Europe was led by the European Trade Union Confederation. The group represents trade unions from 36 European countries and claims 60 million members, CNN reported.  “Cutting in a recession is crazy, and we must fight it,” John Monks, European Trade Union Confederation’s general secretary, told CNN.  In Brussels, union organizers said they had achieved their goal of drawing 100,000 people to march on European Union buildings, The Associated Press reported. Union workers are rallying against higher taxes, a delayed retirement age and longer work day, the Times said.

In Greece, which has been trying to fight off bankruptcy, some transportation workers had walked off the job, national rail workers were stopping work later, and hospital doctors were on strike for 24 hours, AP reported.


Irish police arrested a 41-year-old man after he drove a cement-mixer emblazoned with the words “toxic bank” to the gates of the Irish parliament in Dublin, which is due to authorize billions of dollars of further funding to bolster Anglo Irish Bank, which was nationalized last year. Authorities took more than two hours to remove the truck, according to the Irish Times, because the protester had taken measures to immobilize it.  CNN said protests are also planned in Portugal, Italy, Latvia, Lithuania, the Czech Republic, Cyprus, Serbia, Romania, Poland, Ireland and France.

Although the UK seems aloof from the EU, it cannot escape the reality of mandatory “austerity” measures, but like the US the new government seems reluctant to tell the public the truth of the nature and depth of the austerity programs.  The point of all of this is that we are not immune from these wars and in fact we are already engaged fully in the “prosecution” of this war.  I, for one, am very concerned that these tensions will build and the resultant tariff wars that will be imposed because of a lack of response from country X or Y to valuation demands will set off hyperinflation and more unemployment globally.  This may well be the biggest story of the year and few media outlets are putting in front of us.  Hmmmmmmmmm.

The Final Assault on Personal and Sovereign Wealth Has Begun

I have chronicled how our financial systems and our sovereign wealth funds are be attacked and pillaged by the PTB.  I have referred to Credit Derivatives and Repos as weapons of mass destruction, and indeed as we see now surfacing from the Goldman Sachs hearings just how devastating these weapons have been in bringing down the economy.  Goldman alone made over $4 Trillion in the last five years.

But now, with governments on their knees on both sides of the Atlantic, the final assault has begun.  There will be some who say I am an alarmist.  I am naive and in my ignorance I just don’t understand the complexities of world finance. Really?  I don’t think so.

One only has to watch from a longer perspective like I have since the assault began on Argentina in 2002.  This has been well planned, methodical, and extremely effective in results.  One fact should be kept in clear perspective.  165 of the world’s central banks are privately owned by the Rothschild family.  Remember this very clearly when you listen to all of the rhetoric.  This point cannot be over-emphasized.

The EU is going down this summer.  In watching the attack, one only has to realize the timing of certain events.  The idea is not having the general public “catch on”.  But for example, look at the timing of the Standards and Poor’s downgrading of Greek and Spanish bonds in relationship to the discussions of the EU ministers on developing a bailout plan for Greece.  I don’t think that is coincidence and it was a bucket of cold water on the whole process and sent waves of concern through the markets. Waves like for the first time since WWII that the German bond auction was not fully subscribed.

In a speech before the elitist Council on Foreign Relations organization in New York earlier this week, President of the European Central Bank Jean-Claude Trichet called for the imposition of global governance to be bossed by the G20 and the corrupt Bank of International Settlements in the name of safeguarding the global economy.

In an address entitled “Global Governance Today,” Trichet proclaims how the elite need to impose “A set of rules, institutions, informal groupings and cooperation mechanisms that we call “global governance”. During the course of the speech, Trichet uses the term “global governance” well over a dozen times, outlining how “global governance is of the essence” to avoid another financial crisis.

A full transcript of the speech was also carried by the Bank for International Settlements, an international organization of central banks that has constantly lobbied for a centralized global currency to replace that of nation states. Trichet praises the BIS as being “ahead of the curve” in dealing with the financial crisis during the speech.

Essentially his conclusions were as follows:

Conclusions

In conclusion I would like to stress four points.

First, global governance is of the essence to improve decisively the resilience of the global financial system. We avoided a major depression but it was a close call. Governments had to support the financial sector by putting at risk taxpayers’ money for the equivalent of around 25 % of GDP on both sides of the Atlantic. This as unprecedented. I am convinced that, if we do not reinforce significantly the resilience of the financial system, our democracies will not accept for a second time such a very large scale of rescue operation.

Second, a characteristic of the recent turbulences is not only that they [governments] displayed a high level of unpredictability but also an extreme rapidity in the succession of events characterizing the unfolding of the crisis. Global governance today must demonstrate a capacity to coordinate with agility and, where necessary, to decide extremely swiftly. This is also unprecedented.

Third, the crisis has had some paradoxical effects: on the one hand it has unleashed a tendency to reengage in financial nationalism if not mercantilism; on the other hand it had contributed to the recognition that a very high degree of interdependencies between economies called for a much higher level of cooperation. These two opposing forces are presently competing. It is imperative that effective global governance preserve the level playing field which is indispensable to foster global stability and prosperity. It is a major challenge. Both sides of the Atlantic have a very important responsibility in this respect in many domains, in particular in prudential and accounting rules.

And fourth, as we have seen the crisis has driven an historic change in the framework of global governance. In my view this transformation was overdue. But there are two immediate reasons for this change. One is positive: the emerging economies are now economically and financially so important and systemically so influential that they must have a full and proper ownership of global governance. But the second reason is negative: the industrialized countries have proven particularly clumsy in their handling of global finance before the crisis at the time when their responsibility in global governance was obviously overwhelming. There was therefore no reason to confirm their exclusive prime responsibility. This calls for the industrialized countries to be now particularly irreproachable in the delivery of their present and future contribution to the stability and prosperity of the global economy within the new, more inclusive framework.”

The primary outfit that will boss the institutions of global governance, according to Trichet, is the Global Economy Meeting (GEM), which regularly meets at the BIS headquarters in Basel. This group, states Trichet, “has become the prime group for global governance among central banks”. The GEM is basically a policy steering committee under the umbrella of the Bank for International Settlements.

The BIS is a branch of the of the Bretton-Woods International Financial architecture and closely allied with the Bilderberg Group. It is controlled by an inner elite that represents all the world’s major central banking institutions. John Maynard Keynes, perhaps the most influential economist of all time, wanted it closed down as it was used to launder money for the Nazis during World War II.

Financial website Investors Insight describe the BIS as “the most powerful bank you’ve never heard of,” labeling it “the most powerful financial institution on earth”.

The bank wields power through its control of vast amounts of global currencies. The BIS controls no less than 7% of the world’s available foreign exchange funds, as well as owning 712 tons of gold bullion.

“By controlling foreign exchange currency, plus gold, the BIS can go a long way toward determining the economic conditions in any given country,” writes Doug Casey. “Remember that the next time Ben Bernanke or European Central Bank President Jean-Claude Trichet announces an interest rate hike. You can bet it didn’t happen without the concurrence of the BIS Board.” The BIS is basically a huge slush fund for global government through which secret transfers of wealth from citizens are surreptitiously handed to the IMF.

“For example, U.S. taxpayer monies can be passed through BIS to the IMF and from there anywhere. In essence, the BIS launders the money, since there is no specific accounting of where particular deposits came from and where they went,” writes Casey.

The Council On Foreign Relations comprises of influential elitists and powerbrokers from all sectors of government, business, academia and the media. It is the public face of the more secretive Bilderberg Group. The CFR only recruits members sympathetic to its agenda for global government and the elimination of U.S. sovereignty.

The scope of the CFR’s mission was best encapsulated by former Deputy Secretary of State under Clinton and CFR luminary Strobe Talbott, who told Time Magazine in July 1992, “In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn’t such a great idea after all.”

The next step is to eliminate all paper money.  Everything will go electronic.  In the US this is already being imposed as a beta test with social security and disability benefits.  By 2013, no one will get their money, just credits and electronic transfer period.

My suggestion is to get hold of and keep as many hard assets as you can and you better start now as time is very short, very short indeed.

Watching the Slow Motion Implosion

When you take all of the events occurring right now, both on the financial front and the social front globally, one can easily get the sense you are watching a slow motion implosion of societal structures. The question becomes how to react to the events. On the one hand, do you get involved, act, react, prepare, declare, etc. or do you just observe and stay detached. I think anyone who is awake is asking these types of questions at the moment.

From a financial perspective, the situation in Europe I fear is going to spread like wildfire in the next few months.  There are many reasons for this, but mostly it is that those who “know” the truth have not been truthful with the general public.  Their reasoning for this is that they don’t want to precipitate a general panic, but the truth is they are trying to save their butts from an angry mob.

The events, however, are overwhelming them and the next few weeks these events are going to spiral out of control.  What events you ask? consider these most recent revelations.

Greece will need financial assistance amounting to between €100-120bn over the next three years, German parliamentarians claimed on Wednesday after meeting Dominique Strauss-Kahn, managing director of the International Monetary Fund, and Jean-Claude Trichet, president of the European Central Bank. They said that the €45bn currently proposed as a rescue package of loans from the IMF and other members of the eurozone was only enough for the first year of support. Yields on two-year Greek bonds rose to above 16 per cent on Wednesday amid growing nervousness about the state of the country’s deteriorating public finances.

When you consider these kinds of numbers, the reality dictates these are not doable in any fashion.  Greece could not devise draconian enough austerity plans to address this kind of debt and the supporting eurozone could not possibly support such an effort. I say this because Greece is not an isolated case given the situations which are similar in Spain, Portugal, Italy and for that matter the UK as well. “It’s not a question of the danger of contagion; contagion has already happened,” Angel Gurría told Bloomberg. “This is like Ebola. When you realise you have it you have to cut your leg off in order to survive.”

Credit rating agencies have been criticized for their role in the financial crisis, but their views are still closely watched by investors anxious about the deteriorating public finances of some of the world’s most heavily indebted countries. S&P’s announcement hit Spain’s stocks and bonds. Spanish 10-year bond yields, which have an inverse relationship with prices, rose to 4.127 per cent, while the stock market tumbled 3 per cent. Greek bond prices fell further in the wake of Tuesday’s downgrade of Greece’s credit rating to junk status by S&P. Ten-year bond yields jumped to 9.91 per cent. The euro was down 0.1 per cent at $1.3135, its lowest since April 2009.

In the UK, the political candidates are debating and without exception they are lying to the public as to the extent and nature of UK national debt.  At best they are representing the issue at 25% of reality.  They cannot bring themselves to even utter the truth about what austerity measures will be required for fear of evoking Greek like riots in Britain.  The truth is they know that in this case the truth would not set them free but exactly the opposite, it would land them in jail or worse on the pointy end of a pitchfork.

Social unrest combined with these financial realities is beginning to spread world-wide as well.  These issues tend to simmer for a period and then rapidly come to a boil.  We are seeing just this in Thailand, the Ukraine, Greece and now I fear the US.  Politicians and talking heads tend to fuel the fires for their own selfish purposes which does not help the situation.

The immigration issues in the US are a prime example of how irresponsible political leaders are acting for what they perceive as political positioning.  Arizona’s politicians managed to guide frustrations into an absurd legislative action that can only bring riots and bloodshed.  At the core of the issue when examined with the cool head is how NAFTA and the impacts of NAFTA were not planned for and dealt with as they unfolded.  NAFTA created a situation in Arizona where agricultural products from Arizona were allowed to be imported into Mexico cheaper than Mexicans could produce the products and import them into the US.  These activities have increased by over 30% in the last three years. http://www.nass.usda.gov/Statistics_by_State/Arizona/Publications/Crops/cur-crop.pdf. Over 2,000,000 small farmers in Mexico were displaced by these facts.  However, Arizona imported those farmers to work the fields in Arizona to deal with the rapid increase in cheap labor demand.  Now the social issues are coming home to roost. We see this spilling over into other states like Texas, California, and New Mexico.

Instead of politicians dealing with these facts and the cause and effect elements of the problem, they choose instead to fuel the emotional aspects of the issues for political gain.  They are however, creating a maelstrom of events like is very likely to spiral out of control.  What we need right now is calm honest debate of the cause and effects of the situation on the border.  We need an honest assessment of all of the factors that have created the tension and most of all we need to deal with issues as partners, not enemies.  There is enough stress and frustation on both sides of the border. The apartheid approach simply will not work.

Globally putting all these things together as a giant tapestry, we certainly look like we are heading into the Summer of Hell.  Maybe we ought not take ourselves so seriously.  Maybe we ought to look at the messes we are in and chuckle at how ignorant we can be, and then sit down and figure our way out of this mess.  That is the one thing I think is gravely missing here.  It is our sense of humor and a good belly laugh.  I can hope.

Here’s Uncle Willy’s Thought for the Day: